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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.

Sample Template Clauses include:

1.     Certifications
2.     Compliance with Law
3.     Copyright of Documents
4.     Cost Estimates Exceeded – Redesign Services Required
5.     Incorporation by Reference and Flow Down
6.     Indemnification
7.     Limitation of Liability
8.     Payment Provisions
9.     Prevailing Party Attorneys fees
10.  Site Visits/Inspection
11.  Standard of Care
12.  Suspension of Services
13.  Time of Performance
14.  Waiver of Consequential Damages
15.  Withholding Fees
16.  Warranties

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.” With that said, the first question should be:

How effective is your risk management program?

An excellent method in answering that question is determining a design firms risk profile.

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.

For many design 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.