Tag: Landscape Architecture

Is there such a thing as a Standard Contract?

By Lynda

The most common refrain I hear when talking to clients about Contract Review and Administration is: “I only sign a standard contract.”

Most clients feel there is no reason for contracts to be reviewed prior to signing, because they only sign a standard contract. Unfortunately, the only standard contract I ever see is one in which an owner or client uses and wants their consultants and contractors to sign. Ironically, one of the few things that makes any contract a “standard contract”…is the omni-present and onerous broad hold harmless/indemnity and defense clause.

Contract Review and Administration is probably one of the most important aspects of a prudent risk management and loss prevention program. A contract that any Contractor or Consultant signs should identify their rights and responsibilities to the owner and third parties. All of this should be determined at the “request-for-proposal” stage. If done here…it allows the Contractor or Consultant to identify, evaluate and treat the risks in the Owner or Client standard contract. Please remember that no one is putting a gun to the Contractor’s or Consultant’s head when he or she signs the contract; so it’s absolutely essential that the Contractor or Consultant knows what he is signing and what his rights and responsibilities are when negotiating for future work.

The prudent Contractor or Consultant should discuss all contracts with their counsel and agent before signing. Some general practice tips to consider when reviewing contracts are:

  • Scope of services: Think about whether the contract is exactly what you thought is was going to be in terms of encompassing more or less services, added responsibilities or services outside your area of expertise. It is also wise to describe things you are not doing to reduce the potential for misunderstandings.
  • Change orders: Find out if the Owner is allowed to change the scope of work once under way, and, if so, under what conditions. For instance, look at what input or options you have and what time frame you have to consider this.
  • Warranties and Guarantees and Performance Standards: First, you have to know if there are any. Try not to assume any and don’t agree to unreasonable ones…if you must assume any! Don’t forget that all professional liability policies exclude the assumption of liability policies which turns out to be a warranty or guarantee or performance guarantees.
  • Compliance with all laws, regulations, etc.: These responsibilities can be difficult to live up to since no one knows what all the laws, regulations, ordinances, rules, etc. are, much less how to comply with all of them. Continue reading “Is there such a thing as a Standard Contract?”

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.

To Hire or Not To Hire?

By Lynda

As the American economy recovers, all eyes are on the construction design industry, a key indicator of the economic climate. Design professionals are preparing for the next phase of recovery in a variety of ways. Not only is there the hope that new projects will begin to come in soon, but there is a backlog of projects which began two or three years ago, but stalled. These projects have been pending in different stages, some abandoned completely, many without funding to continue. Unfreezing from that limbo would mean the potential for immediate work in many design firms, and that work could require additional hands.

In the April issue of CSPE Online, The Official Newsletter of the California Society of Professional Engineers, a/e ProNet Member Reno Caldwell published a column which addresses this exact scenario. For architects, engineers, consultants, and other construction industry professionals, this will bring up one very important question:

To Hire or Not to Hire?

Excerpt:

“Raise your hand if you were thinking of hiring someone this time last year.  Had I posed this question to a group of business owners in April 2011, I am confident not too many hands would have gone up.  The following two questions may still be far fetched, but if the tide begins turn and the project light-switch flicks up it’s worth asking both:

  1. When will your firm begin hiring?
  2. Will errors and omissions liability affect your hiring decision?

“You may be thinking that errors and omissions liability has nothing to do with a hiring decision.  Are you sure?  Most business owners understand the importance of balancing risk for the potential reward.   The term ‘reward’ probably seems distant, but many design and engineering firms have multiple projects that have long been in a perpetual ‘waiting’ mode.  Your office could get busy very quickly should these projects become active within a few months of each other, and as new projects come in the door.   Yes, this will be a happy day!

“However, many business owners have depleted their retirement savings in order to keep the lights on and doors open over the past three years.  It will be very tempting to replenish the bank account when the economy improves.   The risk management pendulum could swing quickly from ‘low risk / low reward’ to ‘high reward without considering risk.’  This move would be understandably tempting, but I urge you to take a closer look beforehand.”

To continue reading (and to get some valuable advice) visit IOA Insurance Services’ website for the full text of this article, as well as a downloadable PDF.

About the Author: Reno Caldwell is Vice President of IOA Insurance Services. He operates from the San Francisco Bay Area office in Pleasanton, CA, which he joined in 2007. He has specialized in providing professional liability insurance for design professionals, construction managers, law offices and other professional consultants since 1996. Reno is an affiliate member of the California Society of Professional Engineers; IOA is the exclusive broker of CSPE’s endorsed professional liability insurance program. reno.caldwell@ioausa.com

Pinterest Pride: An Homage

By Lynda

a/e ProNet has been an advocate for architects, engineers, and other design consultants for more than 20 years. This advocacy includes an abiding interest in protecting the integrity and sanctity of the products delivered by design professionals. We’re proud of what our clients can do and have done to better and beautify communities across the globe.

