Due to the recent economic downturn we’ve seen a lot of projects abandoned and restarted, creating situations where one design firm replaces another to complete a project. This is the topic of an upcoming webinar I will be co-presenting next month for ACEC and is the topic of my blog today.
The interruption of a consultant’s service can create significant liability exposures for both the design firm(s) being replaced and the firm(s) taking over. The likelihood of an error or omission is compounded, and if and when a problem arises there will often be confusion around who did what – the firm that was originally hired to do the work or the firm that took over midterm.
Any firm taking over from another has to question why the other firm failed to complete the project. Was it due to their shortcomings or was it due to problems with the client, project team, contractor and/or the project itself?
Also, a firm supplanting another firm must be cautious of the fact that, depending on the terms of the contract, there may an exposure relative to copyright infringement – a risk that may not be covered under your professional liability policy.
If you are the original consultant on a project you would be well served to work with your attorney to include in your contracts certain clauses that would protect you in the event your work is completed by another firm. For example, in the event you are not allowed to complete all the services called for in your agreement, you would want to address the following:
- That you shall not be held responsible for the accuracy, completeness or constructability of the construction documents prepared by you if used, changed or completed by the client or by another party.
- That the client agrees to indemnify and hold you harmless from all damages arising from such use, change or completion by any other party of any construction documents prepared by the consultant.
If you are the supplanting consultant you will want to educate your client on the potential liability issues you both face.
In addition to the need for you to do a thorough evaluation of the partially completed work, you would like the client’s permission to discuss the project with the predecessor firm prior to accepting the project. In addition, you will most definitely want an indemnity for any claims arising from any services performed by the prior consultant.
Information Provided By Others
Another important clause you will want to include in your agreements is an “Information Provided By Others” clause. If you are supplanting another consultant this is critical – and is in fact an important clause to consider for all your agreements.
The problem design professionals face is that client-provided information can come from a variety of sources including historical records, reports, and surveys prepared by other consultants. As the consultant you should not be held liable for errors in these documents and information provided by others that you may have to rely on.
For this reason you should have a clause similar to what the old DPIC Contract Guide recommends, which is as follows:
Information Provided By Others
The Client shall furnish, at the Client’s expense, all information, requirements, reports, data, surveys and instructions required by this Agreement. The Consultant may use such information, requirements, reports, data, surveys and instructions in performing its services and is entitled to rely upon the accuracy and completeness thereof.
Another issue related to all of this relates to record documents. Consultants are often required to provide what used to be called “as-built” drawings at the completion of a project to depict what actually was constructed. Clients may want to use these documents, creating a potential liability if not addressed, given these record documents were created by others.
Consultants should refrain from using the term “as-built,” which a jury of your so-called peers will most likely interpret as meaning “plans without errors or omissions.” Rather, it’s recommended that you use the term “record documents,” which is a more accurate description.
You should include a specific clause on record documents, in which you will want to note that the record documents are based on unverified information provided by other parties—which you, the consultant, cannot warrant the accuracy of.
As noted in a previous blog of mine, Contracts From Hell, it’s important that consultants use the contract negotiation process as a vehicle to educate their prospective clients as to their standard of care and to establish expectations. This is very important because the vast majority of claims against design professionals come from unmet expectations.
It’s fair to assume that if your prospective client is an unreasonable bully during the contract negotiation process there is a very good chance they won’t be any better down the road when they are your client and something doesn’t go as planned.