Economy Raises Risk Management Stakes for Architects, Engineers

Risk management is a topic of concern for many types of professionals, none more so than those involved in the building trades.

“Unfortunately, the stakes are raised in tough economic times,” said attorney Jay S. Gregory, a shareholder in LeClairRyan’s Boston office who focuses his practice on construction defect litigation and the defense of design professionals and real estate brokers facing malpractice suits.

“There is a certain population of potential litigants who are always looking for someone to blame, and their numbers seem to increase in times like these. It’s imperative that architects and engineers do everything they can to manage risk and limit liability in a proactive manner,” Gregory said.

He was speaking at the Building Technology Boot Camp and New Product Trade Show sponsored by the New England chapter of the International Concrete Repair Institute in Boston. Gregory was a participant in a panel discussion that included architect Peter G. Longley, director of operations at Tsoi/Kobus & Associates; insurance broker Chris Poole, principal of Poole Professional Ltd.; and William Vanderweil, managing partner and principal of Vanderweil Engineers.

The speakers identified potential pitfalls and exposures faced by architecture and engineering firms and offered suggestions on how to manage that risk.

“It is very important that firms structure their client agreements to include an in-house process for developing, tracking and, when necessary, negotiating issues as they arise,” Gregory told attendees.

He stressed that agreements should clearly define the scope of services being provided and should always include appropriate provisions covering indemnity, waiver of consequential damages, standard of care, and, if possible, limitation of liability. He also discussed the insurability of contract obligations, terms and conditions, and issues related to working without an agreement in place.

“Having a properly designed and executed agreement in place is the front line of defense in risk management for architects and engineers, and it goes a long way toward limiting potential liability claims,” Gregory said.

Gregory advised the attendees to be constantly vigilant for warning signs, noting, “It’s best if you are aware of any potential problem before your client even knows about it.”

He also discussed appropriate steps architects and engineers should consider when facing a liability claim, such as when to contact their insurance broker or lawyer, as well as possible mitigation strategies.

“We live in a litigious society, and architects and engineers are more at risk than those in some other professions, especially in a difficult economy,” he said. “Risk management is something you need to take seriously.”

Source: LeClairRyan