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T R E N D L I N E S W W W . T H E Z W E I G L E T T E R . C O M J u n e 4 , 2 0 1 8 , I s s u e 1 2 5 1

Average billing rates

Internal ownership transition done right

Zweig Group’s 2017 Principals, Partners & Owners Survey sheds a bright light on the billing rates of firm principals. According to the survey, the average billing rate in very high-profit firms is $208 per hour, compared to an average hourly rate of $205 in high- profit firms, $180 in average-profit firms, and $164 in low-profit/loss firms. OPEN FOR PARTICIPATION zweiggroup.com/survey-participation/

A s hot as merger and acquisition activity in the A/E industry is – and it is hot (we probably get two or three calls/inquiries/ RFPs a day now) – internal transition – selling from employee/owners to others within the firm – is still preferred by probably 90 percent of companies in this business. That said, it is way too often mishandled. When done right, here are some of the common elements that we see: 1)There was a plan in place and it was fol- lowed. This is so important! The plan has to match up with the business plan, too. Get qualified outside advisors. Industry knowledge is crucial. And this plan has to be modeled and constantly re-evaluated and tweaked so that it works and keeps working. 2)Leadership transition was an integral part of the plan. The math alone is not enough. There has to be a leadership transition as well. And those next generation leaders need time to be trained. It’s best for everyone in the firm to pick their successor, tell them they are their successor, and then spend time mentoring and coaching them – both before and after they assume the person’s position. 3)The company is a growing, profitable con- cern. Growth and profitability must be there to make it all work. That’s what makes the stock or ownership interest value go up. That’s what allows the company to pay bonuses/divi- dends/profit distributions that are essential for buyers to have the cash to buy stock. Without growth and profitability, the wheels will fall off. 4)The valuation methodology responds to the

“Internal ownership transition is part art, part science, part psychology,

Mark Zweig

part timing, and part luck. How much is related to each of these elements can

be debated endlessly!”

F I R M I N D E X Burns & McDonnell Engineering Co.......10

CHA Consulting, Inc................................8

MORE COLUMNS xz GUEST SPEAKER: A buyer’s market Page 3 xz GENERAL COUNSEL: Is there a doctrine in the house? Part 3 Page 9 xz GUEST SPEAKER: Before and after a disaster Page 11

GATE......................................................6

Greenman-Pedersen, Inc......................12

Luna Middleman Architects.....................2

NRCS. ..................................................10

SCST, Inc................................................4

Conference call: Grant Gibson See MARK ZWEIG, page 2

Page 6

T H E V O I C E O F R E A S O N F O R A / E / P & E N V I R O N M E N TA L C O N S U L T I N G F I R M S

BUSINESS NEWS PARALYZED VETERANS OF AMERICA HONORS SAN ANTONIO-BASED LUNA MIDDLEMAN ARCHITECTS WITH 2018 BARRIER-FREE AMERICA AWARD Paralyzed Veterans of America has awarded its 2018 Barrier-Free America Award to Luna Middleman Architects of San Antonio for outstanding contributions to accessible design with their fully inclusive projects, Morgan’s Wonderland and Inspiration Island. The award was presented in a private celebratory event on May 2. “This year Paralyzed Veterans of America recognizes the exemplary work of Luna Middleman Architects with our Barrier-Free America Award,” said David Zurfluh, a disabled Air Force veteran, and national president of Paralyzed Veterans. “The need for accessible design solutions of public areas continues to increase substantially with our aging population and Americans with non-age related mobility impairments, including our wounded veterans. These individuals’ lives are greatly improved when they are able to access barrier-free environments. We congratulate Luna Middleman Architects for their achievements in exemplary accessible design.” “Having the opportunity to be one of many who created this all-inclusive park has been a wonderful experience,” said Robert Luna, president and CEO of Luna Middleman Architects. “Having a love for people is what drives the passion to continue to think outside the box and eliminate the boundaries that allow everyone to enjoy this park. We are excited to be working with groups in other cities and countries to replicate this concept and provide this form of inclusion that unites us all.” The founder of Morgan’s Wonderland and Inspiration Island, Gordon Hartman, of The Gordon Hartman Family Foundation also attended the event.

Take your advice from Mark Zweig to-go.

