February 12, 2019
“Contract corner” is a series of columns occasionally published our Design Profession team’s monthly newsletter, Communiqué. These columns focus on onerous contract clauses and provide guidance for negotiating a contract that will help you prevent problems. This month, we look at what you can do to protect yourself when an owner wants to require you to hire a specific subconsultant.
We understand that owners can be very demanding when it comes to their projects—they might want you to specify a particular material or mimic a design they’ve seen elsewhere. They also might insist you hire a specific subconsultant—one you may not know or don’t want to work with, or a sub that may be unqualified—as part of your project team.In addition to the lack of autonomy such a requirement may represent, it forces you to assume the liability for the services of the sub based on privity of contract. It also requires you to protect yourself from any demands against you based on the negligence of a subconsultant you never planned to hire in the first place.The solution can be found in trying to reason with the owner and, failing that, incorporating the right protection into your contract with the owner. Here, you and your lawyer might want to get creative. For example, if the contract provides the owner with third-party beneficiary status, the owner, in certain cases, could pursue a cause of action directly against the subconsultant without bringing you into it.When you find yourself being pressured by an owner to hire a specific subconsultant, here are a few different suggestions for how you might deflect the owner’s wishes and, if the owner’s not willing to back down, how you might structure your contract:
- As you know, my reputation, along with my exposure to liability, is on the line whenever I design a project. My custom is to work with subconsultants with whom I’ve worked well in the past, or for whom I’ve received a sterling recommendation from others I depend on. Why don’t we agree that I will evaluate any recommendation you have and, if the subconsultant measures up, I will seriously consider hiring him or her for the project?
- While I prefer to hire subconsultants with whom I’ve worked in the past, I will hire the subconsultant you want as long as the contract gives me your assurance that you will make no claim or bring any action against me as a result of this subconsultant’s services. In addition, the contract should contain an indemnification that satisfies the following requirements:
- States that I have hired this subconsultant at your instruction and as a convenience to you
Obligates you to defend and indemnify me for all damages to you or to any third party that have been caused by the negligence of the subconsultant you’ve instructed me to hire
Applies without requiring me to prove negligence by the consultant, causation, or damages
- If you want me to hire a specific subconsultant, then let’s write a contract that provides you with third-party beneficiary status. That way, if you seek damages that you believe have been caused solely by a subconsultant’s negligence, you’ll be able to pursue a cause of action directly against the subconsultant without involving me. We’ll also need to include language that makes it clear that you’ve instructed me to hire this subconsultant and I am doing so as a convenience to you.
Work with your lawyer to draft language that encompasses these requirements. In addition, insist on a solid contract with each subconsultant that contains a clear scope and a strong indemnity, and check to see that the subconsultant is properly insured, particularly for professional liability.
