What Risks do Architects Face?

Wednesday, March 9th, 2016
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Whether we are talking about copyright, safe design, professional negligence or various other matters, architects around Australia face risks in a number of areas, and it is important for them to understand what these are and to have appropriate strategies through which to manage them in place.

According to Rob Buchanan, a partner at law firm Norton Rose & Fulbright and chartered civil engineer, these can be considered as either legal risks or risks to the architect’s reputation.

With regard to the latter category, he says an important issue revolves around copyright, whereby those who produce various forms of bespoke designs may want to think about intellectual property issues associated with how they can maintain worldwide control over the design in question and where and how it is able to be used. This has often been an issue with iconic or landmark structures; designs relatively similar to the London Eye, for example, are popping up in parts of the world including in Melbourne (though no suggestion of any breach of intellectual property rights is intended).

A further area of risk can occur where architects are unable to control important amendments to the design – a situation which could lead to the final as-built product not according with the original vision of the architect yet bearing the architect’s name. This could occur, for example, where the original design is thought to be buildable according to the information available to the architect at the time but subsequently has to be modified due to structural or technical advice from engineers or a suggestion from engineers of less costly design alternatives.

Less commonly, there could be issues in which the quality of the as-built product failed to match that of the design because of substandard workmanship during construction. A famous example of this occurred in France, where renowned architect Jean Nouvel tried (and failed) to have his name struck off the Philharmonie 1 building which opened last year, claiming his design had been ‘martyred’ and the detail ‘sabotaged’ thanks to poor quality workmanship.

In terms of legal issues, Buchanan says architects could potentially be liable for damages in cases where their designs turn out to be unsafe or not buildable. This could happen, for example, where an engineer or builder discovered that the architect’s design as it stood was not constructible but this was picked up only after the principal had incurred significant expense in terms of gaining development approvals, entering into arrangements with investors or pre-letting some space. In a similar manner, architects could also be proportionately liable for damages where designs they produce do not turn out to be constructible within budget and this is not picked up until late in the process.

Less commonly nowadays, any architects who act as certifiers in contracts must in general (subject to specific terms contained within the individual contact in question) act in an impartial manner despite being paid and employed by the principal. This can be problematic, for instance, if the building contractor takes action over issues relating to variations or extensions of time and alleges that the architect in question has unduly favoured the principal in the performance of his or her certification duties.

Professor Kim Lovegrove FAIB, a principal at Melbourne based construction law firm Lovegrove Smith and Cotton and the president of the northern chapter of the New Zealand Institute of Building as well as a past conjoint professor in Building Regulation and Certification at the University of Newcastle agrees with Buchanan’s point regarding certification but insists that the most significant area of potential exposure revolves around buildings which fail to comply with relevant statutory provisions such as the Building Code of Australia. Such buildings are inevitably a result either of defective workmanship, defective design or both, he said – with any questions over the design creating potential exposure from an architect’s viewpoint.

In terms of risk mitigation, Lovegrove says suitable levels of insurance are important as is observing the detail of the contract at all times. While professional indemnity insurance is not mandatory in all states, Lovegrove says carrying this is nevertheless prudent. The contract, meanwhile, represents the fundamental affairs of the contracting parties, and failure to follow this to the letter repeatedly causes trouble.

Architects should also refrain from chasing work which is outside their capacity with regard to skills and experience.

“Anybody should stay in their weight division,” Lovegrove said. “Stay in your weight division. Don’t punch above your weight.”

Buchanan, meanwhile, says it is important that the contract identifies the risks that are carried in the agreement. He says architects should ideally ensure that they are either not held responsible for specified given risks and/or ensure that there is a cap on their overall liability under the contract to the extent of their fees.

In terms of insurance, BJS Insurance Group senior account manager Alex Conlon says it is important to obtain not just insurance advice but legal advice (from lawyers) as well. While agents or brokers could offer advice, this was coming from an insurance perspective only and does not generally reflect any form of holistic or comprehensive advice about the types of liability which architects are agreeing to under the contract.

When entering into a contract, he says architects should be careful about agreeing to any form of liability beyond what they would usually be held responsible for under standard professional service liability, as this additional liability may not be covered under professional indemnity insurance. This could occur, for instance, where the contract included contractual provisions such as ‘hold harmless’ clauses, which might require the architect to respond to certain legal liabilities incurred by the principal in respect of say, public liability claims the principal might incur during construction or operation of the building.

When choosing professional indemnity insurance, Conlon says it is important to look at the different exclusions of various policies as well as any additional benefits which might be covered by some policies but not others. Some policies, for example, include cover for liability arising out of the safe design provisions of workplace health and safety legislation.

Outside of professional indemnity, Conlon says other forms of insurance architects could consider include material damage (damage to physical property such as mobiles, laptops, cameras), theft, management liability, workers compensation, business interruption (loss of turnover due to physical disruption), motor vehicle insurance and corporate travel insurance.

Throughout their operations, architects in Australia face considerable levels of risk.

Through sensible strategies, however, such risks can be managed to acceptable levels.

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