While avoiding litigation during periods of financial difficulty might seem like a sensible option, the current economic times are actually likely to bring more proceedings against architects.
Managing partner of the Sydney office of UK law firm Kennedys, Patrick George, says when money gets tight, problems on a construction site are more likely to translate into litigation for the professional parties, including architects and engineers.
“If builders are squeezed or there has been a major disaster (on a project) architects and engineers can be brought into proceedings.
“The problem is that people who are owed money need that money to pay off their debts and so it’s a cycle whereby someone who owes money needs to chase others for money and will bring proceedings in order to chase it,” he says.
Stephen McComish, a partner in law firm Allens Arthur Robinson’s projects group, says the need to be more downturn will cause all players in the construction industry to become more cost conscious.
“I would expect many clients of architectural practices to be more unforgiving in respect of any failure by the architect — whether real or perceived — to provide advice or carry out design work to the standard expected, or manage a project within time and budget. This could lead to litigation,” he says.
According to historic data trending from Architects Professional Risk Services (APRS), a wholly-owned subsidiary of the Australian Institute of Architects, an increased number of notifications is apparent during an economic downturn.
Sherren Hepburn, national operations manager for APRS, says harder economic times mean more projects are halted or delayed, which can lead to all professionals involved taking the precautionary measure of notifying their insurance companies.
About 25 per cent of architectural notifications go on to become claims against an architect, she says.
However, McComish says Australian architectural practices are unlikely to find themselves in a court case on the scale that UK firms Foster & Partners and HOK Sport are currently facing over the Wembley Stadium project.
In what is shaping up to be one of the biggest legal battles in the history of UK construction, contractor Brookfield Multiplex has filed a £253 ($552) million lawsuit against engineer Mott MacDonald alleging design shortcomings and 11,000 changes to drawings, and is also suing Foster and Hok for breach of contract.
Although the stadium is an architectural success it was delivered more than a year late and £300 ($655) million over budget.
Brookfield Multiplex has also made a court order to gain access to Foster and HOK’s staff so it can clarify the causes of the design changes. Such a move is rare and unlikely to become regular practice, McComish says.
Billard Leece Partnership director, Ron Billard, says he would hate to see Australia go down a path where litigation became the common method for settling such disputes.
He says Billard Leece has rigorous quality systems in place to manage the risk of litigation, and always works closely with everyone involved on a project team.
“We would not want to get into a situation where we could end up in a court case,” he says.
Hepburn says a big part of the risk management against litigation for architectural practices is careful attention to the initial client/architect agreement.
“With an economic down turn and less work about, architects could be more likely to sign something they shouldn’t and take on a commitment that is too onerous in order to get the job.”
McComish agrees that architectural practices should review their standard form contracts and any proposed contracts presented by clients to ensure the scope of their services is accurately defined, appropriate limitation or exclusion of liabilty clauses are included and that they have appropriate insurance in place.
“Also, architectural practices should ensure projects are properly resourced, that they answer any queries from clients in respect of their scope of services fully and frankly and ensure that all appropriate warnings are given in respect of possible effects on quality, time and costs.
“They should also turn around queries cautiously but expeditiously,” he says.
