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Professional Conduct and the Standard of Care
By Dennis I. Wilenchik
A. Definition of the standard of care as a design professional
There are thousands of decisions involved in a typical building project, and often the optimal solution is not so clear. Each project has its own unique problems and solutions, and no one can determine in advance the optimal solution for all projects. This industry is always evolving so it would be impossible to even document the optimal solution, even if it existed. Therefore, the standard of care for design professionals is usually stated as a general principle that is to be determined by the courts.
In a negligence action, the plaintiff has the burden of proving duty, breach of a duty or standard of care, proximate cause, and damages. Although in most cases the question of whether a defendant’s conduct met the applicable standard of care is a question for the trier of fact, in some instances, the court may decide as matter of law that the defendant did not breach the applicable standard and thus was not negligent.
Ordinarily, the standard of care to be applied in a negligence action focuses on the conduct of a reasonably prudent person under the circumstances. However, where a person holds himself out to the public as possessing special knowledge, skill or expertise, he or she must perform according to a higher standard.
Arizona courts have recognized that design professionals, such as architects, have a duty to use ordinary skill, care, and diligence in rendering their professional services, and must use their skill, care, and diligence to provide sufficient and adequate plans. Donnelly Const. Co. v. Oberg/Hunt/Gilleland, 139 Ariz. 184, 677 P.2d 1292 (1984); see also, Easter v. Percy, 168 Ariz. 46, 810 P.2d 1053 (App. Div. 1 1991) (applicable standard of care for an engineer is to exercise degree of skill, care, and diligence as engineers ordinarily exercise under like circumstances, and expert testimony is ordinarily required to establish whether standard has been met).
If a claim is asserted against a licensed professional in a civil lawsuit, the claimant (or his attorney) must provide a statement at the time the lawsuit is filed certifying whether or not expert opinion testimony is necessary to prove standard of care and/or liability. A.R.S. § 12-2602(A). If such a certification is made, the claimant must produce a preliminary expert opinion affidavit when it exchanges its disclosure statement pursuant to Ariz.R.Civ.P. 26.1. This requirement imposes a burden on the claimant to produce a preliminary affidavit at the early stages of a case.
B. Contractual requirements
The standard of care for a design professional is stated above. However, parties to a contract may alter the standard of care. In general, a design professional should not seek to expand the scope of the standard of care. Design professionals should strive to limit the standard of care in contracts to ordinary or customary care exercised by similarly licensed professionals. Unless greater compensation is involved, there is probably no reason for a design professional to agree to a higher standard of care in a contract because of the additional risks involved. Additionally, errors and omissions insurance may not provide coverage for a duty to perform services beyond ordinary or customary professional care. Before agreeing to expand the scope of the standard of care, the design professional should weigh the pros and cons of such an agreement.
The contract should properly define the scope of services, including the services the design professional will and will not perform. That way, there should be a clear understanding of the role of the design professional for the project. The design professional should avoid performing services that exceed his or her responsibilities under the contract. At the same time, the design professional must also make sure that he or she is performing the duties that were contracted for. In particular, the contract should address the role of the design professional in determining how the work is performed and the design professional’s responsibility in overseeing the work. Design professionals often perform these services during a project, but they should probably not perform these services unless they are part of the contract.
It is also important for the design professional to take extra precautions to avoid leading an owner or another party to have greater expectations than the contract requires. Many clients have elevated expectations of performance to a level beyond the legal definition of standard of care, and litigation usually commences when the design professional fails to live up to these expectations, or fails to fully comply with the terms of the contract.
A design professional may attempt to limit his or her liability by inserting specific language into the contract, such a specifying a certain sum or a percentage as a cap. However, these clauses must be inclusive to include all types of legal claims and theories, and the sums or percentages cannot be unreasonably low. Moreover, these clauses will likely not apply to third parties who may have separate causes of action against the design professional.
Design professionals usually carry professional liability insurance, and clients usually know this fact. The contract may very well include insurance requirements. A client may attempt to argue that any deviation that has caused a loss or cost is an “error or omission” that the design professional must be accountable for, regardless of the terms of an insurance policy. Clients often demand that imperfections are fixed at no additional cost, or clients will withhold payment altogether. However, it is the job of the design professional to inform the client that inaccuracies may occur without triggering a breach of the standard of care of the contract. Design or construction documents typically contain some errors and omissions, and the remedy is to identify and correct each problem as it arises with the participation of the design professional. The design professional can also include contract terms that explicitly or implicitly do not require perfection. If a problem arises, the design professional must communicate with the client and/or third party about the problem, and document such attempts. If all else fails, the design professional should include alternative dispute clauses in the contract. Lastly, under Arizona law, an architect’s work can be inaccurate or imperfect without an actionable deviation from the standard of care observed by design professionals. Chaney Bldg. Co. v. City of Tucson, 148 Ariz. 571, 716 P.2d 28 (1986) (also holding that a contractor is not liable for damages which are the direct result of defective plans and specifications furnished by the owner).
