Professional Liability/Risk Management Brief: Vicarious Liability
By Richard B. Garber, Vice President A/E/C Risk Management Services, Victor O. Schinnerer & Company Inc.
Responsibility in the Employer/Employee Relationship
Vicarious liability is similar to the responsibility of an employer for harm caused by employees acting within the scope of their employment. An employer may be held liable for compensatory damages resulting from the negligent or intentional acts of employees. In addition, most courts follow the policy that the employer, as the principal, is liable for punitive damages if the employer:
- authorized the specific action leading to harm;
- employed or retained the individual recklessly; or
- employed the individual in a managerial capacity.
Application to the Prime/Consultant Relationship
In contrast to the employer/employee relationship, a design firm that engages an independent consultant is not liable for the consultant’s negligence if the consultant performs services that are not subject to the prime professional’s control, or right to control, over the manner and means of performing the services.That, however, is rare.And direct contractual liability for failure to coordinate services may also exist.
In providing professional services to the public, however, vicarious liability exists because of duties that cannot be delegated. Courts permit delegation of duties that affect public safety to an independent consultant, but ultimate responsibility for negligence remains with the prime party. Because a licensed professional’s duty is to protect public safety, a prime design professional is liable for the negligence of those consultants providing services through the prime.
Vicarious Liability Risk Management
Care should be taken to select consultants that are qualified and insured or otherwise have the financial strength to stand behind their professional and contractual commitments. It is also beneficial to use consultants that do not attempt to shift risk by unreasonably limiting their liability to the prime design professional or a third party.
In addition, written agreements need to address insurance coverage issues. Consultants to an insured prime design professional should have their own insurance coverage. While the prime design professional’s policy will provide protection from vicarious liability for the negligence of consultants, the policy does not defend or pay on behalf of the consultants.
If consultants want protection for their exposures, they must have their own professional liability insurance coverage. Such coverage not only protects the consultant, it protects the prime design professional. When a prime design professional’s policy pays on its behalf for vicarious liability for the negligence of consultants, the prime design professional has the right to bring an indemnity or contribution claim against the consultant for costs, losses, and damages to the extent such damages were caused by the consultant.
Because the vicarious liability of a prime design professional for the negligence of consultants can result in compensatory and possibly punitive damages, the prime firm should take steps to minimize risks. The prime should obtain certificates of insurance from all consultants that demonstrate their financial responsibility and compliance with applicable contract terms, evidencing coverage at the beginning and other appropriate times during the professional relationship.
CNA/Schinnerer’s professional liability insurance defends an insured firm against allegations of negligence and pays on the firm’s behalf if the firm or its employees negligently performed professional services and caused harm. Just as important, our insurance also provides coverage for harm caused by the negligence of those providing services through the prime design professional—the vicarious liability of insured firms for the negligence of their consultants or agents.Victor O. Schinnerer & Company Inc. is managing underwriter for the CNA/Schinnerer Professional Liability Insurance Program, commended by NSPE/PEPP since 1957.
FEMA Requests NSPE Member Input
On August 27, NSPE Deputy Executive Director and General Counsel Arthur Schwartz met with staff of the Department of Homeland Security's Federal Emergency Management Agency to discuss the roles and responsibilities of licensed professional engineers under FEMA certification requirements for the data, analyses, structural works, and "as built conditions" in connection with the mapping of areas protected by the levee system under federal regulations 44 CFR 65.2 and 65.10.
FEMA is extremely interested in NSPE member input on how existing FEMA requirements are working or can be improved.
