Practice Notes

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

If you have ever had a Will prepared you know that the process involves a great deal of formality. You sign your name in numerous places and witnesses are also present to confirm that you have acknowledged the document as your own. Aside from the fact that such an occasion is deserving of pomp, there is another good reason for all of the ceremony. The reason is that if a dispute were to arise as to the disposition of your estate, you would not be around to clarify your intent.

In reaction to the litigious climate and the runaway jury verdicts of today, architects and engineers have been forced to engage in a variety of risk management and risk avoidance tools and techniques. Today’s loss prevention strategies include defensive project management, use of peer review, rigorous review of contracts by in-house or outside legal counsel, avoidance of certain types of projects and/or clients, and in some cases, reorganization of the firm into a limited liability entity such as a corporation, limited liability partnership (LLP) or limited liability company (LLC). In this issue of ProNet Practice Notes, we will examine the significant features of LLPs and LLCs, their advantages and disadvantages for a/e’s as compared to other business formats such as corporations or general partnerships, and the general requirements for the formation of an LLP or LLC.

The American Institute of Architects recently released a “new” series of documents, including a revised edition of the B141 Owner/Architect Agreement which replaced the 1987 version. At the same time, the AIA also released revised versions of the C141 (Architect/Consultant Agreement) and A201 (General Conditions) documents. These and other related documents form a “family” of coordinated agreements which should be read and used together. From the perspective of the design professional, however, the B141 Owner/Architect Agreement represents the “cornerstone” document upon which other relationships are based and from which most responsibilities fundamentally arise. Given that level of importance, this paper will focus upon the ways in which the 1997 B141 has been materially changed from the 1987 document, with the goal being to provide the design professional with a workable understanding of those changes and the manner in which they may impact the A/E’s services, relationships, rights, and responsibilities over the next decade.

For longer than a quarter century, design professionals have experimented with the outwardly simple contract device their advisors call limitation of liability. The basic limitation of liability clause commonly provides: Client agrees to limit the design professional’s liability to Client for the design professional’s negligent acts, errors and omissions to the greater of the amount of the design professional’s fee or $50,000.