Professional Liability/Risk Management Brief: Defamation Claims
By Richard B. Garber, Vice President A/E/C Risk Management Services, Victor O. Schinnerer & Company Inc.
Managing the Risk of a Defamation Claim
One exposure design professionals face is the risk of a defamation claim. Although not an obvious risk to some design professionals, circumstances that may lead to defaming comments should be recognized and managed. One key aspect to managing any risk is to obtain the proper insurance coverage. The Schinnerer and CNA commercial general liability (CGL) policy provides coverage for liability arising out of personal and advertising injury, including defamation.
What is defamation?
Defamation is an intentional false communication either published (libel) or publicly spoken (slander) that injures another’s reputation or good name. It is important to note that the communication must be false and cause actual injury to the party’s reputation or good name. Allegations that the statement “hurt my feelings” are not enough. There must be proof of actual damage, such as a loss of business opportunities, due to the defaming statement. The allegedly defaming statement must also be published or spoken to a third party.
How can design professionals be exposed to a defamation claim?
Most business activities that require collaboration among business entities have a level of exposure for defamation claims. Design professionals are often members of a larger project team, which requires communication with other business entities and reliance on the information and services provided by those entities. False and adverse comments about other members of a project team may have a negative effect on that firm’s business opportunities and may result in a defamation claim.
What is an example?
Acme Contracting is the front-runner to be the general contractor for a new school. During public hearings, the design-professional-of-record makes an unsubstantiated statement that Acme Contracting is incompetent and that the project is assured to be over budget. As a result, not only does Acme Contracting miss this business opportunity, but other opportunities as well.
Would a defamation claim be covered by professional liability insurance?
Maybe. It is important to remember that your professional liability (PL) policy provides coverage for claims arising out of professional services. The CGL policy excludes claims arising out of the professional services you provide for a client. A conflict may arise in the context of a design professional commenting to the public about the qualifications of a contractor on a project where the design professional is providing construction phase services. Was the statement part of the professional services provided by the design professional? If yes, the claim may be excluded under the CGL policy but covered under the PL policy. Having CGL and PL coverage with the same insurance carrier should minimize the risk of a claim being caught between two carriers as they debate which policy should respond.
How do I manage the risk of a defamation claim?
Remember, truth is always a defense against defamation. Be sure that statements made to third parties are based on facts. In the earlier example regarding the qualifications of a contractor, design professionals should protect themselves by ensuring that any statements are based purely on facts, such as those found in the contractor’s qualification statement.
Also, statements that are qualified as opinions should also be based on facts. Opinions that may defame another party without some rational basis may result in a defamation claim.
© 2008, Victor O. Schinnerer & Company, Inc. Statements concerning legal matters should be understood to be general observations based solely on our experience as risk consultants and may not be relied upon as legal advice, which we are not authorized to provide. All such matters should be reviewed with a qualified advisor. Victor O. Schinnerer & Company Inc. is managing underwriter for the CNA/Schinnerer Professional Liability Insurance Program, commended by NSPE/PEPP since 1957.
NSPE Education for You and Your Firm
June 12-14,Alexandria, VA
2008 PEPP CFO Roundtable
Ownership transition, CEO/CFO relationships and expectations, HR benefit issues, due diligence on M&As, document retention and control, and more.
July 24–27, Portland, OR
2008 NSPE Annual Conference
Participants can earn up to 19 professional development hours at this year’s conference education sessions. Education session topics cover PEs in the LEED world, global energy issues, emerging technologies, sustainable design, risk management, profitability, best practices, stress management, and other current professional topics. A free PEPP Council of Principals session on July 26 will focus on Leadership Inventory and Motivation of Young Engineers.
July 25, Portland OR
NSPE Young Engineers' Forum
Free to the first 40 registrants.
While school may be ending, you can still get education on-line with one of our many recorded sessions:
Building Information Modeling
Earned Value Management: An Introduction
Integrating Trenchless Technology
Toxic Mold: Identification, Recognition, Measurement, Toxicity and Abatement
From Engineer to Manager to Leader: Tools to Advance your Career
Increasing your Management & Leadership Excellence: How to get from Good to Great!
Til Death do us Part: Keeping Your Employees Engaged at Work
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Top 11 Ways to Lose an Employee
Herbert M. Cannon, President of AEC Management Solutions Inc.
11. Have an Empty Supply Cabinet
Having an empty supply cabinet sends all the wrong signals. In addition to wasting time looking for the supplies they need to complete their work, they are left to wonder if incompetence, frugality, or financial difficulties are to blame.
10. Slow Computers and Out-of-Date Software
Your employees want to be working with reasonable, current technology. If you don’t provide it for them, your competitors will. All of your computers and software should be on a three-year replacement cycle. No, it is not acceptable to push off the old clunkers to your administrative staff.
9. Share Information on a “Need to Know Basis”
Employees want to know why something needs to be done. By providing a context to the tasks we are asking them to perform, we are preparing them for greater responsibility.
8. Don’t Listen — Just Assume They are Chronic Complainers
Those of us in management positions deal with problems all day long — this is what we are paid for. It is easy to fall into the trap of believing that some employees are chronic complainers. (This is probably because some of them are.) Take the time to evaluate their complaint and see what can reasonably be done to correct the problem. (See # 2 below. )
7. Click Away on Your Blackberry — After All, You Are the Boss
When your employee, coworkers, or anyone else is speaking, do not go to your Blackberry — it is rude. Live in the moment. Check your e-mail later.
