The Structural Engineer > Archive > Volume 72 (1994) > Issues > Issue 17 > Legal Liability and the Role of Professional Indemnity
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Legal Liability and the Role of Professional Indemnity

A career in private practice can be rewarding for those engineers prepared to be masters of their own ship. However, such positions involve a considerable amount of responsibility and can involve risks that go far beyond the usual commercial considerations of running one’s own business. Unlike many commercial enterprises, professionals often carry a unique burden that arises from the nature of the services that they provide to their clients. In short, the fees charged by professionals are usually a tiny fraction of the potential loss that could be suffered by the client in the event that the professional’s advice is incorrect. Such an unbalanced ‘risk reward’ ratio is particularly pronounced within the construction industry where an engineer’s design fee might only be a small percentage of the overall capital cost of the contract. In a ‘worst-case’ scenario this could produce a claim many times the capital cost and there are certain characteristics of the construction industry that can exacerbate this position: 1. Building structures tend to be high-value items, and as a result, this can mean that repair costs can be significant in the event of a design error. 2. The construction process often involves numerous parties with differing responsibilities, and this can create an inherent degree of friction and disagreement. 3. Consequential loss can be substantial in the event that a building user is unable to conduct his business while repairs are being undertaken. 4. There is always the possibility of bodily-injury claims as a result of structural collapse bringing the possibility of a criminal prosecution as well as a civil claim, where damages are often very sizeable. 5. In the current economic climate, clients’ expectations are always demanding, but this is seldom commensurate with their willingness to pay an adequate fee for the job. F.W. Chappell