Claims Retrospective: The Risks in Providing Professional Services to a Party Engaged in Litigation

Claims Retrospective: The Risks in Providing Professional Services to a Party Engaged in Litigation
August 26, 2019 ASCE Member Insurance
Claims Retrospective: The Risks in Providing Professional Services to a Party Engaged in Litigation

Claims Retrospective: The Risks in Providing Professional Services to a Party Engaged in Litigation

Requests for professional engineering services by a party already in litigation are not unusual and can present unique challenges. The parties embroiled in litigation are more likely to be emotional, frustrated, upset and/or defensive about the subject project, and pursuing a rational resolution may be clouded by the parties’ intransigent positions. The engineer already has some indication that the parties may be difficult to work with, or are generally litigious, so taking precautions to reduce risk is important.

One of the most common scenarios is when an engineer is hired as an expert to provide their professional opinion in a liability case. In this situation, the engineer’s services will not usually have a direct effect on the subject project which limits the engineer’s liability exposure. However, claims can still arise when the engineer is acting as an expert; for example, if the engineer fails to conduct a proper conflicts check and is subsequently disqualified or discredited. Leaving the client without an expert opinion or scrambling to find a replacement expert may lead to a claim if the client loses the case or fails to recover what they feel they should.

An engineer serving as an expert might also face a retaliatory claim once they seek collection on their fee. This is typically a strategic claim that a client pursues to avoid having to pay the engineer’s fee. These claims can generally be avoided if the engineer runs the appropriate conflicts checks, provides accurate estimates of cost for services, and collects a retainer for expert services at the beginning of the engagement.

One of the most likely situations that leads to claims is when an engineer is hired to do remedial work on a project that is already experiencing problems. As noted above, the fact that the client is engaged in litigation may indicate that the client is simply very litigious. It may also reflect special problems with the project. Further, changing or correcting another engineer’s work may involve difficulties not present if one is the project engineer from the start. Before agreeing to perform services in this situation, the engineer should determine how many other design professionals this client has hired, and subsequently fired, or brought claims against. Some clients use litigation to recover costs after a project is completed. These clients can usually be identified with some research and should be avoided.

Other tips for avoiding claims from these clients include (1) narrowly defining the scope of services in writing; (2) informing the client in writing of the information and assumptions upon which the engineer is basing his/her work; and, (3) requiring the client to agree to defend, indemnify, and hold the engineer harmless from claims with the previous design professional’s and/or contractor’s work.

A final claims scenario is when an engineer is hired to provide factual information including surveys, plats, and geotechnical reports that are necessary for the client to establish its claims against a third party. Often claims from clients can be avoided by verbally providing preliminary information as a consultant prior to committing anything to writing. The client can then decide whether to obtain a full report from the engineer. While there is usually little threat of a claim by the client in this circumstance, the engineer can still face claims or licensing proceedings initiated by the opposing party.

The best way to avoid potential claims like these is to follow all rules and regulations to the letter. The losing side in litigation will often initiate frivolous claims against others involved with the case, including the engineers. While there is often no merit to these claims, such claims and/or licensing proceedings can be time-consuming and expensive to defend. Too often, an engineer will overlook a local rule or regulation when simply providing information; for example, forgetting to include language on a document that is mandated by the state or municipality. Although this language may be irrelevant to the matter at issue in the case, the losing side will often use technical violations or even perceived technical violations to initiate licensing proceedings against the engineer before his or her state board.

While it is important to proceed cautiously in all projects, it is particularly crucial to review all the risks and rewards involved when providing professional services for a party already engaged in litigation.