Engineering Inc. - November/December 2019 - 28

"Professional liability is the greatest risk for design professionals,
and it is closely tied to standard of care," says Dan Buelow,
managing director, Architects and Engineers Group, Willis Towers
Watson.
Negligence is typically the reason cited when project owners
take action against engineers and others in the design industry. The
specifics can vary state by state. According to an ACEC white paper
"Do You Know the Standard of Care?," negligence has been defined
as the failure to exercise the care that a reasonable person would use
in similar circumstances. As noted in the paper, there are four key
issues that have to be proven by a plaintiff:
First, the defendant owed a legal duty to the plaintiff. Second, the
defendant breached that duty by failing to exercise reasonable care
through his or her actions or nonactions. Third, there is an actual
and legal cause-and-effect relationship between the alleged negligent
acts and the harm. And, fourth, the plaintiff suffered harm.
Not surprisingly, developers and project owners sometimes place
pressure on design professionals to accept terms and conditions
that extend beyond established standard of care provisions. If an
engineer signs such an agreement, the firm is exposed to additional
claims, penalties, and costs-even if engineers have performed their
duties professionally and successfully.
"They contain warranty provisions that a design firm cannot
guarantee. You are treated as a construction contractor," says Carter
Boardman, vice president, contracts and risk management at
Merrick & Company.
But design professionals can also inadvertently increase their
firm's risk exposure in a number of ways.
"Be careful about how you approach potential clients and how
you market your firm," Erger says. "You do not want to include
overblown claims about how you will exceed expectations or how
you are the best or the most experienced in the field. And if you
agree to incorporate your marketing materials into your contract,
you expand the risk further."
In fact, using words such as "best," "highest," "leading," "expert,"
and, even to a lesser extent, phrases such as "specializing in" and
"experienced with" can lead to claims that fall outside a professional
liability insurance policy.
TAKING CARE

The context around standard of care is changing as Building
Information Modeling (BIM), artificial intelligence, and emerging

"An engineering firm
that agrees to meet
a higher-than-normal
standard of care can
face legal and financial
consequences."
KAREN ERGER
SENIOR VICE PRESIDENT
DIRECTOR OF PRACTICE RISK MANAGEMENT
LOCKTON COMPANIES
28

ENGINEERING INC.

NOVEMBER / DECEMBER 2019

"During contract
negotiations, you
have to let the owner
know when clauses
are not only unfair but
also inequitable and
unreasonable."
CARTER BOARDMAN
VICE PRESIDENT, CONTRACTS AND RISK MANAGEMENT
MERRICK & CO.

technologies such as drones, robotics, 3D printing, and virtual
reality take shape. Other factors, including climate change and
rising sea levels, also factor into the equation.
"There are many evolving risks that continue to challenge what
standard of care means for a design professional-and a consultant
must take responsibility for educating clients and managing
expectations through effective communication and documentation
practices," Buelow says. "It is important that a design firm's
professional liability policy address everything within the context
of standard of care and the specific services the firm provides. It is
often necessary for a consultant's A/E professional liability policy to
be tailored to ensure their evolving practice is properly covered."
John Tawresey, former vice president of structural engineering
firm KPFF Consulting Engineers, adds, "It is important to start
with an understanding that every project must balance costs and
risks. The engineer must make these judgments every day."
How can engineers directly confront the challenges and
reduce risk?
According to Erger, standard of care is an issue that engineering firms must address at the beginning of any potential business
relationship. Project owners must understand that there is no
such thing as a perfect project and that some things are likely to
go wrong.
"You might think of it as a 'birds and bees' discussion that can
be uncomfortable, but is necessary to set appropriate expectations," Erger says. She adds that project owners are far more
receptive to discussion and changes during the honeymoon
period at the start of the project. "People are generally excited,
optimistic, everyone is working together, and nothing negative
has happened. There is no better time."
Boardman says striking out and/or modifying warranty provisions and other unreasonable requirements, along with onesided indemnification clauses that are often used by larger companies to shift risk to contractors and others providing services,
is usually wise.
"During contract negotiations, you have to let the owner know
when clauses are not only unfair but also inequitable and unreasonable," Boardman says. One tactic he uses is to request that his firm's
project managers send the representatives of the other company to
him to discuss potentially contentious issues. Boardman can then
discuss and negotiate terms. If he has good news to share with the

Engineering Inc. - November/December 2019

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