Clients sometimes ask an architecture or engineering firm to carry professional liability limits well above the firm's existing insurance program. Before simply accepting the requirement or walking away from the project, the firm should ask the client a basic question: Why was this limit selected? A standard insurance schedule may be the client's starting point, but it may not reflect a thoughtful assessment of this project's exposure.
Best Practices for Design Professionals
RFIs are so common that it's easy to treat them as routine project correspondence. On many jobs, teams process dozens or even hundreds without incident. When a construction claim develops, however, an ordinary response may reappear as evidence supporting allegations of design error, delay, change-order disputes, or unauthorized modifications to the work. Most responses are prepared to keep construction moving, but speed should not eclipse the need to protect the design professional's contractual role and preserve an accurate record. A disciplined RFI process serves both purposes and remains one of the simplest risk-management tools available to a design firm.
How early decisions can turn a defensible professional liability claim into an expensive one
Editor’s note: The following story is a composite narrative based on common professional liability claim patterns involving architects, engineers, professional liability insurers, and defense counsel. Although fictional, the situations described reflect issues that arise repeatedly in actual claims.
Few tools are more valuable to architects, engineers, and other design/construction participants than project photographs and videos. A well-timed photograph can document existing site conditions, verify construction progress, preserve evidence of concealed work, or support a payment application. Video recordings can provide valuable context that still photographs sometimes cannot capture. These materials can also serve important educational purposes within a firm.
Unfortunately, photographs and videos can also create unintended professional liability exposure when they are taken without a clear purpose, poorly documented, or used inappropriately. In litigation, every image may become evidence. A photograph intended merely as a progress update may later be scrutinized by attorneys, expert witnesses, insurers, and juries.
Twice each year, we compile a Regulatory Round-Up to keep you informed of the major legal, policy, and economic developments most relevant to professional liability insurance. Unlike our regular newsletters, these special editions provide a broader perspective on emerging regulations, legal decisions, insurance trends, and federal actions that can impact your business and the industry at large.
Safety/Risk
Many architects and engineers view professional liability insurance as their primary risk management tool. Most claims against design professionals arise from allegations of professional acts, errors, or omissions, so this coverage receives the greatest attention during annual renewals and contract negotiations.
Yet one question frequently arises: if professional liability insurance covers design errors, why does a design professional also need Commercial General Liability (GL) insurance?
Across the country, data centers are emerging as one of the defining building types of the digital economy. The expansion of AI platforms, cloud computing, and hyperscale infrastructure is accelerating demand for large, highly technical facilities that are reshaping land use, utility planning, and project delivery in many U.S. markets. For architects and engineers, the significance lies not only in the volume of work but in the unique project risks and delivery pressures these facilities create.
The Digital Economy Is Now Physical Infrastructure
As project complexity and project values continue to grow, owners are increasingly asking for professional liability limits that exceed what an Architect or Engineer (A&E) can reasonably provide through their practice policy or afford through project-specific solutions. Owner’s Protective Professional Indemnity (OPPI) coverage offers an alternative solution to satisfy a project owner’s desire for higher limits without an A&E firm taking on additional insurance costs.
What Is OPPI
Stamping and sealing issues are not the most frequent cause of disciplinary action against architects and engineers, but they occur regularly and are highly consequential. Across most U.S. licensing boards, violations related to improper sealing, lack of responsible charge, or misuse of a professional seal typically account for ten to twenty-five percent of enforcement actions each year. That makes them one of the most recurring non-technical compliance failures.
Notably, these cases are rarely driven by poor technical work; rather, they arise from breakdowns in internal processes, documentation, and control over the use of the professional seal. Common scenarios include sealing work prepared by others without sufficient involvement, practicing across jurisdictional lines without proper licensure, sealing outside one’s discipline, or affixing a seal to incomplete or inadequately defined documents.
Issues involving unauthorized use of electronic seals and version control have also become more prominent. In many cases, these violations are typically treated as failures to maintain responsible charge, regardless of how the issue is initially characterized. These risks do not fall solely on individual practitioners; firms themselves are increasingly subject to parallel enforcement, corrective actions, and reputational exposure. Because these issues arise from how professional responsibility is exercised and documented, rather than how design is performed, they often fall outside traditional risk controls focused solely on technical quality.
