There may be any number of clever ways to reduce the risk of professional indemnity claims. But why not start with the simplest?
The three Rs: Reading, ’Riting and ’Rithmetic … therein lies the key to the world, girls!” I can still hear the words of Miss Pettigrew as she solemnly paced those classroom boards so many years ago.
But to give Miss Pettigrew her due, these skills are, indeed, the key to almost every aspect of life. Take claims avoidance - a topical issue in these days of recession. Matt Farman’s article House Rules, (Building, 11 February), usefully lists various tips for consultants to minimise the likelihood of claims against them. I would like to elaborate on a couple of these; those I consider to be the most critical from the professional indemnity perspective and which, sure enough, can be boiled down to practising our three Rs.
First and foremost, Reading. You may think it entirely unnecessary to point out that it is essential to read your contract. Nevertheless, it is surprising how much effort a party can put into negotiating acceptable terms for their contract, only to ignore the thing entirely the moment their signature is dry.
Claims in construction mostly relate to the fact that a party simply has not complied with the obligations to which it contracted. As often as not, it turns out that it could very easily have complied, had it only made sufficient effort to find out exactly what it was supposed to do in the first place - by reading the contract.
Beware the temptation to assume your services are something along the lines of ’the usual’. With so mnay bespoke contracts on the loose, ’the usual’ does not reall exist any more
Every clause of a contract must be carefully examined, but here I shall look primarily at the services. Services are usually attached as a schedule at the tail end of a consultant’s appointment. Some services schedules are painfully long and detailed, often squashed into column after endless column of minuscule print. Even the most diligent consultant may become “clause drunk” way before he reaches the final page and so overlook services which are beyond those which he is intending - or able - to perform.
Beware also the temptation to assume your services are something along the lines of “the usual”. With so many bespoke contracts on the loose, and even standard forms frequently finding themselves altered beyond recognition, “the usual” does not really exist any more. You simply cannot assume that you know what your contract says on any point without referral.
Services can contain many a banana skin just waiting to slip up the unwary. It may be that a material generally regarded by the industry as acceptable for use is nonetheless prohibited for the development in question. Or perhaps unusual procedures are required in respect of notices to third parties prior to certain critical inspections. Maybe services you might associate with another discipline have crept into your own schedule. Or one apparently innocuous line can make reference to a host of contractual tomes between your client and third parties, so that you have to pore over each and every one of those, too, to ensure your actions will not put your client in breach of them. It could be that your inspection duties - especially the frequency of visits - are suspiciously vague. Anyone less trusting than myself might suspect this could on occasion be deliberate to avoid pre-contract argument, but still catch any shortfall on the job.
Next up: ’Riting. I am referring here to record keeping. It is not much use knowing you have done the right thing if you cannot prove it. Record keeping (including drawings, sketches, photographs and the like) can be mind numbingly tedious, but is utterly critical in defending claims.
Casual exchanges by telephone, email and even text are unavoidable in the relentlessly fast pace of work, but do be careful just how casual you make them. Witty banter can seem much less amusing when you hear it repeated, slowly and solemnly, from a judge’s lips. Also, do follow up such exchanges with formal records, and as contemporaneously as you can for greater legal worth.
Finally, it is no use creating a mass of perfect records if you can’t find them when it matters, so make sure your filing allows documents to be retrieved (in a legally admissible form) both now and in 12 years’ time.
And ’Rithmetic? That’s the R you’ll need if you ignore your first two.
These points are as simple and basic as the three Rs. Everybody knows them but certainly not everyone practises them. If they did, claims would be substantially reduced.
Melinda Parisotti is an in-house barrister at Wren Managers, which manages a professional indemnity mutual for architects