Risk Management

~ for ~
Professional Surveyors
~ ~ ~
New York State Association
of Professional Land Surveyors
Webinar
April 7, 2017

Presented by Gary R. Kent, PS

This program is not

a substitute for,
and should not be construed as,
legal advice

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 Avoiding Claims in the First Place

From Victor O. Schinnerer Company

Surveyor Professional Liability Claims

Frequency of Claims

1971 - 21.8 claims per 100 firms

1983 – 44.3 claims per 100 firms
2008 – 26.6 claims per 100 firms
(fairly constant since 1994)

Professional Liability Insurance Claims

Claims frequency (+/-)

• 12% 2003-2004
• 11% 2004-2005
• 10% 2006
• 13% 2007
• 10% 2008-2009
• 8% 2010-2011
• 7% 2012

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 Professional Liability Insurance Claims

In 2012, evidence indicated …

62% of cases against surveyors, claim did not
indicate culpability on the part of the surveyor.
But in 30% of those cases, defense expenditures
were above the deductible.

Professional Liability Insurance Claims

2003-2012
• 37% Houses/Townhomes
• 30% Land/Site development
• 5% Condos
• 4% Highways
• 4% Office buildings
• 4% Retail
• 3% Schools

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Professional Liability Insurance Claims

2003-2012 – Residential Claims

• 46% Boundaries/Easements/Trespass
• 26% Construction layout
• 11% Site prep

Professional Liability Insurance Claims

Most expensive claims?

Construction layout

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Professional Liability Insurance Claims

Common origination of claims

• No common understanding of additional services

• Untimely follow-up on unpaid invoices
• Poor communication on the part of the surveyor
• Untimely response to client questions or concerns

The surveyor’s professional obligation

Exercise reasonable…

• Care
• Skill
• Diligence

…in providing professional services

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 Survey standards
as a risk management tool
• Well-written standards
 Limit liability by providing a guideline for
surveyors in providing professional services
 Help resolve questions as to the appropriate
quality and content of surveys
 Provide a leveling effect amongst competitors
when writing proposals
 Help prevent confusion on the part of
potential clients on what level of services will
be provided

Survey standards
as a risk management tool
• Written standards set a minimum standard
of practice
• Help establish the normal standard of care
which is likely higher than the minimum
standard

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 Survey standards
as a risk management tool
• State mandated standards or guidelines
• Surveying society standards
 NSPS
 New York Guidelines
• ALTA/NSPS Land Title Survey standards

The written contract

as a risk management tool
The three most important items?
• Scope
 Clear and precise
• Compensation
 Prompt payment
 No unreasonable withholding
 Adjustment or renegotiation for
termed or delayed projects
• Schedule
 Not a warranty; must allow for
necessary adjustments

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 The written contract
as a risk management tool
• Clearly stated expectations
• Parties rights and obligations are clear
• Risks and rewards are addressed and
appropriately allocated
• Insurance is available to support obligations
• Change orders are addressed
• Understanding is confirmed in writing

The written contract

as a risk management tool
• Onerous terms and conditions to watch for
 Express guarantees or warranties
Not covered by professional liability insurance
Warranty of facts is fine
Warranty of services is not
Clauses may be cleverly disguised; be cautious
Cross out or change (if possible)

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 The written contract
as a risk management tool
• Onerous terms and conditions to watch for
 “Highest standard of care” [or “highest
professional standards”]
“Highest” is vague, immeasurable and unachievable
Common law standard - “duty to exercise the degree
of learning and skill ordinarily possessed by a
reputable surveyor practicing in the same or similar
locality and under similar circumstances”
Cross out and substitute with clauses like “…will be
performed pursuant to the normal standard of care
and [applicable standards]”
Educate client that a measurable standard is
necessary

The written contract

as a risk management tool
• Onerous terms and conditions to watch for
 Indemnity or hold harmless clauses
May shift liability from one party to another
May not be insurable if unrelated to the
surveyor’s failure to perform pursuant to a
standard of care
Negligence is already a legal remedy; no reason
for indemnity for negligence

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 Addressing Risk Management issues
• Indemnification clauses
 Problem: Client wants surveyor to defend it from
any claims, costs, losses and damages resulting
from the surveyor’s work

Addressing Risk Management issues

• Indemnification clauses
 Response: Your legal duty does not exceed the
indemnification of losses directly caused by your
negligence and that obligation is covered by your
E & O policy
Your contract should not extend your liability to
parties to whom you would not normally be
liable
If you decide to take on risks not otherwise
legally required, you should be compensated
accordingly

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 Addressing Risk Management issues
• Certification
 Problem: Lender insists on its own certificate
Often at the last minute
Surveyor is admonished not to change anything
in the certificate
These are hollow threats having only one
purpose …
To intimidate the surveyor into taking on
inappropriate and unacceptable liability

Addressing Risk Management issues

• Certification
 Response: Surveyor has an obligation and
responsibility to:
Rewrite the certificate so it does not:
o Contain express guarantees or warranties
o Violate the surveyor’s registration act
o Constitute the practice of law
On an ALTA/NSPS Land Title Survey: Provide it
on a separate sheet, not on the face of the plat
o (see Section 7 of the ALTA/NSPS Standards)