Please submit your comments to Arthur Schwartz by October 30. Those comments will be compiled and used in upcoming meetings with FEMA scheduled for later this fall.[ return to top ]
PEPP Young Engineers Advisory Council Happenings
The PEPP/YEAC works feverishly to finalize their two projects:
- Motivation factors of young Engineers. Over 600 young NSPE members and 80 non-members responded to a survey on their motivating factors at work. The output of this will be a document along with survey data, all of which is sure to enhance a firm's understanding of its young engineers, and
- A presentation, to initially be distributed through NSPE states and chapters, encouraging PEs to run for elected office. The information was gained through surveys of PEs who are elected officials, in order to gauge how being a professional engineer has impacted their time in office. Follow up video interviews are being scheduled with selected officials
It is time for the YEAC to begin to focus on its staffing for next year. Chair Bobbi Claybrooke and Vice Chair Richard Delp will be considering what members have shown the necessary zeal and interest to continue on, should they so choose. It is a good time for those who may have an interest to think about participation next year. Any NSPE member who will be no older than 35 years of age in July 2008, and who may be interested in participating may want to preliminarily discuss the opportunity with Bobbi and/or Richard, and then with your employers. It is pretty apparent that those who genuinely participate in the YEAC activities have experienced personal satisfaction, professional growth, and sincere admiration and thanks from the senior crowd in the Society.
PEPP is enormously grateful for the support given to our Young Engineers by their employers, all of which will be recognized in the project report for the year. In closing, let's not forget the terrific products of past PEPP/YEACs – all of which are free to NSPE members.
A Guide to Enhancing Professional Development: From College Student to Company Principal
Mentoring Guide for Small, Medium, and Large Firms
How-to Manual for Seminars, Socials, and Ceremonies: A Practical, Step-by-Step Guide to Organizaing and Hosting Events for Local and State Chapters
Strategies for Member Retention and Attraction
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NSPE PEPP Funds Fight in Texas
The Texas Society of Professional Engineers filed a lawsuit against the Texas Board of Architectural Examiners on June 19 for stepping out of bounds by initiating disciplinary proceedings against engineers who engage in comprehensive building design.
TBAE has filed three disciplinary cases at the State Office of Administrative Hearings against TSPE members, alleging that the engineers are practicing architecture. TSPE believes the Texas Board of Professional Engineers is the only body that has the authority to discipline within the practice of engineering and that TBAE has no jurisdiction.
Over the years, overlap issues between Texas engineers and architects have produced disagreements. Both licensing boards attempted to reach an agreement by signing a joint policy statement in 1990, recognizing that the practices of engineering and architecture overlap in the area of building design. The agreement states that clients may legally select either profession as the prime design professional on building projects and that each board has exclusive jurisdiction over its own licensees.
The statement was renewed with clarifications in 1991 and again in 1993. The state legislature has also become involved by creating a joint advisory committee to help resolve overlap disputes.
In the suit, TSPE claims that architectural board is ignoring the joint policy statement, the law, and history to urge that engineers may only design those portions of buildings that are not within the scope of an architect’s practice. The suit also points out that the passage of the Architecture Practice Act in 1989 did not restrict engineers, and since then the architectural board has taken no action against engineers for alleged unauthorized practice. TSPE is requesting that the Travis County District Court issue a judgment stating that comprehensive building design is within the scope of engineering and engineers are exempt from the Architecture Practice Act.
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Discovery TV Series Needs Engineers
We are looking to put together a team of on-screen engineering experts who can imaginatively and scientifically design and carry out a series of jaw-dropping experiments, stunts and demonstrations for an exciting new television series to be produced for the Discovery Channel. If interested, please contact Amy Ruse at Firefly Productions as soon as possible, with a resume, photo and a few lines about why you are the right engineer for our show.
Did you know? Discovery's latest hit show Build It Bigger is hosted by Danny Forster, who studied architecture at Harvard's Graduate School of Design. Before becoming host of Build It Bigger, Forster hosted Discovery's popular Extreme Engineering. Isn't it time for an engineer?
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Top 10 Mistakes of Strategic Planning
Herbert M. Cannon, President of AEC Management Solutions Inc.
10. Not Having a Strategic Plan
Sadly, most A/E firms do not have the discipline to take several days every year to develop or update their strategic plan. If you have never participated in an effective strategic planning retreat, you might be tempted to dismiss the process as a waste of time. Or think it is something only of value to the "big boys."
