For architects, engineers and other design professionals, project work is high stakes. The risk of being sued is ever present, whether you have made a professional mistake or a client merely perceives that you have. Success in the industry often depends as much on managing risks as it does completing projects.
Proper risk management practices greatly reduce your chance of facing a claim of negligence and ending up in a lawsuit. Risk management best practices also have the added benefit of helping you improve business processes and provide better results for clients and partnerships.
Here are 10 risk management tips for architects and engineers to help protect your design business.
1. Screen Potential Clients
Many claims can be avoided by screening out risky clients before you even work with them. Avoid litigious clients and those with pending claims against them. Don’t work with clients that want you to cut corners on acceptable practices, ask you for discounted work or entail high maintenance relationship management. Get to know a client before negotiating a contract, use screening forms and ask for references.
2. Write Good Contracts
Contract disputes are a frequent source of claims for design professionals. Poorly written contracts make it difficult to solve problems that arise and are generally a lawsuit waiting to happen. Don’t rely on boilerplate contracts not tailored to the project. Educate clients on proper scope of contractual terms and guarantees as well as the appropriate language. Have a lawyer review potential contracts for problems.
3. Educate Your Team
A lack of training and education about the proper procedures for a design practice can lead to a claim. While some claims are due to technical errors, many others are the result of everyday business practices. Processes such as choosing new clients and drawing up contracts put you at risk of a claim, as do communication issues. Train and supervise junior architects and support staff to minimize your risk.
4. Manage Client Expectations
Projects, processes and timelines that don’t meet client expectations are a recipe for a claim. Many such problems can be avoided by setting realistic expectations. Be sure not to overextend yourself or make promises you will be unable to keep. Explain your services, capabilities and expected outcomes honestly in a way that will be clear for the client. Communicating upfront helps avoid unwanted surprises.
5. Document Work Activity
Design liability claims often entail a long span of time, making it difficult to remember important details when you’re defending yourself against a potential claim. Avoid deleting or shredding important records, neglecting reporting or letting files get disorganized. Document work activity such as project management, communications and activities with daily activity logs so that there is a paper trail available to help you in the event of a claim.
6. Monitor for Problems
Small problems can grow into big problems when you aren’t paying close attention. Most claims are preceded by familiar warning signs, including communication issues, the client seeming distant, work stoppages or the start of accusations against you or your practice. Monitor for these signs and contact your legal counsel and insurer if you suspect a claim may be in the works against you.
7. Avoid Conflicts of Interest
Serious problems can also arise if a client perceives a conflict of interest in their dealings with you or your practice. Tread carefully in any situation where there is a potential for financial gain, such as partnerships and referrals. The risk is even higher if there is a problem and the referral or partnership doesn’t work out. Avoid making referrals to anyone you or the firm has a financial relationship with to avoid problems.
8. Exit Unsound Projects
Continuing to work on projects with serious problems after you become aware of them can be a huge liability risk for you and your design firm. Projects where a client demands an unworkable strategy, ignores recommendations and sets unreasonable expectations are the most high risk. While terminating a contract is not without risk, it may be the best course of action to make your exit to avoid excess liability.
9. Talk to a Lawyer
Many design practice situations that lead to a costly claim can be avoided by talking to a qualified attorney early on. Consult legal counsel for a contract review whenever you are drawing up a new contract with a client, or when you have questions about legal or regulatory issues with a project or your practice. Knowledge of and adherence to legal standards is the best way to avoid a claim.
10. Protect Your Practice
Claims of negligence can occur even when you’ve done everything by the book, so it’s important to protect your practice. Every day, architects, engineers, contractors and other design professionals like you risk being sued for the work you do on a project if something goes wrong. Your choice of professional liability insurance matters for you and your career. With coverage from Lockton Affinity Architect and Engineer, you receive competitive coverage, great benefits, the best available pricing and best-in-class customer service.
At Lockton Affinity, we make it easy for you to quickly receive a quote, apply for coverage and get certificates of insurance. Receive an indication of what our coverage will look like for your business today.