By Mark Jackson and Erin Johnson
Design Professionals are held to a standard of care when providing professional services. This standard of care, similar to that imposed on doctors, lawyers and other professionals, requires them to provide professional services within their area of expertise by exercising the same care, skill, and diligence as a person in that profession would ordinarily exercise under similar circumstances. Thus, an architect or engineer can be liable when they fail to exercise such care.
Courts will always default to the traditional standard of care; however, we recommend that your contracts include a clause that defines the standard of care to which you will perform. An example of a reasonable clause establishing the standard of care is:
“The Design Professional will perform its services using that degree of care and skill ordinarily exercised under similar conditions by professional consultants practicing in the same field at the same time in the same or similar locality. Design Professional shall perform its services as expeditiously as is consistent with the professional skill and care and the orderly progress of the Project.”
While we see many variations in the contracts we review, the intent of this provision is the same – the design professional will use the same skill and care ordinarily exercised by other members of their profession. This is not a standard of perfection. The design professional is considered negligent only when they fail to use reasonable care. Unless the contract between the design professional and the client states otherwise, the design professional is not held to a standard of perfection by the courts. With the contract language above, only if you breach this normal standard of care are you deemed to be ‘negligent.’
Here are the State of Florida’s jury instructions that are read when there is a negligence claim against a design professional:
Negligence is the failure to use reasonable care. Reasonable care on the part of an architect/ engineer is the care that a reasonable careful architect/engineer would use under like circumstances. Negligence is doing something that a reasonably careful architect/engineer would not do under like circumstances or failing to do something that a reasonably careful architect/ engineer would do under like circumstances.
~ Florida Standard Jury Instructions. Section 402.5
Not every mistake, error, or omission is a negligent one. On any given project, there can be errors and omissions in plans and specifications. It is possible that the client may incur additional costs due to your error (e.g., change order costs paid to the contractor), and not be entitled to recover those costs from you. Unless the mistake resulted from your ‘negligence’, you should not be legally responsible to your client for the increased costs paid to the contractor.
Your design obligations are different from designing a product. For example, if you were tasked with the design of a bicycle for manufacturing, you would create several prototype designs until you got it perfect. As you all know, this is not the case with design and construction documents in the built environment. Unforeseen conditions, changing criteria, and differing code interpretations are to be expected. You need to educate your clients and set upfront expectations that it is not reasonable to require perfection in design plans. The threshold of acceptability for errors and omissions based on nationally recognized studies and industry practice can be established in the range of 5%. This is an equivalent to 95% perfection.[1]
While the standard of care is not one of perfection, you can contractually agree to increase this standard. Unfortunately, we are reviewing more contracts that attempt to increase the standard of care. It is very important that you do not agree to this language. Any contract language that seeks to raise your standard of care increases your risk. And when your client changes the generally acceptable standard of care, they can create uninsurable risks for your firm. Professional liability insurance is intended to cover you for your negligent acts, errors, and omissions. Coverage for damages caused by anything other than your negligence is expressly excluded by the contractual liability exclusion in your policy.
Listed below are some words or phrases that you want to avoid in your contracts or marketing material. These phrases all state to your client (and potential jury if there is a claim) that you are better than your peers.
Highest and Best – you are telling your client that you are better than other design professionals. If there is a problem, you will now be judged to a higher standard than other firms.
Nationally-recognized – That sounds nice, doesn’t it? However, this phrase does not belong in a contract. This is an attempt to increase the standard of care. Your client knows of your reputation and the quality of your past work.
Trust and Confidence and the best interest of the Owner – these words attempt to establish a fiduciary relationship with the client. A fiduciary duty is an obligation to act in the best interest of another party and is considered the highest standard of duty implied by law, typically required by a trustee or guardian. A fiduciary relationship, by definition, requires a higher degree of care than the generally accepted negligence-based standard of care that is consistent with professional liability insurance; therefore, agreeing to a fiduciary relationship may expose your firm to liability beyond that for which it is insured.
The standard of care provision can be difficult for some clients to understand. They do not see the harm in using words like ‘best’ or ‘nationally recognized’. Sometimes clients have unrealistic expectations and believe that your plans should be perfect. Using resources such as the state’s jury instructions and the AIA/EJCDC contract documents can help educate your client on an acceptable standard of care provision.
In most states you can agree contractually to increase your standard of care. However, two States recently passed laws that prevent project owners from increasing a design professional’s standard of care.
In 2021, Alabama passed a new law that establishes a standard of care for design professionals for projects that are governed by Alabama law. The bill defines the Alabama standard of care as “the professional skill and care ordinarily provided by a competent design professional practicing under the same or similar circumstances and professional licenses as expeditiously as is prudent considering the ordinary professional skill and care of a competent design professional.”
The State of Texas passed a law effective September 1, 2021, that defines the standard of care for architects and engineers. For a contract related to the construction or repair of real property, the code “must require that the architectural or engineering services be performed with the professional skill and care ordinarily provided by competent architects or engineers practicing under the same or similar circumstances and professional license.” Any attempt contractually to increase the standard is considered void and unenforceable.
In the State of Florida, you can agree contractually to increase your standard of care. Why is this so important? If you have ever been involved in a professional liability claim, one of the first documents your claims adjuster and defense attorney asks for is the contract to review. A contract that contains a higher standard of care will be harder to defend and most likely more expensive to settle.
Before signing a contract, both parties need to agree on a realistic standard of care. We recommend that you take caution when reviewing contracts to avoid elevating your standard of care. We are here to help you navigate the intricacies of contract language whenever the need arises.