What are the key factors in client selection?

04/01/2019 by James W. Walker

Design professionals, like all professions (including lawyers), delight when the phone rings with a prospective new client on the line wanting to hire you for a new project. However, any lawyer who represents design professionals can tell you stories about projects that went south and ended up in litigation almost entirely because red flags at the commencement of the engagement were ignored. No project is completely without risk. However, managing risk from first contact with a new client is as essential as managing risk during the engagement itself. Some risks may warrant walking away from the engagement altogether; others may be appropriately managed through thoughtful contract negotiation. This article is not intended to give advice on which new clients to take on; it is intended to flag issues that will allow you to make better business decisions within your risk profile and tolerance.

Some red flags to consider when deciding if you want to work with a prospective client at all, and if so, risks to consider when putting together the terms your contract beyond scope and fee:

Client’s project experience

  • Client is inexperienced generally or inexperienced with the project type, scale, cost or scope proposed
  • Client has only a vague notion of desired program
  • Client has unrealistic expectations for budget, fees and/or schedule
  • Client is chasing the lowest bid for design services
  • Client is in poor financial condition or has no clear plan to pay for/finance design and construction

Client leadership structure

  • Client management is divided or unclear (churches, some government entities, condo associations, etc.)
  • Client does not communicate timely, effectively and honestly
  • Client does not want to sign a written agreement

Client’s other business experience

  • Client routinely falls behind on paying bills
  • Client has a history of claims or litigation
  • Client has a bad reputation with your peers or in the business community generally

Project

  • Project type carries higher risk relative to fee –church, high end single family residential, condos, charitable org
  • Project type has a high discipline-specific risk, like tunnels and bridges for structural, or urban infill projects for civil, student housing or hotels for MEP, etc.
  • Project type, scale, scope or location is outside A/E’s experience and comfort zone

Miscellaneous

  • Client has pre-selected a contractor and the contractor has any of the issues above
  • Client demands contract include warranties, broad indemnity, or other unusual risks to the A/E
  • Client wants to assign duties to design professional that do not belong in a design professional’s service agreement, e.g., dealing with hazardous materials, testing obscure equipment, purchasing or supplying equipment of furnishings
  • Client is likely a one-off

About the Author:

Jim is an AV® rated trial lawyer who has tried more than 200 cases to verdict in the federal and state courts in Virginia and the District of Columbia. Jim focuses on complex civil litigation, including defense of professional malpractice lawsuits against design professionals, accountants and lawyers, construction defects, business and contract disputes, product liability, toxic torts, and catastrophic injury and wrongful death matters. For more information, please contact Jim at jwalker@vanblacklaw.com.

*This article was published on the March 2019 edition of the Travelers newsletter, section “Tips from the Bar.” 

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