There you sit alone in your office. The work shop is buzzing outside. You have three deadlines to meet but it doesn?EUR??,,????'???t bother you because you?EUR??,,????'???re having one of your best years ever. The computer people are installing a new C.A.D system that will help productivity by 45 percent and your collectibles have never been better. When the phone rings you grab for it in eager anticipation hoping its the go ahead on the new housing project. Instead it?EUR??,,????'???s your lawyer.

Apparently, at a site you completed over seven years ago, a limb fell off one of the taller trees during a wind storm and landed on a 12 year-old boy. He ended up paralyzed from the waist down and his parents are suing you for over $1,000,000. They claim you should have realized there would be frequent wind storms in the area and subsequently shouldn?EUR??,,????'???t have specified trees which could become hazardous in strong winds.

That?EUR??,,????'???s not all. The developer of a project you designed in the desert tried to use the same plans on a project in Washington and after three years had to redo the entire landscape. He claims that you should have told him the plans wouldn?EUR??,,????'???t work in different climates. The owner of that project feels that you should pay for the extra work and reimburse him for lost rentals due to the embarrassing landscape.

At the end of the day, you load up your briefcase, flick off the lights, and turn the key on the deadlock bolt. It?EUR??,,????'???s been a long day. Little could you expect that someone would leave a cigarette burning and by the time the fire department could get there most of your office had burned down.

A little much for one day? Perhaps, but individually these events can and do happen to Landscape Architects. What can you do? You can C.Y.A... COVER YOUR ASSETS!

In the case of the fire, as well as theft, or for that matter personal injury on your premises you can call your local insurance agent and take out the appropriate policy There are many insurance companies that will write these forms of comprehensive and liability insurance. We will cover this topic at a latter date in a subsequent issue of The Landscape Architect and Specifier News. But how can you protect yourself against acts of God, misuse of plans, and unforeseen design defects?

A Brief History

Errors and omissions, or more accurately Professional Liability Insurance is something that everyone has heard about but is not that easy to find. According to Richard D. Crowell, president of R.D. Crowell Insurance (a Southern California based company specializing in professional liability insurance), ?EUR??,,????'??There are very few underwriters who are willing to except professional liability policies from Landscape Architects.?EUR??,,????'?? Part of the reason comes from within the insurance industry itself.

?EUR??,,????'??Professional liability,?EUR??,,????'?? said Crowell, ?EUR??,,????'??is what we call a ?EUR??,,????'??long tail business?EUR??,,????'??? in that there is a long time between the work, the filing of the claim and the settlement if any. The average is about five years between each phase.?EUR??,,????'??

Around 1979 several underwriters began offering policies at attractive rates hoping to invest the premiums without having to cover any losses for as long as 10 years. The increased competition brought premiums down to as low as 50 percent of the normal 1979 market rate.

In 1983 the ASLA adopted a program through the Chicago-based Lietzow Agency, which offered even lower premiums and improved coverage due to the strength in numbers of the ASLA members. In some cases premiums dropped to as low as 20 percent of the normal 1979 rates. ?EUR??,,????'??But the policies had holes,?EUR??,,????'?? added Crowell, ?EUR??,,????'??and because of low premiums, multi-million dollar lawsuits, and sympathetic juries the insurance companies weren?EUR??,,????'???t able to continue with their programs.?EUR??,,????'??

?EUR??,,????'??The use of the contract is as important as the delivery of the plans.?EUR??,,????'??

?EUR??,,????'??Of the 12 companies that wrote ?EUR??,,????'???-Professional Liability four dropped out, five others decided not to write any new policies and became very selective about renewals and only three have kept their doors open to new business. One however has refused to insure any firm that had switched to the cheaper Lietzow policy.?EUR??,,????'??

With the decrease in competition premiums began to increase and almost overnight they were back to the 1979 standard, adjusted of course, to keep pace with the rate of inflation over the past five years. This is part of the reason why the premiums now range from between two and eight percent of the firms gross revenue.

?EUR??,,????'??The minimum policy,?EUR??,,????'?? Crowell tells us, ?EUR??,,????'??is $100,000 but is very hard to find. Most policies start at $250,000 and have a minimum deductible of $5000. These policies cover most expenses, after the deductible, including legal costs, win or lose. Because of the economy of scale you?EUR??,,????'???ll find that the smaller companies end up paying a larger percentage of gross revenue for premiums than the larger companies even though the larger companies end up paying a larger total figure.?EUR??,,????'??

A major consideration in regards to your premium is how the company views you as a risk. If you?EUR??,,????'???ve lost three lawsuits in the past two years you may have a hard time getting any coverage regardless of how much your willing to pay.

Liability

Martin B. Greenbaum is a lawyer specializing in landscape concerns over the past 15 years. According to him there are two areas of liability that create the need for Professional Liability Insurance. ?EUR??,,????'??The first area of liability,?EUR??,,????'?? stated Greenbaum, ?EUR??,,????'??is the situation where someone gets harmed or hurt.?EUR??,,????'?? In these cases the injured party usually sues everyone involved with the project and multi-million dollar judgments are often requested ?EUR??,,????'??The second area,?EUR??,,????'?? Greenbaum added, ?EUR??,,????'??is the design defect or business interuption aspect.?EUR??,,????'??

