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:

Computer-aj_aj_ashton_01.svgEmployment 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.

Excerpted from the September 2012 issue of ProNetwork News, part one of a two-part series:

pronetworknews_sept2012What if Caesar had written “I came to the project site, I observed for general conformance with the Contract Documents but not for means or methods or work covered since my last visit” and then wrote a three word report? Caesar was a master of understatement and understatement leads to misunderstandings and, well, understatement. Architects have always faced liability for undiscovered construction defects but current economic times have forced many contractors out of business. With the typical lack of contractor insurance for defective work, A/E’s are the only solvent or insured pocket, leaving design professionals more vulnerable to construction defect claims than in the past.

Veni – I went to the site

Those preaching risk reduction used to urge that architects and engineers leave construction administration to construction managers and contractors. This approach allowed or even encouraged contractors, CMs, program managers and owner’s representatives to take market share for services formerly performed by A/E’s. It also missed the point. Design professionals do not seek to eliminate liability, but to manage the reasonable risks of design practice. Reasonable risks are those placed with the party able to control them.

If an owner wants an A/E to ensure perfect construction, the project is doomed to fail for two reasons. First, there hasn’t been perfect construction since the Pyramids (and they had different labor and insurance agreements in those days). Second, the A/E does not control all of the variables that go into a construction project. There are elements of construction installed and concealed by the time the A/E arrives for a weekly or monthly meeting and site tour and even the most gifted A/E is powerless to see through walls. Continue reading “Veni, Vidi, Vici, Lis Pendens: I came, I saw, I got sued – Part 1 of 2”

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”

Homes designed by a/e ProNet client Andrew Skurman have been featured in a wide variety of publications, including Architectural Digest, The New York Times Magazine, Western Interiors, California Homes, San Francisco Magazine, This Old House, Luxe. Interiors + Design, House Beautiful, and Gentry Design. Work by the firm is also included in the books Napa Valley Style (2003) by Kathryn Masson and San Francisco Style (2004) by Diane Dorrans Saeks. And now, Andrew Skurman has a book of his own!

In August, Princeton Architectural Press published Contemporary Classical — The Architecture of Andrew Skurman.

Excerpted from Princeton’s website:

“Skurman draws on an extensive architectural library of European and American design with the precision of an eminent art historian, skillfully adapting timeless design elements to suit today’s lifestyles. Collaborating with well-respected contractors, interior and landscape designers, lighting and audiovisual experts, and other consultants, Skurman blends modern comfort and conveniences into traditional settings. Featuring gorgeous photography and exquisite watercolor studies, Contemporary Classical showcases an exceptional range of residential work, including projects in San Francisco (Nob Hill, Pacific Heights), the Newport Beach coast, and Northern California.”

ProNet first got wind of Skurman’s new publication from lifestyle blogger The Style Saloniste who said, in her “fall preview”:

“San Francisco architect Andrew Skurman’s new book is essential for the collections of architectural students, interior designers, potential clients, and everyone who wants to learn about classical architecture—the real thing.”

And the San Francisco Chronicle’s review of Contemporary Classical was a rave!

“One of the guilty pleasures in reading coffee-table books about stunning residences is trying to determine which homes are pictured. Locals will have fun guessing from among the 20 anonymously featured in a new book by one of San Francisco’s most respected architects. [The book] features 255 pages of colorful photos of residences inspired by his love of French chateaux and classical Greek and Roman forms….”

The book retails for $60.00, but can be purchased now on Amazon for $37.80, and would make an excellent gift for your favorite architect. Happy shopping!

Item contributed by Leslie Pancoast of a/e ProNet Member firm IOA Insurance Services in Pleasanton, California.

Getting Paid For Design Services

The last few years have been challenging for many design firms. Adding fuel to this fire, many firms are having difficulty obtaining payment for their services. In a recent and ongoing SmartRisk Survey: 81% indicated trouble with getting paid. Successful account receivable programs do not have to be time consuming or daunting. By implementing some straightforward practices, a firm can implement an effective program that gets invoices paid on time along with maintaining a positive relationship with clients.

Establishing Financial Expectations. In an initial meeting with clients, explain in a clear and concise manner exactly what your services will be and the value you bring to the project, along with clearly stating your compensation terms. Your communication should be clear in establishing the financial expectations with the client. At this face-to-face meeting, you will obtain a sense of the client’s financial capability and ability to pay for your services. If you don’t get that warm and fuzzy financial feeling, this is the time to walk away.

Contract Agreement. The boundaries discussed at the initial meeting should be outlined in the contract agreement. Include a specific scope of services for the project, associated fees, expenses and cost of additional services. In basic terms, the agreement should explicitly state your client owes you money for services you will be rendering. The agreement should also specify the terms of payment, including any payment in advance of services. Continue reading “Getting Paid For Design Services”

This week, 46 a/e ProNet members from 27 member agencies are expected to attend our annual meeting in Chicago, Illinois. Over the course of two and half days, twelve top-tier Professional Liability insurance companies will present to our membership. Each company will take this opportunity to announce policy form changes, new endorsements, and pricing expectations for the coming year; as well, they will alert us to industry trends surrounding claims and risk management.

Because a/e ProNet brokers are independent, that-is, not tied to any single insurance company, the insurance companies sending representatives to this event know that they are in competition for our business. It is in their best interest to make their programs as comprehensive and beneficial  to our clients as possible. The companies attending this event include: RLITravelersVictor O. SchinnererLibertyBeazleyCatlinHCCHanover, Navigators, Insight, All Risks, and AXIS.

