Attorney Archives - Page 5 of 6

4 Risk Management Webinars for Design Professionals in 2013

By Lynda

In 2013, Professional Liability insurance provider Victor O. Schinnerer will host independent subject-matter experts for four webinars, all geared toward Architects, Engineers, and other Design Professionals:

Employment Liability Issues in a Recovering Economy

February 13, 2013, 1:00 – 2:00 pm eastern

Thomas L. McCally, Esq., Carr Maloney, P.C., Washington, DC

Design firms face various types of employment liability issues during the normal course of business. However, the downturn and subsequent recovery of the economy have brought these issues to the forefront of concerns for design firms. An attorney expert in litigating design firm employment practices claims will discuss the issues firms need to recognize as the economy improves and firms prepare to staff-up for the recovery.

Business Models and Financial Opportunities in a Recovering Economy

April 10, 2013, 1:00 – 2:00 pm eastern

Michael O’Brien, ASA, Rusk, O’Brien, Gido + Partners, Washington, DC

From funding sources to procurement procedures, the financial environment for professional services has significantly changed since the pre-recession economy. Both in the public and private sectors, the rules, risks, and routes to financial success are different. Professional services firms need to adjust their business plans to remain viable and to benefit from the opportunities in a recovering economy. Specializing in solving the business management and ownership challenges of consulting firms, our expert will share thoughts on the needs and responses of firms in the new service environment.

Technology Risks for Design Professionals

September 11, 2013, 1:00 – 2:00 pm eastern

David J. Shannon, Esq., Marshall, Dennehey, Warner, Coleman, Goggin, Philadelphia, PA

Technology risks associated with the business operations and professional services of design professionals is not new. However, the increased use of building information technologies and collaborative delivery methods, such as integrated project delivery, may increase the exposure of firms to traditional technology risks, as well as introduce new risks. Join our discussion with an attorney expert in technology risks to learn what exposures design firms need to be aware of and how to manage those exposures.

Insurance and Legal Questions for the Collaborative Design Team

October 9, 2013, 1:00 – 2:00 pm eastern

Rebecca H. Farnum, Esq., Thompson & Bowie, LLP, Portland, ME

Building information modeling and integrated project delivery provide a platform through which all members of the design and construction team collaborate. As with all new technologies and delivery methods, there are important questions the collaborating team should ask to identify and respond to legal and insurance issues in the open transfer of information in a contractual arrangement of shared risk and reward. Our expert will discuss what types of questions the team should ask before formally entering a collaborative agreement.

Visit our website to download the full PDF version of the 2013 Victor O. Schinnerer webinar schedule.

Expanding Employment Liability Risks for Design Firms

By Lynda

It’s true. The insurance industry has a reputation for bringing doom and gloom to an otherwise cheery outlook. Forgive us. Our business relies on our being able to spot negative trends in advance so that we can assist our clients in preparing for the worst. That doesn’t mean we don’t also hope for the best! Economic recovery is still ongoing, and we are thrilled that this means our architect and engineer clients are working and growing again.

That’s why, in our May 2012 post, To Hire or Not to Hire?, we mentioned some of the considerations and concerns facing design firms as they take on work that “could require additional hands,” including the need for accurate Professional Liability limits on their insurance policies… just a little worth-thinking-about-in-advance gloom.

Then this week, leading Professional Liability insurance provider, Victor O. Schinnerer, released its most recent Risk Management Guidelines, including an item on the Expanding Employment Liability Risks of recovering architecture and engineering firms.

“As firms downsized to face an economic downturn and restructured due to changing technology and new project delivery systems that required altered business models, employment practices claims rose. Add to that the challenges presented by the new generation of employees—many of whom consider their lives and the operations of their employers as public information, and a number of whom find the workplace to be a forum for their opinions—who are flooding the market during difficult economic times, and by returning military who must be accommodated in their former civilian positions or given preferential treatment, and firms are faced with a demanding and confusing employment perspective as they begin to staff up.”

Continue reading “Expanding Employment Liability Risks for Design Firms”

Integrated Project Delivery: Changing the Insurance Landscape

By Lynda

With more project owners demanding the use of Building Information Modeling (BIM), project delivery is necessarily carried out through greater contributions of design input by the general contractor and the major trade subcontractors. The design professionals are no longer the sole authors of the project design. This collaborative project delivery method has been called integrated project delivery (IPD). The contribution of design input from each of the various project players using IPD is a significant break from the traditional division of responsibility recognized in the standard design-bid-build project delivery method. Players who never participated in the project design now face potential risk of professional liability. Additionally, the new, cutting-edge technologies being used for BIM expand the types of risks born by the design professional if there are errors and omissions within the computer modeling system or the improper management of the computerized data.

