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This edition of “Contract Corner” focuses on the issue of professional ethics, with a twist. Client-developed agreements can sometimes place you in conflict with your ethical obligations. If you abide by the contract, you could be violating your profession’s ethical standards. Conversely, if you abide by the standards, you could be breaching your contract with the client.

We’ll present three contract clauses for you to read and consider whether your agreement to these clauses could put you at risk of violating your professional ethics. We’ll follow up each with our take on the topic.


Your performance
First up is language focused on the consultant’s performance, and might be found in the preamble (the “whereas” section) or confidentiality, scope of services, or standard of care clauses.

The following is an example of a client proposed contract clause we often see:

The Consultant accepts a relationship of trust and confidence with the Client. The Consultant will cooperate and exercise the specialized expertise and judgment required in furthering the interests of the Client at all times.

What do you think—do you have any concerns that this provision may conflict with your professional code of ethics? Are there any words or phrases that give you pause?

Let’s look at the same clause, this time highlighting the language that concerns us as your insurer:

The Consultant accepts a relationship of trust and confidence with the Client. The Consultant will cooperate and exercise the specialized expertise and judgment required in furthering the interests of the Client at all times.

First, the language changes the ordinary standard of care and may impose on you a fiduciary relationship with the client, increasing your liability and jeopardizing your professional liability insurance coverage.

For example, suppose that, as the construction of a project progresses, the client asks that you visit the jobsite several times to observe the work. Since construction observation services were not part of your contract with the client, will you be able to bill for these visits, or will the client point out that you’re furthering the client’s interests as part of your contract and that you’re not entitled to bill for the visits?

Also, “furthering the interests of the Client at all times” means that your interests and the interests of the public may fall below the clients. However, design professionals are licensed for the purpose of protecting the public health and safety, a duty that overrides any obligation to the client, including that of furthering the client’s interests at all times. Nothing in a professional services agreement should compromise your ability to carry out your responsibility to the public.

Both the American Institute of Architects (AIA) and the National Society of Professional Engineers (NSPE) address this duty in their ethics codes, with the NSPE Code II.1. reading, “Engineers shall hold paramount the safety, health, and welfare of the public. a. If engineers’ judgment is overruled under circumstances that endanger life or property, they shall notify their employer or client and such other authority as may be appropriate.”

The question then becomes, what language can you include in your contract that will give your client confidence that you’ll adhere to the standard of care, protect you from creating a fiduciary relationship with the client, maintain your duty to the public and, if necessary, be covered by your professional liability insurance? Here’s what we suggest, which is basically affirming for your client that you’ll perform to the standard of care:

In providing services under this Agreement, the Consultant shall perform in a manner consistent with that degree of care and skill ordinarily exercised by members of the same profession currently practicing under similar circumstances at the same time and in the same or similar locality.

Talk to your lawyer about also adding language that expressly disclaims a fiduciary duty and that affirms your professional duty to the public. (See “Resources.”)

Conflict of interest
Here’s another clause we see in contracts between clients and design professionals:

Except with the Owner’s knowledge and consent, the Consultant shall not engage in any activity, or accept any employment, interest or contribution that would reasonably appear to compromise the Consultant’s professional judgment with respect to this Project.

Is there language contained in this clause that concerns you? If you answered no, we agree. In fact, the language is taken directly from the AIA B101TM-2017, Standard Form of Agreement Between Owner and Architect.

This clause doesn’t contradict the AIA or NSPE ethical codes. AIA Rule 3.201 reads, “A Member shall not render professional services if the Member’s professional judgment could be affected by responsibilities to another project or person, or by the Member’s own interests, unless all those who rely on the Member’s judgment consent after full disclosure.”


Remember that while your professional code of ethics or applicable laws and regulations may change over time, doing the right thing is a constant.

Disparaging the client
Let’s turn to another clause we’ve seen in client-written contracts, known as a non-disparagement clause:

The Consultant agrees that, during the term of this Agreement and thereafter, any public statements made about the Project or the Client or any of its subsidiaries or affiliates or their respective officers, directors, employees, advisors, businesses or reputations shall be of a positive nature. The Consultant further agrees that the Consultant shall not, at any time during the term of this Agreement and thereafter, make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Project, the Client or any of its subsidiaries or affiliates or their respective officers, directors, employees, advisors, or businesses.

What language above do you find objectionable, if any? Or is it reasonable for your client, an entity that has hired you for a project, to expect that you and your employees will not disparage the client or the project?

Here’s the same clause with what we consider to be the unacceptable language highlighted:

The Consultant agrees that, during the term of this Agreement and thereafter, any public statements made about the Project or the Client or any of its subsidiaries or affiliates or their respective officers, directors, employees, advisors, businesses or reputations shall be of a positive nature. The Consultant further agrees that the Consultant shall not, at any time during the term of this Agreement and thereafter, make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Project, the Client or any of its subsidiaries or affiliates or their respective officers, directors, employees, advisors, or businesses.

This one-sided language could conflict with the sections of ethics codes that relate to your obligation to make objective and truthful public statements and to report violations of laws or regulations to public officials.

For example, suppose that your project client didn’t follow through on one of your design recommendations that would have helped prevent surface run-off, but instead went with the contractor’s method, which was cheaper but much less effective. After project completion, runoff becomes a reality and local building officials want to ask you about the building’s design. If you tell the truth—that the client sacrificed effectiveness in favor of savings—you could be in violation of the clause above. 

The AIA and NSPE codes of ethics address this “disparagement” issue. Among other things, AIA Rule 4.103 states, “Members speaking in their professional capacity shall not knowingly make false statements of material fact.” NSPE Code II.3.a. states in part, “Engineers shall be objective and truthful in professional reports, statements, or testimony.”

Work with your client to remove the clause, explaining why it puts you in conflict with your professional code of ethics as well as your responsibility to protect the public’s health and welfare. If your effort to remove the clause fails, then at least modify it so that both parties agree to refrain from making negative statements about the other in public forums, while you retain the right to provide information when legally required. You may want to use this language:

Nothing contained in this Agreement shall prevent the Consultant from fulfilling its legal and ethical requirements to protect the public by reporting to public officials any condition that, in the Consultant’s reasonable professional opinion, threatens the public health, safety and welfare. The Consultant shall have the right to provide information when required by a court or public agency or to use any information to defend itself against any claims or legal action.

Final thoughts
Make ethics part of your firm’s training agenda. Don’t count on young professionals learning much about ethics in their college curriculum; even if they’ve had a course on ethics, it was probably little more than an overview when compared with the complex ethical demands of real-world practice.

Most important, remember that while your professional code of ethics or applicable laws and regulations may change over time, doing the right thing is a constant.

Resources 
If you’re currently a client, see the “Confidentiality,” “Fiduciary Duty,” “Public Responsibility,” and “Standard of Care” chapters in AXA XL’s Contract Guide, available on the Learning Management System (LMS).

United States:
AIA Code of Ethics and Professional Conduct
ACEC Professional and Ethical Conduct Guidelines
ASCE: A Question of Ethics
NSPE Ethics Resources

Canada:
The Alberta Association of Architects (AAA) Code of Ethics
Architectural Institute of British Columbia Code of Ethics and Professional Conduct
The Association of Professional Engineers and Geoscientists of Alberta (APEGA) Legal Obligations & Code of Ethics
Engineers Canada: Public Guideline on the code of ethics
Ontario Association of Architects (OAA) Code of Ethics
Professional Engineers Ontario (PEO) Code of Ethics

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