Taking that pride one step further, we’ve created a Pinterest board dedicated to showcasing the fantastic designs of our ProNet Members’ clients!

Buildings, bridge, amphitheaters, parks, homes, aqueducts, highways, theme parks, wineries, storefronts, and resorts surround and inspire us daily. But as Peter W. Jones, AIA, President of AIA Florida recently reminded us, “Behind every magnificent structure is an architect who helped create it.” In fact, behind every magnificent structure is a team of imaginative, experienced professionals who worked together to meet that goal. And we’re proud to say that many of those professionals are the clients of our members.

If you love design, follow our Pinterest board today!

a/e ProNet at SDA’s EDSYMPOSIUM12

By Lynda

Longtime design industry advocate, a/e ProNet, announced this week that ProNet President Leslie Pancoast will make a presentation at EDSYMPOSIUM12, the 42nd annual education conference hosted by the Society for Design Administration (SDA), an affiliate of The American Institute of Architects.

For more than 50 years, the SDA has promoted education and best practices for design firm administrative personnel. EDSYMPOSIUM12 will take place from May 2-5 at the Embassy Suites Hotel in Portland, Oregon. a/e ProNet will sponsor Saturday’s luncheon, where Pancoast will make a two-fold presentation: Introduction to a/e ProNet and Professional Liability—Coverages, Nuances and Endorsements. SDA members will learn more about a/e ProNet and its active support for the design industry, as well as receive a brief overview of professional liability coverage and the standard endorsements available from most professional liability insurance providers for architects and engineers.

About Leslie Pancoast

Pancoast has specialized in the insurance needs of architects, engineers and other design consultants for more than 20 years. She is a Managing Partner of Insurance Office of America (IOA), one of the largest privately-held insurance agencies in the country. She is also the Branch Manager of IOA’s San Francisco Bay Area office, operating in California as IOA Insurance Services, which she opened in 2005. Pancoast has earned the designations of Commercial Insurance Counselor (CIC) and Registered Professional Liability Underwriter (RPLU). She has been an active board member of a/e ProNet since 2005, and currently serves as the membership’s President.

About a/e ProNet

Established in 1988, a/e ProNet is a national network of specialist brokers. The group focuses on providing educational resources and risk management services to its members’ clients. Its member brokers represent a combined annual professional liability premium volume exceeding $300 million, giving top-tier insurance companies a major incentive to work closely with a/e ProNet to enhance their various a/e programs.

As well, a/e ProNet makes a wide range of Risk Management resources available to all design professionals via their website, including ProNet Practice Notes, Guest Essays, ProNetwork News, Contract Concerns, Typical Coverages, and Frequently Asked Questions.

a/e ProNet is excited about the opportunity to partner with the SDA in order to provide this value-added educational resource to design firm administrative personnel across the country.

Additional information is available about a/e ProNet by visiting their website, following them on Twitter, and/or Liking their Facebook page.

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.

FAQ Arising out of Contract Negotiations

By Lynda

Contract negotiations can be tough, and this is especially true for Architects and Engineers (A/Es). When an A/E is hired by an Owner who lacks prior experience with the nuances of a design professional’s insurance policies, or when an A/E is hired by a contractor (rather than by another design professional), misconceptions and poorly worded Insurance Requirements can fuel adversity in the negotiation process.

The easiest way to avoid deadlock is for the A/E to ask questions of their insurance brokers in advance, thus preparing themselves to educate the other interested parties about the realities of an A/Es insurance coverage. Some frequently asked questions which arise in these negotiations are:

The Owner/Contractor wants to be added to my Professional Liability policy as an Additional Insured. Why can’t I add Additional Insureds to my Professional Liability (E&O) policy?

“A common misunderstanding about E&O insurance involves a client’s desire to be added as an additional insured and to gain a defense through the E&O policy. A/Es cannot add additional insureds on their E&O policies because the other entities are not providing services on behalf of the firm. E&O insurers will not provide this coverage, thus a contractual obligation to do so becomes an impossible situation for the A/E. E&O policies typically also have an ‘insured versus insured’ exclusion in which there is no coverage for claims between insureds. If a client became an insured under the E&O policy, the A/E would not be covered for the client’s claim.”

What does indemnification mean?

“To ‘indemnify’ does not mean that a claimant can profit from the A/E’s errors or negligence – it means that the claimant should be restored to the position they were in prior to the loss; they should be ‘made whole.’ As an example, if an A/E failed to specify interior doors on a new office building, the owner/client would not get ‘free’ doors as damages, but would instead be indemnified for additional expenses caused by adding the doors after the bidding process (e.g. additional shipping, extra installation charges, increased cost of the materials ordered at the later date, etc.).”

