Insurance expert: Managing green liability risk not so different from 'normal' risk mitigation
Worries about legal liability have long dogged the sustainable building movement, but insurance expert Karen Erger says sustainability lawsuits are caused by the same types of issues that have always prompted clients to sue AEC firms.
Worries about legal liability have long dogged the sustainable building movement, but insurance expert Karen Erger (Locton Companies) and attorney Eric Singer (Ice Miller LLP) say sustainability lawsuits are caused by the same types of issues that have always prompted clients to sue AEC firms. "The 'new' risks of green design are the same as in any kind of design," says Erger. The two presentated at BUILDINGChicago earlier this week (download the presentation).
Suits tend to center around four areas:
- Client expectations unmet (desired level of certification not achieved, project failed to qualify for incentives, energy savings not realized, sustainable elements increased cost or caused delay).
- Elevated standard of care.
- Uninsurable guarantees or warranties.
- Problems caused by new products or systems (didn't work as advertised, weren't installed properly, weren't operated or maintained properly).
The best tools for managing such risks are well-established, according to Erger and Singer:
- Define and document the client's goals. (Don't guarantee that goals will be achieved; set and reinforce reasonable expectations throughout the project; don't assume risk of factors you can't control.)
- Set a reasonable standard of care. Don't allow elevated language about your performance to creep into the contract (such as incorporation of marketing language from your initial proposal).
- Don't warrant or guarantee outcomes (specific level of a standard, specific energy savings, etc.).
- Do due diligence when specifying products. (Get the owner's informed consent for using new products, and document your research -- even if most if it is digital. Print it or take screen shots, and put it in a project file that you can find later.)
Singer says the AIA's Guide for Sustainable Projects (D503-2011) is "a really good guide for contract language modification and risk protection." The 2012 AIA Sustainable Projects (SP) forms incorporate model language into existing AIA contract documents (A101, A201, A401, B101, C401). Singer and Erger placed particular emphasis on not guaranteeing achievement of specific sustainability goals, on avoiding unduly elevating the standard of care beyond the ordinary level of professional practice, and on avoiding taking responsibility for functions that are being performed by other parties, including the contractor, subs, and the owner.
The AIA's form B101-2007 SP offers language protecting the architect when untested materials and equipment will be used, and the association also offers "Client Waiver and Informed Consent to use an Experimental Green Product." Since a manufacturer may no longer be in business months or years later, if a problem arises, management of legal liability for the use of experimental green products is important.