2016 - a/e ProNet

AIA Names Leddy Maytum Stacy Architects Nation’s Top Architecture Firm

By Lynda

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Leddy Maytum Stacy Architects, an a/e ProNet client hailing from San Francisco, California, has received the coveted AIA Architecture Firm Award for 2017.

“Firm principals William Leddy, FAIA, Marsha Maytum, FAIA, and Richard Stacy, FAIA, began collaborating in 1983 and the belief that architecture is the synthesis of poetics, economics, technologies, and meaning has always been embedded in the firm’s culture. Dedicated to addressing issues of resource depletion, climate change, historic preservation, and social equity, LMSA and its leadership clearly demonstrate that architects can help their communities adapt to a complex and rapidly changing world. To that end, the firm’s proficiency in diverse building types – from affordable housing to the adaptive reuse of historic structures – has been recognized with more than 140 design awards and are only one of three firms to have ever received eight AIA COTE Top Ten awards.”

Founded in 2001 by principals Marsha Maytum, Bill Leddy and Richard Stacy, LMSA is well known in the region for its long list of modern, sustainable projects. This includes the Ed Roberts Campus in Berkeley and North Beach branch library, as well as multiple low-income apartment buildings in the Bay Area. LMSA’s Plaza Apartments and Rene Cazeneve Apartments house “formerly homeless residents who need on-site support services to try to rebuild their lives.”

As noted by SFGate.com, “In announcing the selection, the AIA praised Leddy Maytum Stacy for its ‘highly influential work that advances issues of social consciousness and environmental responsibility.’ Only two other San Francisco-based firms have received the national firm award in the past 45 years: EHDD in 1986 and Gensler in 2000.”

LMSA has consistently ranked among the Top 50 firms each year since 2011. It considers itself “a teaching practice committed to developing complete, well-rounded architects, leaders in the profession and effective global citizens.” Read more in Architect Magazine.

Congratulations to Leddy Maytum Stacy Architects on this honor from the AIA! Your commitment to social consciousness and environmental responsibility is an inspiration.

Shout-out Credit

Leslie Pancoast, CIC, RPLU
Vice President IOA Insurance Services – Pleasanton, CA
Email: Leslie.Pancoast@ioausa.com / Phone: 925-416-7862

Construction Contracts and Bankruptcy: The Ultimate in “Value Engineering”

By Lynda

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You have just learned that the other party to your contract has filed for bankruptcy. That party owes you money for past work and the project is not yet completed. This is a difficult and confusing situation that your firm might encounter.

In this Practice Note, attorney Jeremy W. Katz provides insight into the bankruptcy mechanism and the steps you might take to protect your firm’s interests.

A prime designer or lead contractor on a design/build project files bankruptcy. Can a design professional/consultant working under contract to the entity filing for bankruptcy protection pack up its gear and walk off the job site or stop work? Can the consultant enforce its mechanics’ lien rights against the real property’s owner? Can the consultant look to the bankrupt’s payment bond for payment? A bankruptcy filed by one party to a construction contract creates significant problems that put at risk the other party’s right to payment. When this happens, the non-debtor party to the construction contract should be ready to act.

The construction business is a volatile one, and it makes little difference if times are good or bad. Prime contractors, consultants, subcontractors, and property owners are constantly filing for bankruptcy protection. They can be huge companies, such as Washington Group, International, Enron, and PG&E, or they can be small mom-and-pop operations. But no matter how large or small the bankruptcy, creditors are likely to suffer, because rarely are they paid in full. All bankruptcies have a ripple effect; the goal is to keep the waves as small as possible. In order to best protect its interests, the creditor should have some knowledge of creditors’ rights and remedies. This knowledge allows the creditor to recognize, anticipate, and act upon issues that arise in a bankruptcy.

This article identifies some of the issues that arise when a bankruptcy is filed, as well as steps a design professional/consultant or subconsultant can take to protect its interests in the project contract. First, this article describes the bankruptcy process from a general standpoint. Second, it discusses specific issues related to the bankruptcy of owners and primes, whether they are design firms or contractors on a design build project. This article is not intended to be a comprehensive study of the topic, nor is it a substitute for a good bankruptcy lawyer. Its purpose is to allow a consultant to identify problems that may affect a construction contract when a bankruptcy is filed. This knowledge makes it more likely that the contractor will fare better than other creditors in the fight to be paid.

