I both respect and pity structural engineers. They remind me of turtles, often sticking their necks out.
I'm talking mostly about claims. During what sounded like a Dear Abby session on disputes at Structures Congress in March, attendees were treated to some horror stories (the names of the defendants were withheld to protect the innocent!) about claims, straight from the mouths of claims managers, structural engineers and a lawyer. The sad tales were followed by advice about on how to protect your back.
I walked out of the session with a giant headache. It was a big, fat sympathy pain. But for me, the pounding was fleeting. It was quickly replaced by a feeling of relief that I am the journalist, not the engineer of record.
I also came away wondering how designers sleep at night—considering how dysfunctional is the system. It's bad enough that one individual stamps drawings worked on by many others in the firm, putting her/his "assets" on the line if something should go awry. That's like self-imposed taxation with minimal representation and by itself is enough to cause insomnia.
On top of that, the innocent often get dragged into the muck and mire of a project gone south. Engineers know from experience they can get sued for something totally out of their control; something they did not do; and something outside their contractual responsibilities. Claims come in many forms. There's the seismic claim, the condo water claim, the vibrating floor claim, the delay claim—to name some common ones.
Potentially, one lost suit could wreck a firm.
Even if the engineer gets exonerated, the cost to defend—both in money, time, angst and bad karma—makes the win seem like a pyrrhic victory.
At the session, the panelists, including a lawyer, structural engineers and claims managers, had really nasty things to say about arbitration, in the event of a dispute: Avoid it at all costs, they advised. Better to go the route of mediation or to a jury trial.
"I've been passionate about being anti-arbitration for a long time," said the lawyer. "I can't think of anything worse for the design community."
In one lost case, he didn't sleep a full night for a month after the decision. "It wasn't a design problem," he said. "Twelve unemployed postal workers could have gotten this better, than the engineer and two lawyers on the arbitration panel."
To try to avoid sleepless nights, here's some advice from some voices of experience:
Though there may be lots of pressure to do so, designers should not sign contracts with binding arbitration clauses, which until recently were standard in AIA documents. Currently, binding arbitration is optional.
When you sign a contract with a clause mandating binding arbitration, you sign away your Seventh Amendment right to a jury trial. That's very bad.
When you sign a contract with a clause mandating binding arbitration, you also sign away your right to appeal the decision, excluding some extraordinary finding of misconduct on the part of the arbitrators. That's also very bad.
Under arbitration, the arbitrators do not have to follow the law. That's astounding and very bad!
The experts also said that when it comes to claims, most engineers naively believe they will pay for their mistakes and not the mistakes of others. That is not always the case.
"If the law in the state is joint and several, if you are 1% at fault, you can end up paying 100% of the damages," said the lawyer.
He had one case where his client was assessed with 8% of the responsibility but had to pay the total amount agreed upon because the contractor was bankrupt. That amount was $850,000.
Lots of warnings were issued about negligent tortious interference. If you say something bad about a contractor to the owner, or call that contractor a name, you can get sued because you interfered with the contractor's business relationship with the owner—and your insurance does not cover you.
The advice: Be careful what you say. Example: If you call the contractor "an asshole," you are not covered by your insurance; if, as the observer of the process, you call the contractor incompetent, you are.
Remember: It is not your job to get the contractor fired...if you do, you will get sued.
There are some things you should point out to an owner. For example, in reviewing bids, you want to be very objective. If the contractor has sued an owner in the last five years, you need to talk about that. It doesn't protect you from getting sued but it helps with the defense.
Speak in a straightforward manner to the owner about any deficit: "The wall has no grout. This is not something I recommend you accept."
Warning: E-mails can haunt. "Any e-mail you write can be used against you. Be careful—don't write anything you don't want to show up on the front page of your local newspaper."
One expert advised against having too much insurance. You don't want so much coverage that you become a target. On the other hand, you want to have enough insurance.
One claims manager said: It's not the size of the claims that hurts, it's the time it takes to fight it—and the cost.
The advice: Early intervention. Get your insurer's assistance during the project to try to resolves issues as they arise. "Ten years ago, early intervention was unheard of," said one claims manager.
More advice: If there is a claim, the senior person in the firm who is handling it should share the experience with others in the firm: "Translate a claims-management situation into a risk-management experience," advised one panelist.
A tip: Mediate, mediate, mediate: This is the chance to control the outcome. In arbitration or in front of a jury, others control the outcome.
Any confession in a mediation can never be used against you in a trial. Mediations are cathartic for they give the injured party a chance to vent. Mediation is also a tool for learning more about your claim. And mediation saves money on litigation.
But for mediation to work, the case has to be at a certain stage (early). It is essential that all parties go in with a problem-solving mindset and are not locked into a position. If the parties are adversarial, mediation is a waste of time.
The panelists said that more than 80% of mediations end in a settlement. But even mediation is not a panacea.
One panelist said: "A good mediation settlement is when both parties are unhappy."