What is BIM?

BIM involves computerized design software tools that help create a model that reflects all of the building components’ geometric and functional qualities. The general contractor and trade subcontractors provide product-specific information for building components and that data is inputted into the model, including performance specifications, connection details and cost data. However, the model is more than a mere representation of the design in a three-dimensional computer graphic. Embedded within the design programs are rules that define each of the components’ relation to the other components. Continue reading “Integrated Project Delivery: Changing the Insurance Landscape”

Construction Observation: Important Risk Management Service

By Lynda

Construction observation is a powerful weapon for architects and engineers (A/E) in their risk management arsenal. Certain clients understand the benefits when A/E firms offer construction phase services. However, driven by slow economic conditions, many clients are asking firms to do more, with less, including reducing or eliminating construction phase services. Other clients decide they will administer the construction contract themselves or decide to use a third party instead of the A/E firm.

Clients have also held the A/E to a higher standard of care when providing construction observation services. How do these actions affect A/E firms? It significantly increases the A/E’s risk and liability exposures.

Construction Phase Risks

Details in design documents cannot anticipate every contingency that may occur during the construction phase. If the A/E firm of record is not retained to provide clarification of the plans and specifications the risk of misinterpretation of the contract documents increases. Bad decisions can lead to project confusion, delays, increased costs, disputes and claims between the owner and the A/E.

The exposure of the A/E is increased due to certain owners and contractors asserting that the designer has a similar responsibility of the contractor for discovering all defects on the project. Based on this distortion and unrealistic expectation of construction observation services, owners and contractors have stated the A/E should be a guarantor of the contractor’s work. These expectations dramatically increase the A/E’s standard of care and risks associated with construction phase services. Court decisions have ruled in Owners’ favor holding that the A/E has a duty to guard the owner against all non-conforming work on the project, although much of that work was completed when the firm was not present on-site. Members of the plaintiff’s bar continue efforts to hold the A/E accountable for this higher standard of care for construction phase services. Continue reading “Construction Observation: Important Risk Management Service”

A Reasonable Contract

By Lynda

Risk Allocation is an important part of the contract negotiation process for Architects, Engineers, and other Design Consultants.

“In allocating risks by contract terms and conditions, the goal is to allocate the specific risks to the party with the best ability to manage them. Although a contract can assign ownership of risks to any party, there can be serious adverse consequences if a party assumes risks it can’t manage. A design firm, for example, isn’t in a position to manage site safety responsibilities that most appropriately belong to the construction contractor. Despite the practicalities, however, of who is actually in the best position to manage site safety, if the design firm agrees to such responsibility by contract, the designer may be found liable for site safety by courts and possibly the Department of Labor.

“To be reasonable, a contract must be reasonable for all parties involved. If a contract attempts to shift all the risks to one party or the other, it will create problems on the project. A one-sided contract is likely to cause hard feelings during contract administration. It may also increase the likelihood of claims turning into litigation. As a practical matter, this means parties are better served by negotiators who don’t try to negotiate a contract that unreasonably shifts risk to someone who can’t logically manage it or accept legal responsibility for it. Such risk transfer will cause problems in the long run, and may even create uninsurable losses and claims.

“In evaluating who the various risks should be assigned to, parties can develop a table or list of responsibilities and risks to more easily see which risks most logically belong to each party. For example, site safety typically falls to the construction contractor. Easements and rights-of-way, as well as site data, including geotechnical information, may logically be allocated to the project owner. Responsibility for exercising due care in the planning and designing of a project generally falls to the design professional performing those services.

“Problems begin when any of these risks are allocated to the party that is not technically responsible for the related services. Unless you are in a position to manage a particular risk, it is not appropriate for you to accept contractual liability for that risk.”

This is an excerpt from a/e ProNet’s Risk Management & Contract Review Guide for Design Professionals (© Copyright 2006; a/e ProNet & J. Kent Holland, Jr.), one of the many resources ProNet Member Broker’s provide to their clients. A digital version of the full guide is available for purchase ($19.99). Contact a/e ProNet today to get in touch with your local ProNet broker.

