Risky Business: Test your liability knowledge

July 2006 » Business
Do you know that, when you are in private practice, you are personally liable for everything you do professionally? Every time you draw a line or write a word, you put your house on the line.
John P. Bachner

Do you know that, when you are in private practice, you are personally liable for everything you do professionally? Every time you draw a line or write a word, you put your house on the line. Sure, your firm indemnifies you, and that's a good reason for the firm to have professional liability insurance (PLI).

But recognize that PLI may not cover a given exposure, in full or at all. In other words, your best protection is provided by you! To some extent, that is a good reason to hone your technical skills. However, if you believe that flawless engineering will save the day, you have another think coming. Speak with civil engineers who have had to pay hundreds of thousands of dollars to defend litigation. Ask them if they did something that was wrong technically.

The vast majority will tell you that they did not, but that getting a judge or jury to believe them was difficult; so difficult that many, on advice of counsel, didn't even try.

When it comes to the practice of engineering, ignorance is not bliss. What you don't know can hurt you.

Try this short, 12-question quiz, scoring 8 points for each correct answer. If your point total is less than 64, you may be a lawsuit waiting to happen. Avoid that misery by improving your knowledge. Materials available at www.asfe.org can help.

1) Considering all projects civil engineers perform each year, including those that comprise construction materials engineering and testing (CoMET) services, the percentage performed without a contract is:

a) more than 25 percent.

b) more than 10 percent.

c) more than 5 percent.

d) less than 1 percent.

2) The best client/design professional contracts address:

a) four distinct elements.

b) five distinct elements.

c) six distinct elements.

d) seven distinct elements.

BONUS! Give yourself 4 extra points by naming what the four, five, six, or seven elements are. (Obviously, if the number is wrong, you get no bonus points.)

3) Generally speaking, those who file the most claims against design professionals are:

a) owners.

b) contractors.

c) contractors' employees.

d) members of the public not involved in the project.

4) The one party most likely to sue a civil engineer is:

a) an injured pedestrian.

b) someone injured because of a vehicular accident.

c) a local government or local government agency.

d) a housing developer.

5) Experience shows that the single-most important factor for preventing negligence claims is:

a) a signed agreement.

b) having the contract negotiated for you by an on-staff or retained attorney.

c) a good relationship between the project manager and the client representative.

d) not making errors or omissions.

6) As a general rule, civil engineers' liability risks increase:

a) when fees decrease.

b) when fees increase.

c) when project complexity increases.

d) when bid-based procurement is used to retain professionals.

7) When a professional negligence claim is filed against you, the PLI that might protect you is the one that was in place at the time:

a) you committed the allegedly negligent act.

b) you signed the contract to provide services for the project on which you performed the allegedly negligent act.

c) the allegedly negligent act was discovered.

d) the claim was filed against you.

8) Civil engineers are not negligent so long as they abide by the standard of care. The standard of care is most often identified by:

a) professional peers in the same general geographic area practicing the same discipline about the same time.

b) generally accepted, widely used guidance documents (i.e., well-known textbooks used in ABET-accredited curricula).

c) a trier of fact (i.e., a judge or jury).

d) expert witnesses.

9) Your one act that's most likely to trigger a professional negligence claim against you is to:

a) withhold final deliverables until you are paid.

b) sue the client for payment.

c) refuse to permit third-party reliance on your deliverables.

d) fail to have representatives on site during the construction phase of a project.

10) A contract provision requiring you to indemnify a client for damages the client experiences because of the client's own negligence or the negligence of some party other than yourself:

a) is unenforceable in all but four states.

b) is enforceable in all but four states.

c) is insurable, providing that your firm's insurance policy is supplemented by a contractual liability rider.

d) is not covered by conventional liability insurance policies.

11) Contractual liability riders are:

a) usually added to homeowner's insurance policies.

b) usually added to PLI policies.

c) usually added to commercial general liability insurance policies.

d) a figment of the imagination.

12) When having services performed by a subconsultant:

a) the value of those services usually counts against values established in your own PLI policy.

b) the professional services performed by your subconsultants are not covered by your firm's PLI policy.

c) the subconsultant must name your firm and its principals as additional insureds on its PLI policy.

d) the insurance your client requires you to provide must be provided by your subconsultants, too.

 


 

Answers

1-d (Virtually all projects proceed with a contract. When the contract is not written, it's oral. An oral agreement says whatever a judge thinks it says.);

2-c (The six elements are: a description of the project, definitions of terms used, scope of service, general conditions, schedule, and fee.);

3-a;

4-c;

5-c;

6-a (The ASFE dictum is, "The smaller the project, the bigger the risk.");

7-d ("Might" is the operative word. A PLI policy's ability to cover a claim is never "a sure thing.");

8-c;

9-b;

10-d;

11-d; and

12-b

John P. Bachner is the executive vice president of ASFE, a not-forprofit trade association that provides programs, services, and materials to help geoprofessional, environmental, and civil engineering firms prosper through professionalism. Visit ASFE's website at www.asfe.org.


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