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 The written contract
as a risk management tool
• Terms that should be included
 Limitation of liability
Value of contract or $? – whichever is less
Particularly appropriate on low fee projects
with relatively high potential liability
Business decision to strike

The written contract

as a risk management tool
• Terms that should be included
 Worker safety
Job site safety is the owner or general
contractor’s responsibility, not the surveyor’s

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 The written contract
as a risk management tool
• Terms that should be included
 Document control and ownership
Documents should be “instruments of service”
and the property of the surveyor
Documents should not be “products” which
might otherwise be owned by the client
Sophisticated clients may require that
ownership of documents be transferred to the
client
Note that copyright and ownership are two
different issues

The written contract

as a risk management tool
• Terms that should be included
 Dispute resolution
Mediation, arbitration or litigation?
Professional liability managers find mediation
o less expensive
o less time-consuming
o less adversarial

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 Addressing Risk Management issues
• Dispute resolution
 Problem: Client’s contract contains no dispute
resolution clauses

Addressing Risk Management issues

• Dispute resolution
 Response: Acknowledging in the contract that
disputes may arise is a first step towards amenable
resolution of a dispute

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 Addressing Risk Management issues
• Dispute resolution
 Mediation
Voluntary process
Good faith (presumably) negotiation assisted
by a facilitator (“mediator”)
Mediator should be trained
Usually an attorney, but can be otherwise
May be mandated by a court prior to a trial

Addressing Risk Management issues

• Dispute resolution
 Arbitration
Adjudication of a dispute by a selected neutral
Note - Often allows consolidation and joinder so
all parties are involved
(may be detrimental to surveyors since they are often
dragged into a dispute that had relationship to the
professional services performed)

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 Addressing Risk Management issues
• Dispute resolution
 Certificate of merit (independent experts assess
possibility of fault)
 Dispute review board (independent experts
suggest solution)
 Partnering (Solve issue at lowest level possible
before it runs into a dispute)

Addressing Risk Management issues

• Provision of CAD files
 Problem: Client insists on surveyor providing CAD
files to architect/engineer

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 Addressing Risk Management issues
• Provision of CAD files
 Response: Contract needs to address intellectual
property ownership in 5 important ways, i.e.,
1. Signed/sealed copy controls over CAD files
2. Electronic info is a component of the instruments
of service for use only on the specific project
3. No representation as to the use of the information
for other purposes, durability, or medium
4. Any use other than for the intended purpose is at
receiver’s risk; receiver shall indemnify from
claims, costs, losses, damages
5. Transfer of info does not transfer license to the
underlying software and does not extinguish
rights of surveyor to reuse info in his/her practice

Addressing Risk Management issues

• Provision of CAD files
 Other considerations
Not the surveyor’s responsibility to distribute
subsequent changes to the provided files
If client owns files, can surveyor transfer them
to other parties?
Who will be using the data?
Surveyor needs to recognize that control over
data is lost once transferred

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 Addressing Risk Management issues
• Surveying on a hazardous site
 Problem: Client wants you to provide surveying
services on a site with environmental hazards

Written contracts for

Land Title Surveys
• Protect both you and the client
• But, the survey is typically required by whom?
The lender
• Yet, the surveyor is usually negotiating and
contracting with whom?
The seller or buyer
• And the seller or buyer has what interest in a
good (not to mention expensive) survey?
None?

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 Written contracts for
Land Title Surveys
• Specify scope
 2016 ALTA/NSPS Standards
 Applicable state standards
 Table A items
 Exceptions/Qualifications to Table A items (e.g.,
utilities, zoning, wetlands)
 Section 7 Certification and certified parties
 Address lender’s certificates and additional parties
 Title work to be provided
 Number of revisions/sets of comments

Addressing Risk Management issues

• Surveying on a hazardous site
 Response: Client needs to provide protections to
the surveyor
Provide protection and defense for any claims
arising out of the release of any contaminants
Provide for appropriate compensation for
increased level or service and risk
Allocate as much of the risk as possible to the
contractor who is insured for, and can manage,
the risks

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 Addressing Risk Management issues
• Surveying on a hazardous site
 Other considerations
Although the likelihood of culpability is low, the
chances of a third party claim are real
Preferred method of controlling risk is release
and indemnity agreement from client for any
claims against the surveyor resulting from the
actions of the contractor

Addressing Risk Management issues

• High risk projects
 Problem: Client wants you to take on a project that
involves risks beyond your control or far in excess
of the compensation you will receive

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 Addressing Risk Management issues
• High risk projects
 Response: Contractual provisions that shift risk
Limitation of liability
Indemnification by client for expenses, losses
or damages caused by risks beyond the
surveyor’s control
e.g., meritless claims

Questions?
Gary R. Kent, PS
The Schneider Corporation
8901 Otis Avenue
Indianapolis, IN 46216
Phone - 317.826.7134
gkent@schneidercorp.com

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