“Unfettered access to all our facilities at Morgan’s Wonderland and Morgan’s Inspiration Island has been a given since we embarked upon building these world-renowned parks,” said Gordon Hartman, founder of The Gordon Hartman Family Foundation. “We’re truly grateful to Paralyzed Veterans of America for recognizing and understanding this part of our DNA, and we’re tremendously proud of Robert Luna and his team for their creativity and design expertise in achieving ultra-accessibility.” For nearly 30 years, Paralyzed Veterans’ architects have been on a mission to promote accessible design for the entire nation. Since 2001, Paralyzed Veterans’ Architecture team has been the leader in recognizing exemplary accessible design by others through our annual Barrier-Free America Award. The award honors and promotes leadership, innovation, and action in the architectural, design, and construction communities for advancing accessibility – an advancement that directly improves the quality of life for everyone. “Paralyzed Veterans gladly honors others who share our vision of this fundamental right of equal access for veterans and people with disabilities,” said Mark Lichter, AIA, director of architecture for Paralyzed Veterans. “We applaud Luna Middleman Architects for making Morgan’s Wonderland and Inspiration Island an enjoyable destination for visitors of all abilities.” Previous recipients of the award have included government leaders, architects and builders, business people, philanthropists, and television personalities. Paralyzed Veterans of America is the only congressionally chartered veterans service organization dedicated solely for the benefit and representation of veterans with spinal cord injury or disease.

thezweigletter.com/category/podcast/

1200 North College Ave. Fayetteville, AR 72703 Mark Zweig | Publisher mzweig@zweiggroup.com Richard Massey | Managing Editor rmassey@zweiggroup.com Christina Zweig | Contributing Editor christinaz@zweiggroup.com Sara Parkman | Editor and Designer sparkman@zweiggroup.com Liisa Andreassen | Correspondent landreassen@zweiggroup.com

MARK ZWEIG, from page 1

company’s financial performance. Again – value should go up with the company’s growth and profitability. If it doesn’t and is strictly tied to assets or some other arbi- trary numbers, then it’s possible owners will be doing the wrong things to make the company successful over the long haul. 5)The sellers aren’t too greedy and the buyers aren’t unrealistic. These two are ab- solute requirements for a successful internal transition. I think the best way to do this is through education. This is where you have to be darn sure your advisors are appro- priately experienced and have worked with other firms in this business. They can help everyone be realistic. 6)There’s trust amongst all parties. This trust is necessary so everyone knows the other guy wants to be fair and do the right thing. When there’s no trust it all falls apart. Com- munication is the key to trust. Without good communication, there won’t be any. Internal ownership transition is part art, part science, part psychology, part timing, and part luck. How much is related to each of these elements can be debated endlessly! MARK ZWEIG is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.

Tel: 800-466-6275 Fax: 800-842-1560

Email: info@zweiggroup.com Online: thezweigletter.com Twitter: twitter.com/zweigletter Facebook: facebook.com/thezweigletter Published continuously since 1992 by Zweig Group, Fayetteville, Arkansas, USA. ISSN 1068-1310. Issued weekly (48 issues/year) $250 for one-year print subscription; free electronic subscription at thezweigletter.com/subscribe Article reprints: For high-quality reprints, including Eprints and NXTprints, please contact The YGS Group at 717-399- 1900, ext. 139, or email TheZweigLetter@ TheYGSGroup.com. © Copyright 2018, Zweig Group. All rights reserved.

THE ZWEIG LETTER June 4, 2018, ISSUE 1251

O P I N I O N

Percentage of Insurers Planning New or Expanded Coverage (by exposure)

12% Design-build

18% Public-private partnerships

76% Cyber-liability

53% Drone usage

Total exceeds 100 percent because survey respondents gave multiple answers.

A buyer’s market

A new survey by Ames & Gough of 17 leading insurance companies providing A/E professional liability insurance has some good news for design firms with respect to their insurance, as well as insights that might aid their related risk management practices. An experienced insurance advisor can help design firms find the coverage and program structure required to address their evolving needs.

Joan DeLorey GUEST SPEAKER

Conducted earlier this year, the survey showed that even though a few insurance companies consolidated or withdrew from the architects and engineers professional liability insurance market, there’s still intense competition benefiting design firms purchasing this insurance. Here are six key takeaways from the survey that might inform how design firms approach their risk management and professional liability insurance. 1)Good news: It’s still a buyer’s market for profes- sional liability insurance. Even with the modest uptick in rates anticipated from some insurers, a plus for design firms is that the A/E professional liability insurance market continues to have a wide selection of insurance companies offering this cov- erage. For 2018, this will again enable firms with favorable loss experience and less risky disciplines to renew coverage with flat or only modestly increased

premium rates. In some cases, firms with increased revenues may be able to obtain some rate reduction to partially offset premium increases associated with growth. 2)Evaluate opportunities for expanded coverage. Of the insurers surveyed, 76 percent are exploring new or expanded coverage for cyber-liability; 53 per- cent, for drone usage; 18 percent, for certain risks associated with public-private partnerships; and 12 percent for design-build exposures. Check your cur- rent policy to see what additional coverages it pro- vides and see what’s new at renewal. With respect to cyber-risk, assess your insurance needs carefully and determine whether any coverage offered under your professional liability policy is adequate or if you need to consider a separate, stand-alone policy that will offer more robust protection, such as security breach notification and credit monitoring expenses,

