As an architect and design professional, you want your vision for what the client needs and wants to become a tangible reality. My knowledge of architects arises not only from 30 years of practice in construction law, but from my experience at Columbia College, my alma mater, back in the early 80’s when I was a clerk at Avery Library – to many, the best architectural library in the country. There I met and befriended many architectural students and graduates who showed me that architecture is as much an art as it is a science. Architects are special people – artists really – because they have an uncanny ability to see things in multiple dimensions and amazingly, they are able to turn concept and energy into matter.
But then we step down to the sometimes unpleasant reality of construction risks and legal exposure that every engagement or project brings.
If you are an architect, I’m sure your professional liability broker or carrier has educated you about what risks to avoid and what best practices to implement. However, as a construction attorney – both transactional and as a trial lawyer – I can share some tips that you may not be aware of, which I have learned over the years.
First, make sure your contract specifically defines what you are, and most importantly, are not doing. AIA forms are great, but with all due respect to the AIA, they always need tweaking. If you are doing only design, make sure there is no language that can “rope you” into administering, inspecting, or overseeing the contractor. If you do only design, but are tempted, for the sake of keeping the client happy, to dip your toes into the murky waters of giving your view of whether or not the contractor followed your plans and drawings, a creative lawyer will find a way to bring you in as a defendant because they will claim you should have “sounded the alarm” or “taken action” about a defect or a problem.
If you are doing contract administration, reviewing and approving payment applications, and visiting the site periodically, make sure you note and record everything. RFI’s may be a headache, but always require them and keep good records of responses to RFI’s and your communications with everyone. Always put your advice to the Owner in writing. If you hire consultants to work under you, such as structural or mechanical engineers, make sure you have solid contracts with them that provide you with indemnity, and that their insurance policies would cover that indemnity. Remember that if your consultants produce a defective design – say for example, a defective ventilation system for a refrigerated area – you may be sued along with them.
Second, make sure the contract you sign with the Owner does not impose on you a higher standard of care than your professional liability carrier is willing to insure, or the carrier may deny coverage. The standard of care usually involves what a reasonable architect in your locality would have done, but sometimes it is more complex than that. It is a critical issue.
Third, consider a limitation of liability clause in your contract. An experienced Owner may reject it right away, but you should try and negotiate it if you can. Such a clause would limit your liability to, for example, all of the fees paid to you. Such a clause, if upheld by the court or arbitrator, could save you a ton of money. Limitation of liability clauses are upheld in New Jersey if they are not against public policy; the limitation is clearly stated; the parties have equal or relatively equal bargaining power; and the limitation is reasonable compared to the work undertaken. If the Owner balks at your including it, you can negotiate other concessions in exchange for deleting it from your proposal.
Fourth, depending on the insurance carrier, policy and premiums you pay, you may be entitled to use the attorney of your choice in defending a claim against you that involves the carrier – provided the attorney can accept your carrier’s approved hourly rates. In some cases where a client wanted me to defend them, the client made up the difference in hourly rates – above what the carrier was willing to pay. Sometimes the rate was competitive, and I accepted it. Other times where there clearly was no coverage, we negotiated the carrier paying 20% of the legal fees because the client was a valuable insured.
As I learned at Avery Library, a lot of study and preparation upfront always and ultimately pays off.
If you have any questions about this post or any related matters, please feel free to contact our Construction Law Practice Group.