It is not uncommon for a design firm to receive a request from its client owner (Owner) to execute a document required by the Owner's lender. Oftentimes, this is an urgent ‘must-do or the world will end’ request. The form is known by various names, including Consent to Assignment, Collateral Assignment of Architects/Engineers Contract, Architect/Engineer Certification and Consent, and more. In this article, we shall refer to the document as the ‘Lenders’ Consent’. 

Risk management is a vital component of any successful A/E firm. Whether you’re establishing a new program or refining an existing one, taking proactive steps to mitigate risks can safeguard your firm’s reputation, profitability, and future stability. 

Time is a crucial element that all professionals, particularly design professionals, must manage effectively. Few professions are as bound by strict schedules as architecture and engineering (A/E) firms. Frequently, clients of A/E firms demand and expect their projects to be completed as quickly as possible. Many clients mistakenly believe that A/E firms somehow have control over time—control over the project completion dates. Reality is otherwise, but A/E firms can do a poor job of educating their clients about their inability to control project completion in a timely manner. We have all witnessed project schedules go awry for various reasons. While it may be easy to identify a specific cause, multiple factors often contribute to a delay, making it difficult to pinpoint responsibility. 

From the very start of a potential project, time is a significant concern. As owners begin conceptualizing a project, they immediately consider the timelines involved. Owners may face delays in securing funding, selecting a project team, or adhering to deadlines set by others that are non-negotiable. The A/E firm must also contemplate time at the outset of their involvement. Is the proposed schedule realistic? Can they mobilize their staff as required by the schedule. What potential threats could hinder the timeline, such as labor shortages, supply chain issues, permitting problems, or public resistance? Some of these issues are not in the control of the A/E, but the Client may still find reason to put blame on the design firm.  

Some clients, we know, often expect perfection as to projects coming in on time, within budget, and code-compliant.   Many believe the design firm's plans and specifications should be perfect, with no errors, omissions, or deviation from code.  That’s what the client is paying for, is it not?  Of course, the goal of all designers is to meet these expectations.  And most of the time, designers are quite successful in doing so.  Those firms that do not meet such expectations disappear over time.  Success is a wonderful thing.  But we know what happens when it is when the project doesn’t come in on time, comes in over budget, or it is discovered the plans are allegedly not in strict compliance with code.    Owners become unhappy and look to the design firm to ‘make it right’.  

We look at code compliance issues with a broad stroke since so many variables are involved.  Without a contractual promise to provide plans in strict compliance with code, courts will usually determine responsibility based on the standard of care.  In preparing its drawings, did the design firm act within the applicable standard of care? There are important legal distinctions between a claim of negligence (breach of the standard of care) and a breach of contract claim. It is often much easier for a client to prove negligence than a breach of contract.  Remember, most breach of contract claims are simply not insurable under any firm’s professional liability policy.  Such policies are designed to cover negligence claims and usually exclude coverage for breach of contract claims.  So,,,, this is an important issue for design firms.