Q: What are the liability issues associated with design/build? The AIA is a powerful umbrella for the registered architect, but what about all of us residential designers without that designation? I run a design company that subcontracts design and estimating from a remodeling company. I have consulted my color wheel, and I'm fairly certain that I inhabit a gray area. Even our insurance agent would rather not go there.” – a designer in Virginia
A:Answer provided by Ciro Giammona, CR, general manager, Harrell Remodeling, Inc.
In our increasingly litigious society, there is no perfect way to avoid liability, but there are certainly ways to minimize it.
The design/build team advantage
We are a design+build remodeling firm, with our own in-house design staff and production team. This structure in itself works in our favor in that we have a collaborative group working toward creative and buildable solutions to meet our clients' needs. The result is fewer problems, as both teams are available throughout the entire process, but it also avoids the adversarial relationships that sometimes arise when failures do occur later on – e,g., was it a design flaw or a construction defect?
As an independent, you may be able to stipulate that you will be retained during the construction process (at least until final inspection), not for construction management, but to make sure that design integrity is maintained and that construction solutions meet your original intent. You can also make sure, contractually, that the builder verifies and approves assumptions regarding existing conditions and measurements prior to the start of construction so that those kinds issues can be resolved as soon as possible.
Urge to merge?
If you are working with only one remodeling firm, issues could get messy on more than just design matters, but tax laws as well. That’s because you may actually be considered a statutory employee of the firm that is hiring you. Have you considered joining the firm that you work with the most?
You haven't said whether you do structural design or who is responsible for engineering. If you are subcontracting the engineering, consider having the builder or homeowner pay the engineer directly (ideally, you’ll recommend and trust the engineer), while keeping the engineer available to you during design, so that you can have input regarding structural issues.
There may still be some liability in the engineering relationship, but this process will keep liability further removed than if he or she is working for you.
Regarding the products you specify: You may want to include a disclaimer clarifying who is responsible for their suitability and warranty (not you!).
Our insurance agent opened my eyes when he told me that there is nothing we can do to keep someone from suing us and that insurance is really a "legal defense fund" in disguise.
One way to minimize the cost of "errors and omissions" (E&O) insurance is to get into a program with other companies as a group. If you aren't part of an association (NKBA, AIBD, NARI, ASID, for example), consider joining one, as most already have programs in place.
Otherwise, your agent may be able to find independent groups of other designers like you that offer plans, thereby sharing the risk. Insurance is a cost of doing business. It can also actually be a differentiator between you and your competition, as well as a professional "selling point" for you, even if your clients need to spend a little more to get you.
Ask a lawyer!
Finally, I am not an attorney and none of the above should be considered legal advice, especially because the laws vary from state to state.
Spend the time (and sadly, the money) to have a professional who is experienced in construction contract law review your standard documents. This will save you in the long run by making sure you are not taking on liability for situations that you don't control, and you'll also sleep better at night.
-- Ciro Giammona is general manager of Harrell Remodeling. Iris Harrell is CEO and president of Harrell Remodeling (www.harrell-remodeling.com), which she founded in 1985. Harrell Remodeling is an award-winning design/build company with nearly 50 employees and $11 million in revenues. Iris has received many awards and is also a popular speaker at industry events, where she encourages other remodeling contractors to hire women for non-traditional jobs.