By James G. Stevens, Jr., Esq.
It is human nature to sometimes be a little casual in our approach to smaller tasks. After all we’ve done them many times in the past without a problem and perhaps even picked up some decent fees for limited effort (or at least picked up some cash flow that helps with the overhead). As attractive as that low hanging fruit may be sometimes, don’t let your guard down. “I did it for a low fee or no fee” is not a defense recognized in the law. Your duty to your client and the public is not dependent on the size of the job or the size of the fee. The duty is always to comply with the standard of care. Although it may seem like a bother for smaller projects which appear to have minimal risk, a written contract (after all the oral agreement to provide services is a contract too just not one that is well defined) can help you manage and control the unexpected exposure that can arise from a small project. The contract doesn’t have to be and probably shouldn’t be a standard form agreement for services as authored by well-known professional organizations. Using the standard form documents on a smaller project should cause you to cross out, that which you are not providing and which don’t apply and that in itself would be time consuming too. You might as well spend your time drafting a contract tailored for your project with a clear scope of services and a clear statement of what facts or assumptions the services are to be based on. Significant limitations on the services should be listed. The duration of the services should be spelled out in certain terms and those time limits or milestones you don’t control should be identified. The payment terms should be clear and unambiguous. With commercial clients a clear limitation of liability clause should be included. A clause requiring reimbursement for attorney’s fees to the successful party in litigation (even if it is reciprocal) would help preserve the small fee that you did earn if you are in the right. Specifically limiting the person or entity that may use or rely upon the services or work product helps keep the potential number and identity of claimants within your control. Expanding that circle should require your written consent. Don’t forget to have the client sign the agreement- no sign, no services, no matter how “good” the client is. These clauses should all be in contracts for smaller projects.
True story illustrating the point: An engineer did a Phase I Assessment for a modest 4 figure fee. The project was taken on with the expectation that more work from this client would coming be in the future. On the right track, a written agreement with a limitation of liability clause was executed but the contract was silent as to who could rely on the report. A stranger to the contract, a company related to the engineer’s client, purchased the property and of course ran into what it claims is a 6 figure problem. The stranger sued the engineer and others. The limitation of liability clause was raised as a partial defense but as of this date, because of the complexity of the case (federal court, multiple parties etc.) the engineer has racked up legal expenses of 5 figures and mounting. The contract doesn’t have a clause allocating legal fees to the winner. The engineer has lost even if he wins.