If you have ever gone car or shoe shopping with and for someone else (teenagers and significant others, in particular), you know the difficulty and frustration that usually follows efforts to fit and style those with strong opinions and feelings on the subject. Such shopping is more an effort in very personal comfort, feel and perception than utility. The same can be true for design professionals’ scope of services. The most recent economy has left design professionals to suffer earliest, longest and hardest, particularly those that rely on residential development. To keep busy, some A/Es are marketing a broader scope of services, including services historically reserved for construction contractors. The comfort, feel and perception of such expanded scopes of services are highly personal but come with distinct and practical liabilities and risks. Like finding the right shoe size or vehicle type, A/Es can manage expanded risks with properly fitting contracts, insurance and professional structure.
SUV v. Sedan and Dress Shoe v. Cleats
In annual magazine reviews, sedans are compared to sedans and SUVs are compared to SUVs. The same is true of legal standards by which different roles are judged. A/Es provide a professional service and are compared to other A/Es by a standard of care – what others in the same profession are doing or would have done for a similar project. A/E contracts typically take care to adhere to recitations of the baseline standard of care and avoid or disclaim responsibility for means and methods, safety, warranties and the contractor’s timely or proper performance.
Contractors provide a finished product which is judged by a good and workmanlike standard: a warranty of quality, timeliness and, usually, safe performance of the work. Contractor agreements therefore give the contractor control over and responsibility for means and methods, safety, warranties, schedule and performance.
Crossovers and Hybrids
There is a line between trucks and cars, but there are luxury SUVs and crossovers to blur the line and offer compromises of varying degree. The line between A/E services and contractor services has become equally fuzzy. Try to explain in words the difference between the scope of services of a Construction Manager/Advisor, a Program Manager and an Owner’s Representative. For example: The label is less important than the intended division of responsibility, control and money, and how that is expressed in a contract.
Sometimes these services are combined with the marriage of more than one firm or entity. Joint ventures are just like partnerships. Two firms combine efforts for a project, usually with a contract that marries the two firms for that project and defines who does and pays for what. Like a marriage with joint credit accounts, each of the married firms is responsible for the charges and actions of the other. Sometimes such a marriage means a new entity – a corporation or LLC, owned by the constituent firms. There, too, is a contract in the form of a shareholder or operating agreement dividing up responsibilities and dollars. With any of these arrangements, the contracts must address who will do what in the relationship – who will carry insurance, contract with the trades, be responsible for cost and time, and how will liabilities be divided.
This has been an excerpt of the November 2012 edition of ProNetwork News. Download the full PDF version of this newsletter.
About the Authors:
Melissa S. Roberts, AAI is Vice President at Euclid Insurance Agencies, a USI Company. She has been with the firm in Itasca, Illinois since 1984. Melissa’s specialties are helping design firms avoid claims, manage their risks and purchase Professional Liability insurance. She has served as President of a/e ProNet – the national organization of Architects and Engineers Professional Liability brokers that brings you this newsletter. The AIA Northeast Illinois Chapter awarded her their 2000 Service Award for Outstanding Affiliate Member, and her recent articles, The Big Switch – Look Before You Leap When Changing Insurance Companies and Reporting Claims and Potential Claims Under Professional Liability Insurance Policies, were published by AIArchitect and are included in the AIA’s Best Practice feature. Contact Melissa Roberts at: Melissa.Roberts@usi.biz.
Eric Singer is a partner at Ice Miller, LLP. He concentrates his practice in construction law, with emphasis on the representation of architects, engineers, contractors, owners, and lenders as well as other professionals, in litigation and alternative dispute resolution of design and construction issues. Mr. Singer, who was awarded his J.D by the University of Chicago Law School, is a former Professional Affiliate Director of the American Institute of Architects of Chicago and is a member of multiple bar associations and design professional groups. Recently ranked as AV Preeminent by Martindale-Hubbell and listed in The Best Lawyers of America, Construction Law, by those peer-review organizations, Eric is an active speaker and prolific author on the subject of construction litigation and the liability of the design professional. Contact Eric Singer at: firstname.lastname@example.org
Don’t forget to contact your local a/e ProNet broker if you have any questions!