Blog Archives - Page 5 of 29

Copyright Rights and Wrongs

By Lynda

Copyright Definition Copyright seems like a rather lofty notion. Few put copyright at the top of their list of must-haves in contract negotiations, and even fewer take the time to actually register their documents for copyright protection. But you do have copyright protections under current law. That copyright can come in handy as a risk management tool as well as leverage in a fee dispute. Unfortunately, many design professionals give away their rights vis-à-vis their contracts without a full appreciation of the implications of their actions.

Copyright statutes have been on our books since the 1700s. The Copyright Act (Title 17 of the US Code) provides useful protection applicable to your practice by including pictorial, graphic and sculptural works, as well as architectural works, as copyrightable materials. Architectural works include drawings, models and the structure itself. “Arrangement of spaces and elements” are protected, but not “individual standard features.” Registering your architectural works creates a public record of the registration and is essential in an infringement action. It takes 30 minutes and $30 to complete. But even if you do not register your works, they are still protected unless you give those rights away by contract.

Copyright in Standard Design Contracts

Standard design industry contracts (e.g., AIA and EJCDC), keep the copyright with the design professional and provide for a limited license to the client/owner for use of the documents. That license is generally limited for use on the specific project only, and does not allow for transfer of that license to third parties. The design industry contracts also include an indemnity provision in the professional’s favor that mitigates risk should those documents be used or modified without proper authority. Most owner generated contracts, on the other hand, demand a transfer of copyright to the owner, and those terms are often agreed to by the professional, presumably because the professional is not fully aware of its rights or the risks involved in giving those rights away. Continue reading “Copyright Rights and Wrongs”

How to Avoid Invalidating Your Professional Liability Insurance

By Lynda

At a panel for the NC Bar Association Construction Law Winter Meeting, attorney Melissa Brumback and her colleagues discussed insurance issues for design professionals. One hot topic was the way architects and engineers can inadvertently invalidate their insurance by agreeing to overly broad contractual language. Frequently, this has to do with the standard of care. Melissa penned the following post for the NC Construction Law Blog, and we have reposted it here with her permission:

As most of you know, Errors & Omissions insurance (“E&O” coverage) is meant to provide coverage for mistakes you may make in performing your professional architecture or engineering services. E&O coverage is important to protect you in the event of a lawsuit because, as you know, no set of plans is perfect (nor is perfection the standard of care).

Be careful, though. Do not promise to provide a higher standard of care than the “professional standard.”

If you are asked to sign a contract that states you will use your “professional best,” “best efforts”, “highest care” or similar, you are being asked to sign something that could cost you your E&O coverage.

Examples of such language:

[Architect] [Engineer] shall perform the Services in accordance with the highest standards of professional competence in the industry.

[Architect] [Engineer] shall exercise a high degree of care and diligence in providing the professional services.

[Architect’s] [Engineer’s] services shall be of first class quality and free from defects.

E&O policies cover you for failing to meet professional standards, but not in cases where you agree by contract to provide a higher/better/best standard.

Explain the risks in such language to your owner clients. No owner will want to put your insurance policy in jeopardy, and they should be willing to strike or modify that language to ensure that your work on the construction project is fully protected and covered by your E&O policy.

Some examples of coverable standards:

All services to be performed shall be performed in a manner consistent with that level of care and skill ordinarily exercised by members of Designer’s profession.

All services shall be performed in a manner consistent with that level of care and skill ordinarily exercised by members of Designer’s profession currently practicing in the location of the project for which the services are rendered, or similar locations.

Remember this, and make sure your future construction contracts contain favorable language that will actually be insurable. You know–the whole reason you have professional liability insurance in the first place!

About the Author

Melissa Dewey Brumback, who blogs at www.constructionlawNC.com, is an attorney at Ragsdale Liggett in Raleigh, North Carolina, where she represents architects and engineers in risk avoidance, contract negotiation, and construction litigation.

SmartRisk Checklist Can Help Your Firm Shore Up Cybersecurity

By Lynda

Architecture and engineering firms are still learning how to cope with a growing cybersecurity threat. According to this year’s Global Application and Network Security Report from Radware, nearly half of all companies experienced a cyber ransomware attack in 2016. Vulnerability to loss of personal data, exposure of sensitive or proprietary information, etc., is also on the rise. Tim Corbett of SmartRisk LLC, a longtime affiliate of a/e ProNet, has recently analyzed the report findings. He writes that the gravest irony is that while “Employees are the first line of defense” against cyberattacks, they are also a company’s “greatest cyber security weakness.”

Employees’ personal habits regarding company data and digital interactions open doors for hackers, viruses, and the siphoning of information. If your employees aren’t aware of basic threats and/or best practices regarding cybersecurity, your firm is more likely to lose out. The costs of these attacks can be severe. They are also avoidable. SmartRisk’s post recommends regular and up-to-date cybersecurity trainings for your firm “[t]o obtain a broad understanding, and buy-in from the entire organization.”

Arm yourself with SmartRisk’s Checklist

According to SmartRisk, cybersecurity training should take place annually. Corbett offers a checklist for these trainings. Remember to include “all members of the organization, including senior management… so they are knowledgeable of recent trends, monitoring methods, and controls used to prevent the installation of malicious code on the organization’s computer systems.” He also recommends making cybersecurity training a standard protocol for new hires. It’s probably a good idea, as well, to encourage your IT department to be accessible for even basic questions on cybersecurity. Demystifying the response to the threat will empower your employees to be proactive in protecting the company’s interests.