If you think this way, you are wrong. An effective strategic planning retreat can be a transformational event. Strategic planning is important for every firm.
9. Using an In-House Facilitator
Many firms first try to use an in-house facilitator to lead the strategic planning process. This person they choose is usually the CEO. Using your CEO as the facilitator will lead to disappointing results at best. Most likely the CEO has no experience in being a facilitator and doesn't really understand the strategic planning process. Strategic planning participants will be reluctant to share their true feelings and ideas when the CEO takes on the facilitator role.
8. Having Too Many Attendees
As with most meetings, the results you produce are inversely proportional to the number of attendees. Do your best to limit the participants to around 10 or so. You might hurt some feelings, but you will accomplish a lot more.
7. Holding the Session In House
Do your best to hold the session away from the office. The temptations of taking that important phone call, interruptions by your staff and checking your e-mail are too much for most firms to overcome. You don't need to travel to a distant location, but try to do it away from the office. It will set the tone as something special and not business as usual.
6. Setting Your Goals Too Low
Lousy Goals = Lousy Results.
Let me repeat that. Lousy Goals = Lousy Results
Your goals need to be difficult but achievable. You will not inspire anyone with goals like increasing sales by 4% or increasing profits by 5%. Raise the bar of expectations and you have a much better chance of inspiring your staff and producing better results.
5. Believing That Tactics are Secondary to Strategy
Tactics are the actions and processes that you implement every day in order to achieve the goals laid out in your strategic plan. They are the basic things we do every day (or should do every day) that over the long run will help us achieve our goals.
Much has been written about strategy in recent years. It is certainly a more inspiring subject than tactics and a book on strategy will outsell a book on tactics every time. The fact of the matter is that a great strategy will go nowhere without good tactics.
Strategy is the Vision. Tactics are the Action
4. Too Much Documentation of the Plan
The quality of a strategic plan should not be judged on how much it weighs. There are certain consultants in this industry that produce 100 page strategic plans that are 90% boilerplate. I can only assume they charge by the pound.
The best strategic plans are short 15 to 20 page action oriented plans. The strategic plan is really a plan for action with deadlines and a plan for follow-up.
3. Mistaking the Strategic Plan for a Marketing Plan
Marketing is only one component of a strategic plan and in many cases it is the most important part of your plan. Other components include, project delivery, organizational structure, human resources, ownership transition and financial. Be sure to include these components when producing your plan.
2. Using the Wrong Outside Facilitator
If you have wisely decided to use an outside facilitator, please be sure to use someone who has an extensive background in the A/E Industry. Choose a facilitator that has run an A/E firm or has held a senior position at a larger firm. A person with this background has real hands on experience to draw upon. Don't settle for someone with an MBA that has never even worked in an A/E firm.
1. Not Following Through
A strategic plan that sits on the shelf gathering dust is of little value. You took the time to develop a plan, set goals, assigned responsibility for action now you must hold each other accountable for following through. Don't make it a stealth plan - share the non-confidential decisions with your employees. In order to maintain your focus, commit to reviewing the progress on a monthly basis.
Herbert M. Cannon, president of AEC Management Solutions Inc. and publisher of AEC Managing Partner Newsletter, is a management consultant, seminar provider, and speaker exclusive to the A/E industry. He is available to speak at company meetings and conferences. For more information, contact Herb via e-mail. Or visit his Web site.[ return to top ]
In Memory of Dick O'Malley, P.E., PEPP Chair 1988-89
Former PEPP Chair Richard J. “Dick” O’Malley, P.E., died Saturday, October 13, 2007, at home surrounded by his family. Dick lost his battle with cancer and will always be remembered for his love of life. Dick dedicated his entire life to his family, profession, and community.
Dick graduated Brenham High School in 1955. He completed his mechanical engineering degree from Texas A & M University in 1959 and embarked on a 40-year career as a professional engineer serving municipalities throughout Texas.