C. Regulatory requirements (licensing boards, boards, building and zoning codes, professional conduct)
Design professionals are generally obligated to comply with codes, licensing laws, and zoning regulations. Failure to comply with these standards is negligence per se. Gunnell v. Arizona Public Service Co., 202 Ariz. 388, 46 P.3d 399 (2002) (violation of a statutory standard of care is usually held to be negligence per se).
In Arizona, the Board of Technical Registration regulates architects and engineers, and other professionals. The general purpose of the Board of Technical Registration is to provide for the safety, health and welfare of the public through the promulgation and enforcement of standards of qualification for those individuals registered or certified and seeking registration or certification. A.R.S. § 32-101(A). Any person or firm seeking to practice a board-regulated professional must secure a certificate or registration to practice. A.R.S. § 32-121. A person who practices without a proper or valid license or improperly holds himself out as a professional may be guilty of a class 2 misdemeanor. A.R.S. § 32-145. In a malpractice action against a professional, the plaintiff’s attorney shall forward a copy of the complaint to the Board of Technical Registration, and the Board shall initiate an investigation into the matter to determine if there was a violation of any statute or rule. A.R.S. § 32-146. Any person may report information to the Board of Technical Registration regarding grounds for a disciplinary action, and anyone who reports or provides such information in good faith in not subject to civil damages. A.R.S. 32-147. Moreover, the identity of the person who reported the information to the Board of Technical Registration shall not be disclosed if confidentiality is requested, but the name may be disclosed if essential to a disciplinary proceeding. Id. Failure to comply with an order of the Board of Technical Registration may be cause for suspension or revocation of a license. A.R.S. § 32-150.
Additionally, in Arizona, the Arizona Administrative Code has a section relating to the rules of professional conduct for registrants under the Board of Technical Registration. In sum, there are 20 separate rules of professional conduct, and A.A.C. R4-30-301 provides as follow:
All registrants shall comply with the following rules of professional conduct:
1. A registrant shall not submit any materially false statements or fail to disclose any material facts requested in connection with an application for registration, certification, or subpoena.
2. A registrant shall not engage in fraud, deceit, misrepresentation or concealment of material facts in advertising, soliciting, or providing professional services to members of the public.
3. A registrant shall not knowingly commit bribery of a public servant as proscribed in A.R.S. § 13-2602, knowingly commit commercial bribery as proscribed in A.R.S. § 13-2605, or violate any federal statute concerning bribery.
4. A registrant shall comply with state, municipal, and county laws, codes, ordinances, and regulations pertaining to the registrant’s area of practice.
5. A registrant shall not violate any state or federal criminal statute involving dishonesty, fraud, misrepresentation, embezzlement, theft, forgery, perjury, bribery, or breach of fiduciary duty, if the violation is reasonably related to the registrant’s area of practice.
6. A registrant shall apply the technical knowledge and skill that would be applied by other qualified registrants who practice the same profession in the same area and at the same time.
7. A registrant shall not accept an assignment if the duty to a client or the public would conflict with the registrant’s personal interest or the interest of another client without full disclosure of all material facts of the conflict to each person who might be related to or affected by the project or engagement in question.
8. A registrant shall not accept compensation for services related to the same project or professional engagement from more than one party without making full disclosure to all parties and obtaining the express written consent of all parties involved.
9. A registrant shall make full disclosure to all parties concerning:
a. Any transaction involving payments to any person for the purpose of securing a contract, assignment, or engagement, except for actual and substantial technical assistance in preparing the proposal; or
b. Any monetary, financial, or beneficial interest the registrant may hold in a contracting firm or other entity providing goods or services, other than the registrant’s professional services, to a project or engagement.
10. A registrant shall not solicit, receive, or accept compensation from material, equipment, or other product or services suppliers for specifying or endorsing their products, goods or services to any client or other person without full written disclosure to all parties.
11. If a registrant’s professional judgment is overruled or not adhered to under circumstances where a serious threat to the public health, safety, or welfare may result, the registrant shall immediately notify the responsible party, appropriate building official, or agency, and the Board of the specific nature of the public threat.
12. If called upon or employed as an arbitrator to interpret contracts, to judge contract performance, or to perform any other arbitration duties, the registrant shall render decisions impartially and without bias to any party.
