Fire exits are an important contingency when designing a building, even though you hope no one will ever have to use them. Contingency planning for your own professional design business works much the same way. Even though you hope you’ll never need it, it’s important to have a plan in place in case you suddenly die or become incapacitated.
Here’s why having a plan matters, what can happen without one and how to get started with these contingency planning tips for architects.
Why Contingency Planning Matters
Having a well-defined contingency plan makes sense, considering how much responsibility an architect carries on their shoulders. Every project’s impact, timeline, budget, functionality and safety relies on you and your unique skills. You help provide artistic inspiration and professional guidance for thousands of people. When a project inevitably encounters a problem, you use your knowledge and skills to find a suitable solution and continue the work and meet the needs of stakeholders. So if something were to happen to you, you would definitely be missed.
Without a contingency plan in place, there’s obviously a heightened risk for current clients and business partners, as they struggle to find another professional to fill your shoes and continue the work. But past clients and business partners can also be put at risk, and even your business entity, personal assets and family can be affected if a professional negligence claim arises after your death or incapacitation.
What Can Go Wrong
Many architectural offices are small. It’s not uncommon for you and a partner to be the only architects in the business, if you have a partner at all. In these circumstances, it can be difficult to move forward when something happens because there may not be anyone to act on your behalf.
This means firstly that there could be no one else to:
- Finish design plans
- Answer client questions
- Provide guidance on a project
Whatever deadlines and timelines were in place would be put in jeopardy, with likely delays. Those delays would likely lead to cost overruns that may exceed the budget of the project. The project may be difficult to finish as you intended and any mistakes made could introduce building defects or safety issues. Missed deadlines, financial losses, building defects and safety issues result in lawsuits all the time under normal conditions. That’s likely to occur in this case, as well, except that there will be no one to respond on your behalf.
Even if you were to die or become incapacitated in between projects, the risk remains:
- If a former client or business partner discovers a problem, you won’t be able to respond.
- If the dispute escalates into a lawsuit, there may be no way for your firm, insurance company and legal representation to defend your work or assist you in your own defense.
Some legal claims can seek damages against your business that are harmful enough. However, lawsuits can also target you individually. In some cases, the courts will allow so-called “corporate veil” protections to be “pierced,” giving a claimant access to your personal assets or estate, including funds that were meant to provide for your family in case of an untimely death.
Even in the case of a temporary incapacitating illness, a contingency plan is important. While death is final, it is possible to wake up one day and find a short but serious illness has caused added hardship impacting your business, financial assets and reputation.
How to Make a Contingency Plan
It’s worth the time and effort to make a contingency plan in case you do die unexpectedly or become incapacitated. Planning for this risk is not unlike planning for other business risks and follows a set process.
- Consider possible risk scenarios. Make a list of possible events that could suddenly take you away from your work, either temporarily or permanently. Examples might include having a serious accident, experiencing a sudden health emergency or receiving a terminal medical diagnosis.
- Create plans for the biggest risks. Make plans to address the most likely and most severe risks. Since each risk may be different, a plan should be tailored for each. The key things to cover are the triggers that will set the plan in motion, your firm’s immediate response, the names of who to inform and involve, a list of each of these persons’ key responsibilities and a timeline for when each of the plan’s action steps should occur.
- Organize your documentation. Organize everything that the persons you designate to act on your behalf will need to carry out your contingency plans. This could include your current project documentation, past project documentation, client files, business records, financial files and more. Use a safe or electronic passwords that keep the materials secure while also allowing access to the right people.
- Share it with the right people. Sit down with one or more trusted colleagues, employees or family members to discuss your plan. Like a last will and testament, a contingency plan sitting in drawer does no good. It’s important for someone to know your plan exists, when to put it into action and where to go for the files and documents needed to carry it out.
- Review and update as needed. Take time to review your contingency plan regularly and whenever something important changes, such as when you get a new client, take on a new project or make a change to your business. If a change creates a new risk your plan doesn’t cover, update your plan to address for it.
How to Further Protect Your Firm
While it may seem like a morbid topic, contingency planning is really no different than setting aside square footage for fire exits in you next project. It’s a risk management tool that helps protect you, your business and your clients.
Along with a contingency plan, it’s important to make sure you carry the right insurance. Lockton Affinity Architect & Engineer offers specialty coverage made for architects, engineers and other design professionals.
Besides tailored coverage and best-in-class customer service, coverage comes with standard benefits that can help protect your firm if there’s a sudden death or incapacitating illness.
- Disabled Partner Replacement covers the cost to hire a professional replacement if your partner is injured and unable to oversee their project responsibilities.
- A Say on Settlements means that we will never settle a claim without your consent, saving you from common “hammer clause” policies that limit your options.
Plus, pre-claim assistance and complimentary contract reviews for every project can provide even more value to you and your firm. Request your quick price indication today to find out what our coverage will look like for you.