See JOAN DELOREY, page 4

THE ZWEIG LETTER June 4, 2018, ISSUE 1251

TRANSACT IONS SOUTHWEST GEOPHYSICS MERGES WITH SCST TO ENHANCE AND COMPLEMENT SOLUTIONS SCST, Inc. announced a merger with Southwest Geophysics, Inc. Southwest Geophysics is a San Diego based firm specializing in geophysical data acquisition, processing, and interpretation. The firm has experienced accelerated growth over the past few years and will operate as a subsidiary of SCST. The merger presents both organizations the opportunity to expand geographically and strategically while simultaneously enhancing and complementing services already available to both client bases. “We are thrilled to welcome Southwest Geophysics into the SCST family. This merger will allow SCST to expand into new geographic

areas and bring a specialized service to our existing and future clients,” explained Neal Clements, CEO of SCST. “Their experience and reputation as an industry leader will continue to support our vision of providing the best technical solutions to the most challenging projects.” Established in 2004, Southwest Geophysics is comprised of skilled geophysicists providing state-of-the-art geophysical services; nondestructive and relatively unobtrusive subsurface investigations. Their innovative and cost-effective methods help reduce explorative costs and assist in mitigating against unexpected site conditions. The use of geophysics provides pragmatic data relating to structural, geotechnical, geologic, and

hydraulic conditions as well as subsurface infrastructure. “Southwest Geophysics is excited about the merger with SCST,” says Hans van de Vrugt, Principal Geophysicist at Southwest Geophysics. “We have a long-standing relationship working together for many of the same clients. This merger will allow us to collaborate and continue to provide our expertise across a broader range of clients across the United States.” Established in 1959, SCST is a professional engineering firm headquartered in San Diego with additional offices located in Los Angeles, Newport Beach, Fresno, Chicago, and Milwaukee.

JOAN DELOREY, from page 3

$10 million and $19 million. Along with the potential for large claims, contractual requirements by clients are driving design firms to purchase higher insurance limits. Today, many face requirements for limits of $5 million to $10 million, up from former standards that called for limits of $2 million to $3 million. “Whether a design firm is looking to maintain its current level of business or expand into new areas, an experienced insurance advisor can help them make sure they have the coverage and program structure required to address their evolving needs.” 6)Don’t overlook the need to maintain sound risk manage- ment. Even as the market for professional liability insurance remains competitive, A/E firms need to remain focused in their risk control efforts to mitigate claim activity. One key is to negotiate contracts that fairly allocate risk and limit uninsured exposures, which might involve making sure cli- ents know you won’t be covered for certain risks. Firms also should engage staff in risk management training through we- binars or seminars to help avoid claims or mitigate the risk. Given the continued competitive marketplace for professional liability insurance, design firms have the opportunity to make sure their insurance protection and risk management are aligned with their risks. Whether a design firm is looking to maintain its current level of business or expand into new areas, an experienced insurance advisor can help them make sure they have the coverage and program structure required to address their evolving needs. To obtain a complimentary copy of the Ames & Gough survey, PLI Market 2018: Insurers Maintain Growth, Profitability Against Headwind of Competition , email info@ amesgough.com. JOAN DELOREY, RPLU, CRIS, is senior vice president and partner at Ames & Gough. She can be reached at jdelorey@amesgough.com.

business interruption losses, social engineering fraud, cyber extortion, and network and data damage. 3)Know how new business and M&A transactions will im- pact your risk profile. Even under the current competitive market conditions, underwriters generally have continued to prudently evaluate exposures. For instance, while several factors might affect how they underwrite a particular risk, insurers now place more emphasis on an A/E firm’s project mix. This year, 88 percent of those surveyed identified type of project (e.g., condominiums, schools, transit, tunnel, water/ wastewater), as one of the top factors for raising a design firm’s PLI premium rates. So, firms expanding their business or engaging in mergers and acquisitions might consider how these initiatives could affect how underwriters perceive them and the impact on their insurance program and costs. 4)Be aware of risks insurers are monitoring as potential red flags. Insurers are carefully watching what they deem to be emerging risks. When asked about their top concerns, the most prominent were: evolving project delivery methods (e.g., design-build and public-private partnerships), cited by 82 percent; judicial rulings that may erode protections for design firms under state statutes (76 percent); innovation, such as new construction materials/methods (47 percent); and the use of BIM and technology (18 percent). “Given the continued competitive marketplace for professional liability insurance, design firms have the opportunity to make sure their insurance protection and risk management are aligned with their risks.” 5)Take care in assessing liability limits. Even as stable claims experience, reported by 76 percent of the insurers surveyed, is helping insurers maintain profitability and keep rates down, design firms still face the potential for catastrophic losses. When asked to provide the amount of their largest single professional liability loss paid in 2017, the majority (59 percent) of insurers surveyed paid a claim of at least $1 mil- lion or higher, including two insurers whose largest claim paid was between $5 million and $9.9 million and two between

THE ZWEIG LETTER June 4, 2018, ISSUE 1251

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THE ZWEIG LETTER June 4, 2018, ISSUE 1251

P R O F I L E

Conference call: Grant Gibson Founder and CEO of GATE (Hot Firm #35 for 2017), a 300-plus person oil and gas engineering consulting company based in Houston.