13. To the extent applicable to the professional engagement, a registrant shall conduct a land survey engagement in accordance with the April 12, 2001 Arizona Professional Lands Surveyors Association (APLS) Arizona Boundary Survey Minimum Standards, as adopted by the Board on June 15, 2001, the provisions of which are incorporated in this subsection by reference and on file with the Office of the Secretary of State. This incorporation by reference does not include any later amendments or editions.
14. A registrant shall comply with any subpoena issued by the Board or its designated administrative law judge.
15. A registrant shall update the registrant’s address and telephone number of record with the Board within 30 days of the date of any change.
16. A registrant shall not sign, stamp, or seal any professional documents not prepared by the registrant or a bona fide employee.
17. Except as provided in subsections (18) and (19), a registrant shall not accept any professional engagement or assignment outside the registrant’s professional registration category unless:
a. The registrant is qualified by education, technical knowledge, or experience to perform the work; and
b. The work is exempt under A.R.S. § 32-143.
18. A registered professional engineer may accept professional engagements or assignments in branches of engineering other than that branch in which the registrant has demonstrated proficiency by registration but only if the registrant has the education, technical knowledge, or experience to perform such engagements or assignments.
19. Except as otherwise provided by law, a registrant may act as the prime professional for a given project and select collaborating professionals; however, the registrant shall perform only those professional services for which the registrant is qualified by registration to perform and shall seal and sign only the work prepared by the registrant or by the registrant’s bona fide employee.
20. A registrant who is designated as a responsible registrant shall be responsible for the firm or corporation. The Board may impose disciplinary action on the responsible registrant for any violation of Board statutes or rules that is committed by a non-registrant employee, firm, or corporation.
D. Additional Items
1. Taking risks on services
Every job involves some risks, and a design professional cannot avoid risks altogether. The only way for a design professional to avoid all risks is to change professions. Design professionals are trained and educated to deal with risks. However, when design professionals take on additional risks, they should be properly compensated. In evaluating potential risks, assess them, allocate them to the best and most qualified people of the team, and document the job.
Any additional risks should be accompanied with additional compensation. When the contract is created, the design professional should negotiate compensation where he or she is taking on services not typically covered. If, during the project, the design professional assumes additional duties, the contract should likely be amended to reflect these services.
A design professional should probably take on risks that he or she is qualified to handle. If certain services are not part of the services that a design professional typically performs, the design professional should not assume the risk unless qualified, even if the design professional is to receive additional compensation. A personal injury attorney will probably not draft an estate plan for a client. Similarly, design professionals should probably avoid performing services outside their realm of expertise. Moreover, insurance policies may not provide coverage where the design professional performs services that are not covered by the policy.
- 2. Conflicts of interest
A.A.C. R4-30-301, which is set forth above, provides the rules of professional conduct for registrants under the Arizona Board of Technical Registration, and one of these rules relates to conflicts of interest. Specifically, A.A.C R4-30-301(7) provides as follows: “a registrant shall not accept an assignment if the duty to a client or the public would conflict with the registrant’s personal interest or the interest of another client without full disclosure of all material facts of the conflict to each person who might be related to or affected by the project or engagement in question.”
In order to avoid potential conflicts of interest, design professionals should set up internal systems designed to discover potential conflicts. Without adequate safeguards, it may be difficult to discover potential conflicts, especially in larger firms. The simplest method to determine whether a conflict exists is to send an e-mail around the office, but more sophisticated methods are available.
During the initial contact with a potential client, gather as much information as possible, including the names of other business entities that are associated with the client. Certain clients prefer to set up separate business entities for each project that they work on, so it would be difficult to discover a potential conflict without knowing the names of other entities associated with the client.
3. A defensive practice approach for design professionals
There are many defensive practices and procedures that design professionals can use to minimize potential problems.
First, closely examine the contract, and make sure it properly defines the roles and responsibilities of the parties. If possible, make sure that the contract does not expand the standard of care of the design professional. If the contract does expand the standard of care for the design professional, the design professional should probably receive additional compensation.
Second, after the contract is executed, the design professional (and his or her team) should be aware of all of its terms to avoid performing services that are not part of the contract and to avoid failing to perform services that are part of the contract. All important communications, status and progress reports, and payments should be documented. However, anything in writing could later be used as an exhibit in litigation. Therefore, pay attention to what is documented.
Third, the design professional should make sure that all of his or her certifications and memberships are up-to-date.
Fourth, the design professional should also maintain insurance, and timely notify insurance carriers of potential claims.
Fifth, the design professional should keep up-to-date with all codes, regulations, etc., and attend continuing education courses when available.
Sixth, the design professional should always communicate with the other people or teams working on the project.
Finally, the design professional should not misrepresent qualifications or promise things that cannot be delivered.