Category Archives: Law Notes

Are we having fun yet? Construction in a post-COVID world (law note)

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Remember how I said to never assume?  Yeah, about that……   even when you plan for failures, mistakes, and other problems, sometimes things get so outside the realm of what you considered that it can leave your construction project spinning.  Take, as a random example, a world-wide pandemic that shuts down supply chains, shuts down job sites, and limits the labor pool.  Just as an example.

What does construction law say about pandemics?  They fall under an “Act of God” that you may have read about in your contracts, or in the contracts of the contractors working your projects.  An “Act of God” is an event that is not foreseeable, and as such not something the parties could have anticipated when they drafted the contract.  Acts of God generally excuse a party’s failure– for example, a contractor’s failure to complete the project on time can be excused when an “act of God” has occurred. 

By now, you’ve dealt with the practical fall out, one way or another.  Many projects no longer made financial sense for your clients.  Others may have been modified, reduced in scope, or had substitute materials put in place.

What do you, as an architect or engineer, do now, faced with the potential for further shut downs, supply chain issues, and other COVID variants?  The short answer is to give yourself options and assume changes will be needed to your own scope of work on each project.  Consider:

  1.  If the project needs to be re-designed to account for shortages, can that be an additional service that you get paid for?
  2. If the project requires substitute products, how many of those are part of your basic service, or is there a point at which you should get paid hourly for researching, reviewing, and approving substitutes?
  3. If the project takes a lot longer than anticipated to complete, whether due to government shut downs, labor issues, or supply chain problems– can you get paid increased contract administration fees?  And, is there a contract provision that allows you to increase your hourly rate after X number of months, to reflect inflation?

These are some of the ways that you, as a designer, can protect yourselves from ongoing delays, and make sure you are not tied to a project without a way to recoup your extra costs.

Thoughts?  Questions?   Share what’s worked for you or what you’d like to learn more about in the comment section below.

 

 

Never, ever, ever assume! (or, how a stuck shoe is like a construction project assumption)

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This summer, I had the fortune of taking a trip to Europe.   The first place I visited was Amsterdam.  A lovely town with a lot of culture and more canals than you can shake a stick at.  I was meeting family there, but had hours to kill ahead of time.  So, I decided to take the train from the airport into the City Centre, leave my bags at the train station luggage locker, and begin exploring.

My plan took its first misstep when I attempted to board the train.  Not being in a hurry, I let the other passengers get on first.  Sure, I noticed the train conductor blowing his whistle while I stepped onto the train, but figured I was fine since I was already on the steps up.  Until, that is, the door began to close, with me in the doorway, suitcase in the train, one foot inside, and one foot mid step up to the cabin.   The door closed on my backpack (which was still on my back), but I managed to force it into the train compartment.  My shoe, however, was not quite as lucky.  Part of my shoe made it inside, and part was outside the door.

 

shoe

The shoe in the doorway

No worry– just look for the door release mechanism, right?  Wrong!  There was none.  The train started up, with my shoe still halfway in and halfway out of the train.  (Luckily my foot itself made it inside all in one piece).  The conductor came along to scold me, and told me that he could *probably* rescue my shoe once we got to Central Station.  In the meantime, I sat on a nearby jump seat, keeping tabs on my shoe and  fuming that this was *not* the way I planned to start my vacation.  Long story short– the train conductor was able to salvage my shoe, but not without a lot of commentary on how I should never have boarded the train after the whistle blew.  Lesson learned.

HOW, you may ask, does my shoe tale relate to your construction project?  It’s in the title:  never, ever, ever (ever, ever, ever) make assumptions.  I made the unfortunate assumption that the train doors in Europe would release when met with any type of obstacle, since they tend to do that here.

You make that assumption when you do projects for clients without a formal letter or contract outlining your scope of work.  Sure, you’ve worked with a client before, and know what he wants.  But maybe times have changed, or management has a new policy in place.  Maybe in the past, you could simply email the client that you needed to increase your hourly rates.  Now, you are required to keep the same hourly rates for the entire project.   Unless, that is, you already planned for regular increases in your contract itself.

Or, maybe you are working with a new owner client.  That owner may assume that you will do certain things for your fixed rate, that are not standard and were never even on your radar.  Do you have exclusions to your Scope of Work in the contract?  If so, you are set.  Point the client there, and you should be done.  Or, you could be like me, and go shoeless into the City.  Your choice!

Have you ever made an unfortunate assumption?  If you did and lived to tell the tale, share in the comments below or drop me a line.  I want to know that I’m not the only want that has stuff like this happening to them!!!

