On the Level: Risk Mitigation for Surveyors
Surveyors in private practice need to be aware of ways to mitigate the risk of lawsuits and claims.
For those who carry professional liability coverage, participation in an insurance provider’s risk-mitigation credit program may not only decrease the chance of being sued--it can reward proactive surveyors with a significant deductible credit when a claim is made.
One such offering is CNA’s Risk Mitigation Credit (RMC) program, which is especially tailored for surveying firms. This program is described in detail in the July/August 2007 “Guidelines for Improving Practice,” a publication of Victor O. Schinnerer & Co. Inc. Surveyors who are not policyholders might be interested in the program for the good advice it offers; policyholders who don’t read the literature should pay close attention to the following program summary.
The intent of the RMC program is to reduce the frequency of claims, a matter of great concern to any insurance company. For policyholders, participation in the program may result in a deductible credit of up to $25,000. Any deductible credit is a significant benefit considering that so many claims against surveyors are relatively small compared to their deductibles. In fact, many surveyors faced with a claim at or near the amount of their deductible will not even report the incident to the insurer to avoid a possible increase in premium at renewal.
To take advantage of CNA’s RMC program, a policyholder must satisfy a baseline criterion and meet three of five additional criteria. The baseline criterion--no surprise here--is a written agreement entered into by the surveyor with his or her client prior to the services that led to a claim. An agreement based on a handshake or telephone call is dangerous territory as our attorneys have advised us for decades (although some surveyors continue the practice). “Written agreements with clear scopes of service help manage client expectations and help in the defense of claims,” Schinnerer advises. If sued for negligence, an insured surveyor must produce an executed agreement in order to qualify for a deductible credit under the RMC program.
The additional five criteria are payment terms, professional services and accuracy standards, interprofessional agreements, pre-project planning and quality assurance/quality control. Addressing each of these areas can substantially mitigate the surveyor’s risk.
The written agreement specified payment terms including a schedule of when payments were to be made, which was consistently followed and enforced, or attempts to do so were documented. A clear contract provision covering payment not only helps a business run efficiently, but also helps in the defense of common counterclaims stemming from fee disputes.
It has been my observation that claims against surveyors are more apt to stem from fee disputes or misunderstandings of the scope of the services than from poor or inaccurate surveying.
Criterion 2: Professional Services and Accuracy Standards
The firm engaged with the client to produce a structured, contemporaneously documented scope of professional services and accuracy standards--such as those currently used in the ALTA/ACSM survey standards--which are incorporated into the written agreement.
In my opinion, the next worst thing to having no written agreement is an agreement with no scope or limited scope. Accuracy standards written into an agreement must be appropriate to the type of survey being conducted, and they may or may not be the ALTA/ACSM standards. In any case, a surveyor should never let the client (an architect, for instance) specify standards. The client may specify the services he or she wants, but it is up to the surveyor to apply the appropriate standards for those services.
Criterion 3: Interprofessional Agreements
A written agreement must be executed and certificates of insurance exchanged (evidencing both professional liability and general liability coverage) with each professional whom the firm engaged or was engaged by.
In other words, when a surveyor is hired as a subcontractor to an architect, their written agreement should reference both professionals’ coverage. When the surveyor hires another professional, such as a wetland specialist, the same rule should apply. The difficulty comes when the other professional is uninsured. In this case, the surveyor may have to shoulder all the liability exposure for their joint work, but the breadth of the surveyor’s coverage may come into question in the event of a claim.
Criterion 4: Pre-Project Planning
The firm engaged with the client in a pre-project planning process that produced a project definition document that addressed: project objectives, project constraints, basis for the survey or investigation, project communication requirements, and procedures and project monitoring.
Parameters such as scope and standards should be identified before entering into the contract. Note that communication and monitoring--two activities that are apt to be an afterthought by surveyors--are included in pre-project planning. To the surveyor, project constraints may include weather issues, inaccessibility of property corners, erroneous deed descriptions and so on. These are the booby traps of surveying, and clients are always surprised after the fact to discover that such constraints have increased the cost of their survey.
Prior to delivery of the instruments of professional services, a documented quality assurance/quality control process was completed by a qualified professional to assess the likelihood that such instruments or deliverables would satisfy the client’s objective and are in conformance with good professional practice.
The first step, of course, is for the firm to actually have a documented QA/QC program. It need not be a complicated document, and it will probably define many of the checking procedures that any professional firm ordinarily employs. The point is to have it formalized for all employees with responsibilities assigned. The second step is to apply the program on a project-by-project basis. Many surveyors will say they cannot afford the time to apply such a program. But a QA/QC program can be designed for the $500 staking job as well as the six-figure multidiscipline land development project.
Implicit in CNA’s Risk Mitigation Credit program is the cautionary advice to recognize the normal standard-of-care doctrine as both a requirement and a limitation. Surveyors, like other professionals, are held to that level of skill and care as practiced generally by others in their field of expertise--but not more. In a written agreement for professional services, there should be no claim or promise to work to a higher standard than the profession generally holds in that geographic area.
Editor's Note: References can be found in the online version of this article at www.pobonline.com.