Consider this situation: You have been awarded a commission to design a building for a new client. You propose using the AIA’s Standard Form of Agreement B101 as your owner-architect contract, but the client insists you sign a version of the B101 “with just a few minor changes.” You notice that one of those changes requires you to “comply with all laws, rules, and regulations," rather than, as the B101 states, to “review laws, codes, and regulations applicable to the Architect’s services.” That changed language should be setting off alarm bells for you.
A recent court decision requiring an engineer to indemnify and defend its client, a project owner, against a routine contractor claim is a wakeup call to further clamp down on indemnification language so that only those damages resulting from tort claims against the indemnitee based on the negligence of the design professional will be indemnified, and that there will be no duty whatsoever to defend such claims.
Most people, and most professionals in particular, know what they should do. It is the stuff of aspirational New Year’s Resolutions and Twelve Step Plans. Yet even those readily acknowledged “right principles” often fall to the wayside of neglect and outright avoidance. The mind and heart acknowledge and are willing, but the follow through falters. Nowhere is this more true for the world of design and construction professionals than in the arena of written/unwritten contracts. It may result from the enthusiasm to jump straight into the work, unresolved contract negotiations, or an attitude that the contract just isn’t that important.
For design professionals, finding the right insurance broker can present a challenge. You need someone with ample experience handling the professional liability needs of architects and engineers, and who offers a wealth of value-added services. Only if your broker has a comprehensive understanding of what you and your firm are all about can he or she be of real use to you.
Continued from If You Build It, They Will Sue: Condominium Projects – Part I, an analysis of Beacon Residential Community Association v. Skidmore, Owings & Merrill LLP, et al. and its impact on future court decisions.
Design professionals are often asked by their clients to sign contracts that include comprehensive—sometimes unreasonable—insurance requirements and indemnification terms. These are usually drafted with the goal of protecting owners, clients, contractors, or other project participants. But how does this work when the required coverages aren’t found in the commercial insurance marketplace?
Key risk allocation clauses in design professional contracts that routinely require editing to make the risk more manageable or insurable include those presented in this template. The language set forth below is suggested as reasonable compromise language to onerous terms and conditions. This is not legal advice, and before adopting contract language for any specific situation, consultations with legal counsel is recommended. Enforceability of contract language varies from state to state.
The use of broker-verification questionnaires has been a growing trend seen most commonly in the context of construction insurance. In attempting to secure a contract, it is becoming increasingly common for project owners to request that brokers complete questionnaires wherein the broker is asked to verify whether the client’s policies meet the contractual requirements, contains specific exclusions, etc.
Many design firms attend risk management training sessions and implement certain practices based on an industry trend or project claim. Other firms may only concentrate on contracts and insurance coverage’s as a risk management strategy, which only addresses a portion of an effective risk management program. As they say – “you cannot manage something that is not measured.”
You’ve worked hard to establish your business and plan to stay actively involved in its future success. So, why would you plan your exit from it now? Because, as the saying goes, if you fail to plan, plan to fail. You won’t lead your company forever, and statistics show most businesses don’t make it past the second generation of ownership due to the lack of a proper and thorough succession plan.
In the world of claims-related contract clauses for design professional agreements, the indemnity and defense clauses get all the attention. However, lurking in the shadow of the indemnity clause is a menacing cousin with potentially even greater and more frequent impact and risk: the prevailing party attorneys’ fee clause. Both clauses share the common risk that they are often not covered by professional liability insurance because each represents a contractually-assumed liability which would not exist in the absence of the contract.
Carefully selected and advantageously used, your broker can be as important to the management of your practice as your accountant or your attorney. Poorly selected and ill-equipped to advise you on the risks of professional practice, your broker may add little more of value to what you do than the cost of a few postage stamps at renewal time. The choice is yours.
For many firms, the ability to offer and maintain competitive employee benefit programs continues to be one of the keys to attracting and retaining the best available talent. Yet, the regulatory and legal environment within which these benefit plans are being designed and administered is more complex than ever. Not only are there ERISA issues, but there is a literal alphabet soup of COBRA, FMLA, HIPAA, etc. With this greater complexity and heightened scrutiny comes risk: risk for the company itself, and the executives and administrators responsible for overseeing and administering the benefit plans
Which is better, more or less documentation in your project file after the job is complete? Despite recent advances in technology, document retention has become a difficult, expensive and complex proposition. Computers have changed design professionals’ work flows and methods, greatly increasing efficiencies, but also exponentially multiplying the volume of data; e-mails, attachments, drawing revisions, text and voice messages, not to mention folks are still sending faxes and letters, actual paper ones. All of this adds up and can become an unmanageable mess, even for the best of us. So what should you do? To answer these questions see the attached article by William Thomas.
The closely watched California Supreme Court case of Beacon Residential Community Association v. Skidmore Owings and Merrill et. al. has been decided, and the opinion is bad news for California Architects. The Court held that architects owe a duty of care to future homeowners in the design of residential buildings where the architect is a principal architect on the project, meaning that the architect is not a subordinate to other design professionals
The construction phase is a dynamic time of a project and a design professional’s involvement is significant from a risk management perspective since it allows the design professional the opportunity to provide input during the construction of the project. Since no designs are perfect (and, moreover, are not expected to be perfect to still meet the standard of professional skill and care), all designs require some level of interpretation that is best done by the design professional who created them.
"Stirring the Pot: Work Place Drug Policy Implementation in the Era of Legalized Medicinal and Recreational Marijuana”. This article was written by Stephanie Rawitt, an attorney with the Philadelphia office of the Clark Hill Law Firm.
IMCI hires new employee Jarrad Smith, J.D.