Managing the risks of retaining subconsultants

Many design professionals are concerned about their “vicarious liability” when retaining subconsultants. Many others don’t realize that a prime design professional is always responsible for the actions—including negligence—of those providing services through the prime design professional. This exposure is amplified if the subconsultant doesn’t have adequate insurance. Although the Schinnerer professional liability insurance program provides coverage for the vicarious liability of the insured firm for the negligence of its consultants (not all professional liability insurance policies do), the insured firm still has to pay its deductible and expose its policy limits for a claim that may not have been their fault.

Here are some suggestions for ways to manage the risks of subconsultant claims:

  • Select subconsultants that are qualified and capable. Verify that they have the right type and depth of experience and can handle the work load within the time available.
  • Select subconsultants that are adequately insured or otherwise have the financial strength to stand behind their professional and contractual commitments. Obtain certificates of insurance evidencing professional and general liability coverages.
  • Execute written interprofessional agreements prior to the performance of agreed-to services.
  • Use coordinated project documents, such as the standard form agreements published by the AIA and EJCDC, to avoid inconsistencies between prime contracts and subcontracts.
  • Avoid agreements that limit a subconsultant’s liability unless a corresponding limitation of liability can be negotiated in the prime agreement.
  • Evaluate the pros and cons of hiring subconsultants directly versus having the client contract directly with subconsultants or other specialty service providers.
  • Resist being forced into retaining subconsultants selected by the client.

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