Ethics Double Check 9

[KootK]

The situation:

1) I have a contractor client that accounts for 5%-10% of my annual revenue.

2) This contractor did some work on a property and, in the course of that work, may have done some inadvertent damage to the structure. This is the property owner's claim. The contractor doesn't really agree but has done some DIY reinforcement anyhow.

3) The property owner wants a structural engineer to sign off on the damage / repairs before paying the contractor for their services.

4) The contractor has engaged me to help the property owner with this. They see this as a favor that they are trying to do for the property owner. They've not leaned on me to influence my recommendations etc. They just want to do what's right and exit the situation with their reputation in tact as much as possible.

5) The property owner has raised the question as to whether or not this is a conflict of interest for me.

Is this a conflict of interest for me? My instincts are not always great on this stuff. I just like to work and ride my bike(s).

Yes, I do have a vested interest in helping my contractor client to solve their problem. However, I consider that interest to be trumped by my ethical obligations to our profession and the public.

Frankly, I struggle to envision a real world assignment where I would not have some vested interest in helping my clients in ways that would be in opposition to my ethical obligations. It's a constant balancing act. Saving people money and making whacky architectural dreams come true is the cornerstone of my business after all.

What say you?

 

[mfgenggear]

If you do this you have taken responsibility
I don't recommend it. I would consult an attorney .

 

[canwesteng]

The contractor is being asked to provide an engineer to sign off on the work? Or is the homeowner paying you? If the contractor is paying for the engineering, then they are allowed to hire whoever they want. If the owner is paying, well they can find someone else if they like, as long as you have disclosed your relationship to the contractor it's fine.

 

[TRAK.Structural]

The contractor is being asked to provide an engineer to sign off on the work? Or is the homeowner paying you? If the contractor is paying for the engineering, then they are allowed to hire whoever they want. If the owner is paying, well they can find someone else if they like, as long as you have disclosed your relationship to the contractor it's fine.

Agree with this. As long as you are completing the analysis/design in accordance with the applicable codes and upholding your ethical duties in the practice of engineering than I think you are fine.

 

[phamENG]

Yes, it is a conflict of interest. Just like both sides of a real estate deal should have their own agent, or both sides of a lawsuit should have their own lawyer, parties in a dispute like this should have their own engineer. I think this is reinforced by the fact that the property owner brought it up.

When I'm brought in for similar situations, I insist on bringing this up to the owner. I'll explain to them that my first commitment is to the health and safety of the public - generally to be interpreted as the occupants of a structure - but that I'm being paid by somebody who has an interest in the problem going away. If they take me at my word and agree, then I'll move forward. If they don't, I step back and let them hire their own engineer. Some people just don't know where to begin, and would rather take my word for it than try to find an engineer.

 

[kissymoose]

The whole point of this is to make the owner feel good about what's going on. Since they've already brought up the issue, it has already failed that purpose.
I'd recommend whoever's paying for the assessment engage someone else.

 

[jhnblgr]

There is a conflict of interest. In this situation the owner would have to independently hire an engineer. Now if the contractor recommends you to the owner and all parties are aware of the relationship and take no exception to it and the owner hires you directly this should remove the conflict of interest since engineers work for various entities and it would severely limit your work. That being said you cannot have worked directly for the contractor on the project in question.

 

[Greenalleycat]

There is a potential conflict but I don't see this as something that prevents you from being involved
The homeowner asked the contractor to get an engineer, he has provided one that he knows - what else is he supposed to do? Find someone openly hostile to him to give the homeowner reassurance of independence?
If it's a big deal you could propose that the homeowner engage you directly with your fees paid for by the contractor or substituted directly from the contractor's final payment - that way the homeowner has a greater control over the process
This may be a nice way through it too as both parties seem to feel aggrieved here so the best solution is one that all parties agree on: the contractor proposes an engineer he is happy with, the homeowner has the contract control in case of issues

Regardless, the point for the homeowner is that there is a professional engineer signing off the repair: if you do the dirty on him to help your mate, your insurance is there regardless
He has what he needs, which is someone backing the repair that he can sue

So the main thing here is that this is a risk for you: you're taking the risk for someone else's mistake and repair
But for a good client, that is what you do: you help them using your professional skills
I have been involved in very similar cases here and have felt comfortable to do so
Just make sure that the repair you sign off on is one you ARE comfortable with: that's where your only ethical risk lies IMO

 

[Tomfh]

Like you say, if this is a conflict of interest, then so is much of the work we do for builders.