By LIISA ANDREASSEN Correspondent

“W hen clients/friends see what we post and comment to colleagues, or know who we are before we walk through the door, marketing is doing its job – generating awareness and interest,” Gibson says. A CONVERSATION WITH GRANT GIBSON. The Zweig Letter: There are A/E leaders who say profit centers create corrosive internal competi- tion for firm resources. What’s your opinion on profit centers? Grant Gibson: We have five major profit centers depending on type of work, business model, and clients. Each profit center has a president who is responsible for all financial performance of his group. We try to create collaboration between the groups as they will each benefit by higher revenues and meet strategic objectives. TZL: What’s your policy on sharing the firm’s

financials with your staff? Weekly, monthly, quarterly, annually? And how far down into the org chart is financial information shared? GG: On a weekly basis we share our prime covenant – liquidity and over 90-day invoices. Monthly, we share our financials with all presidents and busi- ness group managers. Quarterly, we have a share- holders’ meeting where we share the group perfor- mance and each president presents on their perfor- mance. TZL: The talent war in the A/E industry is here. What steps do you take to create the leadership pipeline needed to retain your top people and not lose them to other firms? GG: Our focus has been to develop leadership to grow the firm. We’ve taken what we call a “Level 4 Organization” where we focus on people develop- ment. We do this in three areas:

Grant Gibson, Founder & CEO, GATE

THE ZWEIG LETTER Ju

never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams? GG: When the oil price crashed, we went in four directions with our port- folio. We were concentrated in deep- water projects. The oil companies put almost a 100 percent hold on all new projects and they changed their con- tracting strategy. We decided to diver- sify our revenue into operations and maintenance, services, geography, and downstream. Thus, we started work- ing for pipeline operators, fertilizer plants, refineries, shale oil production, overseas and shallow-water produc- tion. Our goal was to have a balanced portfolio of 50 percent OPEX and CA- PEX. We achieved that goal by the end of 2017. TZL: The list of responsibilities for project managers is seemingly end- less. How do you keep your PMs from burning out? And if they crash, how do you get them back out on the road, so to speak? GG: While PM burnout hasn’t been a concern for the past three years, we manage this risk with a flexible vaca- tion/time off policy and ensure that staff has access to leadership so they can communicate any stress or frustra- tions associated with long work hours. We also compensate our employees for longer hours worked with bonus mon- ey or equity options. To date, we have never had a PM burnout from exces- sive hours worked and we plan to re- main proactive when supporting our employees’ work-life balance. TZL: What is the role of entrepre- neurship in your firm? GG: It’s critical for us. Our team needs to recognize when they are in the right place at the right time to capture op- portunities. We train our team of fu- ture leaders through our GATE Excel See CONFERENCE CALL, page 8 “To date, we have never had a PM burnout from excessive hours worked and we plan to remain proactive when supporting our employees’ work-life balance.”

❚ ❚ GATE University: A technical syllabus ❚ ❚ GATE Excel: Develops business acu- men ❚ ❚ Five Levels of Leadership: Develops servant leadership culture TZL: As you look for talent, what po- sition do you most need to fill in the coming year and why? GG: We need to fill the next level of leadership, so our current presidents can continue to expand their busi- nesses. “Our team needs to recognize when they are in the right place at the right time to capture opportunities.” TZL: While plenty of firms have an ownership transition plan in place, many do not. What’s your advice for firms that have not taken steps to identify and empower the next gen- eration of owners? GG: Ownership is the key ingredient for our business. We do this via re- stricted stock grants and options. The plan was developed more than five years ago and is still in progress. We are just coming out of an oil price crash and that has presented an opportuni- ty for us to issue options to our staff that will see more upside. My advice is to start early and hire some advisors to help you make good decisions. TZL: Zweig Group research shows there has been a shift in business development strategies. More and more, technical staff, not marketing staff, are responsible for BD. What’s the BD formula in your firm? GG: This depends on each of our af- filiate businesses. For engineering/ consulting, business is generated via relationships, referrals, and techni- cal reputation in the industry. For large integrated projects, which have a large field component, reputation and past project history bring us into be- ing part of bid requests or sole source awards. For our service business lines, they require dedicated sales teams to interface with the client and ensure we are on the bid list. TZL: Diversifying the portfolio is

