A wise old lawyer once said: “If you’re not being sued, you’re not making money.”The point he was making was that as a professional’s business grows, it is statistically inevitable litigation will follow.
We partly can blame the rising volume of construction defect lawsuits brought against design professionals on the litigious world in which we live. Design professionals themselves, however, must shoulder some blame as well.
Too many design professionals remain uneducated about the litigation traps they unwittingly create daily on a job site; fail to develop internal policies to mitigate against the risk of suit; and remain unprepared to defend against the inevitable lawsuit when it comes.
A design professional’s legal liability typically flows from the duty to act reasonably with the same skill and care ordinarily exercised by other professionals in their field. A design professional is generally civilly liable only for damages arising from defects in their designs, but the full scope of liability for specific defects in construction or other work by the design professional is typically determined by contract.
How design professionals unwittingly create liability:
Design professionals frequently, however, create liability where none otherwise would exist. Sometimes, design professionals create liability because they are trying to be helpful during the construction process. At other times they create liability because of the conflicting responsibilities imposed by their codes of ethics and professional responsibilities.
For example, the National Society of Professional Engineers (NSPE) Code of Ethics directs engineers to report concerns about building safety to the appropriate individuals or authorities. Ironically, the design professional typically could not be held civilly liable for a failing to report a known design defect or safety hazard, even where an injury or death occurs, unless the state where the events occurred imposes a “Good Samaritan Law” that creates such a duty.
A design professional who fulfills this objection and voluntarily reports a defect or safety hazard could prove the key to a successful defense or even the key to avoiding litigation altogether. Unfortunately, conscientious design professionals attempting to meet their professional responsibilities sometimes unwittingly create liability for construction defect where none would otherwise arise.
Assume a design professional reports a design defect or safety concern to a building owner. In an attempt to be helpful, the design professional voluntarily assumes the role of consultant or adviser to help the owner resolve the potential defect or safety hazard. In such a case, the design professional could be held civilly liable in a subsequent lawsuit brought by the owner or a third party if he fails to act reasonably or breaches the applicable standard of care that results in damages.
For example, assume a sound engineer is retained only to design a theater on the second floor of a building. While inspecting the job site, he observes that the second-floor truss system is improperly designed because splices have not been constructed according to the plans. He reports his concerns to the building owner or general contractor.
The architect, however, goes on to offer his unsolicited opinion the trusses should be fine until repairs can be made or the truss system is replaced. The owner relies on the architect’s opinion to delay taking immediate action. The next week, before repairs can be made, the second-floor collapses, causing substantial property damages and serious bodily injury to several people onsite.
In this circumstance, if the architect would simply have reported his concerns and not offered his opinion the trusses would be okay for a few days, the architect would have fulfilled his professional duties and likely have created no civil liability. In this example, however, the architect can be expected to be sued because he offered his professional opinion the trusses likely would be safe for a few days. As a result, it arguably was reasonable for the owner to rely on that representation to delay taking action to mitigate against the collapse.
In another example, assume the sound engineer goes onsite to inspect the progress, and thereafter, prepares a written report to the owner, noting the second floor is “complete.” The sound engineer recommends the owner move forward with the next phase of the project, including installing the theater seating on the second floor. During construction, the second floor collapses because the trusses were not constructed in accordance with the designs of the truss engineer and were insufficient to hold the additional weight of the seating. People are injured. Litigation will inevitably follow.
A creative plaintiffs’ attorney will argue the owner could reasonably rely on the representations by the sound engineer that the second-floor was “complete” only if the engineer had concluded the truss construction by the contractor and subcontractor was performed in accordance with industry standards and the truss engineer’s plans to adequately hold the weight of the theater seating. In this case, the sound engineer may have unwittingly created liability where none otherwise would have existed because he failed to foresee such liability when preparing his report advising the second-floor was “complete” and his phase of the project was ready to proceed.
