TZL 1562 (web)

November 18, 2024, Issue 1562 WWW.ZWEIGGROUP.COM

TRENDLINES

Referral bonus per hire

$- $1,000 $2,000 $3,000 $4,000

Engaging with employees at all levels fosters respect, uncovers issues, and strengthens company culture. Undercover boss

Zweig Group’s 2024 Recruitment & Retention Report shows that referral bonuses have become the most popular incentive in AEC firms, slightly ahead of performance bonuses. Referral bonus amounts range, with a median of $2,590 per hire. Participate in a survey and save 50 percent on the final or pre- publication price of any Zweig Group research publication.

U ndercover Boss was a show that intrigued me in the mid- 2000s. It featured a CEO/owner of a large business disguising themselves as an entry-level worker to delve deeper into the inner workings of their business. Through that process they would discover the issues their people were facing and better understand where the business was deficient. They had to go into the trenches and see the mess that was going on there in order to address major shortcomings in their business. It may have been cheesy or nonsensical at times, but I always enjoyed the concept of a successful individual going to do a job way below their pay grade for a couple of days in order to get in touch with the people who keep their business running. There is a special humility and dedication that makes someone want to do that. What are the benefits of doing this in your firm? It brings you down to earth, and reminds you of when you had to do that type of work. It allows you to be closer to the beating heart of your business. Doing this could help you address major problems your firm currently has or identify snowballs that will become avalanches in the future. You don’t want to be a small business with big problems. If you ignore these, you only add more to your plate down the road and your firm will begin to slowly deteriorate. What does it take to work more closely with and better understand your employees down the org chart? It boils down to these three things: 1. Time. If you take the time to do this, you are showing your people that you care about them, which fosters respect. You get to see their perspective, but you also have the opportunity to communicate your vison to them. Our greatest assets come in and out of the office every day. Even though they are not on the balance sheet as an asset, they are the unrealized value of your firm. It is crucial to meet people where they are and spend quality time seeking to understand them. 2. Curiosity. Do you want to truly know what is happening in your firm? This is a learning lesson because you hear the good and the bad. No matter how busy you are with the work of running your firm, it’s critical to come down from your ivory tower and

Ezequiel Tovar

FIRM INDEX AECOM...............................................................6

Bowman Consulting Group Ltd....10

Core States Group.....................................2

Tetra Tech.........................................................6

Wallace Design Collective, PC.........4

MORE ARTICLES n BRAD THURMAN: The trouble with familiarity Page 3 n MARK ZWEIG: Thoughts on job descriptions Page 5 n CHRIS CONNELL: A new lever for M&A in AEC Page 7 n LAUREN MARTIN: Navigating confidentiality clauses Page 9

See EZEQUIEL TOVAR, page 2

THE VOICE OF REASON FOR THE AEC INDUSTRY

ON THE MOVE CONNER MEADOWS JOINS CORE STATES GROUP AS THE DIRECTOR OF REFRIGERATION Core States Group – an integrated, industry-leading AEC firm that partners with some of the world’s most recognized brands – has welcomed Conner Meadows as their new Director of Refrigeration. With offices nationwide, Core States Group designs, builds, and manages projects and programs across North America and has been recognized on top lists throughout the AEC industry. As the Director of Refrigeration, Conner is focused on innovative design and growing partner relationships with grocery, convenience, restaurant, retail, and cold storage clients. Throughout his 12+ years of experience, Conner has led, mentored, and trained teams that optimize refrigeration projects’ safety, efficiency, constructability, and reliability. His background combines thoughtful consulting with a technical design perspective, detailed knowledge of refrigeration systems, and focus on sustainability and environmental impact. Conner’s approach to collaborating with refrigeration manufacturers, contractors,

and partners, enables him to address each customer’s specific needs. “The refrigeration industry is currently experiencing an exciting phase, with numerous changes on the horizon due to the continuously evolving regulatory environment. It is critical that we work together as an industry to help the end users identify and implement a refrigeration system that meets and exceeds their operational and sustainability goals,” said Meadows. With the addition of Conner’s expertise in refrigeration, Core States Group has the unique ability to provide turn-key solutions that optimize a portfolio of stores or single sites as the primary service provider for clients. Since 1999, Core States Group has collaborated with clients to create a world where all environments improve everyday life. With 24 offices in the United States and Canada, the company designs, builds, and manages projects and programs across North America and has been recognized on top lists throughout the AEC industry.