The Owner doesn’t want there to be a Contractual Liability Exclusion in my Professional Liability policy. What is a Contractual Liability Exclusion and does my policy have one? 

“Yes, E&O policies also contain a ‘contractual liability’ exclusion which will not cover liability assumed by contract unless liability would exist absent the contractual undertaking.This exclusion is meant to protect the A/E from overextending themselves in an effort to protect a client.

“It is worth noting here that an Architect or Engineer does not have corporate protection (no ‘corporate veil’) from personal liability arising out of the performance of professional services. When considering the severe risks they may be assuming when providing design services, it is no wonder that the Architects and Engineers take contract negotiation and insurance coverages very seriously.”

Portions of these answers have been excerpted from one of our ProNet Guest Essays, this one titled Architects’ and Engineers’ Insurance — What does it cover? The essay, authored by a/e ProNet Member Diane Hoskins of Wortham Insurance & Risk Management, goes on to answer several other FAQs. Download the full PDF version here.

How to Choose a Professional Liability Insurance Broker

By Lynda

Recently, Bizjournals.com published an article on How to choose an Architect. The author stressed that the hunt for the right architect should include obtaining recommendations from friends and colleagues, calling a potential architect’s references, and studying his or her previous projects to ascertain quality and sustainability.

This process isn’t news to architects. Every job bid opens an architect’s firm and history to scrutiny, and that’s all part of an owner’s due diligence. What architects and engineers might not consider is that this logical due diligence should extend to them in the selection of their own insurance broker(s).

Remember, “Not every attorney can deal with the problems you are likely to find yourself faced with in professional practice; not every doctor can perform heart surgery; not every insurance broker can deliver the professional liability loss prevention and insurance services you need. Knowing this, it would seem to make sense for you to spend a certain amount of time searching for a broker capable of responding effectively to the unique requirements of your firm.”

a/e ProNet has put together a guide to finding the best specialist insurance broker for your design firm. Authored by David Lakamp, the founder of a/e ProNet, this guide addresses the qualities and qualifications you should require of the broker handling something as important as your Professional Liability policy. The following is an excerpt from our ProNet Practice Note titled How to Select a Professional Liability Insurance Broker:

Your professional liability insurance broker can deliver services of great value. This is as it should be, for you are paying for those services. Carefully selected and advantageously used, your broker can be as important to the management of your practice as your accountant or your attorney. Poorly selected and ill-equipped to advise you on the risks of professional practice, your broker may add little more of value to what you do than the cost of a few postage stamps at renewal time. The choice is yours.

There are many people in the insurance business, but finding the one broker best for you can be somewhat problematic. For one thing, your broker can be of real help to you only if he or she has a comprehensive understanding of what it is you are all about. Not all do. For another, the most valuable services your broker can deliver require an investment of time and resources few are prepared to make. Fortunately, there are knowledgeable brokers throughout the country who have made that investment. Your challenge is to find one you can rely on with confidence.

What a Good Broker Can Do For You

Your broker, first and foremost, is your advocate in the professional liability insurance marketplace. A good broker will know what the markets are doing, who the underwriters are, what they are looking for, and how to present your firm in the best possible light. This requires a thoroughgoing knowledge of the applications for insurance and a clear understanding of what the questions really mean, how the information being requested is likely to be interpreted, and how that information can best be communicated to the underwriters. The cost of your insurance will depend on this knowledge and on the skill and attention to detail with which it is utilized on your behalf.

A skilled professional liability insurance broker will be experienced in dealing with the underwriters in both hard and soft insurance markets. Today’s promises and prices may be real, or they may be of fleeting value. To evaluate the differences, you need competent, independent advice from a broker who is capable of a long look down the road ahead. Experienced brokers have been down this road before, and the value of the advice you receive as you seek to sort out the trade-offs between coverage options, company services, and premium dollars depends on that experience.

Other valuable questions answered by this ProNet Practice Note:

  • Why is it important to choose a specialist insurance broker?
  • How will I know a specialist insurance broker when I see one?
  • Where can I get good recommendations for specialist brokers in my area?
  • When I purchase insurance, why shouldn’t price be the bottom line?
  • What is the difference between an independent insurance broker and an insurance agent?
  • What questions should I ask an insurance broker to make certain he or she fits this criteria and will offer the best, specialized service to my architecture or engineering firm?

We invite you to download the full-length PDF version of this ProNet Practice Note here. For additional resources like this one, visit our website. And as always, the easiest way to find a specialist insurance broker for your firm is to get in touch with your local a/e ProNet Broker.

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.
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