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Mitigating

ProfessionalLiability forCivil Engineers:

White PaperASCE COMMITTEE ONPROFESSIONAL PRACTICE,

CONSTITUENT COMMITTEE ON BUSINESS

PRACTICES ANDPRACTICE GUIDELINES

ABSTRACT: The profession of civil engineering has again come to the attention of personalinjury attorneys. Recent trends in professional liability litigation show disturbing shifts,

as plaintiff attorneys seek to expand the historic doctrines of what does and does notconstitute professional liability for engineers. Historically, professional liability has beenlimited to negligence in the performance of an engineering assignment (an error or anomission). Recently, however, claims have been litigated against engineers based on suchdiverse additional exposures as job-site safety, product liability (e.g., defects in reports,which attorneys claim are sold by engineers to their clients), warranties that ones workwill meet a certain standard or fulfill certain promises, claims of damages incurred byunauthorized third-party users of reports, and similar situations. While such litigationcan create legal and financial nightmares for practitioners, assistance is available inmeeting and mitigating these challenges. Practitioners are urged to review the guidelinespresented in this white paper, and work within their firms and with competent outside

counsel to prepare specific programs and policies to address how best to mitigate theirown professional liability exposures.

This document is a white paper about

professional liability for civil engi-

neers. Its purpose is to examine the

current status of the profession with

respect to what might be termed

assumed and imposed legal liabil-

ity for our professional actions. It is not, however, legal advice

andshouldnotbe construedassuch.Thecontentsofthisdocu-

ment, furthermore, are quite broad and comprise generic

descriptionsof a complexandchallengingsetof circumstances

that affect all civil engineers. For advice on a specific issue or

issues involving professionalliability, readers areurged to con-

sultwith anexperiencedandcompetentattorney.

Thiswhitepaperwas preparedbyand isunderthe jurisdic-

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tion of the ASCE Committee on Professional Practice, Con-stituent Committee on Business Practices and PracticeGuidelines.

STATEMENT OF THE PROBLEM

Opportunities relating to the just and unjust application ofprofessional liability law have again caught the attention ofthe personal injury bar in the United States. In their zealoussearch for jackpot justice, tort lawyers are increasingly seek-ing to engage design professionals as defendants inindividual and class-action lawsuits. More and more civilengineers are being caught up in this legal feeding frenzy,resulting in time being spent in defending against suits aswell as drastic and dramatic increases in the cost of profes-sional liability (errors and omissions) insurance. Nor is thiscrisis limited to civil engineers in private practice; public

agency representatives and their employers arealso affectedasthe tort lawyers are fully aware that government representsthe ultimate deep pocket.

This white paper is based on the notion that there are twotypes of professional liability for civil engineers; they are de-fined herein as assumed and imposed liability, and thereis a significant distinction between them. Theassumed profes-

sional liabilityis that which has traditionally applied to alldesign professionals, not just civil engineers. It is the justifiedimposition by society and the profession of the design pro-fessionals responsibility for their own errors and omissions.On the other hand, imposed professional liability flows fromrecent trends in personal injury litigation to expand thescope of responsibility of the design professional to includeerrors, omissions, and actions by other parties, or to includeincidents occurring in the normal course of business thathave never previously been the basis for litigation.

As an example of imposed liability, a small geotechnicalengineering firm in metropolitan Atlanta had an assignmentto oversee the foundation construction and to test concreteand mortar being used in the building of a big box retailoutlet. The engineering firms contract specifically and ex-plicitly excluded any responsibility for means and methodsof project construction, and any responsibility for job-sitesafety. During the erection of the concrete-block wall, the

contractor neglected to fill the wall voids with grout on aregular basis, as specified in the project plans, and did notproperly shore the wall as erection proceeded. When the wallreached its final height and grouting of the concrete blockvoids began, the wall became top-heavy and collapsed, kill-ing one worker and injuring two others (all undocumentedforeign nationals). The contractor was protected by his work-ers compensation coverage, and the owner was protectedbecause it was still the contractors project. The only targetfor litigation was the design firm, whose professional liabilitycarrier ultimately settled for over $750,000.

THEORIES OF LIABILITY LAW

When a person is injured through the deliberate or negli-gent action or inaction of another, a torthas occurred. Ex-cluded from the definition of tort, however, is any damage orloss resulting from a civil contract. In the case describedabove, the injury to the undocumented workers was a tortand, in the opinion of the design professional, was the re-sponsibility of the workers employer. The design profes-sional had presumed that the terms and conditions of thecontract between their firm and the owner would provide ashield from claims by parties with whom there was no con-tractual tie. As noted above, this was a mistaken assumption.

