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Preparation can aid building design professionals in disputes: PLUS speaker

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LAS VEGAS — While building design professionals do not necessarily anticipate legal disputes before they begin a project, preparing for such a contingency can be helpful, says an expert.

For instance, should you select arbitration over traditional litigation at this stage, there are “a number of things you can do to hammer out some of the negative aspects of arbitration,” in advance, said Jeffrey R. Neidle, Farmington, Connecticut-based vice president at OneBeacon Professional Insurance, a unit of the OneBeacon Insurance Group Ltd.

Mr. Neidle spoke Thursday at a session of the Professional Liability Underwriting Society’s annual conference in Las Vegas.

Building design professionals want to control discovery costs as much as they can, he said. In addition, the design professionals may “want to also to throw in mandatory mediation provisions,” he said. “This is a good idea for a few reasons,” including that arbitration is final and cannot be appealed, whereas mediation is voluntary and “you know what you’re getting,” said Mr. Neidle.

It is also a myth, he said, that arbitration is necessarily less expensive and quicker than litigation. Arbitrators are paid, he said, so they may have a “subtle incentive” to move cases along more slowly than a judge would, he said.

Other speakers at the session included Wendy D. Testa, a partner with law firm Wilson, Elser, Moskowitz, Edelman & Dicker L.L.P. in Philadelphia, who warned that design professionals who have both professional liability and general liability policies “may still be at risk for, or exposed to, gaps in coverage,” which she has seen in construction defect cases.

Another area where problems may arise is if the design professional promises the “highest standard of care,” said Kenneth J. Wittman, senior vice president with brokerage Dealey, Benton & Associates in Santa Ana, California. This can create “real issues” in defending subsequent litigation, as well as coverage issues if the standard of care is elevated, because insurance policies only respond to a negligence standard, he said.

Speakers at the session also warned against design professionals wearing too many hats on a project. In addition to explicitly stating what they will do beforehand, they should also explain what they will not do in a project, said Nicole L. Mancino, Exton, Pennsylvania-based vice president, underwriting, at XL Insurance, a unit of XL Group P.L.C.