NSPE's Gateway to Private Practice June 2009 
 

Professional Liability/Risk Management Brief: Client Selected Consultants

When a professional agrees to provide services for a client, that professional takes the same level of responsibility for the service whether the service is performed directly by the professional or by a subconsultant. The legal concept of vicarious liability is the imposition of liability on one party, in this case the prime professional, for the conduct of another party, the subconsultant, based solely on the relationship between the two parties.

The legal system strives for efficiency, holding one party vicariously responsible for the acts of another eliminates the need to apportion fault. This concept extends to the negligence of a subconsultant providing services through a prime consultant.

For various reasons, a client may want specific consultants as part of the professional service team. Indeed, clients should have the right to select specific consultants; if they do so, however, they should have the obligation to contract separately for the services of consultants. When a client demands a specific interprofessional consultant, a prudent design professional will use one of these two risk management techniques:

       Negotiate the use of subconsultants for whom the prime professional is willing to take responsibility

       -or-

       Require an arrangement for the consultants or specialty service providers to contract directly with the client so that the prime professional is not vicariously liable for their actions.

The latter arrangement may necessitate greater coordination of the independent services of the client-selected consultants. The prime professionals coordination of the documentation requires careful attention, and this service should be appropriately compensated. Because the prime design professional does not have authority over the independent consultants services, the prime design professional should not be held responsible for their accuracy. In an arrangement where the client is contracting directly with individual consultants, each should be acknowledged as being able to rely on the technical sufficiency and timely delivery of documents and services furnished by the others.

Moreover, it would be appropriate for the client to agree to indemnify the prime design professional for any costs resulting from the negligence of the independent consultants. There are significant risks for a prime design professional when the client contracts separately for the services of consultants. If the client insists on separate consultants or the use of specific consultants by the prime design professional, the client should acknowledge that the prime design professional should not be held responsible for the adequacy of their services. The prime design professional should be paid for providing a review of the information by other consultants, which should be generally limited to conformance with design concepts.

If a firm has professional liability insurance, its policy usually defends it against allegations of its negligence and pays on its behalf if the firm or its employees are found to have performed professional services in a negligent manner and caused harm. The CNA/Schinnerer professional liability insurance program does provide coverage for the vicarious liability of the insured firm for the negligence of its consultants, but does not defend or pay on the behalf of the consultants. Some other professional liability insurance policies will not cover such vicarious liability.

Because a prime professional is always responsible for the actions—including negligence—of those providing services through the prime design professional, care should be taken to select interprofessional consultants who are qualified and capable of providing their services; who are insured or otherwise have the financial strength to stand behind their professional and contractual commitments; and who do not attempt to shift risk to the prime design professional by unreasonably limiting their liability either through their contract with the prime design professional or because of their lack of insurance coverage or assets to support an indemnity provision.

 

© 2009, 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.

 

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NSPE Education for You and Your Firm

NSPE 2009 Fall Engineering Ethics Forum (September 9, October 7 and November 11) 12:30—1:30pm (ET)

 

Session # 1

Protecting the Public Health and Safety and Welfare & Demonstrating Professional Competence

Potential topics to be addressed (time-permitting) include

  •  Conformance with Applicable Standards
  •  Approval/Signing and Sealing of Engineering Drawings
  •  Responsible Charge/Responsible Control
  •  Judgment Overruled
  •  Awareness of Safety Violations
  •  Awareness of Illegal Practice
  •  Education, Experience, Qualifications
  •  Acceptance of Assignment
  •  Signing and Sealing of Work
  •  Coordination of Work
  •  Scope of Practice

Session # 2

Maintaining Objectivity/Truthfulness/Non-Deception and Preserving Confidentiality

Potential topics to be addressed (time-permitting) include

  •  Inclusion of All Relevant Information
  •  Issuance of Public Statements
  •  Disclosure of Interested Parties
  •  Expression of Technical Opinions
  •  Reviewing Work of Another
  •  Sales and Marketing Practices
  •  Business or Technical Affairs of Employers/Clients
  •  Proprietary Information/Files
  •  Arranging for New Employment or Business Opportunities
  •  Consent

Session # 3

Addressing Conflicts of Interest and Receiving and Providing Gifts and Other Valuable Consideration

Potential topics to be addressed (time-permitting) include:

  •  Faithful Agent and Trustee
  •  Avoidance vs. Disclosure
  •  “Appearances”
  •  Acceptance of Compensation From More Than One Party
  •  Serving on Public Bodies
  •  Accepting Contracts from Government Bodies
  •  Part-Time Engineering Work
  •  Contingent Fee Arrangements
  •  Representing Adversary
  •  Accepting Consideration From Suppliers for Specifying Product
  •  Accepting Commissions/Allowances Directly From contractors
  •  Gifts
  •  Bribery
  •  Political Contributions

 

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Meet NSPE in St.Louis

 

The 2009 NSPE Annual Meeting will have a new format this year. All education sessions will be held on Sunday, July 19. The day will be filled with numerous networking opportunities, the opportunity to earn up to seven professional development hours on issues affecting the engineering profession and NSPE, and even lunch with a guest speaker all for only $99!

Register today to save! Join your fellow engineers July 15–19 in St. Louis and help NSPE celebrate its 75th anniversary. Visit the NSPE Web site to learn more and to access the registration form.

 

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Put the Spotlight on Your Project

Have you recently been involved with an engineering project that stands out from the crowd? Perhaps it's a project with an innovative design or one that uses cutting-edge technology or materials. Maybe it's a project that required overcoming significant obstacles or is on that simply has an interesting story. Now is the time to showcase that work in PE magazine and on the NSPE Web site.

If you are currently involved with such a project or have completed one in the previous 12 months, submit a brief project description, your contact information, and any supporting materials that help tell the story to pemagazine@nspe.org. [ return to top ]


Business Group Says U.S. Jobs Could Be Hurt by 'Buy American'

According to Reuters, the U.S. Chamber of Commerce says jobs could be threatened by the "Buy American" provisions in the stimilus package. Some firms may be shut out of projects because they have little choice but to use foreign-made materials or parts. The Chamber says the provisions need clarification so that it knows how the rules will be applied.

How are the "Buy American" provisions affecting NSPE engineers? We welcome your comments at the bottom of this article.

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PEPP 2008-09 Executive Board

Chair
Randy Rakoczynski, P.E., F.NSPE 
Buffalo, NY

Chair-Elect
Bill Clarke, P.E., F.NSPE
St. Louis, MO

Secretary
Andrea Martinez-Graves, P.E.
Tampa, FL

Immediate Past Chair
Kevin Skibiski, P.E., P.L.S., F.NSPE
Brookline, MO

Vice Chair, Northeast Region
Randy Petersen, P.E., F.NSPE
Washington, DC

Vice Chair, Southeast Region
Dan Dawson, P.E., P.L.S. 
Wilmington, NC

Vice Chair, Central Region
Mark Davy, P.E.
La Crosse, WI

Vice Chair, North Central Region 
Karen Stelling, P.E.
Kansas City, MO

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Eric West, P.E.
Midland, TX

Vice Chair, Western and Pacific Region
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Salem, OR

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