Interested in learning more

about the projects and ideas driving the AEC industry forward? Learn more with Civil+Structural Engineer Media.

EZEQUIEL TOVAR, from page 1

make the effort to learn about the people throughout your business. Numbers and charts cannot convey everything. The human element better completes the picture. 3. Effort. If you embark on this exercise, you must follow through by addressing any concerns that came up during the process. The time you spend in this endeavor is valuable, so you must use the information you gathered in the process to move your firm in the right direction. It takes strong leadership to make this function and be a part of your firm. Change takes time and, if you are consistent with your effort, you will be able to change the culture of your firm to a degree you never would’ve thought possible. Getting back to the ground level of your firm can provide invaluable insights into the inner workings of your business. Taking the time to engage with your employees, showing curiosity about their day-to-day challenges, and making the effort to address any concerns are key steps in fostering a strong, connected company culture. By doing this, you strengthen the foundation of your business. Ultimately, this hands-on approach not only benefits your team but also sets your firm on a path toward long- term success. Ezequiel Tovar is a senior transition analyst at Zweig Group’s. Contact him at etovar@ zweiggroup.com.

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Chad Clinehens | Publisher cclinehens@zweiggroup.com Sara Parkman | Senior Editor & Designer sparkman@zweiggroup.com Tel: 800.466.6275 Email: info@zweiggroup.com Online: zweiggroup.com/blogs/news LinkedIn: linkedin.com/company/22522 Instagram: instagram.com/zweiggroup Twitter: twitter.com/ZweigGroup Facebook: facebook.com/p/Zweig- Group-100064113750086 Published continuously since 1992 by Zweig Group, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/year). © Copyright 2024, Zweig Group. All rights reserved.

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THE ZWEIG LETTER NOVEMBER 18, 2024, ISSUE 1562

OPINION

The trouble with familiarity

Consistently nurturing long-term client relationships and adding value are essential to maintaining loyalty and avoiding complacency.

T he joke goes something like this: A man passes away and has to choose to spend eternity in heaven or hell. He visits heaven and has a beautiful time connecting with family and friends. He then visits hell and is surprised. He sees some old friends, and they spend the day playing golf, enjoying whisky and cigars, and capping the day off with a big steak dinner. He returns to St. Peter and decides to pick the latter destination. When he returns downstairs, he’s met with a blast of heat and the odor of brimstone. Everything around him is burning and horrible. He sees Satan and asks, “What happened? Yesterday, there was golf and good times, but now it’s all gone. Why?”

Brad Thurman, PE, FSMPS, CPSM

Satan replies, “Yesterday, you were a prospect. Today, you’re a client.” FUNNY, NOT FUNNY. The story above usually elicits a chuckle or two followed by a bit of a cringe because it can ring true. In the AEC industry, we often quote the percentage of our business that comes from repeat clients. And repeat clients are fabulous because you can build long-term relationships with them and work together for years. The other side of the sword is that you can start to take them for granted, to think they’ll always be around. In 1989, United Airlines released a commercial titled

“The Speech,” and it’s one of the best ever. Thanks to the interwebs, you can still find it today. In it, a manager calls his team together and informs them that a 20-year client has fired them, saying, “They don’t know us anymore.” He believes it’s because phone calls and faxes (remember…1989) have replaced personal attention. He passes out plane tickets to everyone to see their clients and heads himself to the client who fired them. Fast-forward to 2024. One can argue that phone calls and faxes have been replaced with email and text