YEAR FOUNDED: 2000 (After completing his Ph.D. in corrosion science and engineering from the University of Manchester in the U.K., Gibson founded GATE.) HEADQUARTERS: Houston, TX OFFICES: 2 offices in two states: Texas and Louisiana NO. OF EMPLOYEES: 300-plus THEIR EXPERTISE: A mid-size upstream oil and gas engineering consulting company, GATE’s expertise includes: ❚ ❚ Materials and corrosion ❚ ❚ Commissioning and initial startup ❚ ❚ Waterflood ❚ ❚ Flow assurance ❚ ❚ Subsea engineering ❚ ❚ Chemical systems engineering THEIR MISSION: “We make it work right the first time.” THEIR COMPANY CULTURE: Company culture

is based on five pillars: ❚ ❚ Servant leadership ❚ ❚ People development ❚ ❚ Employee ownership ❚ ❚ Respectful place to work ❚ ❚ Empowerment

une 4, 2018, ISSUE 1251

TRANSACT IONS FIRST RESERVE ANNOUNCES ACQUISITION OF CHA CONSULTING, INC. FROM LONG POINT CAPITAL First Reserve announced the acquisition of CHA Consulting, Inc. from Long Point Capital. CHA provides a wide range of design, engineering, and consulting services to customers across a variety of end markets including utility infrastructure, energy, industrial, transportation, environmental, facilities, water, sports, and aviation. Founded in 1952, CHA is a highly diversified, full-service engineering firm with a broad range of capabilities and a talented team of more than 1,000 employees. The company has cultivated a loyal, recurring base of public and private customers with a geographic presence across the U.S. and Canada and a client focus driven by trust and collaboration. Jeff Quake, managing director at First

Reserve, commented, “The investment in CHA is a continuation of our theme of investing in middle-market growth companies that we believe will benefit from long-term macro trends including the upgrade and replacement of aging infrastructure across the United States and Canada. We are pleased to partner with CHA management to grow the business and deliver its full suite of service offerings to all of its diversified end markets.” Mike Carroll, president and CEO of CHA, added, “This is an extremely exciting time for us at CHA. After a long and highly successful relationship with our previous financial partner, Long Point Capital, we are excited to begin this new venture with First Reserve. First Reserve has 35 years of proven operational excellence and investment expertise and has amassed significant market knowledge and

relationships. This investment validates the successful results of CHA’s strategy to be a leader across the markets we serve and be an acquirer of choice. This new partnership will allow CHA to continue to serve our clients with the same focus and attention for which we are known and help us to recognize our strategic growth goals. Our employees are committed to CHA’s future, which is represented by deep ownership within our management team.” “It has been a pleasure working with the CHA management team,” said Ira Starr, managing director at Long Point Capital. “The company has developed into a full-service engineering firm while maintaining its client-focused business model, and we are confident the company will continue to flourish with its new financial partners.”

CONFERENCE CALL, from page 7

night. Through the process of adjusting to the new “lower for longer,” we really learned our business, our market and what was important to our clients, stakeholders, and em- ployees. We also saw it as an opportunity of a lifetime to make acquisitions and pivot to new services/markets. “When clients/friends see what we post and comment to colleagues, or know who we are before we walk through the door, marketing is doing its job – generating awareness and interest.” TZL: While M&A is always an option, there’s something to be said about organic growth. What are your thoughts on why and how to grow a firm? GG: Even if you’re making acquisitions, it doesn’t pay out unless you grow the firm you acquired. Our presidents fo- cus on growing their respective groups organically, but also through synergy between the groups to help gain more mar- ket share, vertically integrate, and also bring our expertise to each to help entry into new markets. TZL: Do you use historical performance data or metrics to establish project billable hours and how does the type of contract play into determining the project budget? GG: Yes. We switched to an ERP system and this has giv- en our leadership a lot more data than we had before. With the oil price, our clients went from being schedule driven to cost driven. Using past project man-hours, we can become more accurate on project budgeting based on variables such as project tonnage or number of control loops. TZL: What’s your prediction for 2018? GG: The upstream oil and gas market for deep-water is trending in the right direction. Last year was our worst year of the downturn, while 2018 will be a return to growth and profitability. Our backlog is now reaching levels we’ve seen before.