Fifty years ago, design professionals were already awarethat they were rightly responsible for liability arising fromtheir professional acts and omissions. The legal standard thatwas applied had been developed from the English CommonLaw and required that design professionals exercise that

level of skill andcare ordinarily demonstrated by members ofthe same profession, under similar circumstances and at thesame time as the services being provided, in the same geo-graphic area. It was recognized under the law that errors andomissions occur and that not every such action or inactionconstitutes negligence. To demonstrate negligence, it wasnecessary to show how the design professionals action orinaction failed to meet the standard of ordinary skill andcare.

This has all changed in the last 50 years. Current juris-prudence is such that anybody can sue anyone else for any-thing at any time. Claims are made that defendants shouldhave protected plaintiffs from any injury regardless of cir-

cumstances. Juries, sympathetic to injured parties, too oftenagree, with sometimes staggering awards being the result.Personal injury attorneys sift through all parties involved in afailed project, seeking the organization with deep pocketsas their principal target and slanting the evidence to makethat party appear culpable. In most cases, it is less expensiveto settle an unfounded lawsuit than to fight and win, whichmany attorneys use in their favor. In the Jonathan Harrbook,A Civil Action, the lead attorney, Jan Schlichtmann,was quite candid in explaining that his firm used the pro-ceeds of numerous small lawsuits settled quickly to fundtheir pursuit of the big fish at Woburn, Massachusetts.

Examples of jackpot justice have made headlines all acrossthe country. Recently, in Alabama, the purchaser of a Mer-cedes Benz sedan with a minor flaw brought suit and won averdict in excess of $100,000,000, more than 1,000 timesthe value of the automobile at issue. Every cup of coffee nowpurchased at McDonalds has a printed warning that coffeeis hot, owing to a jackpot justice award to a customer whospilled coffee while driving and was scalded, and whose law-yer claimed at trial should have been warned.

Excessive jury awards have finally caught the attention ofCongress and the various legislatures across the country, and

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attempts are underway to rein in the system. Such efforts,however, are being resisted at every turn by the trial lawyers,who have much to lose if the present personal injury jackpotjustice system is significantly reformed. Since attorneys com-

prise most of the legislators at the federal and state levels, andsince the trial lawyers make huge contributions to politi-cians campaign funds, true reform remains an elusive ideal.

Professional Liability

As previously described, professional liability in the UnitedStates arises from the English Common Law doctrine that allprofessionals have duties to the public and to their clients.These duties include practicing only in areas of ones profes-sional competence, practicing in a fashion that allows theengineer to meet the prevailing standard of care, working toprotect the health and safety of the public, and many others.

Professionals, by virtue of their advanced training and spe-cialized experience, are rightly expected to practice in a pro-fessional manner and are held to higher standards than areworkers in other occupations.

Negligence is a failure, through a preventable error or omis-sion, to practice within the prevailing standard of care. Aclassic example of negligence occurred when a hotel mezza-nine collapsed during a dance, and the subsequent trial re-vealed that the engineer who designed the structure hadfailed to take harmonic motion into account during the de-sign. The court found that an engineer practicing with ordi-nary prudence in that state at that time would have realizedthat dancing on the mezzanine was a predictable event, andwould therefore have examined the resulting harmonicvibrations. Professional liability (errors and omissions) insur-ance was created to protect the design professional, theirclients, and the public from such negligence. Gross negli-gence, on the other hand, is willful or reckless professionalmisconduct (such as falsification of test results) that results inharm and is generally excluded from professional liabilityinsurance coverage. As was previously noted, however, per-sonal injury attorneys are always attacking the prevailingstandard of care doctrine, seeking to define it as somethingmore strict than its actual intent.

Other theories of law that are being increasingly applied

to engineers are strict liability, contractual liability, breach ofwarranty, and third party reliance. As suggested earlier, thesetheories have not traditionally been of concern to design pro-fessionals, but recent litigation has made their understandingmore important to our profession.

Strict liability was developed on the basis that productsthat are sold in commerce need to be free from materialdefects, because uncorrected defects can lead to injury. Re-cent high-profile examples include toys that cause chokingin small children, gasoline tanks that explode on impact, andsimilar cases. It is because of strict liability that product re-

calls have become a common occurrence. But how does thisapply to design professionals? Consider the following. If anattorney can demonstrate that a professional report had oneor more errors, and that the report was a product that was

sold to the client by the design professional, then the lawyercan claim that strict liability applies. As a means of legalrecovery for damages, the standards of strict liability aremuch more adverse to engineers than are those of profes-sional negligence. The avenue that allows this problem toarise is when the design professional somehow allows theownership of documents to be transferred to the client.