I. Defining Risk Management in the Design Profession
Take a moment to reflect on if a group of design professionals from different backgrounds were asked to write a one-sentence definition of what the term ‘design profession risk management’ means to them, they would likely come up with numerous answers. The same result would most likely occur if we were to ask a group of insurance professionals dedicated to insurance and risk management services to the design profession. And again, if we were to pose this question to a group of lawyers focused on representing design professionals, we would most likely get a range of answers.
Closing an architectural or engineering practice, or retiring from an ongoing practice, is a milestone marked by both accomplishment and transition. Design Professionals spend decades shaping communities, influencing skylines, solving complex building issues, and stewarding projects from the first client conversation through to the final punch list. The decision to close a practice, whether a sole proprietorship, partnership, or established design firm, or to retire, should be approached with the same thoughtful planning that guides every project. Some concerns addressed herein also apply to those Design Professionals retiring from an ongoing practice.
Across the country, Design Professionals confront the same reality: although the firm may close, business risks, particularly professional liability exposure, do not end on the last day of business. Buildings remain in use for decades, and claims related to design, construction administration, or contract obligations may arise years after a project is completed. To retire with confidence, Design Professionals must proactively address insurance requirements, documentation obligations, statutory considerations, and administrative responsibilities. After all, having worked a lifetime, the Design Professional has earned the peace and quiet that retirement is supposed to bring.
A new wave of privacy lawsuit targets professional services websites.
Recently, there has been an increase in claims and litigation concerning website tracking and data collection practices. Primarily driven by heightened privacy awareness and evolving legal standards, professional service firm websites are being targeted for alleged violations of privacy and wiretapping statutes because of the use of tracking pixels, cookies, and similar technologies.
In the architectural and engineering (A/E) profession, vicarious liability refers to the legal principle under which a firm may be held responsible for the negligent acts, errors, or omissions of others performing services on its behalf, even if the firm did not directly commit the wrongful act. This concept is particularly significant in professional services contracts, where responsibility for design coordination, integration, and delivery is often centralized in a single entity. In most projects, that entity is the Prime consultant.
Vicarious liability most commonly arises in the context of Prime consultant (Prime) to Subconsultant (Subconsultant) arrangements, in which the Prime contracts directly with the owner and retains Subconsultants to perform discrete portions of the professional services. Because the Prime is typically contractually responsible for the overall delivery of professional services, owners and third parties frequently seek to impose liability on the Prime for the negligence of Subconsultants under theories of agency, control, apparent authority, or contractual assumption of responsibility. As a result, vicarious liability is a central risk-management concern in A/E practice and directly informs how professional services agreements are structured.
Twice each year, we compile a Regulatory Round-Up to keep you informed of the major legal, policy, and economic developments most relevant to professional liability insurance. Unlike our regular newsletters, these special editions provide a broader perspective on emerging regulations, legal decisions, insurance trends, and federal actions that can impact your business and the industry at large.
Safety/Risk
INTRODUCTION
People are a design firm's most important asset. This fact cannot be overstated. Firms invest a significant amount of time and energy in new hires. However, they often fail to invest the time in setting this new hire up for success. Onboarding is not simply the first day of work, filling out paperwork, taking a quick tour, or meeting a handful of team members. In well‑run organizations, onboarding is a carefully designed, strategic, and human‑centered experience that begins the moment a decision is made to hire a new employee. It continues after a candidate says "yes" to an offer, well into the new employee's first 90 days, and often beyond. Effective onboarding strengthens culture, accelerates productivity, increases engagement, and significantly improves retention.
The Design Professional’s Balancing Act
Every Design Professional remembers their first “first-time client.” They walk into the studio brimming with excitement and Pinterest boards, but often with little understanding of budgets, schedules, or the regulatory maze that shapes design and construction. Their enthusiasm can be contagious but without proper guidance, catastrophic. Managing inexperienced clients isn’t about tolerance; it’s about leadership. It requires patience, empathy, and the ability to translate complex processes into human language. When done well, these projects can become models of trust and success. When handled poorly, they can turn into cautionary tales of unmet expectations, legal headaches, and financial loss. “Unmet expectations are one of the most common causes of client dissatisfaction and a leading driver of claims against design professionals.” Ask any insurance broker, lawyer, or claims consultant about this statement. They will agree without question. The reality is that Design Professionals work in an era of heightened liability and blurred boundaries. The client who doesn’t understand their role, or the Design Professionals, can unintentionally expose your firm to significant risk. That’s why the ability to manage inexperienced clients isn’t a soft skill; it’s a strategic one.