Download the full article–Construction Contracts and Bankruptcy: The Ultimate in “Value Engineering”–to continue reading the following sections:

How Bankruptcy Works – An Overview
Pending or Executory Contracts
Perfect Your Mechanics’ Lien Rights!
The Automatic Stay
Unauthorized or Preferential Transfers, or Having to Give Money Back to the Debtor

If you have further questions on construction contracts and bankruptcy, contact your local a/e ProNet broker. We’re here to help!

Indemnification Clause Templates for Architects & Engineers

By Lynda

We’ve posted several times about the confusion surrounding so-called “standard contracts,” as well as the most commonly misunderstood clauses in design professional contracts. When reviewing a new contract for the first time, it can be helpful to know what sound contract language looks like. In February, we published an issue of ProNetwork News titled Template of Reasonable Contract Clauses for Design Professionals. In it, author Kent Holland of ConstructionRisk, LLC lays out 16 templates to help architects and engineers deal with contract review and negotiation.

The following is an excerpt of the Indemnification clause portion of the newsletter, including six different templates for this deceptively complex contractual requirement:

In the examples provided below, some include an obligation to indemnify a client for reasonable attorneys fees and defense costs. To the extent the a/e is required to pay attorneys fees for its client only because it obligated itself do so by the indemnification clause (i.e., attorneys fees would not be imposed on the a/e by a court under common or law or statute), then these costs will not be covered by insurance. The contractual liability exclusion will bar their recovery.

Sample 1:

Consultant shall indemnify and hold harmless the Client, its officers, directors, employees, from and against those liabilities, damages and costs that Client is legally obligated to pay as a result of the death or bodily injury to any person or the destruction or damage to any property, to the extent caused by the willful misconduct, negligent act, error or omission of the Consultant or anyone for whom the Consultant is legally responsible, subject to any limitations of liability contained in this Agreement. Consultant will reimburse Client for reasonable defense costs for claims arising out of Consultant’s professional negligence based on the percentage of Consultant’s liability.

Sample 2: For California contracts must add that there is no duty to defend:

Consultant shall indemnify and hold harmless (but not defend) the Client, its officers, directors, employees, from and against those liabilities, damages and costs that Client is legally obligated to pay as a result of the death or bodily injury to any person or the destruction or damage to any property, to the extent caused by the willful misconduct, negligent act, error or omission of the Consultant or anyone for whom the Consultant is legally responsible, subject to any limitations of liability contained in this Agreement. Consultant will reimburse Client for reasonable defense costs for claims arising out of Consultant’s professional negligence based on the percentage of Consultant’s liability.

Continue reading “Indemnification Clause Templates for Architects & Engineers”

Two a/e ProNet Clients Win AIA Indiana Design Awards

By Lynda

Normal Hall in the evening shortly before unveiling. Photo credit: arcDESIGN

Last month, AIA Indiana announced the winners of their annual awards. Happily, a couple of familiar names were among the group.

ONE 10 STUDIO Architects came away with two awards. The first was a Merit Award (Preservation / Adaptive Reuse / Reservation) for the Marion County Public Defender Agency project.

Jury Comments:

Though entered as an adaptive reuse, this project was the strongest interior as well. A small number of elements (red doors, wood ceiling panels, white walls) are employed to create spaces that elevate the program – a public defender’s agency. The new systems are clearly articulated and juxtaposed with the historic shell that contains them.

ONE 10 STUDIO also achieved a Citation Award – New Construction (Project cost greater than $1 million) for their Reliant Partners project.

Jury Comments:

This small commercial building is expressed as a simple, wood frame pavilion placed upon a masonry plinth. This strategy allows the lower level bank to appear (appropriately) secure, while allowing the upper level office space to be airy and filled with daylight. The scale of the building appears to complement the neighborhood without copying the neighbors.

Also honored with a Citation Award (Preservation / Adaptive Reuse / Renovation) was arcDESIGN for their project at Indiana State University Normal Hall.

Jury Comments:

This project lovingly restores a series of public spaces lost and hidden by years of ill-conceived renovations. The preservation component of the project was thoroughly researched and painstakingly executed – recapturing the grandeur of this academic building. The work was very clearly communicated allowing the extent of the renovation to be completely understood.

Congratulations to all the Indiana design firms who won! And good luck going forward.

Shout-out Credit:

Holly Gill-Gaither, CIC
Agent, Professional Liability
Walker & Associates
Email: holly@walkeragency.com / Phone:317-759-9320

Cyber Security Awareness & Last Week’s DDOS Hack

By Lynda

Navigating your continuously connected life

If you used the internet last Friday, chances are you experienced a few problems. Twitter, PayPal, Spotify, Netflix and AirBnB were just a few of the major websites struggling throughout the day. News sites across the country, including The New York Times and The Wall Street Journal, had trouble, too. This was the result of a distributed denial of service (DDOS) attack, a brand of malicious hacking that the cyber security industry knows well.