6. Think of Them as the Enemy
I am astounded on how some employers/bosses talk to or treat their employees. We are all working toward the same goal — they are not the enemy. I am not saying you should let them take advantage of you, but treat them with some respect and get some better results.
5. Create a Moving Target of Expectations
Employees respond to certainty — not uncertainty. Be consistent in your performance expectations. When your expectations do change, be sure to let your employees know in advance, not after the fact.
4. Have a One-Sided Employee Manual
The employee manual should be a comprehensive and fair document — and it should be presented as such. The tone of the manual is as important as the content.
3. Uncomfortable Furniture
If you want your employees to work long hours when needed and go the extra mile to meet client deadlines, you need to provide comfortable chairs and work stations. No one likes working long hours when his or her muscles ache from ergonomically challenged furniture.
2. No Heat
It’s hard to believe that an A/E firm would not see the necessity of providing adequate heat for their employees, but I come across it all the time. You may be a fresh air freak or enjoy the crisp feeling of a 55-degree office — but trust me when I tell you that your employees do not.
1. Put Off Reviews
Yes, a year goes by very quickly when you are responsible for conducting reviews and giving raises. However, when you are the one waiting for the review or raise, a year seems like an eternity. Employees view any delay as an insult and are likely to seek employment elsewhere.
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.
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What Are Engineers Paid?
Covering over 35 disciplines, including the five licensure-eligible disciplines in addition to 30 other recognized branches, the NSPE Engineering Income & Salary Survey is designed to give you the most accurate pay information for all engineering professionals. Participation is free and open to both NSPE members and nonmembers.
Your input is essential to the validity of the survey data. It will enable us to produce a survey with the most accurate representation of the profession, and one that will continue to be purchased as the standard. To promote a broad range of participants, we ask that you encourage other working engineers, both NSPE members and nonmembers, to contribute to this growing database by also submitting their data online. Total confidentiality and anonymity of the survey data is assured, and the data submitted will not be used for any other purpose.
Also, for the first time, a FREE individualized report summary will be available to all who participate in this years survey. This special benefit has been added as an incentive to keep participation growing so that NSPE can continue to provide the most statistically valid data available.
Visit the NSPE Web site to participate in the Salary Survey.
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NeXt Generation of Leaders
Some baby boomers will retire (not all, we hear!), leaving a leadership shortage. PEPP is talking with the future generation of leaders and listening for ways to attract younger generations to the profession — and retain them. Each month PEPP Talk plans to profile a young engineer who exemplifies what is in the pipeline for leadership — that is when these young engineers aren’t too busy!
Carlos Garza, P.E., P.G., CAPM, CFM
Company: AEC Engineering, LLC
Been There: 1.5 years
Previous Gigs: Texas Agricultural Extension Services, USDA-ARS, Malcolm Pirnie, Melden & Hunt.
Number of employees: 3
How did you first get into engineering? My family has been involved in the construction business since my early childhood. After working with my father doing project estimating, I developed a greater interest in math and engineering.
If you weren’t an engineer you’d be…. a veterinarian.
What’s your peak experience as an engineer so far? Being selected as NSPE’s New Faces of Engineering representative (2004) and obtaining my Professional Engineering license.
What do you value in the people you work with? Their loyalty to the company and their opinion on the work being performed. Employees should have the liberty to express their views and concerns on a specific issue without fear of employer reprimands.
What do you think engineering firms need to do to attract younger generations into the engineering industry? Convey a diverse work environment, while showing young engineers that the company is taking a proactive approach to keeping up with the changing times, technologies, and trends that other fields have been so succesful at capitalizing on.
What does leadership mean to you? Leadership is an art that must be learned, practiced, and rehearsed continously. As any athlete trains for their sport, a leader must rehearse his/her steps and approach to a task at hand. Leadership styles must be properly and meticulously calculated to get people motivated to do what you want them to do and persuade them to envision your dreams as their own at the time you want them to do it. A good leader does not only have one leadership style, but several that he/she must trade between in a given scenario.
Leaders you admire? Rachel Carson and George S. Patton
Football or baseball? College football (Go Aggies)
Favorite cereal? Kashi Whole Wheat
Web site you can’t go a day without visiting? Texas Commission on Environmental Quality and CNN.
Finish this sentence: In 10 years... I will look at the past 10 years and admire the variety of projects I have worked on and wake up with the same enthusiasm I have today regarding doing engineering everyday.
How do you strike a work/life balance? When I decided to open my own engineering company, I had a vision for the type of company and clients I wanted to serve. At the same time, my family was the biggest driving force behind the decision. At this time having a young company, work life balance is a daily struggle. At some points I have to draw the line and say work will be there tomorrow. I have learned to be able to tell clients, that I will be out of reach for some specified amount of time because I am devoting that time to my family, but I have developed strong working relationships with these clients and I know they respect my honest and truthfulness about the work being performed on their projects. Don’t get me wrong, I am a workaholic by nature, but I have learned to stop working so I can let loose and take the time out of my day to play with my daughter and spend time with my wife. At some point in your career, you learn that all your work is pointless unless you can step back and reap the benefits of that work by spending time with your family.
Are you a young engineer interested in getting more involved in NSPE? Interested in being profiled? Contact Kim Granados.
Are you a baby boomer trying to understand the Generation X, and then the Millenials? View the free two part PEPP Council of Principals video on Leadership and the Emerging Generations. Or purchase the Future Leader Focus report of survey results from HR Advisors Group.
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