Professional liability: Limiting your exposure
May 1, 2001 12:00 PM, By Mark Krieger, CBT
Broadcast engineers are an eclectic bunch. Put a few of them together at a social function, and you're likely to hear a discussion about almost anything - with the notable exception of professional liability. This isn't surprising, since bringing up the subject of one's professional slip-ups is likely to clear the table faster than the bar tab's arrival. Simply stated, no one likes to dwell on his mistakes in either past or future tense, much less the potentially devastating legal consequences. But professional liability is a serious matter, particularly for the contract engineer. Let's consider the following issues.
In the most basic terms, your potential liability as a contract engineer or consultant can take two forms: professional negligence and general liability, with which most of us are familiar. Liability is a legal responsibility for personal injury or property damage that may occur as a result of negligence.
For example, let's say you pay a service call to a transmitter installation in the elevator penthouse of a commercial building. While you are moving a toolbox, it falls and damages a piece of equipment belonging to another tenant in the space, making you responsible for the cost of repairs. Or, perhaps you run an extension cord across an aisle, and someone trips, resulting in an injury. Again, you may be held responsible for compensating the victim for related expenses. Though a legal determination of what constitutes negligence is not immutably fixed, the standard is fairly straightforward and is generally consistent from state to state.
Less familiar to most of us, however, are potential liabilities arising from professional malpractice, which Black's law dictionary defines as �Professional misconduct or unreasonable lack of skill�. Though the term is usually used in reference to cases in the legal or medical field, it is nearly interchangeable with the broader term �professional negligence.� Either way, it's a concept every contract engineer needs to understand. What it means is that you, as a practicing professional, may be held liable for damages or losses a client suffers as a result of your (commission of) errors or omissions. Suppose, for example, you lay out a plan for new studios at a medium-market radio station, specifying a network-based audio server system that you believe will be adequate to the task. Upon migration to the new studios, however, your client finds that the system is too slow to get the entire commercial inventory on air as scheduled. The client loses revenue and decides to sue you for professional negligence as a result of your error in calculating needed capacity.
Here's another scenario: You specify and install a solid-state FM transmitter for a client. In the process, you see that the manufacturer calls for a certain type of power surge suppression system to be installed as a requirement of certification of the transmitter's warranty. Knowing your client's limited budget, and judging the available power to be �clean,� you discuss the issue with the client in an informal conversation and elect to go without the suppression system. A few weeks go by before a spike results in extensive internal damage to the transmitter. To make matters worse, the manufacturer demands to inspect the installation before honoring warranty claims. Finding no suppression system installed, the manufacturer denies the warranty, and the client demands that you pay for all repairs, claiming that you never explicitly advised him regarding the conditional nature of the warranty. You counter that the client was provided a copy of the warranty when the transmitter was purchased, and decline to pay for the damage. The client sues you for professional negligence stemming from your failure to provide an explicit statement that the warranty would be voided if no suppression system were installed.
If the case is not settled and goes to trial, a judge or jury will likely rely on expert witnesses to determine the professional standard to which your performance will be held. Referring back to Black's law dictionary, the standard is �that degree of skill and learning applied under all circumstances in the community by the average, prudent, reputable member of the profession�� Thus, the definition is amorphous, particularly if an abundance of applicable case law isn't available. In our hypothetical case, that uncertainty could work for � or against you.
Clearly, this is the stuff that broadcast engineer's bad dreams are made of. Worst of all, it's the plausibility of such scenarios that makes them so scary. How, then, do you best protect yourself and your company?
A proactive approach
To begin with, consider your company's structure. Being incorporated may provide some insulation for personal assets should the worst case occur. However, the degree of protection offered by the �corporate veil� will vary from state to state and in no way indemnifies your company. Thus, it should be considered strictly as an addition to, and not a substitute for, other protections.
Secondly, the old adage, �put it in writing� applies in spades. Retain a reputable attorney skilled in professional liability, and have him review your contracts before signing to see if additions or changes in language can minimize your exposure. While some contractors and consultants feel they can dance around potential professional liability claims by working directly from proposals and avoiding contracts altogether, this only muddies the waters in a legal dispute. Avoid the tendency to rely on �conventional wisdom� when considering any legal issue.
Finally, invest in general liability and professional errors and omissions insurance. These policies are available from a number of reputable carriers and cover the types of issues we've discussed here. Take a look at the program available to members through the SBE. Details are available at www.sbe.org. Typically, these policies offer coverage upward of $1 million, often at modest premiums. Remember that the cost of this insurance is a deductible business expense. Furthermore, some companies will require you to hold such a policy before they'll do business with you, so it can also be seen as a competitive and prudent investment.
We all make mistakes. But by better understanding professional risks, and adopting strategies to compensate for them, you'll be better able to get a good night's sleep after a hard day's work.
Mark Krieger, BE Radio's consultant on contract engineering is based in Cleveland.