About the Author: J. Kent Holland is a construction lawyer located in Tysons Corner, Virginia, (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC. He is also the author of Contract Concerns, a series of articles available on our website here.

Just a Rabbit? Small Projects Can Bite

By Lynda

Who doesn’t love a good Monty Python reference? With our latest ProNetwork Newsletter, Just a Rabbit? Small Projects Can Bite, we’ve proven that the classic moments in Monty Python and the Holy Grail can be made analogous to anything, even insurance. Or, more accurately in this case, to potential professional liability claims:

“King Arthur and his knights approach a cave known to be guarded by a ferocious beast. Upon seeing that the beast is but a wee rabbit, they let down their guards, proceed forward and are savagely attacked. Was the mistake having approached the cave at all or having done so without anticipation of the risk and use of appropriate protection? I sometimes ask the same question of design professionals who undertake small fee projects and unhappily receive large claims. But it has always been true that little projects can generate big claims, particularly where we let informality replace careful practice and appropriate documentation. In a troubled economy, a/e’s want to take the work and no responsible lawyer should tell you to minimize your risk by eliminating your work. Take the work but don’t skimp on process, procedures and gut feelings in contract negotiations and documentation, even if done less formally.

Just a Rabbit

“Like King Arthur’s knights, I have frequently heard that the project was just a rabbit, or just a slab on grade, or just a retaining wall, or just a room addition, or just a (fill in the blank). Insurance statistics prove that smaller firms do not necessarily get smaller claims, nor do smaller projects necessarily generate only small claims. A modest structural engineering engagement for balcony maintenance on a condominium building can bring in modest fees. When one of the balconies collapses or defects become apparent in 350 identical units with 350 separate plaintiffs, the defense and repair costs can be astronomical. The same can be true for a small church addition, with the church school remaining open during construction.

Just a Contract

“Aside from legalities, written contracts serve two important practical purposes. First, before work begins, the contract serves as a discussion outline with which a client can be educated about what you do for a living, what they have to give you in order for you to do the work, what work you have in mind and, equally important, what work is not included. All of these topics are much more easily and less emotionally discussed before anyone has started working and before a problem has arisen.

“I frequently receive calls about contracts just as the a/e is finishing Construction Documents and realizes either that nothing has been paid to date or that a risky project is about to go out for bid. This is not ideal, but very common, and still better than having the discussion after CDs are out or a problem has arisen. I also frequently receive calls after the contract is signed, work is proceeding and could I just take a quick look at the contract, because it is “just a room addition” or similar small project? Once signed, there is little I can do but warn the a/e of the teeth on that rabbit.

“Contracts serve a second important purpose as well – to tell a third party (judge, jury, arbitrator, Grand Inquisitor) what the parties thought about the scope of services, risks, rewards and the deal before they got to court. If you show up to court with a contract calling you “contractor,” saying that you will perform your services to the “highest, best” standards of care and that you intended to “ensure” a successful project, you will be hard pressed to proclaim otherwise, even if Mrs. Justaroomaddition was a little flaky and Mr. Justaroomaddition employed his brother-in-law to do some of the work. You will also create insurance coverage problems for the claim, perhaps ending up with two lawyers and two lawsuits instead of one of each. Use the same scrutiny of contract language for your small projects that you use for your large projects, because the same words can cause problems regardless of size of the work.”

Visit our website to continue reading this newsletter. You may download the full PDF version here.

ProNetwork News is the latest value-added resource produced by a/e ProNet. Each monthly edition includes an informative, timely article relevant to the design industry and authored by an industry expert. Contact your a/e ProNet broker for early access to these excellent newsletters.

About the Author: 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. Eric is an active speaker and prolific author on the subject of construction litigation and the liability of the design professional.

Right of Set-off on Unrelated Projects

By Lynda

The following is an excerpt for the most recent ProNet Guest Essay by Frank L. Pohl, Esq. and James C. Washburn, Esq.:

“Frequently, general contractors will work with the same subcontractor or supplier on two separate, unrelated projects. When that happens, the situation may arise that on the first project (Project A), the subcontractor defaults on its contract, resulting in a back-charge that exceeds the subcontractor’s contract balance, i.e. the subcontractor owes the general contractor money. On the second project (Project B), the subcontractor satisfactorily completed its work and is due money from the general contractor. It may seem obvious that the general contractor would have a right of set-off, allowing the general contractor to deduct the amount due from the subcontractor on Project A from the amount that the general contractor otherwise owes the subcontractor on Project B. Seemingly, the general contractor should only have to pay the net difference or be able to avoid paying the subcontractor anything if the back-charge on Project A exceeds the amount due on Project B. However, as outlined in this article, that seemingly straight-forward right to “net out” the competing claims might not always be available.

