As a design professional in California, you bear an enormous amount of responsibility, not all of which should rest solely on your shoulders. Through properly drawn contracts, you can mitigate some of that responsibility.
However, many contracts try to place undue risk on design professionals using a “duty to defend” clause. California designers should be wary of these clauses and understand their potential impacts on both individual projects and their long-term careers.
What is a duty to defend clause?
Duty to defend clauses oblige the design professional to provide legal defense for their client – usually the developer or owner of the project – against third-party claims. Essentially, design professionals take on liability for mistakes made in the implementation of the design they provided to their client.
How can a duty to defend clause go awry?
Under a duty to defend clause, the design professional agrees to fund their client’s legal defense against litigation. Attorney and court fees can well exceed the financial capabilities of a design professional. To address the lack of funds, a design professional may turn to their professional liability insurer to assume the cost.
Unfortunately, professional liability insurers rarely cover contractually assumed liability. Insurers can also argue that the design professional exhibited the proper standard of care and reject the insurance claim on the grounds that someone else should be held liable. In either case, the designer will have to provide compensation from their own pocket.
What can designers do?
Review your contractual obligations with a contract law or real estate development attorney before agreeing to anything. An experienced attorney will be able to identify both explicit and implicit duty to defend clauses and assist you in negotiating a disclaim of problematic language.