Limiting liability for engineering consultants

Clients are loading engineering consultants with unreasonable liabilities beyond the scope of their expected professional responsibilities, as reported by Bronwen Parsons in a piece for Canadian Consulting Engineer. In the context of construction, this can include establishing warranties for products and materials, safeguarding workers on the construction site and other tasks that traditionally fall to engineering contractors.

There are a couple of factors thought to have contributed to this phenomenon:

An increasing number of millennials are being put in charge of projects, and their dearth of experience is manifesting itself in several ways. “They sometimes mistakenly think, for example, that they can simply use the same contract for procuring widgets as they use to hire professional services,” noted Parsons.

In an age of social media and 24/7 news coverage, the risk of embarrassment associated with a project is higher than ever. “Consequently politicians and bureaucrats are much more leery of projects hitting technical snags and going over budget, and so they are keen to cover all their legal bases in their contracts with the consultants,” Parsons explained.

Essentially, firms are recognizing that the stakes are higher than ever, and are eager to protect themselves as much as possible.

What do consulting engineers need to know?
One way to dissuade clients from drawing up their own contracts that include tricky terms and high engineer liability is to explain that Association of Consulting Engineering Companies contracts are an industry standard, or point to general advisories released by consulting engineering associations that deal with specific contractual issues. Failing this, engineers could adhere to the higher risk/higher reward model by increasing fees to cover new risks. Of course, consultants also have the right to turn down projects that come with particularly high liability demands, although they should keep in mind that efforts to unite multiple firms within the industry against an overly demanding client may be regarded as collusion and should be avoided for legal reasons.

But what if the unthinkable happens? In a piece for Plant Engineering, Jocelyn Knoll and Colin Wicker advised engineers involved in a data center project that experiences an outage for which they may be held liable to still offer assistance in a bid to mitigate disruption. Reducing the cost and length of an outage allows engineers to make the best of a bad situation, helping them save face and preserve client relationships while simultaneously tempering the professional losses of all parties. That said, Knoll and Wicker cautioned against prematurely assuming responsibility, as this might put engineers on the hook even if another party is determined to be at fault down the line. The pair also advised consulting a lawyer as soon as possible.

Best practices for hiring engineering consultants
Typically, firms looking to hire engineering consultants recognize that they don’t have the expertise, time or manpower to execute a project internally. Although they acknowledge their own limitations, it’s understandable that they might still be reticent to place trust in an outside consultant. Because of this, they may be tempted to load multi-page legal documents with a plethora of liability clauses in an effort to cover as many bases as possible. However, this can actually do more harm than good, as contractors who are experienced, qualified and optimally positioned to take on a project may end up declining it due to unreasonable demands associated with liability.

Ultimately, when it comes to drafting contracts, clients need to strike a balance between protecting themselves and alienating potential partners.