CLIENT: CASE SCENARIOS
LITIGIOUS CLIENT An interior designer agreed to work for a client that was frequently involved in litigation. The client did not approve of the antique French floor that was moved to his Palm Beach estate from a chateau in France. He filed suit and refused to budge from his initial demands. It was estimated that the cost for taking the case through trial could exceed $400,000. The interior designer and client finally agreed to a settlement of $235,000 and a waiver of the interior designer’s $70,000 in fees. In addition to the $235,000 settlement, the insurer also paid more than $250,000 in legal and expert fees. JOINT AND SEVERAL LIABILITY A municipality hired a civil engineer to design a pedestrian walkway across a 12-lane highway. One night, a vehicle struck two minors as they crossed the highway. Although the engineer’s design included crosswalk warnings, it was alleged that the warnings were not large enough. The injuries were very serious, resulting in an estimated jury verdict of $20 million. The department of transportation and the city each had statutory caps of $250,000 per child. Because of the joint and several liability laws in the state, the engineer could have been responsible for the entire settlement, even if the engineer was found to be only 1% negligent. The case settled for $3.5 million. COLLECTING FEES AND COUNTERCLAIMS A small town retained a civil engineer to design a new sewer system. The town wanted additional components and eventually ran out of money. The town sued the engineer for cost overruns of $1.2 million. The engineer was still owed fees of $350,000. Although there was no liability on the part of the engineer, the town could not release their claim as long as they still owed fees to the engineer. The engineer was finally forced to compromise his fee claim, accept partial payment from the town’s insurer, and collect the remainder of fees over a period of years. POOR CLIENT SELECTION An architect agreed to design a condo project for a developer that was new to town and had no ties to the community. The developer’s emphasis was on cheap, fast construction with little concern for quality. He paid low fees and refused to allow the architect to provide construction contract administration services. Several years after the units were sold, the homeowners association filed suit, alleging numerous design and construction defects. The developer had left town and did not have insurance. Despite minimal liability, the design team contributed over $2 million to settle the claim.
14 • From Risk to Profit - Benchmarking and Claims Studies
Victor
Made with FlippingBook Publishing Software