Lots to Consider When Hiring Consultants
When a client hires an architect to design a project, the architectural firm is legally responsible for all of that work, even though they hire various consultants to help them with different aspects of the design. The consultants, in turn, are liable to the architect, not the client. They have “privity of contract” with the architect. The architect also has privity of contract with the client. The consultant has no real legal relationship with the client and generally all communications between the consultant and the client go through the architect.
While the architect may spend many months negotiating a contract with the client, it is amazing how little time goes into the contracts with the consultants. Rather than drafting a contract with the consultant, architects often just ask the consultant for the consultant’s standard letter of agreement, attach a description of the work and sign. It is not very different from contractors who tell their subs to “Start on Monday” without having any paperwork. This can result in problems, since the architect’s responsibilities trickle down to the consultants, who do not necessarily have the same level of legal liability as the architect. The problems usually involve invoices for the work. I have seen invoices from consultants for a large number of hours times various hourly rates, with no explanation of what work was done and when.
Generally speaking, the architect is obligated to pay the consultant, even though the owner has been slow in paying him. Many an architect has tried to claim that he is not liable for paying consultants until he has been paid by the client, but that is not a legally correct position.
Architects need to be especially careful of contract provisions in the prime contract which allow the client to charge them back for any work that the client “feels” was not done properly. This is most likely to arise in public projects, but I have also seen it in private contracts. In other words, the architect may find its invoice being offset by some charges which really relate to work by one of its consultants. If they do not have a contract allowing them to pass these costs back to the consultant, the architect may lose out on some significant fees.
This also underlines the need for a provision in which the consultant agrees to indemnify, defend and hold harmless the architect. It should be noted that the consultant may also request indemnification back, since they are relying on the architect’s work product, which may be flawed. There may also be copyright and intellectual property issues between them that need to be addressed in the contract.
The records kept by the consultants can be very important should there ever be litigation with the client. The contract should allow the architect access to those records, especially the designs. I always advise my architect clients that if consultants in other states are used, there may be problems with obtaining jurisdiction, in the event of litigation.
A consultant who has done work, with the knowledge and consent of the client, may file a mechanic’s lien, the same way that an architect can. The consultant’s participation on the project is generally known because their work product may be part of the project drawings. Architects should be careful to “know” the consultants that they work with, since sometimes they unwittingly use people who are not licensed and who claim to be working under the supervision of licensed individuals, but are not. In the same vein, the architect should require that the consultant maintain professional liability insurance and provide evidence of it.
Architects routinely ask for waivers of mechanic’s liens from contractors, but they do not usually do so for their consultants, who have the same rights to file a mechanic’s lien. If a consultant files a mechanic’s lien for an inflated or a disputed amount, the Clerk who accepts the mechanic lien for filing has no way of knowing whether the consultant is really owed that money or not. The parties are then left to their own devices to sort out the problem.
Architects and their consultants are well-advised to seek legal counsel before entering into agreements with each other and to spend some time really reviewing the relationship and the potential for liability.