Risk Management tips for design professionals

We at Maloney & Company, LLC have helped our clients through many tricky situations, and several tips and techniques emerge as really good risk management practices. These are not “pie in the sky” ideas, either. You can probably incorporate some if not all of these suggestions with only minor changes in the way you do business currently.

  1. Cultivate your relationship with the project owner.

Project owners make the lion’s share of the claims against architects and engineers. If there is a significant problem on a project, stay close to the owner and be supportive. In our experience, if the design professional backs away at such a critical time, the project owner will either turn to a different design professional for help (which firm has nothing to lose by laying blame on you) or to an attorney, who makes his or her livelihood by pursuing others. It is often our goal to emerge from a claims situation with a stronger relationship between you and your client than if the problem had never arisen. It is a change for you to “show your mettle” when the going gets tough.

  1. However, in the case of a problem do not admit to blame for the problem, or commit to making any payments to rectify it.

In the first place, it would be premature to make such an admission before a thorough analysis had been conducted. It is rarely a straight-forward situation, and there may be several contributing factors to any one problem. Further, it is likely to be the requirement of your professional liability insurer that it have the chance to review the matter before any agreement is reached. It sometimes even makes sense for the insurer to help you from the sidelines – providing help, support, and money without your client knowing of their involvement.

  1. Limit your liability in your contract, and then transfer risk to an insurance company when you can.

A contract is a powerful tool for setting each party’s expectations and responsibilities. There are several ways to manage your risk using contract language, enough that we (Maloney & Company, LLC) have an entire guide dedicated to tips, techniques, and sample clauses that you should consider putting into your standard agreement (and some provisions you should try to negotiate out of any contract prepared by another party)!

Design professionals can then transfer much of the remaining risk to insurance companies. Unlike most industries, architects and engineers can get an insurance policy that protects them from themselves at least from their own errors and omissions. When you have this type of protection, you can run your practice assertively and worry less about the personal liability you have for your design services.