That said, if the builder’s client perceives it as a conflict, that perception often matters more than the technicalities. Given the impression exists that you’re on the wrong side, it may be wise to acknowledge that concern and step back if necessary.

 

[ANE91]

I work in this space of pre-litigation (and litigation) regularly in my capacity as a forensic engineer.

First and foremost, if you have any intent to engage in this work, which it seems like you do, then consult with an attorney versed in construction defect law + the engineering practice acts in your state. Most conflicts can be waived up-front with appropriate documentation. Some cannot. Note that certain state laws heavily favor homeowners over contractors; other states have it the other way around.

Next, recognize that the contractor’s performance of remedial work already establishes a degree of admission of damage, or at the very least an acknowledgement of his impartial/incomplete work. He can’t play both sides of the damage coin. What do you mean he “doesn’t really agree?” A jury will find him either liable for some portion of the damages or not. Damages is money; damage is to the building.

What your contractor really needs to do is get with his insurance company about builder’s risk coverage. If he already has a policy, then you don’t need to get involved, as his insurance company will handle it. I gather that he has no policy, which is part of the problem here.

Residential construction is relatively more emotional than commercial. This is relevant insofar as how contentions like this play out. If you’re involved at all, and the contractor later files for bankruptcy, there is precedent for the homeowner to come after you, instead, simply because of your “deeper pockets,” as perceived by the homeowner.

I personally consider this matter to have at least the appearance of a conflict. What specifically makes this a conflict, to me, is the contention between parties with opposing interests coupled with your history with the contractor. It could very easily have not been a conflict had the contractor retained you to assess his work in advance of both the homeowner’s claims and the contractor’s subsequent remedial actions. Even then, the first question you’ll be asked in a deposition is about how much work you do with this contractor, in an attempt to establish your pecuniary interest in the outcome.

You wanna help this guy; I get it. You should. You can help him by advising him that his best course of action is hiring an independent engineer that he has never worked with before. If he doesn’t like that engineer’s findings, then he can explicitly request no report from that engineer and get a second opinion. There’s nothing wrong with getting a second opinion, unless it can be established that the contractor is “opinion shopping.” Whether that’s 2 opinions or 6 opinions is up to the attorneys. The owner will most certainly be doing so when they read anything from the contractor that says, “damage is non-existent/minimal and can be cheaply repaired.”

 

[mfgenggear]

I work in this space of pre-litigation (and litigation) regularly in my capacity as a forensic engineer.

First and foremost, if you have any intent to engage in this work, which it seems like you do, then consult with an attorney versed in construction defect law + the engineering practice acts in your state. Most conflicts can be waived up-front with appropriate documentation. Some cannot. Note that certain state laws heavily favor homeowners over contractors; other states have it the other way around.

Next, recognize that the contractor’s performance of remedial work already establishes a degree of admission of damage, or at the very least an acknowledgement of his impartial/incomplete work. He can’t play both sides of the damage coin. What do you mean he “doesn’t really agree?” A jury will find him either liable for some portion of the damages or not. Damages is money; damage is to the building.

What your contractor really needs to do is get with his insurance company about builder’s risk coverage. If he already has a policy, then you don’t need to get involved, as his insurance company will handle it. I gather that he has no policy, which is part of the problem here.

Residential construction is relatively more emotional than commercial. This is relevant insofar as how contentions like this play out. If you’re involved at all, and the contractor later files for bankruptcy, there is precedent for the homeowner to come after you, instead, simply because of your “deeper pockets,” as perceived by the homeowner.