See BRAD THURMAN, page 4

THE ZWEIG LETTER NOVEMBER 18, 2024, ISSUE 1562

with your firm’s culture and core values, and it often comes down to more than money. One way is to rank your clients by one-three-five year net service revenue. The five-year numbers reflect the mainstays, while the one-year values help identify the up-and-comers. Next, compare how these rank in profitability across the same periods. You’ll find that the lists likely don’t fully align. Inevitably, there will be large-revenue clients whom you struggle to make profitable. Not a deal killer, but definitely something to consider. Then you might parse the list by other, softer factors: which bring the work we most enjoy doing, which are the best to work with, etc. BE THE “PARTNER” IN PARTNERSHIP. That’s your list. Start there. Look for ways to enhance your services to them. Look for additional opportunities to make them successful beyond providing quality work. Can you help them with business development? In community outreach? In brand awareness? What will make them say, “This is the only firm we want to work with?” Providing quality service to all your clients is essential to your firm’s success. Looking for ways to add value to your best clients will only make a good thing better. Brad Thurman, PE, FSMPS, CPSM, is a principal and chief marketing officer at Wallace Design Collective, PC. Contact him at brad.thurman@wallace.design.

BRAD THURMAN, from page 3

messages and connectivity apps, but that’s not the point I want to make. The heart of “The Speech” is that his team was taking their relationships with their clients for granted and not giving them the attention they needed to thrive. They weren’t nurturing connections as they likely did when they were shiny and new. “Repeat clients are fabulous because you can build long-term relationships with them and work together for years. The other side of the sword is that you can start to take them for granted.” START WITH THE TOP. How you treat all your clients should be consistent with your firm’s core values and indicative of what you consider “client service.” This level you strive not to fall below serves as the core of your business’s client-focused approach. Established, long-term clients deserve special attention, care, and, yes, maintenance to continue to grow. These are your very best clients, the ones others want to poach and that you definitely don’t want to lose. There are many ways you can determine this list, and the criteria used should be consistent

THE ZWEIG LETTER NOVEMBER 18, 2024, ISSUE 1562

FROM THE FOUNDER

Thoughts on job descriptions

Flexible job descriptions with clear responsibilities, single reporting lines, and adaptable salary ranges foster employee satisfaction and avoid rigidity.

J ob descriptions. I never cared for them. But the HR people always tell us we need them. Do we really?

The answer to the question above is both “yes” and “no.” We do need basic roles and responsibilities, and the individuals in those roles need to understand who their boss is (who they report to), what their goals are, and how their performance is going to be measured. These things are good. We don’t need rigid role definitions, arbitrary experience requirements, titles that mean nothing in terms of functional job differences, and/or rigid salary ranges that can never be strayed from. These things are bad. Putting these job descriptions together in a meaningful way is never easy. If you ask the individuals involved to list their current duties and responsibilities their first thought is probably going to be, “Are they getting ready to fire me?” You have to

do this as a firm-wide project, ask everyone for their list, and explain what you are doing and why so that paranoia doesn’t run rampant. A few other pointers: 1. Too many titles with no difference in function or responsibilities is bad. Don’t do it. Many times I find companies cannot distinguish between multiple levels of engineers in any way other than their titles. Doing that leads to a lot of unhappiness of the people involved. 2. Duties and responsibilities for each role should always include “other duties as assigned.” When you ask someone to do something, I don’t ever want to hear, “That’s not in my job description.” It will get an immediate negative reaction from me.