Our Thursday night reception for members and insurance company representatives will be held at a new venue this year: The Grand Army of the Republic (GAR) Rotunda at the Chicago Cultural Center.

Our clients are architects and engineers, and we appreciate what they do today, as well as what they have created in the past. We chose the Chicago Cultural Center, opened in 1897, because it is “one of the city’s most popular attractions and is considered one of the most comprehensive arts showcases in the United States.” In other words, it’s beautiful! A Chicago landmark, located in the Loop, across Michigan Avenue from Millennium Park, the GAR Memorial consists of a large hall and rotunda in the north wing of the building. The hall is “faced with deep green Vermont marble, broken by a series of arches for windows and mahogany doors. The rotunda features 30-foot walls of Knoxville pink marble, mosaic floor, and a fine, stained-glass dome in Renaissance pattern by the firm of Healy and Millet.”

If you have questions about this meeting, or a question about a/e ProNet, don’t hesitate to contact us. You can also find your local a/e ProNet broker through our website.

No Common Law Indemnification Duty Owed by General Contractor to Project Owner for Subcontractor Employee Injuries Where GC Did Not Control and Supervise the Subcontractor’s Work

In a case whose principles apply to design professionals as well as general contractors, a GC was performing a build-out for a store tenant (not the project owner) and retained the services of a subcontractor for certain work. An employee of the subcontractor was injured by falling from a ladder, and the project owner sued the contractor for common law indemnification and contractual indemnification for damages for which the Owner had been found vicariously liable under the state’s statutory law.

Although the general contractor had not itself been found to be directly liable or vicariously liable for the subcontractor employee injuries, the property owners argued they were entitled to common law indemnification. They asserted the general contractor contractually assumed sole responsibility and control of the entire project, and had the contractual authority to (1) direct, supervise and control the means and methods of plaintiff’s work, and (2) institute safety precautions to protect the workers.

The Owner asked the Court to adopt a general rule that a party may be liable for common-law indemnification upon a showing that the party (i.e., the proposed indemnitor) either was actually negligent or had the authority to direct, control or supervise the injury-producing work, even if it did not exercise that authority. What the Owner asked to court to do was equate a party that merely has authority to direct, control or supervise the work with a party who is actively at fault in bringing about the injury suffered by the plaintiff.

The appellate court held that in the absence of proof of any negligence or actual supervision of a general contractor, the mere authority the general contractor has to supervise the work and implement safety procedures is not a sufficient basis to require common law indemnification of the project owner. McCarthy v. Turner Construction, Inc., 953 N.E. 2d 794, (New York, 2011).

Although the GC interacted with the subcontractor and the sub-subcontractor firm whose employee was injured, the GC had no supervisory authority over the sub-subcontractor’s work and it provided no tools or ladders to subcontractors that worked at the site.

No Contractual Indemnification

Citing case law that stands for the proposition that through a contractual indemnification clause, an owner who is only vicariously liable by statute may seek full indemnification from the party that is wholly responsible for the accident, the court found in this case that there was no direct contractual relationship between the project owner and the general contractor. The contract was in fact between the contractor and a store tenant of the project owner. In addition, the owner had no third party beneficiary rights under the contract between the contractor and the store tenant. For these reasons, the contractual indemnification claim was dismissed on summary judgment by the trial court, and that dismissal was affirmed on appeal.

This has been an excerpt of the June 2012 edition of ProNetwork News. Download the full PDF version of this newsletter to read more about Common Law Indemnification and the implications for design professionals.

About the Author: J. Kent Holland is a construction lawyer with the risk management consulting firm Construction Risk Counsel, PLLC, in Tysons Corner – Vienna, Virginia. The firm provides consulting services including: Contract Risk Management and Insurability Review; Change Order and Claim Preparation and Analysis; Insurance Risk Management; Insurance policy and endorsement review and drafting; and Risk Management Training. Mr. Holland is admitted to practice law in Virginia and Maryland and concentrates on construction and environmental law, insurance and risk management. For more information, call 703-623-1932 or e-mail Kent@ConstructionRisk.com. This article is adapted from one originally published in ConstructionRisk.com Report, Vol. 14, No. 5 (May 2012). and is used here with permission.

Blog Love: Schinnerer’s RM Blog

Time to return some Blog Love!

We are big fans of Victor O. Schinnerer’s Risk Management Blog. Several times a month, this long-standing professional liability insurance provider posts brief, timely, helpful articles that are relevant to the design industry. The emphasis is on risk management for design firms, and posts often include links back to pertinent studies and claims scenarios.

A few recent posts:

Building Reuse Provides Environmental Value — 27 August

“Earlier this year the National Trust for Historic Preservation released a report by its Preservation Green Lab that provides the most comprehensive analysis yet of the potential environmental benefits of retrofitting the existing building stock. The study, The Greenest Building: Quantifying the Environmental Value of Building Reuse is available from the organization’s PreservationNation.org/Sustainability website.

“The report concludes that when comparing buildings of equivalent size and function, building reuse almost always offers environmental savings over demotion and new construction. The report states that it can take between 10 and 80 years for a new energy-efficient building to overcome, through efficient operations, the climate change impacts created by its constriction. For the majority of building types in different climates, the study points to 20 to 30 years of use to offset the initial carbon impacts from construction. The study recognizes that the environmental benefits of reuse are maximized when a minimum of new materials are used; renovation projects that require many new materials can reduce or even negate the benefits of reuse.” Continue reading… Continue reading “Blog Love: Schinnerer’s RM Blog”

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”