Design Professionals face unique risks that can lead to professional liability claims. Their work directly impacts public safety, client satisfaction, and project outcomes. Given the complexities of their responsibilities, implementing effective risk management practices is crucial to reduce exposure to professional liability claims.
Below are 5 key practices for design firms and why they are critical to protecting the firm’s reputation, finances, and relationships.
1. Develop Comprehensive Contracts
Clear and comprehensive contracts are a cornerstone of effective risk management. One of the most common sources of professional liability claims against design professionals is disputes over the scope of work. Clients may have unrealistic expectations or misunderstandings about what services are included, leading to allegations of negligence, delays, or cost overruns. A well-drafted contract should define the scope of services explicitly, including what is excluded, to avoid ambiguity.
Best Practices
- Use precise language to define the scope of work.
- Clearly outline exclusions and limitations.
- Specify the responsibilities of all parties involved.
- Incorporate a clause addressing scope changes and additional services- all verbal instructions or opinions given in the field must be documented in writing
- Avoid broad indemnification clauses- ensure indemnification is tied to actual negligence
Professional contracts should outline the scope of services, timelines, fees, deliverables, and liability limitations. Interesting fact, the average lifespan of all claims in the Great American program is ~261 days. However, claims arising out of Client Drafted Contracts, the average lifespan of claim is ~401 days.
2. Evaluate Your Subs
Did you know that your firm is totally responsible for the services provided by subconsultants that are under your control? Errors, omissions, or delays caused by a subconsultant can become a liability for the lead firm, even if the mistake was not their own. This is particularly true in design-build contracts, where responsibilities are closely intertwined. Inadequate performance by a subconsultant can lead to contract disputes, claims for professional negligence, or even litigation.
Please continue the article HERE