In the A/E world, the phrase ‘expert witness’ (hereafter ‘Expert’) can bring to mind many thoughts. Some pleasant, some unpleasant, depending on the memory. Many of us have been involved in disputes where we thought the so-called Expert was anything but an expert. Perhaps their credentials were lacking. Possibly their investigation, which led to their Expert conclusions, was shoddy or incomplete. For whatever reason, their Expert opinion was wrong.
There are many well-respected Experts with excellent backgrounds resulting from their experience, education, judgment, and demeanor. That doesn’t mean the Expert cannot be wrong, they are human, like the rest of us, and are fallible. Some Experts will say almost anything their client wishes them to say, for the right price. These might be called Hired Guns, or even more derogatory epithets. There are those Experts whose opinions are not for sale. To paraphrase the late, great Yogi Berra, these Experts call 'em as they see 'em. Regardless of competency, many individuals make an excellent living from selling their expert witness services. Just do an internet search, and you will find thousands of Experts in any discipline.
In today's complex legal landscape, the importance of selecting effective legal counsel cannot be overstated. Whether you are an individual facing a personal legal issue or a design firm navigating regulatory challenges, the right legal representation can make a significant difference in the outcome of your case. Effective legal counsel not only provides expert advice and representation but also offers strategic insights that can help you avoid potential pitfalls and achieve your desired results. This paper explores the critical factors to consider when choosing legal counsel and highlights the benefits of making an informed decision.
It is not uncommon to find a clause in a client’s agreement form that relates to responsibility for attorneys’ fees and litigation expenses. It’s common to see this towards the end of a contract, perhaps in a section entitled “Miscellaneous Provisions”. Possibly it’s contained within the dispute resolution provisions. Wherever it is located, by the time one comes to what is commonly referred to as a “Prevailing Party” clause, one’s brain can be tired. A Prevailing Party clause is a clause that many design firms don’t spend a great deal of time or energy negotiating. Many firms don’t see it as a critical clause, nothing worth fighting about. Isn’t a clause like this why firms buy insurance? Hopefully, you understand that in many instances, Prevailing Party clauses drafted by your clients are often totally uninsurable. Since litigation costs can be enormous, this is not a clause you want to ignore or pass over quickly. Cases arise regularly where one party agrees to an onerous Prevailing Party clause, only to find themselves paying a relatively small amount in damages, but a vast sum in legal fees. Very often, merely the threat of the massive expense of a legal squabble is enough to convince the architect or engineer to make a business decision to settle, even if they have little liability.
The origin of the Prevailing Party clause goes back to merry old England. England is usually thought of as the Mother Country of the United States. As such, many of the laws in the early colonies were borrowed from Mother England. One legal concept that the United States left behind when it became a sovereign nation involved the rule over which party was responsible for legal fees incurred during civil litigation. The longstanding “English Rule” held that the party who loses in the litigation pays the winning party their legal costs incurred in the lawsuit. The rationale behind the English Rule seems fair enough: if you sue me and I win, it’s only fair that you pay me for the legal fees I’ve incurred, because I won. If I sue you, and you win, fairness dictates that I pay your legal costs. Since most claims against design firms are resolved without any damages being paid out by the design firm, it might seem the English Rule would be preferable for the American design profession.
In today’s competitive business environment, client selection and strong client relationships are pivotal elements in fostering sustainable growth. By understanding related risk drivers, implementing a thorough client selection process, and maintaining strategic relationships, organizations can mitigate potential risks while enhancing their overall success.
AXA XL’s proprietary “Risk Drivers” data looks at the top six non-technical causes of loss that may exacerbate or influence claims. Current data indicates that client selection-related issues rank second in frequency, demonstrating how crucial it is that firms conduct diligent research to identify potential risks associated with new clients and make informed decisions. Below are some client-specific factors to consider as part of your go/no-go decision making.