program to develop business acumen and future leaders so we can grow. TZL: Measuring the effectiveness of marketing is diffi- cult to do using hard metrics for ROI. How do you evalu- ate the success/failure of your firm’s marketing efforts when results could take months, or even years, to mate- rialize? Do you track any metrics to guide your market- ing plan? GG: Most of our tracking KPIs and monitoring is done dur- ing specific marketing campaigns. Marketing campaigns al- low us to see how effective our campaign efforts are. We can measure how effective LinkedIn is at bringing traffic to the website and generating awareness for the specific service. Success with marketing is typically through word of mouth. When clients/friends see what we post and comment to col- leagues, or know who we are before we walk through the door, marketing is doing its job – generating awareness and interest – especially when other avenues besides Google searches are bringing people to the website or when a new client contacts us. As far as measuring lead generation, the only path we currently have is if someone contacts us through the website. “Ownership is the key ingredient for our business. We do this via restricted stock grants and options. The plan was developed more than five years ago and is still in progress.” TZL: They say failure is a great teacher. What’s the big- gest lesson you’ve had to learn the hard way? GG: The oil price crash was a big wake-up call for GATE. We had 15 years of continuous growth. All we had experi- ence with was a business that was growing. Our clients quit spending about 60 percent of their capital budgets over-

THE ZWEIG LETTER June 4, 2018, ISSUE 1251

O P I N I O N

Be careful. While a design firm can retain its copyrights by contract, the firm can just as easily give those rights away – by written contract. Is there a doctrine in the house? Part 3

D esign professionals are, traditionally, reluctant to give up ownership of their designs or drawings, including the copyrights. Several reasons exist for this.

First, retaining ownership is a way to secure payment from a client, by preventing use or copying of the drawings until payment is made; second, there is expanded liability with each use of a design, so that restricting use of the drawings to a single project is a way to limit liability; and, third, a design that has market value (especially in the residential sector) can be sold again to new clients, such that the designer of a hot-selling plan might reap rewards for a clever plan layout or aesthetic design beyond the initial client for whom it was prepared. Knowing just a bit about copyright law will help you protect yourself. WHAT IS A “WORK-FOR-HIRE” ANYWAY? The phrase “work for hire” refers to the doctrine in copyright law dealing with ownership and authorship of work created by an employee or an independent con- tractor. The doctrine dates to a 1903 U.S. Supreme

Court case holding that an employer owned the copyright to advertisements created by an employ- ee in the course of his employment. The concept is now codified in the U.S. Copyright Act. “While a design firm can retain its copyrights by contract, the firm can just as easily give those rights away – by written contract.” Section 201(a) of the Act provides that copyright ownership “vests initially in the author or authors of the work.” The “author” is generally deemed to be the person or party who actually created the work. But the Act carves out an important

William Quatman GENERAL COUNSEL

See WILLIAM QUATMAN, page 10

THE ZWEIG LETTER June 4, 2018, ISSUE 1251

ON THE MOVE GREG NORRIS SELECTED AS NRCS CALIFORNIA STATE CONSERVATION ENGINEER The USDA Natural Resources Conservation Service in California has selected Greg Norris as its new State Conservation Engineer. Norris, who has worked as an engineer for NRCS since 1992, will oversee a staff of approximately 50 professionals. “I aim to improve both internal and external customer service and will look at new ways of increasing work productivity and quality so that our engineering projects continue to set an example for excellence throughout the state,” said Norris.

The NRCS California engineering staff is made up of engineers and technicians that provide service to agricultural operators, government agencies and non-government entities on a diverse mix of projects. Funding for conservation work, that requires engineering expertise, is allocated through the NRCS Environmental Quality Incentives Program, the Small Watershed Program (commonly known as PL-566), or the Emergency Watershed Protection Program. NRCS’s engineers help design or provide technical guidance on approximately half of conservation practices available to customers. These include, but are not

limited to, manure storage facilities, irrigation infrastructure, dam repair and assessments, solar pumps, and erosion control. NRCS’s engineers are sought-after professionals by outside organizations and other government agencies for over 85 years of expertise and guidance. Norris grew up in San Diego, where he attended high school. He received his bachelor’s degree in agricultural engineering from Cal Poly Pomona and a master’s degree in agricultural engineering from Oklahoma State University. Norris owns and operates his own farm in Galt, California, managing hay, grain and pasture on 150 acres.