Business interruption usually occurs because of a design defect or omission. One of the more common areas of business interruption is caused by slope failure. ?EUR??,,????'??Many times,?EUR??,,????'?? Greenbaum exampled, ?EUR??,,????'??the landscape architect is not responsible for the soil analysis or sub-surface geological condition, that (was) for the geologist or the soil engineer, but the Landscape Architect gets sued none the less because he did not have it in his contract that he did not do a soil analysis and was not required to.?EUR??,,????'?? Today?EUR??,,????'???s Landscape Architect has to be aware of the forces out there against him and must also be aware of the steps he can take to protect himself.

C.Y.A.

There are several steps or procedures you can follow that will greatly decrease your chances of being involved in an unwarranted lawsuit. The first step pointed out by Crowell is to be careful marketing your service. ?EUR??,,????'??When marketing your service do not oversell or promise a perfect project, perfect cost estimates, or create unrealistic expectations with the client.?EUR??,,????'?? The client is relying on you to provide him with the plans to a landscape that will enhance the beauty and profitability of his project while keeping within an allotted budget. It is your responsibility to be candid with the client. The more he knows up front the less likely he will be able to come back at you with a damaging lawsuit.

The second recommendation again comes from Crowell and is a natural extension from the first point. He recommends that, ?EUR??,,????'??you should exercise care in selecting a client. Walk away if the client seems too legalistic or tries to create too many indemnity clauses. They may be setting you up too take the fall in the event of a lawsuit. You should also watch out for overly cost conscience owners who demand unrealistic budget restrictions.?EUR??,,????'?? It may be tempting to take the business and try to make it work, but be aware that you may be asking for trouble.

The Contract

The third (and probably most important) thing you can do is to protect yourself is agreed upon by both Crowell and Greenbaum. Make a good contract.

According to Greenbaum, ?EUR??,,????'??The proper contract has to specify when you do have responsibility and when you don?EUR??,,????'???t have responsibility. Included in the list of things that you do should be a corresponding list of things that you don?EUR??,,????'???t do. For example if the owner says he doesn?EUR??,,????'???t need the irrigation system then you have to put that in the contract, ?EUR??,,????'??Irrigation designed by others, owner indemnifies Landscape Architect from any claims relating to the irrigation design.?EUR??,,????'????EUR??,,????'??

Many Landscape Architects have a standard checklist built into their contract with boxes to indicate who?EUR??,,????'???s responsible for the various aspects of the job. If you don?EUR??,,????'???t say you?EUR??,,????'???re not responsible the courts may very well say you are.

In addition to the checklist Crowell recommends that you include a clause expressly stating that the plans will remain the sole property of the Landscape Architect.

There have been a number of cases where the owners have retained a copy of the plans and try to recoup their costs by selling the plans to another development or by using them on another identical?EUR??,,????'??? project. Since the Landscape Architect has his name on the plans and if he hasn?EUR??,,????'???t retained contractual ownership of those plans he can be held responsible for any liabilities resulting from their use.

Besides contractual ownership of the plans the contract should provide for the ?EUR??,,????'??on site observation?EUR??,,????'??? of the project by the LA and should include compensation for the time spent at the site. Crowell offers that, ?EUR??,,????'??its the last chance for the LA to make changes without incurring major liability and it is a critical safeguard against having someone else change your plans, creating possible liability situations that the LA will still be responsible for. If the owner doesn?EUR??,,????'???t agree to this clause the LA should just get up and walk away.

Greenbaum sums up the contract issue by offering this advice. ?EUR??,,????'??The use of the contract is as important as the delivery of the plans. Its not just some little perfunctory thing you fill out?EUR??,,????'??? You really have to think about what is included and what is not included in your contract... You don?EUR??,,????'???t need a lawyer every time, what you need is a checklist every time.?EUR??,,????'??

A fourth avenue of security is found in the incorporation of the LA. As Greenbaum puts it, ?EUR??,,????'??Nobody should be practicing Landscape Architecture as an individual. They should all be corporations... So that if they ever come after your personal assets are not at risk.?EUR??,,????'?? Forming a corporation is not very difficult considering the benefits. But Crowell warns that it is not always as comprehensive as is often thought.

?EUR??,,????'??We come across situations where not only the firm is mentioned in the law suit but the individual is also named. In some of these cases we have found that personal assets are indeed at risk.?EUR??,,????'?? The corporation blanket is a valuable tool in protecting yourself against liability but alone it is not enough. The Landscape Architect must increasingly be thinking of ways to decrease his chances of being caught up in a lawsuit.

Greenbaum sums it up with this advice, ?EUR??,,????'??Be a corporation, have proper insurance and have proper contractual agreements.?EUR??,,????'?? With a little luck and barring actual design defects, proper implementation of these principles will help keep you out of the courts and into your successful Landscape Architectural practice.