Mark Zweig

See MARK ZWEIG, page 6

THE ZWEIG LETTER NOVEMBER 18, 2024, ISSUE 1562

ON THE MOVE AECOM APPOINTS JILL HUDKINS TO LEAD ITS NEW WATER & ENVIRONMENT ADVISORY GLOBAL BUSINESS LINE AECOM, the world’s trusted infrastructure consulting firm, announced it has appointed Jill Hudkins as chief executive of its new Water & Environment Advisory global business line. The appointment of Hudkins and the formation of the new advisory business mark key milestones in the Company’s growth strategy, which is built on extending AECOM’s competitive advantage by drawing on its technical leadership and strong client relationships to develop complementary, high-value businesses. The Water & Environment Advisory global business line will focus on advising clients to strategically guide them through the lifecycle of their largest and most complex water and environmental management challenges. Leveraging AECOM’s existing number one water, environmental engineering and environmental science businesses, as ranked by Engineering-News Record, the new advisory business will expand the company’s capabilities in high growth areas, such as advanced digital water asset management and automation, environmental permitting, per- and polyfluoroalkyl substances remediation and emerging opportunities for water solutions in high-tech environments. “I’m pleased to welcome Jill to AECOM to lead the expansion of our water and

environment advisory business and continue on our path to double the size of our industry-leading water capabilities over the next five years,” said Troy Rudd, AECOM’s chief executive officer. “Much like how key leadership appointments were central to the success of growing our Program Management business, Jill’s appointment, along with our commitment to investing in key resources to expand our capabilities, sets the foundation for similar success in this new business line. We are excited by the opportunities ahead as we respond to our clients’ increasing demand for comprehensive advisory, consulting, design, and program management solutions that address today’s most pressing water and environmental challenges.” Hudkins previously served as president at Tetra Tech with more than 25 years of experience spanning several operational and strategic leadership roles at the firm. During her tenure, she led the advancement of digital applications and data analytics across its global operations in water, environment, and sustainable infrastructure, including the launch and rapid growth of its Digital Water practice. “Jill is a respected authority in our industry, and I look forward to working with her to advance our strategy for helping clients navigate their growing complexities and challenges, while also ensuring their projects deliver long-term value for communities and the planet,” said Lara Poloni, AECOM’s president. “The

development of our Water & Environment Advisory global business line brings exciting prospects for our people as we seize emerging opportunities. With Jill at the helm, we will build a world-class team and platform that shapes the future of environmental and water management through visionary, knowledge-driven solutions.” Hudkins obtained her master’s degree in civil and environmental engineering at the Massachusetts Institute of Technology, and bachelor’s degree in civil and environmental engineering from Duke University. She currently serves on the University of Miami’s College of Engineering Academic Review Committee. AECOM is the world’s trusted infrastructure consulting firm, delivering professional services throughout the project lifecycle – from advisory, planning, design and engineering to program and construction management. On projects spanning transportation, buildings, water, new energy, and the environment, public- and private-sector clients trust AECOM to solve their most complex challenges. AECOM’s teams are driven by a common purpose to deliver a better world through its unrivaled technical and digital expertise, a culture of equity, diversity and inclusion, and a commitment to environmental, social and governance priorities. AECOM is a Fortune 500 firm and its Professional Services business had revenue of $14.4 billion in fiscal year 2023.

If you disagree with me or have other thoughts on this topic that you’d like to share, please drop me a line at mzweig@ zweiggroup.com . We would love to hear from you! Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com. “We don’t need rigid role definitions, arbitrary experience requirements, titles that mean nothing in terms of functional job differences, and/or rigid salary ranges that can never be strayed from. These things are bad.”

MARK ZWEIG, from page 5

3. Each person reports to one and only one other person. No reporting to committees or naming of three different individuals all as being supervisors for anyone. This is fundamental rule of management called, “unity of command,” and it’s critical. Many of you will wonder how that works in a matrix organization structure. It works with one person being the individual’s permanent boss, and anyone else they do work for has to understand who they need to go through to get the services of the individual in question. 4. Let’s not have rigid salary ranges. Someone will always deserve more than that. Why turn them off by publishing a “max” for that role. It accomplishes nothing. Let the government operate that way if they want to, but we don’t have to over here in the private sector.

THE ZWEIG LETTER NOVEMBER 18, 2024, ISSUE 1562

OPINION

A new lever for M&A in AEC

Purpose-built technical report management technology in AEC mergers drives cost savings, productivity, collaboration, standardization, and scalable growth.