WILLIAM QUATMAN, from page 9

including the copyrights therein, for the reasons stated above. The AIA’s B101 form intentionally omits the phrase “work for hire” because for a work to be considered “made for hire,” the Act requires that the parties state, in writing, their intent that the work is “made for hire.” If an architect agreed that its drawings were “made for hire,” the client might attempt to assert ownership rights over the copyright, just as if the architect were an employee. While not using the phrase “made for hire,” the AIA forms are very specific, however, on who is the “author” and “owner” of the work, including copyrights – it is the architect. WHY DOES IT MATTER? In a 2016 copyright case, the court stated simply: “Architectural drawings are not ‘works for hire’ under the Copyright Act,” noting that it had been held that, “drafting of architectural blueprints does not fit into any of the ... nine categories of ‘specially ordered’ work.” In a 2008 copyright case, the project owner claimed to own the copyrights to the design prepared by an architect, under the work for hire doctrine. The court rejected that argument, however, noting that the AIA standard agree- ment does not make “even a veiled reference to works for hire, nor does [the] contract contain any language remotely suggesting an intention to establish a work for hire rela- tionship.” TAKE AWAYS? While a design firm can retain its copyrights by contract, the firm can just as easily give those rights away – by written contract. Clients that pay large fees to design firms often want to own the work product, with the ability to reuse the design for additions, expansions or even for a totally separate facility. It is a negotiation, and the lawyers drafting these clauses need to understand the difference between ownership of the drawings versus ownership of the copyrights (which are separate legal rights under the Act). So, in the tug and pull of contract negotiations, de- sign professionals should make it clear that regardless of which party owns the physical drawings, 1) the designer retains the copyrights, but merely licenses their use to the client for a single project; 2) the design firm is an inde- pendent contractor (not an employee). These two factors should negate any claim by the client that the design con- tract was a “work for hire,” and protect your copyrights. G. WILLIAM QUATMAN, FAIA, Esq., is general counsel and senior vice president at Burns & McDonnell Engineering Co. He can be reached at bquatman@burnsmcd.com.

exception for “works made for hire.” If the work is created by an employee of a company (thus “for hire”), the Act states that “the employer or other person for whom the work was prepared is considered the author,” and owns the copyright, unless there is a written agreement to the contrary. This gives the architectural or engineering firm the rights to own designs prepared by their employees in the regular course of their employment. When we are dealing with commissioned architectural drawings, however, most often the architectural firm is an independent contractor (not an employee) of the client. As such, are the drawings subject to the work for hire doctrine? There has been considerable confusion and much litigation on this topic. We can look to the Act, however, for clarity. “Clients that pay large fees to design firms often want to own the work product, with the ability to reuse the design for additions, expansions or even for a totally separate facility.” Section 101 of the Act provides that a work is “for hire” under only two sets of circumstances: 1) when prepared by an “employee” or 2) when prepared by an independent contractor, “specially ordered or commissioned,” but limited to nine specific types of works – and if there is a written contract specifically stating that the work is “made for hire.” Noticeably absent from the list are “engineering” or “architectural” drawings. THE STANDARD AIA CONTRACT FORMS. The standard AIA Owner- Architect Agreement, B101 (2017 ed.) devotes an entire section (Article 7) to the topic of copyrights and licenses. Section 7.2 states: “The Architect and the Architect’s con- sultants shall be deemed the authors and owners of their respective Instruments of Service, including the Drawings and Specifications, and shall retain all common law, statu- tory and other reserved rights, including copyrights.” Clearly, the AIA (and all design professionals for that matter) want to protect the designer’s work product,

THE ZWEIG LETTER June 4, 2018, ISSUE 1251

O P I N I O N

Before and after a disaster

Planning and preparation are crucial if you want to take care of your people, take care of your clients, and get your firm back to doing business.

H urricanes, bomb-cyclones, catastrophic floods – a well-considered plan for crisis and post-crisis operations can help your business weather the storm in more ways than one. Last year’s Hurricane Harvey, for example, was shocking even to a region that thought it had already seen the worst Mother Nature could serve up. While longer-ranging issues – why the region flooded where it flooded, how we should rebuild – will be years in resolving, the immediate imperative for area businesses was all about people. Who is safe? Who is missing? How can we help?

Brent Christian GUEST SPEAKER

Within days of Harvey hitting, RPS’ automatic notification system reached all 175 area employees to determine how each was affected by the storm and flooding, and to what degree. With the touch of a telephone button, an email, or a text response, employees could indicate the severity of “A well-considered plan for crisis and post-crisis operations can help your business weather the storm in more ways than one.”

For RPS, the key to operating after a major weather event or other disaster is first ascertaining the personal safety and location of each employee; then determining who’s been impacted, and to what extent; then working to mitigate and resolve those situations to get our people back on their feet and get our teams, our offices, and our business back to business. To make this happen, leadership must have robust processes for contacting employees, handling systems failures, and responding to widespread electrical outages, building closures, and inaccessible streets and transitways.

