Beware the Duty to Defend
Posted on Aug. 29, 2012

Indemnity provisions are some of the most negotiated provisions in design professional contracts.  They can be highly technical due to specific wording.  Avoiding a problematic situation is best addressed during contract negotiations with the assistance of an attorney.  Many indemnity provisions prepared by owners include a requirement that the design professional “defend” the owner against claims brought against it arising out of the design professional’s services.  However, the design professional should eliminate any defense provisions because the defense of another is typically not covered by professional liability insurance.  It is an obligation that arises solely out of contract in the absence of negligence.  Defense costs can easily exceed $200,000, which is an expense most design professionals cannot afford.

Removing the defense provision entirely may not be possible in many cases, so an acceptable alternative is to tie any duty to defend or indemnify to a court finding actual negligence by the design professional.  An example of an acceptable indemnification provision is: “To the extent permitted by law, Consultant shall indemnify and hold harmless Owner and Owner’s officers and employees from and against all damages, injuries, liabilities, losses and expenses to the extent adjudicated as having been caused by the negligence of the Consultant.”  This example provision is consistent with what the law requires of design professionals regardless of the contract language.  Therefore, it should be covered under a professional liability policy.  Note that the language does not expressly require the design professional to defend its client.  Rather, the indemnification of the client will include reimbursement of the client’s costs of defense if (and only if) the design professional is found negligent.

Indemnification provisions are not to be taken lightly.  They are some of the most challenging contract provisions encountered because the consequences can be very costly.  It is always recommended that design professionals consult with their insurance and legal representatives if there is any doubt regarding indemnification language in a contract.

Construction Law
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About Adam

Adam
Attorney Adam T. Mow

Adam is a trusted resource for architects, engineers and other members of the construction industry in litigation, risk management, contract negotiations and mechanics’ liens. Adam is also a licensed architect and a past president of the Utah chapter of the American Institute of Architects. He has been elected by his peers to the Utah Legal Elite since 2009.

Awards and Recognition

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Excellence in the Study of Architecture, American Institute of Architects Certificate of Merit, 1999

CALI Award for Excellence in Mediation and Advanced Negotiation, 2003

Community Mediator of the Year, Utah Dispute Resolution, 2007

Graduate of the Last Decade, Ball State University, 2008

Utah Business Magazine, Legal Elite, 2009-Present

Mountain States Rising Stars (Construction Litigation), 2009-Present