I n the dynamic world of AEC mergers and acquisitions, purpose-built technology for technical report management emerges as a powerful tool for driving synergies and creating value. As firms combine, efficiently managing, standardizing, and optimizing technical report deliverables becomes a game-changer, unlocking significant cost reductions and revenue growth.

Chris Connell

Technical report deliverables are key to AEC firms, representing major revenue streams and highlighting their expertise. These reports span a wide range of assessments, including everything from geotechnical reports to environmental site assessments. Each type requires specific expertise, data collection, and formatting. In M&A contexts, efficiently managing this diverse array of reports across combined entities becomes critical for realizing synergies and finding advantage. Purpose-built platforms offer comprehensive solutions for streamlining the entire report lifecycle. They address unique AEC challenges, from data collection to final delivery. By replacing general purpose tools with an end-to-end system, top- performing firms transform report creation from a tedious, error prone task into a streamlined, measurable process driving growth and profitability. This technology not only enhances efficiency but also facilitates seamless integration of merged entities,

standardizes best practices, and enables rapid scaling of operations – all crucial factors in successful M&A outcomes. Let’s explore five M&A benefits of technical report management for AEC firms: 1. Rationalizing costs. Deliverable management technology provides a central platform across the combined entity, eliminating redundant software and lowering costs. Automation capabilities reduce the time and resources required to produce technical reports, with some firms reporting time savings of more than 40 percent and up to 50 percent improvement in first-time approval rates. 2. Increased productivity to meet demand. An end-to-end platform streamlines tedious tasks associated with technical report creation. The impact on productivity (as much as 20 percent

See CHRIS CONNELL, page 8

THE ZWEIG LETTER NOVEMBER 18, 2024, ISSUE 1562

technical report deliverables is best illustrated by its effect on a firm’s ability to scale and generate improved financial performance over time.

CHRIS CONNELL, from page 7

per employee) is substantial, with some firms experiencing both increased deliverable volume and decreased average edit time per report. This dual benefit expands margins and allows the firm to capture market share. 3. AI powered knowledge harvesting and content optimization. An end-to-end platform offers a unique advantage in M&A scenarios by enabling the harvesting and standardization of best practices and content from across all merged entities. By leveraging AI to access and rapidly parse the deliverable history of all involved firms, the platform can identify and promote the best content for use by the firm. This process accelerates integration and yields synergies. It also facilitates the creation of optimized templates for specific reports that combine the strengths of each entity. Ensuring that the absolute best of the merged company’s knowledge is being leveraged, the platform drives improvement in deliverable quality and efficiency. This not only streamlines the integration process but also positions the firm to deliver superior value to clients from day one. 4. Standardization and collaboration. An end-to-end platform for managing the report creation and delivery process enforces standardization across multiple dimensions. It implements uniform templates, formats, styles, and approved language, ensuring a cohesive brand and accelerates integration. Features like integrated language libraries, content locking, and permission-based controls ensure consistency. This approach to standardization not only creates uniformity but also drives collaboration among merged teams, often spread across different geographies. Automated workflows guide every report, enabling teams to deliver on client requirements without disruption. By streamlining processes, the platform enhances efficiency and quality. This is particularly valuable in M&A, where aligning diverse teams and practices is key for realizing synergies. 5. Compliance and scalability. Purpose-built technology empowers firms to enforce compliance standards and mitigate risks. Cloud-based solutions offer scalability, allowing firms to adapt to evolving business needs, accommodate growing volumes of data, and onboard employees effortlessly. REALIZING BENEFITS: TECHNOLOGY-DRIVEN SYNERGIES. The synergies unlocked by technical report management technology in M&A scenarios can be substantial. Cost synergies arise from system rationalization, increased productivity, and reduced editing times. Revenue synergies emerge from the ability to meet increasing demand, manage higher volumes, and improve quality leading to higher client satisfaction. The standardization and efficiency gains enable firms to pursue growth aggressively and expand into new markets more confidently. FINANCIAL POWER OF TECHNICAL REPORT MANAGEMENT. The transformative impact of purpose-built technology for

