What Potential Liability Issues Impact You and Your Designs?

Association of Construction and Development
December 14, 2012 — 1,274 views  

Complex projects can easily create a myriad of issues, some good and some bad. Building roads, constructing buildings and planning transportation systems all carry an inherent responsibility to the end user of the design, known as a professional's duty of care.

When a professional agrees to perform a project for a client, the professional and the client usually execute a written document known as a contract. The contract will outline the rights and responsibilities of each party, including the time for completion and the amount of payment. The contract will also likely require the professional to carry some sort of professional errors and omissions insurance, and will require the professional to complete the work according to the standard of care used in the profession.

Many liability issues come out of a perceived failure to complete the responsibilities outlined in the contract. Common issues for contractual liability include timely performance and complete performance.

Negligence is another issue design professionals can face. Engineers are expected to perform their work according to the standards of a person of ordinary competence in their profession. Liability for negligence in design can arise from preparing plans and drawing personally, and also from reviewing the plans and drawings and applying the engineer's seal.

Take time to talk to your firm's counsel about recommended courses of action for limiting the firm's exposure to liability. The attorney may recommend the firm use disclaimers on documents. During the contractual negotiations, the firm may be able to negotiate a cap on any damages allowable under the contract. The contract negotiations can also be used to insert a clause that will limit any personal liability for actions under the contract.
Indemnity or hold harmless agreements can be drafted and used in your practice. Your attorney may also recommend the use of releases.

When deciding to go or no-go a project, talk about potential risks for taking the project. Are the risks worth the effort of the pursuit? If you use sub consultants on your project, be sure to use individuals you know well. If possible, have the client contract with sub consultants directly.

Finally, be sure you have adequate professional liability insurance coverage. Discuss the potential risks when choosing your policy. Also ensure that any sub consultants who contract for you carry adequate insurance themselves.

You may choose to have a personal policy on top of any firm coverage for additional protection from potential liability.

 

Association of Construction and Development