A typical DDOS attack involves a hacker or hackers using malicious software to infect thousands of computers. They then control those infected machines to coordinate an attack, overwhelming a website with too much traffic until it crashes. Friday’s DDOS attack was more complex and more powerful.

First, the hackers didn’t use a mere “bot-net” of infected computers. They used millions of infected webcams, closed-circuit TV cameras, DVRs, routers… the so-called Internet of Things.

As NPR technology reporter Alina Selyukh explains:

“We’ve all been buying these new things, connecting them to Wi-Fi. Internet wonks will call this the internet of things. Experts have been warning that these things are never secure. This is the most visible example so far of what happens when hackers hijack a tremendous number of them.”

The other thing that set this attack apart was the target. Certainly, the major companies affected by the rolling attack throughout the day were targets, but it does not appear that any one of their websites was hit individually. Instead, the hackers targeted a company called Dyn.

“[I]t is the kind of company that sits between you and a website that you’re trying to access. When you type in a web address, it makes sure that you land exactly where you intended,” Selyukh told NPR. “And Dyn’s clients are some of the most popular websites and services out there.”

Friday’s events prove that technological innovation often advances faster than technology security. We’re all vulnerable when that happens.

National Cyber Security Awareness Month

October is National Cyber Security Awareness Month (NCSAM), an initiative created to bring awareness to issues like this one, and to encourage collaboration between government and industry to serve the American public. As part of the annual campaign, Stay Safe Online offers a collection of resources to educate and assist you in shoring up your own cybersecurity. These are useful both personally and professionally, so we hope you’ll check them out.

And for those interested in insuring against potential losses due to cyber risks, many top tier professional liability insurance carriers also offer cyber liability insurance for design professionals. Here are just a few:

PUA Cyber Liability Insurance

RLI Cyber Liability Insurance

Travelers Cyber Liability Insurance

Victor O. Schinnerer Cyber Liability Insurance

Keep those passwords strong!

Hargreaves Wins Rosa Barba Prize for Int’l Landscape Design

By Lynda

In Barcelona last month, a/e ProNet client Hargreaves Associates received the Rosa Barba International Landscape Prize for Queen Elizabeth Olympic Park. Senior Principal Mary Margaret Jones was on hand to collect the 15,000 Euro prize and spoke briefly about the project, which she helped design for the 2012 Summer Olympics in London.

The park converted an abandoned industrial area of the capital. After years of pollution damage, the riverbank needed rehabilitation, and Hargreaves found a way to do it. At 270 acres, Queen Elizabeth Olympic Park is the largest park created in Europe in more than 150 years.

As Jones said, the goal was to develop the area in a beautiful, sustainable way. Hargreaves Associates collaborated with London’s LDA Design on the innovative master plan. They combined traditional British landscapes with forward-thinking trends in green design. They hoped it would continue to be an asset to the city in the years after the Games had come and gone. The theme of the 9th International Biennial of Landscape Architecture was “Tomorrow Landscapes,” so the olympic park was the perfect candidate for the prize.

Learn more about the development of the park

Watch a short film on the creation of the park posted by the UK Landscape Institute. Or read more about the design at the Hargreaves website:

“The head gardener of the Olympic Park says,”This may have the feel of a Chelsea show garden, where everything has been grown to be at its best for the same limited period of time, but it really isn’t. After the Games, everything will be allowed to flower at its natural time of year. I’ve been a gardener for 35 years and I’d always previously worked on private estates because most municipal gardens are a bit crap. But this park is absolutely stunning.”

Congratulations to Hargreaves Associates! Read more about the award and ceremony at World-Architects.com.

Shout-out Credit:

Leslie Pancoast, CIC, RPLU
Managing Partner
IOA Insurance Services – Pleasanton, CA
Email: Leslie.Pancoast@ioausa.com / Phone: 925-416-7862

The Temptation to Cut Corners on Insurance

By Lynda

wood-jetty-landing-stage-sea When it comes to insurance, cutting costs without determining the risks can leave your design firm vulnerable. In a recent IA Magazine article called Are Your A&E Clients Cutting Coverage Corners?, editor Jacquelyn Connelly outlines three crucial “coverage developments” pertinent to architects and engineers:

Cyber liability
Design-build contracts
Stricter insurance requirements

These categories are rapidly changing and expanding. Knowing where the risk comes from isn’t always clear. Design firms, especially a small ones, can easily underestimate their exposure. Connelly quotes Barbara Sable, assistant vice president of the RLI Design Professionals Program (an a/e ProNet sponsor):

“Even the smallest of A&E firms—which often are buying insurance because they’re contractually obligated to, not because they perceive any real exposure—can be in the wrong place at the wrong time. For example, a small A&E firm may be responsible for the maintenance of traffic on roadways or bridges. In the event of an accident, “they may be one of the deepest pockets available associated with that crash.”

