The Case For Designers Shouldering More Legal Responsibility
A consultant and attorney says increased designer liability is good for construction
Ujjval Vyas is dignified, articulate and persistent. In past years he earned a law degree and a PhD where his thesis concerned Philip Johnson and architectural modernism. He is a founder of a hydrogen energy company.
He is also leading a crusade, largely by himself, advocating that designers should be held to a "clients come first" approach applied to other professionals—an idea that would burden engineers and architects with the weight of vastly increased legal liability. The reactions to his ideas in the past have ranged from scornful to sympathetic.
On his LinkedIn page, Vyas says he is "the mastermind" behind a "disruptive paradigm shift that has broad legal implications " and which will "radically change the way construction projects are structured and delivered" and "reduce risk and promote innovation."
At the International Risk Management Institute's Construction Risk Conference in Houston November 5, most of the sessions concerned detailed discussions of insurance, safety and law. The session on designer responsibility was more theoretical and may have owed its existence to the general feeling that the construction industry and its late, over-budget projects need to be fixed, either via integrated project delivery, industrialized off-site fabrication or some other approach.
The designer responsibility session also had a kind of subversive appeal. One of the panelists appearing with Vyas, Gregory A. Field, managing director of construction and surety practice for Willis Towers Watson, said he was neutral on Vyas' proposal and that most of the times "when we make these presentations people stand up and call us blasphemers."
That didn't happen in Houston, possibly because the audience didn't believe Vyas' proposal was likely to be adopted anytime soon.
His argument is simple in its basics.
Designers are licensed, learned professionals but they enjoy a freedom that doctors, lawyers and accountants don't. Those professionals must by law always act in their clients best interest as part of a special class of legal relationships with a fiduciary responsibility. The client or customer's interest is paramount.
Unlike those other state-licensed professionals, designers work under an arms-length type of relationship that frees them from strictly acting in their clients' best interests at all times and shields them from higher level legal liability. Technically, architects and engineers work under the same "caveat emptor" rule as an automobile dealership.
Designers are thus able to limit liability, usually via long, complex contracts.
Under a fiduciary responsibility, other licensed professionals have to disclose all possible conflicts of interest and obtain informed consent for anything that materially compromises the client, Vyas said. The fiduciary responsibility owed to clients by the other licensed professionals forces them at all times to serve as educators who propose options rather than pressing their own agendas and disregarding the cost of their own advice and potential errors.
'Completely Different Standard of Care'
The other licensed professions are subject to "a completely different standard of care, having nothing to do with tort law," Vyas explained. "It has to do with loyalty."
To be sure, professions have been forced to evolve by changes in culture and society. Physicians' relationship to their clients has changed from pure paternalism early in the 20th Century, when doctors more or less dictated to patients what treatment was required, to one involving patient rights in the 1950s and later decades. Ideas about patient rights expanded to include informed consent for treatments and surgery and the Patient Self-Determination Act, a federal law adopted in 1991.
Katherine Jones, an attorney who appeared on the IRMI conference panel, said that law is scattered on the subject of designers' responsibility. But in the last several years a pattern is emerging where courts are applying the standard of fiduciary responsibility. One case involved claims over remediation of mold. Another case involved a power plant designed for a California town that went far over cost.
"If you [find yourself a defendant] in a claim based on fiduciary responsibility," Jones said, any contractual limit of liability "would almost certainly not be enforceable."
With a fiduciary responsibility, architects and other designers would have to change priorities.
Where Architectural Fees Go
Another panelist was Frederick F. Butters, an attorney who represents architects and who said that he formally served the American Institute of Architects in different capacities. Currently, he said, he is "on the outs with the AIA."
He said that architects spend less than half of their fee on construction documents and only about 5% on specifications—with often disastrous results for the project budgets. Butters presented a slide entitled "How Architectural Firms Work" stating that most rely on information from product manufacturers, have little knowledge of specified products and that many firms hire outside consultants to do the constant design input and interactions needed for proper specifications.
An example is structural steel design. Butters said that steel fails when connections fail but that architectural plans have no connection detail, which are deferred to steel fabricators.
Vyas and other panelists stated that fiduciary responsibility would shift a designer's primary loyalty in a design-building contract "to the owner." Field offered that the numerous affected relationships could make mitigating the risk very complicated.
Responding to Vyas' ideas, one engineering association manager said the danger of being held to a fiduciary responsibility, with the potential for massive damage awards, is a problem that rears its head from time to time but was of no immediate concern. A spokesman for the AIA said the association would have no comment on the matter.
Quixotic? Certainly. Vyas says that, if adopted, the construction industry would work with much lower transaction costs and the number of pages in a design contract would shrink to three or four. He believes all it takes is a lawsuit or two, perhaps an influential national report on the subject that sways judicial thinking, to turn matters in a new direction.