Design Professionals Leaving Projects Before Completing Services Need To Be Protected
When parties discuss terminating the designer/client relationship, they often make certain agreements between themselves regarding the terms of the termination. It is imperative that such terms be memorialized in writing, since they are as important, if not more so, than the terms of the original agreement between the parties.
There are no guarantees that litigation will not subsequently ensue regarding the services performed by the professional prior to the date the relationship is terminated. Preparation of the appropriate settlement agreement, however, will certainly go a long way toward protecting the design professional's interests if a lawsuit is filed. Although each project is unique, thus requiring preparation of a settlement agreement which provides the appropriate terms and conditions, the following is a general list of provisions professionals should include to provide protection:
•Identify the parties to the agreement and the effective date of the agreement;
•State the relationship between the parties and the existence of any prior agreements which will be superseded by the settlement agreement;
•Set forth that although the professional's services are not yet complete, the parties have agreed to terminate their relationship and any prior agreements for mutual convenience with no admission of liability on the part of the design professional;
•Identify the termination date of the prior contract and state that the professional will not perform any further services at the project as of that date;
•If applicable, set forth the date the design professional will provide written notice to the appropriate agency (i.e., Department of Buildings) advising of the withdrawal of the professional at the project;
•With respect to outstanding fees, provide the exact amount, method and date of payment to the design professional;
•When turning over project records, clearly identify what documents will be provided, and in what form, as well as the party that will retain ownership of the documents. If ownership is retained by the professional, set forth that the documents are to be used solely for the subject project;
•Acknowledge that the design professional is issuing a limited license for use of the identified documents solely at the subject project, and provide that any breach of the agreement by the contracting party will terminate the license;
•State that any reference to the professional on the design professional's project documents will be deleted;
•Provide that the design professional is to be indemnified and held harmless by the contracting party for any liability resulting from subsequent use of the design professional's project documents;
•Include mutual General Releases in favor of each party to the settlement agreement; and
•Clearly state that the agreement is being signed by individuals authorized to enter into the agreement and bind the referenced parties to the terms of the agreement.
The above list is comprehensive, but by no means exhaustive. Each project has its own nuances that must be addressed should the parties decide to terminate their relationship. The days of the handshake deal are over. Therefore, to the extent possible, a design professional should not leave a project while there remain services to be performed by them without first consulting their legal counsel and protecting their rights, in writing.
By Steven Goldstein Esq
Co-Author: Barbara Marty
Hall and Company is an insurance brokerage firm that specializes in the placement of A/E professional liability insurance. We currently are the brokers for more than 3,600 architects, engineers, environmental consultants and land surveyors. Our clients are located throughout the United States. We are located in Poulsbo, Washington, a suburb west of Seattle located on the Kitsap Peninsula. Our website is http://www.hallandcompany.com.
Steven Goldstein is a partner at the law firm of Shaub, Ahmuty, Citrin & Spratt, LLP with offices in Long Island, New York and New York City. Mr. Goldstein chairs the firm's design professional practice group, which is dedicated exclusively to the representation of architects, engineers, construction managers and land surveyors.
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