Podcast Highlights (No. 1): Design Professional's Guide to Construction Law

As the litigation and dispute resolution division of the Forum, D1 members deal with a variety of aspects of construction law and many are discussed on the Forum’s podcast “Construction Law Today.” This podcast was established in 2019 and created by Buzz Tarlow, one of D1’s ADR neutrals. As an additional benefit to members, the D1 blog is spearheading a series summarizing the Forum podcast episodes.

Episode 22: Design Professional’s Guide to Construction Law

(Click title for the full podcast episode)

This is a summary of the podcast discussion, which focused on the new book “Design Professional’s Guide to Construction Law”, published in 2021,  and edited by the three guests Matt Ninneman, Buck Beltzer, and Mark Mercante. Their practice expertise ranges the whole gamut from transactional to insurance risk management, litigation, arbitration, and acting as arbiters. Unlike the previous edition of this book, that covered construction manager issues along with design professionals, this edition focuses only on design professionals and emphasizes risk management strategies for attorneys to use when counseling these professionals. It also includes recent developments in legislation and case law. 

This book was developed because design professionals are at greater risk than most project participants due to variations in state law, updates to contract forms, and shifts in project delivery systems, with an increase in construction-manger-at-risk projects and end-design builds, which have created new risks for which designers and legal practitioners, did not traditionally account. For example, on the design-build side, there is risk that design professionals may face the same treatment as subcontractors, with offsets, etc. On the construction-manager-at-risk side, design professionals begin working with general contractors earlier in the development of the entire project and there is case law that suggests that design professionals, unless it is stated otherwise, might take on additional risk as representative of the owner. Furthermore, design professionals have weakened ability to minimize risk as projects progress. For example, design professionals, particularly subconsultants, can find themselves doing large expensive projects with sophisticated designs that require licensure and significant education and if the contractor does not build in accordance with the plan and makes changes without the designers’ input, the design professional is stuck in the middle with risk on both sides with the typical design professional malpractice insurance policy eroding, with defense costs being taken out of policy limits.

The book examines ways to minimize risk within the contract setting, including consequential damage waivers, waiver of subrogation and setting limitations of liability to the design professionals’ fee or insurance coverage limits, or some set number to which the design professional can agree. On a related note, the book includes a rewritten examination of insurance policies and how to minimize risk using them. This includes a review of standard language, like indemnity provisions. What are they? What restrictions are there on indemnity provisions? Who is covered? What is covered? Who has a duty to defend and when is it triggered? What are coverage positions of former employees? What is the impact on additional insureds? What is excluded from coverage? What is contractual liability? What is the warranty language? What is heightened standard of care? (and more)…

Readers of this book will also see an in-depth examination of numerous doctrines, including heightened standards of care; betterments—which has been better developed recently; and the economic loss doctrine, which has evolved and varies by state. The book also addresses recent modifications to AIA form provisions which incorporate recent state legislation and important case law developments that should be incorporated into design professionals’ form contracts. 

Another specially treated issue in the new book is licensing, including the stamping and sealing obligation of various states. (FYI, the Forum’s Division 3 has a 50-state survey on this issue.) The vast differences in process and procedure are quite surprising.  For example, who is stamping? When do you stamp? What are you stamping? What is the reporting obligation for malpractice? What is the scope? Is there a threshold value? Each state has some expectations for self-reporting, which are also addressed. Finally, the text touches on intellectual property, and how to protect specialized knowledge of structures and advancements in engineering.

In summation, this book is a valuable resource for practitioners and the design professionals that they counsel, as it is comprehensive and current, addressing new trends in the industry that all players must know and incorporate into their contract negotiations and risk management planning.

Blog contributor Kanita Williams is the Principal at The Law Office of Kanita C. Williams, PC, in Washington, DC. Her practice is criminal litigation, real estate and landlord/tenant matters, and construction law.