Ordinarily, a design professional who approves the work of a contractor that later turns out to have been deficient does not automatically mean the design professional will share liability with the contractor. The design professional, however, likely will be placed in the position of having to explain why the observations and tests he made before approving the work did not uncover the defects.
Every design professional firm should take care to develop internal policies and procedures to mitigate against the risk of creating such legal liability. In our examples above, a careful design professional should have implemented an internal policy that prohibited any design professional from individually offering any onsite opinion or consultations that were outside the scope of the written contract with the design professional’s firm.
Where a design professional is asked to offer such an opinion onsite, a clearly-worded policy could be drafted to require the design professional to obtain express, written authorization from a firm supervisor. The supervisor, in turn, confirms in writing with the owner/contractor the scope and limitations of liability applicable to such an unplanned opinions or consultations that are outside the scope of the original contract and arise only because of the unique situation involving a design defect or safety concern.
What to include in a litigation mitigation policy:
A strong litigation mitigation policy should mandate that every design professional who reports any defect or safety concern should immediately document:
- who was told;
- what was said;
- when it reported;
- where the report was made;
- why the design professional felt compelled to report, and
- how the matter was resolved, including whether the design professional offered any opinion or consultation as to how to resolve the defect or safety hazard.
Every design professional firm would be well-advised to develop a written form for reporting such communication, which is signed by the reporting design professional.
The internal litigation mitigation policy should advise all design professionals to routinely clarify in all external oral or written communication that they are making no representations that can be construed as approval of any work performed by any contractor or subcontractor for which the design professional is not contractually responsible. It may be advisable to draft standard, limitation of representation language to be included in any outgoing emails or correspondence.
While such steps may appear excessive and burdensome, invariably lawsuits seem to turn on the innocuous email or handwritten notation prepared without consideration at the time of how the email or report would be used in subsequent litigation.
Additionally, every design professional firm should develop a litigation response plan. For example, every design professional firm should designate an internal litigation response team comprised of senior members of the firm, who are prepared to act quickly when a situation arises.
Every design firm should develop a strong relationship with an experienced construction litigation counsel who becomes part of such a litigation response team. By directing the investigation, litigation counsel can seek to preserve the attorney client privilege for documents prepared as part of the investigation, communications among employees, and investigations of potential witnesses.
The firm’s litigation response plan also should include a well-defined document retention policy to preserve all emails, correspondence, and documentation that may be available for anyone involved in the incident. Frequently, the preservation of documents only arises as an afterthought once a lawsuit is filed, which may be years after emails and a construction file it lost or destroyed in the ordinary course of business.
Experience litigation counsel also can assist a design professional firm and its professional liability insurer to quickly evaluate the design professional’s potential exposure and possibly help coordinate a plan with other potentially responsible third parties to develop a cost-effective a mitigation plan to reduce the future damages and costs of litigation.
Design professional companies must prepare for the inevitability of litigation through a long-term commitment to ethical conduct; the implementation of ongoing, internal training to educate their employees on the legal pitfalls that confront design professionals every day; and development of strong internal policies and procedures to quickly respond and effectively manage the inevitable litigation that will arise. A well-crafted litigation mitigation and response plan is a positive first step.
The basics of a litigation mitigation plan check list:
- Establish written ethics policy;
- Internal training to avoid creating unintended legal liability;
- Documentation of all external communication with owners, contractors, and subcontractors;
- Implement limitation of liability language for all external communications;
- Require written supervisor’s approval prior to any design professional offering any advice or consultation outside scope of a written contract;
- Develop documentation retention policy;
- Designated internal litigation response team of senior design professionals and project leaders;
- Establish a pre-existing relationship with qualified legal counsel.
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Timothy B. Soefje is Managing Member and head of the professional liability section at the boutique firm of Seltzer │Chadwick │Soefje, PLLC. in Dallas, Texas. Follow him on Twitter at @TimSoefje. For more information, visit at www.realclearcounsel.com or contact Mr. Soefje at email@example.com