Contractual liability(also known as breach of contract) is adoctrine that argues that a design professional violated theterms and conditions of the contract by a specific action orinaction. This can arise, for example, when a work scope istoo broadly written (e.g., XYZ Engineering will examine

allalternatives before selecting the roof support system. It is

not possible to examine all the alternatives to anything). Thestatutes of limitation for breach of contract lawsuits are typi-cally longer than those that apply to professional negligence.Also, the burden of proof for the plaintiff is typically lessdemanding and is completely out of the engineers controlduring litigation (the decision will rest on how attorneys canparse the language of the agreement, not on the engineersactions or inactions).

Abreach of warrantycan be claimed if a contract includeseither an express or an implied guarantee of, say, a certainlevel of professional service (e.g., XYZ Engineering will per-form its services in accordance with the highest standards ofthe profession.). In this example, hapless XYZ Engineeringhas managed to shoot itself in both feet. Not only is thisclause impossible to fulfill, it is also a warranty, and its lan-guage negates the prevailing standard of care defenseagainst a claim of negligence. In addition to the problemsthat canarise under contractual liability claims (which can bequite similar in terms of statutes of limitation and the bur-den of proof), any warranty that a design professional gives toclients is typically excluded from coverage under professionalliability policies.

Third party reliance occurs when somebody who was not aparty to the original assignment or contract for professionalservices somehow seeks to convince a judge and jury that

they had the right to rely upon the findings of the profes-sional services performed. An example is when a subsequentpurchaser of real estate relies upon a Phase I environmentalsite assessment (ESA) performed for an earlier owner or pro-spective owner, or when a developer attempts to use a previ-ous foundation design for a completely different type ofstructure. The fact that the third party is unjustly attempt-ing to get something for nothing is of little import to aplaintiffs attorney, who is willing to argue with a straightface that the design professional should have been able toforesee the application of their work in such a fashion.

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Professional liability insurance has been mentioned sev-eral times in this document. Such insurance (also known aserrors and omissions insurance) is required by some classesof clients (e.g., public agencies), and has generally thought to

make good business sense. Recently, however, attorneys havebeen known to voice the opinion that professional liabilityinsurance is a source of money that engineers have a duty toshare. In the case of the collapsed wall cited before, the plain-tiffs attorney told the CEO of the engineering firm, Its notpersonal, Im just after your insurance, as if the insurancefirms provide coverage at no cost as a public service. Posses-sion of professional liability insurance by a design profes-sional firm is being increasingly viewed as a lawsuit magnet,and more (typically smaller) firms are canceling their cover-age.

Mitigating Professional Liability

In light of the foregoing, how is a professional services firmto protect itself from the unjust lawsuit while protecting itsclients in the event an error or omission occurs? While thiscan be very challenging, help is available. In addition to theresources provided by ASCE, there are other organizations ofprofessional service firms that specialize in providing assis-tance for design firms. Two of the best for private-sectordesign professionals are ASFEThe Best People on Earth(formerly the Associated Soil and Foundation Engineers,ASFE) andtheAmerican Council of EngineeringCompanies(ACEC). The Resources section at the end of this paper listssome of the additional resources available to expand under-standing of the issues.

Techniques to implement loss prevention are many andvaried, and they make good business sense. Here are a fewbrief examples: Make loss prevention part of the fabric of your professional

practice. While nobody goes to work ever thinking, To-day Im going to do something negligent that will get mesued, all of us too often go to work distracted by othercares or concerns.

Communicate with your clients. Clients are not limited toprivate sector engineers; public-sector design professionalsalso have clients who rely upon their professional work.

All clients are alike in one waythey need informationfrom you. There is an axiom in loss prevention thatfriends dont sue friends. What this means is that if youhave a strong relationship at a personal level with yourclient, and if your client is aware that you are sincerelyinterested in him or her as a person over and above thedemands of the project, then they are far more likely tocome to you personally and informally if a problem arises.Similarly, if you are aware that a problem has developed, itis imperative that your client hear about it from you first.Be proactive about solving problems that occur and seek

out your clients opinion and feedback on how your orga-nization performed on the assignment. Ask yourself thisquestion, If your client was unhappy, would you ratherknow about it and know why, or would you rather hear

via the grapevine that they had gone to a competitor? Train yourself and your employees in loss prevention. Lossprevention training includes a host of topics, all of whichneed to be hammered in to you and your staff continu-ously and repeatedly. A few examples are:Examine your marketing materials to ensure they dont

promise more than you can deliver;Examine your proposals to perform professional services

to ensure that they accurately describe what you will do(and, more importantly, what you will not do);

