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

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!)

 

 

Apologize for a design error? (law note)

SorryHave you ever apologized to a client for a failure in your professional work? Is that a good idea, or one that will get you in trouble with your partners/ lawyers/ insurance carrier/ the Court? As always, the answer is “it depends”.

Clients are people too. Even institutional clients are made up of people, and all people appreciate being told the truth and having a sincere apology when warranted. However, in general, anything that is said against your own interests can be used against you in Court. What’s a responsible engineer or architect to do?

Last week, I attended a thoughtful presentation on apologies by Burns Logan, Corporate Counsel for Jacobs, at the American Bar Association’s Construction Law Forum. Burns Logan

Burns’ main take aways:

1. You don’t have to actually say you are “sorry” (especially if you aren’t) to get the benefit of the strategy. You only have to include an explanation, accept responsibility, and make a reasonable offer of repair.

2. Deliver the “apology” in mediation where you don’t run the risk of it being used against you as evidence in court (most apology statutes don’t help in construction-related disputes)

 

The second point is key– mediation in most states (including North Carolina) is confidential.  Nothing can be quoted or held against you if it is part of mediation.  So, consider taking responsibility (with explanation), but do so at your mediation conference.

If you’d like to see Burns’ entire slide show, it can be found here.  Thanks, Burns, for a very informative presentation.

Questions/thoughts/comments?  Share below, or drop me an email.

“Sorry” photo (c) myguitarzz via Creative Commons. 

Insight into the AIA changes from an insider (law note)

Arlen SolochekAfter my series on the Top 10 Changes to the AIA 201, I heard from the Chair of the Task Group for the A201-2017, Arlen M. Solocheck.  Arlen is also both an architect and in-house owner’s representative at Maricopa Community Colleges, where he is the Associate Vice Chancellor for Capital Planning & Special Projects.

Arlen’s Task Force was responsible for the Herculean task of updating the A201 from the 2007 version, a process that took over 3 years.  He writes:

 

As chair of the Task Group that updated the AIA A201, I want to provide some additional thought to your AIA documents update, #10, Hidden Conditions. The objective of most notices, claims processes, etc. in the A201 is to keep the work proceeding while problems are resolved. Delays due to any reason harm both the contractor and owner. Once hidden conditions are discovered, the contractor is to notify the architect, who then is supposed to observe the conditions. The longer it takes to provide the notice, the more the hidden condition may be modified, impacted, or delay other work as that work progresses. We suggest that parties who are concerned about adverse impacts from shortening the notice period also note that no solution, no additional pricing, etc. is required with the notice. All that 3.7.4 requires is notice. A contractor should know pretty quickly if he’s seeing something that he didn’t expect. All that 3.7.4 requires is for him to say that.  

 

Arlen also notes that the process involved in making changes to the AIA documents is extensive:

I want people to understand that AIA and our task groups don’t make quick, willy-nilly decisions and changes, but they come from a lot of discussion, balance, reviews, feedback, etc. from the entire 30+ person document committee, AIA staff attorneys, and dozens of outside liaison reviewers we have who read every word and offer literally thousands of review comments on our drafts.

We can’t catch everything, even over 3 years of working on the document, so we enjoy and respect the outside comments and analysis, including those after publishing the updated version. If we goofed something up, it goes into the list to review for the next update.  I like to add some of the behind the scenes thinking so that even if someone doesn’t necessarily agree with the change we made, at least there’s an understanding of the reason behind it. 

In the particular comments made in the article, the comment seemed (to me) to overstate the risk due to and reasons for the change. Your caution in the article is reasonable for readers and clients, but I wanted to balance it with what the language really requires and effectively that it did not change a lot of the risk from the prior version.  The big picture is that there’s a reason for proper notice to be given on a project and lack of that notice puts a contractor or owner in a bad position should the claim later be lost or denied due to lack of Notice

 

Arlen also commented on the changes to the notice provisions

In A201-2007, there was capital N Notice, small n notice, “notify”, etc. not used consistently. We tried to clean that up with how when notice (small n) needs to be made, how notice (small n) can be made (including electronic/email if agreed upon), and that only Notices for a claim (capital N Notices) must be made in writing with proof of receipt possible.  We felt that this was the kind of Notice that was important enough to continue as formal, in writing, and proof of receipt. 

