Melissa Dewey Brumback’s Construction Law in North Carolina is, as you might expect from it name, a regionally focused blog about North Carolina construction blog. I’ve been aware of her blog from the earliest years of the Best Construction Blog competition, as her coverage area matches that of our North Carolina Construction News (NCCN) publication.
The value of this sort of blog is its focus; there is much useful content for anyone interested in construction law, but the real utility occurs when you are either in or considering participating in the North Carolina market.
Her post explaining why you should use a North Carolina lawyer is legitimately self-serving, a message that causes some conflict for me, since her practice is not among several law firms advertising in NCCN. (Nevertheless, I do my best to keep my own commercial considerations out of this blog and competition.)
One thing to keep in mind is that if you practice in multiple states: be sure you are well aware of the rules and regulations concerning your license in each state. Each state does things a little differently, and what may be perfectly acceptable in one state may not be in another state.
For example, I had an out of state professional design firm that was unaware of the supervision requirements of non-professional staff that is required under North Carolina law. Another client had some North Carolina references on its website without an appropriate disclaimer as to who was, and who was not, licensed in North Carolina. In both of those cases, I was able to help the professional firms get out from under the violations with minimal damage, but it cost time, money, and aggravation.
In another post, however, she takes on an issue that could affect anyone signing a construction contract, regardless of location — the “duty to defend” clause”..
As I told my client, a duty to defend clause is not a good idea for a couple of reasons. First, if you agree to provide a defense, what that means is that you are footing the bill for the Owner if the Owner is sued by another party. Think about that for a minute. You are paying legal fees for someone else’s legal defense. You may or may not be able to direct the litigation or have a say in who is hired. Can you say open check book?
Secondly, and more importantly, the duty to defend is almost never insurable. What that means is that your professional liability carrier will not be footing the bill—your Firm will be doing it. This is not a case of adding the Owner as an additional insured, so do not confuse the two. Agreeing to a duty to defend is an extremely burdensome, and potentially costly, mistake.
What do you do if your owner is insisting on such a clause? Try to get the clause written out of the contract, period. Point out to your owner that it is not covered by your professional errors and omissions policy. That alone is often enough to get owners to agree. You might also contact your insurance carrier/agent to add weight to your statement. They can point to the provisions in the policy that will likely exclude coverage.
If the owner will not strike the provision, then what? Seriously think about whether this is a risk you can afford to take. What type of project is it? Do you know the contractor and other parties—are they reputable and qualified? And most importantly, is the profit to your firm such to justify the potential risk. Usually, the answer to the last question is no.
Overall she writes a great blog, certainly one worth of your consideration and vote.