Examine your standard form contract to ensure you arenot selling your reports to your clients (you sell yourprofessional time, not your reports), that third parties

are not somehow entitled to rely upon your work, andthat you are not taking responsibility for other aspectsof a project that are not intended (e.g., site safety orconstruction means and methods);

Examine your field practices to ensure your groupsrepresentatives are not inadvertently enlarging yourresponsibilities on a project site (e.g., what your em-ployees should do or say if they observe an unsafe workpractice; if they say or do too much, that can make yourfirm responsible for all site-safety issues);

Examine your field report forms and reporting formatto ensure that what is said is what needs to be said, andthat overly broad language is not included (in the caseof the collapsed wall, the engineers field representativeshad been in the habit of finishing each report with thephrase, all activities observed today were in accordancewith plans and specifications);

Examine your internal peer-review practices to ensurethorough checking and rechecking of designs andcalculations;

Examine your client maintenance strategies (your cli-ents should not hear from you via only the proposal, thereport, and the invoice; take other opportunities tomake personal contact); and

Above all, treat your clients the way you want to be

treated by the professional firms that you engage. Solicit help from your professional liability carrier. Profes-sional liability insurance firms love to provide loss preven-tion training to their customers, and most of them areeager to furnish no-cost or low-cost classes and othermaterials.

Make use of existing resources that are already available.The section on Resources at the end of this documentprovides a list of professional practice associations thathave already spent years developing products and servicesto assist practitioners in successful loss-prevention tech-

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niques. Web site links are provided for convenience. Inaddition, two existing ASCE Policy Statements (PS 318on Tort Reform and PS 364 on Prevention of FrivolousLawsuits) summarize the public posture of our society on

these important issues. Adoption of the recommendationsprovided in the two policy statements by legislatures andthe courts would provide significant assistance to practi-tioners nationwide. All practitioners, therefore, should jointhe efforts to achieve tort reform, including support forefforts to prevent frivolous litigation.

When all your goodwill fails and you receive a certified letterfromsomelawyeryoudontknow,whatcanyoudo?

IVE JUST BEEN SUED...NOW WHAT?

What can you do when that day comes when you are servedwith a lawsuit? Aside from the obvious steps (call your pro-fessional liability carrier and your attorney), there are a num-

ber of techniques that can be employed. One of them is theprevailing standard of care survey.

A proactive use of the prevailing standard of care doctrinecan provide material assistance in defending a lawsuit alleg-ing negligence. For such a suit to be successful, the plaintiffsattorney has to convince the judge and jury that the engi-neers action or inaction somehow failed to meet the standardof care (previously defined). Typically, this is accomplishedthrough the use of a plaintiffs expert. This individual willexamine the facts of the case and testify that the standard ofcare was not met. The defendants attorney will naturallyengage another expert who will directly contradict the plain-tiffs expert. Then the judge and jury have to weigh thecompeting testimonies and decide which one is to be be-lieved. This system has the principal disadvantage of distill-ing an evaluation of complex technical issues down to apopularity contest of sorts, where the most attractive andarticulate expert will be believed, giving the victory to his orher side. Plaintiffs attorneys know how to use this system totheir advantage, and there are experts who make a very com-fortable living doing nothing but accepting assignments ofthis type. Such individuals are the source of the term, hiredgun for personal injury litigation.

Fortunately, there is a better way to overcome the use ofhired guns.

In the document, Recommended Practices for DesignProfessionals Engaged as Experts in the Resolution of Con-struction Industry Disputes, ASFE, ASCE, ACEC, NationalSociety of Professional Engineers (NSPE), and 27 other orga-nizations of design professionals have defined a means of de-fending against hired-gun testimony through the use of asurvey of the standard of care. It works in the followingfashion. The defendants attorney and defendants expert examine

the allegations in the complaint and define the specifics ofexactly where negligence is said to have occurred. The

accuracy of this assessment should be tested when the de-fendants attorney deposes the plaintiffs expert.

Once the specifics of the alleged negligent act or acts arethus defined, the defendants expert conducts a survey.

Typically a questionnaire is prepared, which is presentedto a group of similar design professionals who were offer-ing similar services in the same area where the incidentoccurred, at the same time. The questions are designed tosolicit what each surveyed engineer would have done ornot done when faced with the same situation.