See BRENT CHRISTIAN, page 12

THE ZWEIG LETTER June 4, 2018, ISSUE 1251

ON THE MOVE GREENMAN-PEDERSEN, INC. ANNOUNCES THE APPOINTMENT OF THE NEW PRESIDENT AND CEO CHRISTER ERICSSON, P.E. Greenman- Pedersen, Inc. is pleased to announce that Christer Ericsson, P.E. has been named president and CEO. Ericsson joined Greenman-Pedersen, Inc. as a project manager for HTSD, a firm acquired by Greenman-Pedersen, Inc. in 1998. Since then, he has successfully led the growth of Greenman-Pedersen, Inc.’s New England Regional presence from one office to five offices in four states. For the past 18 years, Ericsson has served as the New England office’s branch manager, rebuilding the operation from a traffic engineering group to a multi-disciplined operation providing bridge design, construction inspection, protective coatings, geomatics, landscape architecture and UAS services. In 2015, Ericsson was promoted to chief marketing officer, a role in which he was responsible for geographic and discipline growth of Greenman-Pedersen, Inc., which is

comprised of 48 offices throughout the United States. With a passion and understanding of the importance of brand identity, strategic cross-branch marketing and the awareness of the changes in the engineering industry, his focus was on the development of the corporate communications plan and improved collaboration between the approximately 1,500 employees. As president and CEO, Ericsson will continue the strategic process and lead Greenman- Pedersen, Inc. in employee engagement and company-wide growth. “Greenman-Pedersen, Inc. recently celebrated its 50th anniversary,” Ericsson said, “and as we commemorate our past, we are excited about and focused on our future. As technology evolves, all of what we do becomes more and more integrated. The future success of Greenman-Pedersen, Inc. will be built upon the new and developing leaders collaborating and taking the company to higher levels.” “I met Ericsson at a project manager’s

meeting in 1999 and immediately knew he was a leader and people would support him,” said Steve Greenman, P.E., Greenman-Pedersen, Inc. chairman of the board. “Over the past 19 years, Ericsson and his staff have taken the New England operation from a branch that at times was struggling to stay afloat to one of the premier offices in the Greenman- Pedersen, Inc. organization. I have the same feeling that he will lead the entire Greenman- Pedersen, Inc. operation to new and exciting levels.” Greenman-Pedersen, Inc. is an employee- owned consulting engineering firm providing design and construction management services to both public and private sector clients. Areas of expertise include highway and bridge design, construction inspection, MEP design, traffic engineering, transportation planning, land development, training and development, underwater inspection, and protective coatings.

BRENT CHRISTIAN, from page 11

It assured employees we were making headway on operations and tactical issues, let them know we were actively working to get systems up and running, and assured them we put them first, always. At RPS, our team is our No. 1 asset – the health, safety, and well-being of each employee is paramount. Minimizing uncertainty and instilling a sense of connection are important to maintaining staff well-being and trust. Externally, RPS teams mobilized to bring food and other supplies to emergency responders in communities across the region. Additionally, we adjusted our social media outreach to reflect sensitivity to the crisis and utilized channels to impart important information. We wanted to let our communities and clients know that while we were working hard to restore our internal operations, we were also concerned with how our region was handling the devastation. All non-critical posts and updates were paused, and when operations were back up and running at functional levels, we issued a post that RPS in Houston was indeed back open for business. WHAT HARVEY TAUGHT US. It was this planning and preparation – long before the first raindrop fell – that enabled RPS to maintain our mission of putting people first. It was these plans and processes that gave our staff the tools and re- sources they needed to get back to work, whether from the office, from home, or from a temporary satellite location. It was these plans – executed during a difficult time by our dedicated employees – that allowed us to return quickly to full operations, keeping our commitments to our commu- nities and our clients, and keeping our projects on sched- ule. BRENT CHRISTIAN, PE, is senior vice president, Infrastructure, RPS. He can be reached at brent.christian@rpsgroup.com.

the storm’s affects on them personally: no damage, some damage, or extensive damage. This gave us a clear idea of how our staff fared in the storm and provided a roadmap going forward of resources needed and how to deploy those resources effectively. “Last year’s Hurricane Harvey was shocking even to a region that thought it had already seen the worst Mother Nature could serve up. While longer-ranging issues will be years in resolving, the immediate imperative for area businesses was all about people.” While the majority of employees reported none to minimal damage, some staff suffered significant impacts. Regularly scheduled check-ins were instituted to verify that all staff remained safe and that their needs had not changed nor their situation worsened. Once we determined the extent of need, within 36 hours RPS created a $100,000 employee relief fund. Additionally, we announced to RPS employees outside the impacted region that any funds they donated would be matched by RPS – this raised another $40,000. A fast-tracked process enabled employees-in-need to apply for this financial assistance quickly. Throughout the week following Harvey’s arrival, RPS continued to contact employees regularly via our automated telephone/email/texting system to provide updates on office closures, street conditions, and the progress on restoring full RPS operations. This consistent contact and built-in redundancy had a three-fold purpose.

THE ZWEIG LETTER June 4, 2018, ISSUE 1251

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