Scale: Efficiency Drives Volume & Profit Growth This graph illustrates the virtuous cycle of growth enabled by efficient technical report management. The “Productivity Zone” demonstrates how costs are constrained while revenue accelerates, driven by enhanced capacity to meet increasing demand. This widening gap between revenue and costs fuels profit growth. As firms scale their report production with greater efficiency, the unit economics of each deliverable improve, creating a compounding effect on profit margins. Every incremental report contributes more to the bottom line, amplifying the financial benefits. This compounding growth is particularly advantageous in M&A scenarios, where the ability to profitably scale operations significantly enhances the value of the combined entity, creating a formidable competitive advantage in the market. TECHNICAL REPORT MANAGEMENT AS AN INTEGRATION LEVER. In the dynamic landscape of M&A, purpose-built technical report management emerges as a powerful tool for unlocking economic synergies. By addressing key challenges in system integration, knowledge optimization, collaboration, and standardization, an end-to-end platform can smooth the path to successful post-merger integration. The benefits extend beyond cost savings and efficiency gains. They enable the merged firm to create a more cohesive brand, deliver higher quality, and position itself for sustained growth in a competitive market. As firms pursue growth through M&A, those that leverage technology as a strategic tool will find themselves better equipped to integrate, realize rapid synergies, and deliver greater value to clients and shareholders. In M&A, where every advantage counts, end-to-end technical report management could well be the differentiator that turns a good deal into a great one. Chris Connell is the CEO of Quire, the leader in technical report management. With customers in the engineering, environmental consulting and commercial real estate industries, Quire has helped deliver more than 1.3 million technical report deliverables and influenced more than $1.5 billion in deliverable related fees. Visit us at openquire.com.

THE ZWEIG LETTER NOVEMBER 18, 2024, ISSUE 1562

OPINION

AEC firms should carefully assess confidentiality clauses in contracts to avoid uninsured risks, especially amid growing cyber threats. Navigating confidentiality clauses

A EC firms should be careful not to overlook the growing number of longer and more complicated confidentiality agreements currently finding their way into proposed design contracts. In some cases, these clauses have the potential to create exposures which may not be covered under professional liability or other insurance policies typically carried by design firms. Furthermore, the rapidly changing environment, including an increase in sophisticated cyber-attacks and the widened use of artificial intelligence, can make these clauses more problematic.

Lauren Martin

That’s more reason for design firms to become educated on the potential exposure and take steps to avoid it. Nondisclosure agreements are becoming a more routine part of doing business – and it’s completely understandable for owners to want their proprietary information protected. Nonetheless, you should read and understand these agreements and the confidentiality clauses in your contracts and be aware of the potentially uninsured exposures they can create. Your professional liability insurance coverage responds to confidentiality clauses the same way it applies to other contractual clauses. There will be coverage afforded unless you exceed obligations that would be owed in the absence of the contract.

In other words, you are covered for your negligence, but not for warranties, guarantees, or obligations that exceed the professional responsibility of your peers. Certainly, you have coverage under your professional liability insurance for your normal obligation to keep client information confidential while the firm is providing professional services. Yet, there likely may be no coverage if the disclosure occurs outside of the scope of providing professional services. It’s hard to imagine a situation where a design professional would intentionally disclose confidential information, but there are situations where unintentional disclosure can occur. Indeed, there are the “old-fashioned” ways, such as if untrained junior

See LAUREN MARTIN, page 10

THE ZWEIG LETTER NOVEMBER 18, 2024, ISSUE 1562

BUSINESS NEWS BOWMAN CONTRACTED

FOR

accommodations, signing and striping upgrades, bus stop improvements and green stormwater infrastructure. Bowman’s assignment is to help facilitate a roadway corridor with enhanced pedestrian mobility, efficient movement for vehicles, transit riders and bicyclists and an improved experience for commuters and the community within the corridor. “This assignment is another affirmation of Bowman’s reputation for innovative transportation services and solutions,” said Gary Bowman, chairman and CEO of Bowman. “We look forward to starting immediately to collaborate on solutions

with all the stakeholders involved in the successful completion of this complex and extremely impactful project.” Bowman’s involvement is part of a larger initiative by PennDOT, the City of Philadelphia and the Southeastern Pennsylvania Transportation Authority to implement a multi-phase improvement program along the Roosevelt Boulevard corridor in North and Northeast Philadelphia. The Boulevard, as it is known locally, carries over 100,000 vehicles daily and is a vital link for traffic in the Delaware Valley region.