Typically, the plaintiffs expert will not have practiced in thearea,offeringsimilar servicesasthedefendant atthesametime.Heorshewill beofferingtestimonythat isbasedondissimilarexperiences, at other locations, at different times. The court-room presentation of the standard of care survey to theplaintiffs expert, and the subsequent disclosure that theexperts testimony is not supported by the actions of actual

peers of the defendant, is typically sufficient to discredit thehired-gun testimony and has been known (in some cases) tocause the judge to instruct the jury to ignore that expertstestimony.

SUMMARY AND CONCLUSIONS

Unfortunately, it has come to pass that if you are a producerin this country you are a target for litigation. The more yousucceed, the better the opportunity for others to find faultwith what you have done. The courts used to act as a filterand would throw out obviously frivolous suits. That is nolonger the case and it appears that the more ridiculous atheory is, the better its chance of success. It is not a question

of if you will get sued, it is a question of when will you getsued.Although this appears (and is) unfair to the design pro-

fessional, it is a reality of business and must be taken intoaccount with the services you provide. As with all businessissues, they cannot be taken personally and they cannot beignored. Education and experience are the key to success andit is always easier and less expensive to learn from others. Thegoal of this paper is to increase your awareness of the currentissues surrounding professional liability and provide re-sources to further your knowledge and understanding.

The fight to reduce litigation against design professionalsand control liability theory expansion has to be waged at

several levels. These include how you conduct your personalwork, how your company conducts its work, how you sup-port your profession, and how you influence public opinionand policy. The following are some of the steps that weresuggested in this white paper that can be taken at the busi-ness level to reduce the impact of unjust professional liabilityassessment: Maintain good personal relationships with your clients. Be responsive and responsible for the services you provide.

If its wrong, fix it as soon as you find out, and definitelybefore being asked.

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scious failure to exercise diligence in an effort to prevent aninjury which the situation indicates is very likely to occur intheabsenceofordinaryprecautions.

Negligence: Undertort law, anyactor omission whichbringsinjury to another or others can be redressed even when theindividual who committed the act or omission has absolutelynointentionofoccasioningsuchinjury.

Negligent action: An act of conduct which is abnormallylikelytocauseharmto othersthoughnotintentionallyso.

Prevailing standard of care: That level of skill and care ordi-narilydemonstratedby membersofthesameprofession,undersimilar circumstances and at the same time as the servicesbeingprovided,inthesamegeographicarea.

Product:A tangibleitem that is produced. Themanufacturerof a product typically has control over all aspects of its design,prototypeandtesting,fabrication,distribution,anduse.

Productliability:Alegaldoctrinethatholdsthatproductsthatare sold in commerce need to be free from material defects,because uncorrected defects can lead to injury. Also known asstrict liability, product liability invokes a higher standard ofcare than does the prevailing standard of care doctrine. It alsorequiresa lowerthresholdof proofinlitigation.Engineers pro-videservices;theydo notproduceproducts.

Professional liability: The justified legal liability that attaches

to engineers and other professionalsthat is based on thedutiesowed to clients from professionals. These include, but are notnecessarilylimitedto,practicinginones ownfield ofexpertise,practicing in a fashion that meets the prevailing standard ofcare, practicing in a fashion that protects the public health,safety, and welfare, and others. Failure to fulfill these dutiesmayconstitutenegligence.

Professional service: Services performed by professionals, e.g.,engineers, attorneys, physicians, accountants; these are profes-sions that are controlled by state professional codes. Profes-sional services areexpected to have some errors and omissions

that do not always necessarily arise from negligence. This iswhy engineers are held to the prevailing standard of careinsteadofmore strictdoctrines ofliability (suchasthoseassoci-atedwithproducingaproduct).

Strict liability: A legal doctrine that a damage- or injury-causing defect in a product is enough to establish liability,whether or not the producer of that product was negligent inthedesignortheproductionof theproduct.

Thirdpartyreliance: Occurswhena person orentitythatisnota party to a contract for professional services has a right, orclaimsa right,torelyonthe workperformed.Thiscreates dif-

ficulty for the design professional because it is not possible toforesee thegoals and requirements of unintendedthird partieswhenthe serviceisperformed.

Tort: Includes any and all wrongful acts done by one personto thedetriment of another for whichthevictim may demandlegal redress. A tort may be committed intentionally orunintentionally and with or without force. Also, a privateinjury on account of which a suit may be brought by theaffectedparty.

Warrantee: See Guarantee.

This white paper was prepared by the ASCE Committeeon Professional Practice, Constituent Committee on BusinessPractices andPracticeGuidelines.ThecorrespondingauthorisPeter H. Dohms, Gallet & Associates Gulf Coast, Inc., 3355CopterRd.,Suite8,Pensacola, FL32514. Hecanbe contactedby e-mail at pdohms@gallet.com. LME

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