“There are several different factors that can frustrate the general contractor’s right of set-off. In some jurisdictions, state statutes may prohibit the general contractor from withholding from the subcontractor the amounts received from the owner for the subcontractor’s work, such statutes holding that those funds are held in trust for the benefit of the subcontractor. Some states might even find the withholding of funds received by the owner for the subcontractor’s work to be statutorily criminal. On projects covered by a payment bond, courts in some jurisdictions have held that even if the general contractor has a contractual right to set-off, the Surety may not. As a result, in those jurisdictions, notwithstanding the contractor’s contractual right of set-off, the subcontractor may be entitled to recover the full amount on Project B (from our scenario above) from the Surety without any deduction of the amounts the subcontractor owes on Project A. Given that the general contractor must almost always indemnify the Surety, such a result has the practical effect of eliminating the contractual benefit of a right of set-off. Additionally, in certain circumstances, by the discretion afforded to judges under the rules of civil procedure, courts have required the two competing claims to be handled by separate lawsuits independently and without regard to the general contractor’s claim of set-off. This article discusses these scenarios and others that impact the right of set-off.”

To continue reading, download a the full PDF version of this article at our website.

About the Authors:

Frank L. Pohl, Esq. and James C. Washburn, Esq. are partners in the law firm of Pohl & Short, P.A. in Winter Park, Florida. Pohl & Short, P.A. is a business boutique law firm concentrating in four main areas of business law: commercial litigation, real estate law, corporate law and trusts and estates. Mr. Pohl has been advising clients involved in all aspects of real estate development for over 30 years. Mr. Washburn practices construction law and is Board Certified in Construction Law by The Florida Bar.

This article is intended for general discussion of the subject, and should not be mistaken for legal advice. Readers are cautioned to consult appropriate advisors for advice applicable to their individual circumstances.

Construction Administration Liability Risk Avoidance

By Lynda

So, your architecture firm is preparing to sign a contract on a new project. You’ve reviewed the wording with your insurance broker and attorney. You feel good about the language, the limitation of liability, and the scope of services outlined therein. (And you feel even better about the fees you’ll be collecting along the way!) But before you scribble your name on the dotted line, it is important to remember that the black and white words in the contract only go so far.

The signed contract is only the first (if the most major) verifiable communication between the interested parties: Architect and Owner. As the project progresses, you’ll be communicating with the owner many more times, not only for changes and modifications to the design, but depending on the scope of your responsibility when you visit the job site, you may be keeping the owner apprised of progress. More importantly, you may be alerting the owner to problems!

Stepping outside your scope when it comes to construction administration is a risk and may leave your firm vulnerable to claims. Likewise, dealing directly with contractors without remembering your relationship to the owner (“the law will treat the architect as the owner’s agent”) is also risky. In his newsletter titled Construction Administration Liability Risk Avoidance, William L. Coggshall of Archer Norris covers some of the steps an architect can take to manage these risks.

The following is an excerpt of the aforementioned newsletter published in February of 2010. For access to the full-length PDF version of this newsletter, please visit our website.

Professional liability claims against architects generally fall into two different categories. The first type of claim is errors or omissions in the architect’s design drawings and/or specifications. The second type of claim is that the architect failed to properly perform its construction administration services pursuant to the generally accepted standard of care in the industry. Of course, there are instances where both types of claims are alleged.

The new AIA Standard Form Agreement between Owner and Architect (B101-207) describes construction administration services as ‘Construction Phase Services.’ An understanding of the nuances of these services and how claimants view the role of the architect is a key to educate architects (also applies to engineers and land surveyors) and to better equip them to avoid professional liability claims.

While the term ‘construction administration services/construction phase services’ encompasses a variety of services by the architect (i.e. evaluations of work, certificates for payment, submittals, changes in work, and project completion), the focus of this article will be on the architect’s construction observation services (described in the AIA documents as ‘Evaluations of the Work’). The intent is to give the architect an understanding of how to effectively handle their construction administration site observations in such a manner in order to help protect the professional from construction administration services liability claims, or at a minimum, to have the appropriate factual defenses to such a claim should a claim be made by the project owner.