Dick was an engineers’ engineer. He founded O’Malley Engineers in 1968 and operated his business for the next 32 years. Dick loved the creative aspects of his work but also believed he must give back to his profession. He spent decades dedicated to the Texas Society of Professional Engineers. Dick served as vice president, national director, and as president of TSPE. After serving as TSPE president, Dick served similarly in the National Society of Professional Engineers, culminating in achieving the office of chairman of the Professional Engineers in Private Practice from 1988 to 1989. Dick served continuously from 1969 until 2006 in some volunteer capacity to his profession.[ return to top ]
25th Annual NSPE New Product Award Call for Entries
Know of a process, machine, or material developed in the U.S. that improves the public’s standard of living? If so, it may be eligible to enter the 25th Annual NSPE/PEI New Product Award competition.
Winning products will be honored with the NSPE/PEI New Product Award crystal and are entitled to use the coveted NSPE/PEI New Product Award logo. Winners will also be recognized in the “Winners Circle” ad in the PE magazine, NSPE online and print communications, and through significant media coverage.
All 2008 NSPE/PEI New Product Award entrants will have the opportunity to showcase their product during the NSPE Annual Conference and will receive two complimentary tickets to the NSPE/PEI New Product Award presentation.
Submit your entry by February 15, 2008.
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Are You a New Face in Engineering?
NSPE is seeking nominations of dynamic, young engineers for the 2008 New Faces of Engineering, a recognition program sponsored by Engineers Week. The initiative promotes the accomplishments of young engineers by highlighting their engineering contributions and their impact on society.
Individuals selected from the various engineering societies will be featured in a full-page advertisement in USA Today during Engineers Week (February 17-23, 2008). Each photo will be captioned with the engineer’s name, the name of the engineering society providing the nominee, the employer, and a brief statement of that individual’s accomplishments as they relate to the public welfare.
Circulation will include not only USA Today but also the engineering trade press, the individual’s local press, and the Web sites of Engineers Week and the sponsoring engineering societies, among others. Learn more about Engineers Week!
The deadline for submission is November 9.
If you’re an NSPE member and an engineer intern or licensed working engineer two to five years out of college or graduate school who could represent the up-and-coming in the profession, seek nomination now!
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NSPE Education for You and Your Firm
October 30, 1:30–3:00 E.D.T.
Professional Engineers in Construction 2007–08 Web Seminar Series: Integrating Trenchless Technology
PB Americas, Inc.
November 6 , 1:30–3:00 E.S.T.
From Engineer to Manager to Leader: Tools to Advance Your Career
Mick Morrissey, Principal, Morrissey Goodale LLC
November 13, 1:30–3:00 E.S.T.
Client/Consultant Relationships: the Good, the Bad, and the Ugly
Panel: Charles Dodge, P.E., HNTB Corporation, Gregg Granato, P.E., TxDOT, Tom Wendorf, PE, City of San Antonio, and Nellie Shannon, P.E., TxDOT
Sponsored by the Professional Engineers in Government
November 14, 12:30–1:30 E.S.T.
Ethics Forum: Ethical Engineering/Fair Trade
Arthur E. Schwartz, Esq., NSPE Deputy Executive Director
November 27, 1:30–3:00 E.S.T.
** Free seminar ! **
Future of Licensure for Engineers in Construction
Registration Form (PDF)
David Johnston, Ph.D., P.E., NCSU and Chair, ASCE Construction Engineering Education Committee, and Susan M. Cline, P.E. NCEES Exam Development
Co-sponsored by NSPE Professional Engineers in Construction, American Society of Civil Engineers-Construction Institute, and National Council of Examiners for Engineering and Surveying
December 5, 1:30–3:00 E.S.T.
It’s Who You Know: The Power and Process of Building Your Network
Dan Ryan, The Human Capital Group Inc.
December 6 , 1:30–3:00 E.S.T.
Essentials in Cyber Law: Domain Names, DMCA , Cyber Squatting & Trademarks
Rick Martin and Michael Dockins, Attorneys at Law, Fraser Clemens Martin & Miller LLC
Intellectual Property and Technology Law
More information and registration form
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