COMPREHENSIVE IMPROVEMENT

ROADWAY

PROJECT IN PHILADELPHIA Bowman Consulting Group Ltd., a national engineering services firm delivering infrastructure solutions to customers who own, develop and maintain the built environment, has been contracted to commence engineering services impacting safety improvements along portions of Roosevelt Boulevard (US 1) in Philadelphia, Pennsylvania. Key elements of the assignment include intersection modifications, traffic signal enhancements, pedestrian

unlikely to be covered by professional liability insurance as the incident involves business practices rather than professional practices. Although most design firms now carry standalone cyber- insurance coverage, which helps them restore their system – and includes protection for other related risks, including damage to clients as a result of the breach – the limits are generally aggregate, relatively low, and not necessarily meant to respond to confidentiality clauses. Given the proliferation and scope of these attacks, it’s not difficult to envision a situation where multiple clients could be impacted. In this case, coverage limits might not be sufficient to address the heightened exposure. In order to present a strong defense in the event of this type of breach be sure you have been appropriately educating your staff with established, documented, and constantly reinforced protocols to avoid breaches and safeguard your system. As part of your standard contractual review process, when you see a lengthy, onerous confidentiality clause in your contract ask yourself several key questions: ■ What portion of this clause is covered by my various insurance policies? ■ What are my peers doing in relation to accepting this type of clause? ■ Is the provision complex enough that I should have my lawyer review it so that I understand the uninsured risk? In the past, AEC claims involving breaches of confidentiality components have been relatively rare. However, design contracts are changing, as are theories of litigation. So, being thoughtful and proactive in your contractual review process and risk management practices can help you keep from having to deal with such claims, particularly in the face of elevated client expectations, rapidly evolving risks, and a changing legal climate. Lauren Martin is a risk manager and claims specialist at Ames & Gough. She can be reached at lmartin@amesgough.com.

LAUREN MARTIN, from page 9

members of the firm disclose information they shouldn’t, or when what should be a discrete discussion about a current project is overheard in a public place. That’s why it’s critical to make sure your entire staff is fully aware – and constantly reminded – of the confidential nature of client-related matters and properly trained to avoid any inadvertent disclosure. Furthermore, during your review of any design contracts, be sure to carefully check the clauses to determine what is classified as confidential, and that the language is not overly broad. You should also be very careful about damage spelled out in the contract that might be associated with these breaches. For instance, does the owner have to prove the breach to recover the damages? Can they be construed as “liquidated damages,” which are not covered by your professional liability insurance policy? Do the amounts stipulated exceed the actual damages incurred? Whether your professional liability insurance policy will respond to a claim related to a breach of the confidentiality clause will be based on the allegations. Most importantly, make sure that the requirements in the contract are what you would owe in the absence of the contract; in other words, that they are consistent with a negligent breach of the standard of care. If the allegations in a claim are based on negligence related to providing professional services, a defense to the claim should be provided. Firms that historically handle government contracts typically have strict office protocols with respect to all individuals entering and leaving the premises – including sign-ins with identifying information – to avoid the risk of any materials inadvertently getting into the wrong hands. Depending on the terms of your contract, consider implementing similar procedures on specific projects that are deemed as “highly secure.” In the current environment with growing numbers of sophisticated cyber breaches that have targeted businesses in all sectors the risk potential has mushroomed. Design firms, like all types of businesses, have vulnerabilities to this type of breach. Unfortunately, should a client make a claim, it is

THE ZWEIG LETTER NOVEMBER 18, 2024, ISSUE 1562

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