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COPYRIGHT 2006 Hanley-Wood, Inc.
Architects who've never been involved in a professional liability claim should count themselves lucky--and knock on wood. Those who have know how quickly a lawsuit can turn ugly. Litigation typically takes on a life of its own, consuming the feuding parties emotionally and financially. And in the end, the winners often find that the settlement amount wasn't worth the disruption to them and their families. The fallout from a court trial is broader, too. After each side finishes bringing out the big guns, any lingering hope of mending a broken relationship is gone. For all of those reasons, nearly a decade ago, insurance companies began asking policyholders to use mediation to settle claims out of court. It's a voluntary, nonbinding process that involves hiring an impartial third party to help resolve the conflict--usually within a day.
Back in the late 1980s, when architects began to hear about the use of mediation to clear up disputes, most shied away from the idea. Even after it began to gain widespread acceptance as a speedy way to resolve charges in the areas of civil rights and consumer protection, architects continued to view it as a sign of weakness, as though it would signal to their opponent that they didn't have a strong case. Enter the litigation-happy environment that grew out of a number of failed condo projects in the 1990s, and that attitude began to shift. Architecture firms began to realize how expensive and time-consuming a court trial is. Nowadays, mediation is considered standard, and AIA contracts typically mandate mediation as a practical first resort.
Of course, not every case should be mediated. Frank Musica, a risk management attorney at liability insurance provider Victor O. Schinnerer & Co., Chevy Chase, Md., says that when there is a clear-cut case of designer error, it's better to rectify the problem immediately. Conversely, when it's obvious a design firm is being dragged into litigation frivolously--say an injured construction worker is seeking more damages than he could get through workers' compensation--those cases are usually successfully fought in court. Of the 4,500 claims among Schinnerer/CNA's policyholders each year, less than 1 percent go to litigation. They're either settled or mediated--80 percent of them successfully. Even among professionals who make a living...
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