 

Thanks, Arlen, for your dedication to the design community, and for sharing your comments with us today.  I invite other readers to ask questions (for Arlen or me) in the comment section, below.   

 

 

Bonus Post: Other Notable Changes to the A201 Construction Contract (law note)

Bonus

Following our deep-dive into the newest A201 changes, and as promised in yesterday’s Insurance changes post, here are a few bonus changes to the General Conditions of the Contract:

  • If the Architect is terminated, the Owner must identify a successor Architect that the Contractor agrees with (Section 2.3.3)
  • The Contractor’s schedule is to include interim milestones and apportionment of the Work (Section 3.10.1)
  • The Contractor can rely on the accuracy of the design criteria in the Documents (Section 3.12.10.1)
  • Minor changes in the  Work- must be in writing; are deemed accepted at no cost unless Notice is given (Section 7.4)
  • The Owner may contact not only Subcontractors to determine payment, but also Suppliers (Section 9.6.4)
  • The Contractor indemnifies the Owner for lien claims, if paid in full (Section 9.6.8)

Do you have a question or comment about the A201, or the revisions to the A201?  If so, drop me a line below or through email.

Photo via AlphaStock images via Creative Commons license.

 

Contract Change #1- Insurance in the A201 (law note)

At last, we have arrived at the Top Change in the AIA A201— and it deals with the subject that everyone loves to hate (until they need it!), Insurance.  (Go here for yesterday’s post on Digitial Data changes).

Got Insurance

Insurance– everyone needs it; everyone would just as soon not have to deal with it.  I get it, I do.  Attorneys, Insurance Agents– no one likes spending time with those folk!  Good news though.  The changes to the A201 mean that you may end up spending less time with both!

The most important change to the Insurance requirements of the AIA contract is that most of it has moved to a new Exhibit.  Why is this important?  Instead of having to send the entire contract to your agent or broker, you can now send them only the section that they really need to review for compliance.  This also means that if insurance policies change (as they surely will), the entire contract document does not need to be re-written– the Exhibit can be updated accordingly, leaving the rest of the A201 alone.  Nice, right?  This change was made to streamline insurance review and provide for that flexibility of the changing insurance market.

Does this mean that there are *no* insurance requirements in the A201 anymore?  Unfortunately, no.  There are still some insurance provisions in Article 11, such as the requirement that both parties maintain insurance.  (11.1.1 and 11.2.1).

Most notably, it is now the Owner & Contractor, and not the insurer’s, requirement to provide each other with notice of cancellation/expiration within 3 days.  (Section 11.1.4 and 11.2.3).  The party receiving notice can stop work until the insurance lapse is cured.  The reason for the notification change is that prior editions of the A201 required that the insurer notify the Owner of a pending lapse in insurance.  That provision was ultimately removed from the certificates of insurance issued by most insurers, so it was eliminated as a requirement to codify what was happening on the ground between the parties.

There are also some changes to property insurance losses.  The Owner must notify the Contractor of proposed settlements and allocations, and the Contractor has 14 days to object or he will be bound by the allocation.  (See 11.5.2).

The main take-away here is that most insurance will now be in a streamlined, stand-alone exhibit which will make it easier for you to ensure your agent/broker is on board with the requirements before work begins.

In case you are wondering why, as the architect or engineer, you need worry about insurance of the contractor, just remember that it is in your own financial interest to make sure they are properly insured for the project.

That’s it.  You’ve made it through the Top 10 changes.  I do have a few other changes of note, which will be in my next post.  Stay tuned!  As always, if you have any comments or questions, drop me a line or comment below.

Photo (c) CheapFullCoverageAutoInsurance.com

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