Point of Beginning

How do you approach contracts?

May 2, 2002
Do you require them? Enforce them? Involve legal counsel?

When it comes to contracts are you the ‘don’t leave home without one’ type or does the thought of requiring a contract for every job you do make you laugh? According to POB’s unofficial survey, a majority of surveyors require contracts under some circumstances, if not all the time. In fact, 76 percent (37 out of 49) of those who responded to our survey said they did get a signed contract always or sometimes (47 percent always, 29 percent sometimes). The circumstances that seemed to demand a contract in most surveyors’ minds were large, expensive projects and first-time/non-regular clients.

When it came to preparing those contracts, surveyors were split as to whether or not they involved legal counsel. Only 12 percent responded that they always involve legal counsel in contract preparation, several stating they had a lawyer review their standard contract. Fifty-three (53) percent responded that they never did and 16 percent said they did sometimes, usually when the contract was prepared by the client.

If the legal stuff is necessary, at least keep it to a minimum, right? Surveyors obviously like to keep things short and sweet. Half of all contracts prepared by land surveyors are 2 pages or less. Client prepared contracts on the other hand run 4 pages or more 43 percent of the time!

In many professions retainers are standard. Among land surveyors, however, only 31 percent of respondents required a retainer for every job every time. 37 percent required one sometimes. Requiring a percentage of the total cost of the job down was the most common form of retainer. Forty-seven (47) percent of respondents required this type of retainer ranging from 10 to 50 percent, with the 25-50 percent range seeming to be the most common. Compared with this, 16 percent required a fixed amount down.

Requiring money down is one thing, collecting monies due after a job is complete is another. We asked how surveyors collect late fees and by far the most common method was to use past due notices, a third of the respondents preferred method. Other popular methods were to send letters (15 percent), use in-house telephones (15 percent) or an outside collection agency (10 percent).

Sixty-one (61) percent of respondents have never had litigation over contractual issues, while 39 percent responded that they had had to resort to litigation at some time. Here are some interesting comments we received about contracts:

“I involve legal counsel in preparing a contract when using clients contract forms or requirements”

“If the contract was presented by the owner, I have the attorney review the indemnifications. Also, I had an attorney help with developing our standard letter contracts.”

“At a minimum I have the client sign-off on the scope of work and the fee. Othertimes I have used a full-blown contract, but that is time consuming for me.”

“I develop a contract with all clients when the work will be ongoing and monthly billings will need to be sent. This helps to establish both your expectations and the client’s responsibilities. It also spells out the work that you are contractually bound to provide and helps your client understand the product you will be delivering.”

“I am the sole proprietor of a small shop, and haven't had any collection problems in the past 20 years. The reason I believe is because I work with each client and we trade expectations, contract or not. That way, the client knows exactly what he can expect from me and what I expect from him/her. Contracts are invaluable and I always develop one if the work I expect to do will be worth more than I can afford to lose.”

“By having a contract with clear scope of services and the respective fee for those services to be performed leads to a smoother job for both client and surveyor. By having a prospective client sign a contract, it shows that they a least acknowledge the services to be performed and it gives the surveyor/engineer and client a means of legal recourse if the contract is not upheld.”

“If we are in a tiered subcontractural process, it always helps to have the attorney critique the contract to ensure our viability for payment and access the liability should the upper tier contractors have a contract dispute. The attorney is usually one that works for us in the capacity for our E&O insurance.”

“If the client has not responded to the terms of the invoice within 15 days of the past due date, late fees are added for the remainder of the time the bill stays past due and work is stooped on the project until past due balances are caught up.”

“The days of a handshake and someone's word are over. We truly live in a litiguous society today. Ninety-nine (99) percent of the time our contracts are signed and no problems occur with the projects. It's that 1 percent of the time that something goes wrong that by only having a contract is your rear end covered. Our philosophy is like the old American Express Card saying, ‘Don't leave home with out it.’ ”

“Other than subdivision platting, all survey orders are taken on the phone or fax. If I required a contractional arrangement prior to performing a survey, I would not have any work. I suggested to our local society in 1975 that we as surveyors should require a contract for services, however, was laughed out of the room. The courts question why we do not have a written contract (over $600) when pursuing payment in court. One is lucky if most pay their bills, however, beware when trying to collect through our Court system without something in writing.”