Certificates of Merit for NC lawsuits against engineers and architects? (still no)(law note)

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Certificates of Merit  are documents intended to show that a true issue exists with a professional’s work, prior to that person being sued.  While North Carolina does require that a person suing a medical provider first have the matter reviewed by a professional (and attest to that in the Complaint), there is no requirement for any review prior to a lawsuit against an architect, engineer, or surveyor.  Thus, anyone can file a lawsuit against an engineer/architect/surveyor without first having their case eyeballed reviewed by another professional. magnifying glass

Over the years, there have been attempts at adding a Certificate of Merit requirement to design professional lawsuits.  See, for example, examples here: from 2005; from 2007;  from 2011; and from 2013.

While many states do have Certificates of Merit for lawsuits against licensed design professionals, North Carolina, to date, does not.  This is a shame, because having a professional review a potential error *before* a party spends the time and money to file a lawsuit, can only help eliminate frivolous, merit-less claims.   To win a lawsuit against a design professional, a party will need to have an expert testify that they were negligent.  The Certificate of Merit just ensures that there truly is a valid dispute before a design professional’s name and reputation get pulled into expensive, perhaps unnecessary, litigation.

Would a requirement for a Certificate of Merit eliminate unnecessary claims?  Perhaps not.  But, it gives all parties an honest “first look” at the alleged design errors before the lawyers sharpen their claws begin filing their lawsuits.

Share your thoughts on such certificates in the comments, below.

 

Do Not Pass Go! Duty to Defend in a Professional Services Agreement (law note)

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sword to defendRecently a client asked me to review a contract for his Firm.  The Owner, who had prepared the draft, had inserted a rather stringent “duty to defend” clause.

As I told my client, a duty to defend clause is not a good idea for a couple of reasons.  First, if you agree to provide a defense, what that means is that you are footing the bill for the Owner if the Owner is sued by another party.  Think about that for a minute.  You are paying legal fees for someone else’s legal defense.  You may or may not be able to direct the litigation or have a say in who is hired.  Can you say open check book?

Secondly, and more importantly, the duty to defend is almost never insurable.  What that means is that your professional liability carrier will not be footing the bill—your Firm will be doing it.  This is not a case of adding the Owner as an additional insured, so do not confuse the two.  Agreeing to a duty to defend is an extremely burdensome, and potentially costly, mistake.

What do you do if your Owner is insisting on such a clause?  Try to get the clause written out of the contract, period.  Point out to your Owner that it is not covered by your professional errors  & omissions policy.  That alone is often enough to get Owners to agree.  You might also contact your insurance carrier/agent to add weight to your statement.  They can point to the provisions in the policy that will likely exclude coverage.

If the Owner will not strike the provision, then what?  Seriously think about whether this is a risk you can afford to take.   What type of project is it?   Do you know the contractor and other parties—are they reputable and qualified?  And most importantly, is the profit to your Firm such to justify the potential risk.  Usually, the answer to the last question is no.

Have you seen a “duty to defend” in an Owner contract?  Did you agree to it?  Share in the comments below, or drop me an email.

Photo: (c) MatthiasKabel via Creative Commons Attribution-Share Alike license.

What you don’t know about construction law can hurt your engineering firm (law note)

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truckbridgeWelcome to a new year!  By now, you’ve eaten the last of the Christmas cookies, opened all of your presents, and rung in 2019.  Back to business, right?  The new year is always a good time to remind your employees, and yourself, that there are no shortcuts on the success train.

Sure, you can sometimes skate by for awhile, but karma has a way of catching up with you.

One thing to keep in mind is that if you practice in multiple states: be sure you are well aware of the rules and regulations concerning your license in each state.   Each state does things a little differently, and what may be perfectly acceptable in one state may not be in another state.

For example, I had an out of state professional design firm that was unaware of the supervision requirements of non-professional staff that is required under North Carolina law.  Another client had some North Carolina references on its website without an appropriate disclaimer as to who was, and who was not, licensed in North Carolina.  In both of those cases, I was able to help the professional firms get out from under the violations with minimal damage, but it cost time, money, and aggravation.

Do violations always get discovered?  Not always, but- like speeding– a violation is a violation is a violation, and at some point, your number may be up.

Save yourself the headache, bite the bullet, and make sure you retain competent professionals in *each* state that you are licensed in make sure that you are playing by that state’s rules before you work in that state.  (Obviously, if you have North Carolina questions, I’d love to work with you!)

You’ll thank me later.

Your turn.  Have you ever been surprised to learn about a state’s specific requirements after you’ve already violated those requirements?  Anonymous confessions encouraged– let’s learn from each other!  (or, drop me an email!)