October is Cybersecurity Awareness Month, so you can find a/e ProNet’s past posts on related issues here:

Federal Trade Commission Releases How-To Cybersecurity Guide (Oct 2016)

Cyber Security Awareness & Last Week’s DDOS Hack (Oct 2015)

As always, if you have further questions, please contact your a/e ProNet broker.

a/e ProNet Holds Annual Spring Meeting in Arizona

By Lynda

For the last few sunny days, a/e ProNet members from across the country have gathered in Scottsdale, Arizona for our annual Spring Meeting (March 1-3). a/e ProNet brokers are independent. Technically, we operate as competitors. Membership is by invitation only. We come together voluntarily as recognized leaders in our industry, meeting the insurance needs of architects and engineers. Our combined premium volume, experience, and national reach make our meetings an attractive target for insurance companies, premium finance companies, and other professionals. With our two annual meetings, we keep our fingers on the pulse of the insurance industry and advocate for our clients.

The Spring Meeting

The purpose of our Spring meeting has changed over the last three decades. Invited representatives from the companies and industries mentioned above present to the group on educational topics. This year, attorney David Ericksen of Severson & Werson in San Francisco also organized a series of five panel discussions:

Non-Traditional Project Delivery Methods
Cyber Communication Conundrums
The Prime/Sub Team: Roles, Responsibilities & Risks
Contract and Claims Connections
Material Transparency & Building Green

Ericksen staffed these panels with underwriters, claims adjusters, etc. from companies like Victor O. Schinnerer, AXIS, Hanover, RLI, Beazley, and several other a/e ProNet sponsors. The panel environment increases the awareness of each company regarding their competitors’ products and services. As well, it gives our members a quick, comprehensive understanding of the market’s overall perspective on these issues. Continue reading “a/e ProNet Holds Annual Spring Meeting in Arizona”

To Do in 2017: Take An Online Architecture Course

By Lynda

Ray and Maria Stata Center (MIT) designed by Pritzker Prize-winning architect Frank Gehry

Every day, technology opens new doors to current and future generations. Nowhere is this more apparent than in education. Video streaming capability allows anyone to “attend” classes at renowned universities, for example.

Harvard Graduation School of Design

One of the most recent examples is an introductory level architecture course from The Harvard Graduate School of Design. “The Architectural Imagination” begins on 23 February 2017, and will be available on edX, the Harvard/MIT-developed platform for “massive open online courses” or MOOCs. It will be taught by Eliot Noyes Professor of Architectural Theory K. Michael Hays, Professor of Architectural History Erika Naginski, and G. Ware Travelstead Professor of the History of Architecture and Technology Antoine Picon.

“Architecture engages a culture’s deepest social values and expresses them in material, aesthetic form,” reads the course description. “In this course, you will learn how to ‘read’ architecture as a cultural expression as well as a technical achievement. Vivid analyses of exemplary buildings from a wide range of historical contexts, coupled with hands-on exercises in drawing and modeling, bring you close to the work of an actual architect or historian.”

Harvard is offering this course for free, though there is a $99 fee required in order to receive a certificate of completion. As indicated by Archdaily, “The Architectural Imagination” is one of several architecture-related courses available on edX. Browse the catalog, and you’ll find others from “institutions including MIT, ETH Zurich, and the University of Tokyo.”

MasterClass

Another fun option for continued learning comes from MasterClass. This private education platform offers a series of video courses with some of the biggest names in arts and entertainment. The stated goal of MasterClass is to “give anyone the ability to gain the wisdom and knowledge of the world’s best creators.” Their current roster includes luminaries like Aaron Sorkin (screenwriting), Annie Liebovitz (photography), Dustin Hoffman (acting), Serena Williams (tennis), James Patterson (writing), and Gordon Ramsay (cooking). As of this spring, the great Frank Gehry (architecture) will add his name and skills to the list.

“At 19 years old, Frank Gehry was a truck driver taking sculpture classes at night school,” reads the course introduction. “His vision for what architecture could accomplish went on to reshape our cities’ skylines, and the imaginations of artists and designers around the world. Now this master builder invites you into his never-before-seen model archive for a look into his creative process.”

The MasterClass platform puts students in close touch with their instructors via engaging online classes, interactive assignments, course materials, student community and Q&A. All classes are available online for $90 each.

If You Build It, They Will Sue: Condominium Projects – Part I

By Lynda

Do architects owe a “duty of care” to the homeowners of a condominium project with whom the architects have no contractual privity? According to the California Supreme Court, they do. What does this mean in practical terms? The answer is that architects are now more than ever exposed to potential future claims and lawsuits brought by homeowners and the homeowners’ associations years after the project has been completed even where the architect’s design decisions are trumped by those of the project developer, and the architect’s role in the construction phase of the project is limited.

The purpose of this paper is to provide background on an architect’s potential liability to its client and third parties on condominium projects as well as guidance on how to prospectively address the concerns highlighted by a recent California Supreme Court decision and many other lawsuits in which architects have been sued by third parties. Specifically, we address the following topics: assessing your owner client, important contract provisions, and insurance issues. The intent is to provide a roadmap for architects in assessing their risks on condominium projects and a practical approach to addressing those risks. While it may not be possible to fully insulate architects from all risks, it is certainly a good practice to have a firm understanding of those risks and to address the risks up front. Benjamin Franklin is attributed with the statement: “In this world nothing can be said to be certain, except death and taxes.” For architects who design condominium projects, unfortunately, lawsuits should be added to that list. Continue reading “If You Build It, They Will Sue: Condominium Projects – Part I”

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

By Lynda

pexels-photo-196642

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

shutterstock_462881602

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.