We encourage you to read the full article and consider your own firm’s professional liability coverage today. If you have questions about whether your limits are adequate, be sure to contact your local a/e ProNet broker and ask. That’s what we’re here for.

Design Professionals and the Give-and-Take of “Standard Contracts”

By Lynda

The word standard implies many things. A bar to be cleared; a rubric to be followed. But for design professionals, the word becomes tricky when applied to contracts. Project owners often want to keep things simple by requiring so-called Standard Contracts for all parties. This is a problem for architects and engineers, especially from an insurance perspective.

Construction contracts cause problems for design professionals.

The following are a few Frequently Asked Questions we see from architects and engineers on this issue:

My project Owner insists on using their own contract for hiring my professional services. They are adamant this is a Standard Contract. How should I respond?

There is no such thing as a Standard Contract. Be sure to read each contract submitted by your clients carefully. You need to understand both the client’s expectations and your firm’s rights and responsibilities. It is a good idea to have all owner-drafted agreements reviewed by your attorney and/or insurance broker. This will help to determine whether you are accepting responsibility beyond what common law would hold you to in the absence of the agreement. If, for example, you agree to accountability beyond the protection afforded by your professional liability insurance, that’s a problem.

When I perform professional services for a Contractor in lieu of an Owner, should I be concerned?

Yes. Construction contracts are not meant to be used in this arrangement; they are not designed to meet the needs of the design professional.

What are some of the problems with using “construction contracts” for design services?

Construction contracts are problematic for design professionals. A General Contractor’s contract with a project Owner includes certain requirements (e.g. means, methods, procedures, sequences, safety, etc.). These requirements trickle down to construction subcontractors the verbiage of construction contracts. Beyond that, none of these requirements meet the test of what a design professional should required to do on the same job.

Contract document libraries available via the AIA and EJCDC can be a good place for design professionals to begin. These are standard in the sense that they are templates. However, it’s still important to seek individualized guidance from your attorney and/or insurance broker.

What are some of the other problems with utilizing “construction contracts” for design services?

Most construction contracts contain warranties/guarantees, and some have performance standards. To our knowledge, all professional liability insurance policies for design professionals exclude coverage for warranties/guarantees and (likely) performance standards. Remember: if you commit your design firm to more responsibility than the law expects of you, your insurance policy cannot protect you the way that it should.

We hope you’ve found this helpful. As always, be sure to contact your local a/e ProNet broker if you have further questions.

a/e ProNet’s Fall Meeting to Commence in Chicago

By Lynda

Chicago - a/e ProNet Fall Meeting Location — a/e ProNet meets in Chicago each autumn

This week, a/e ProNet’s membership will gather in Chicago for the annual fall meeting (September 28-30, 2016). It’s an opportunity for the members to exchange insights about the climate of the design industry, broadening each broker’s individual knowledge base.

Established in 1988, a/e ProNet represents a combined annual professional liability premium volume exceeding $300 million. For this reason, representatives from the top tier professional liability insurance providers are eager to present to the group.

What Happens at the Meeting?

A dozen insurance companies are scheduled to present this fall, including: Beazley, Victor O. Schinnerer, Liberty, Travelers and Arch. These presentations update the membership on regional and national insurance trends. Hearing about real life claims scenarios, legal precedents and new policy/endorsement offerings equips our members to do their jobs well. The underwriters are eager for feedback on their programs and changes. a/e ProNet’s members actively advocate for their own clients during this portion of the meeting.

Members will also attend a reception one evening at the Driehaus Museum, just off Chicago’s Miracle Mile. This exquisitely restored 19th century mansion is a must-visit for lovers of Gilded Age architecture and art. Representatives from major design industry organizations, like the AIA and NSPE, are also invited to attend.

To close the conference, Douglas J. Palandech, Esq. of Chicago law firm Foran Glennon will present on the Fiduciary Liability Exposure of Design Professionals. These presentations often turn into articles for one of ProNet’s publications. Don’t miss out! Follow us on Twitter and/or LinkedIn for updates.