The three pillars of properly executing the design professional’s construction administration site observation services can be summed up as the ‘Three C’s’ – Control, Competence, and Communication.

Access the full-length PDF version of the newsletter here.

About the Author: William L. Coggshall is a litigator with the Archer Norris professional liability and construction practice groups, specializing in the representation of architects and engineers in complex commercial litigation. The lawyers in our Design Professionals Liability practice group provide advice and litigation support to architects, engineers and other design professionals.

Newsletter provided by a/e ProNet Member Melissa Roberts of Euclid Insurance Agencies.

This article is intended to provide Archer Norris clients and contacts with general information. The content of this publication is for informational purposes only. Neither this publication nor its authors are rendering legal or other professional advice or opinions on specific facts or matters. No attorney-client relationship is created by this advisory, nor by any response to the information herein, unless and until a conflicts review has been conducted by Archer Norris, and a written agreement containing all terms of representation has been signed.
Copyright © 2010, Archer Norris, PLC.
All rights reserved. Archer Norris grants its clients and contacts permission to forward this publication to third parties in its entirety and without alteration or modification. You may also reproduce this material for your own personal use and for non-commercial distribution. All copies must include the above copyright notice. Please do not replicate, or post on your website, without our express written permission. Any rights not granted in this disclaimer are expressly reserved. Attorney Advertising. Prior results do not guarantee a similar outcome.

Document Retention and Disposition

By Lynda

Emails. Every work-day, we read, write, and respond to dozens of them. Some are no longer than a single sentence, but that sentence may turn out to be a vital one, especially in the event of a claim. Today, expectations for document retention are higher than ever, and the penalties for failing to meet those expectations in the event of litigation are correspondingly severe.

Knowing what you can (and must!) do with your electronic documents is important. We hope the following excerpt from the December issue of ProNetwork News, Document Retention and Disposition: A Key Element of a Design Professional Quality Control Manual, will answer a few of your questions to this end:

Excerpted from “Guidelines for Developing Your Firm’s Quality Control Manual” by Jacqueline Pons-Bunney and Peter Stacy of Weil & Drage, APC of CA, NV and AZ

Electronic Documents

As we increasingly function in virtual or paperless environments, the retention of electronic information has become a hot topic. Courts have imposed damage awards and penalties on companies that have stalled in discovery or failed to maintain and/or purged such information in anticipation of litigation. Further, there are regulatory and contractual requirements that make an electronic document policy a must.

With the passage of document tampering and destruction provisions of the Sarbanes-Oxley Act and recent amendments to the Federal Rules of Civil Procedure, every company is required to have someone with knowledge of the storage and retrievability of electronic records.

Emails in particular are extremely important in litigation discovery, but please note that they are not the only electronic files in your firm. You will have to apply your e-document policy to Internet downloads, instant messaging, text messages, Websites, e-faxes and on-line bulletin board postings. They all need to be retained in some format/location for generally the same length of time as hard copy documents, and you will need to address retention, destruction, system requirements and storage capabilities, monitoring and enforcement.

Here are some basic steps towards formulating an e-document policy:

Consult with your IT staff or outside firm about current system capacities and procedures.
Consider volume, usage, existing archiving (locally and system-wide) and time expended on existing and potential procedures.
Review both legal/regulatory and contractual requirements.
Establish procedures for purging emails from local hard drives, the company’s system and separate servers.
Address implementation (automatic v. manual) and enforcement.

Remember that the policy with respect to the destruction of e-documents, just like hard copies, must be suspended once there has been a notification of litigation or if it is reasonably anticipated.

It is important to consult with legal counsel, and in the case of e-documents, with an IT expert, to determine the scope and content of document retention and disposal policies and procedures. Then, tailor them to your employees, your clients and your fields of practice. The risks and costs of failing to address the retention of both hard copy and electronic information are too great to be ignored.

The full-length PDF version of this newsletter includes many more helpful tips.

ProNetwork News is the latest value-added resource produced by a/e ProNet. Each monthly edition includes an informative and timely article relevant to the design industry and authored by an industry expert. Contact your local a/e ProNet broker for early access to these excellent newsletters.