I personally consider this matter to have at least the appearance of a conflict. What specifically makes this a conflict, to me, is the contention between parties with opposing interests coupled with your history with the contractor. It could very easily have not been a conflict had the contractor retained you to assess his work in advance of both the homeowner’s claims and the contractor’s subsequent remedial actions. Even then, the first question you’ll be asked in a deposition is about how much work you do with this contractor, in an attempt to establish your pecuniary interest in the outcome.

You wanna help this guy; I get it. You should. You can help him by advising him that his best course of action is hiring an independent engineer that he has never worked with before. If he doesn’t like that engineer’s findings, then he can explicitly request no report from that engineer and get a second opinion. There’s nothing wrong with getting a second opinion, unless it can be established that the contractor is “opinion shopping.” Whether that’s 2 opinions or 6 opinions is up to the attorneys. The owner will most certainly be doing so when they read anything from the contractor that says, “damage is non-existent/minimal and can be cheaply repaired.”

This what I was trying explain . Very well written an communicated.

 

[Rabbit12]

The whole point of this is to make the owner feel good about what's going on. Since they've already brought up the issue, it has already failed that purpose.
I'd recommend whoever's paying for the assessment engage someone else.

I agree with this take.

The contractor has engaged you and is paying you to approve their fix. That absolutely is a conflict of interest. Doesn't mean you'll act unethically as you very likely will do the exact same thing in this situation if you were paid by the homeowner.

I think this is similar to how special inspections are required to be handled by the IBC. The contractor is not supposed to hire an inspector to inspect their work. The IBC requires contractual separation between these parties to avoid potential conflicts of interest. It's the classic fox guarding the hen house.

 

[Tomfh]

The contractor has engaged you and is paying you to approve their fix. That absolutely is a conflict of interest

Builders arent allowed to engage their engineer to help fix something?

 

[phamENG]

Builders arent allowed to engage their engineer to help fix something?

They most certainly are. But there's a difference between hiring an engineer to help them find a solution for the homeowner and hiring them to placate the owner and avoid a lawsuit.

 

[KootK]

Kick ass team response here, per usual.

If the contractor is paying for the engineering, then they are allowed to hire whoever they want. If the owner is paying, well they can find someone else if they like, as long as you have disclosed your relationship to the contractor it's fine.

So far, that speaks to me the most. It is the contractor paying for the engineering.

I do not, now, feel that there is a conflict of interest here so long as all parties know of my relationship with the contractor (they do).

My newly clarified thinking is this:

1) This is dispute resolution. As such, both sides should probably have their own expert.

2) By virtue of who is paying me, I am the contractor's expert.

3) If the property owner wants their own expert for any reason, that's their prerogative.

 

[KootK]

If you do this you have taken responsibility

I don't mind taking responsibility here. It's the point of the exercise really.

 

[Tomfh]

They most certainly are. But there's a difference between hiring an engineer to help them find a solution for the homeowner and hiring them to placate the owner and avoid a lawsuit.

The only difference is the context that the owner has kicked up a stink. In normal circumstances a builder fixes something, and their engineer approves it, and life goes on. The difference here is the owner jumping up and down saying “you can’t use him!”

 

[XR250]

IMHO, It's only a conflict if you are lowering your standards to maintain your future livelihood.

 

[Rabbit12]

Builders arent allowed to engage their engineer to help fix something?

This is after the fact though. Is what I did OK? That's a monumental difference between, "Hey, Mr. Koot here is a problem can you help me with a solution?".

In this situation if KootK doesn't agree with the solution and wants to make the contractor do something more elaborate he risks 5-10% of his business which creates a conflict of interest. Or from the owners standpoint they can get the impression that maybe KootK is just rubber stamping this because he gets a lot of his business from this contractor.

 

[KootK]

Yes, it is a conflict of interest. Just like both sides of a real estate deal should have their own agent, or both sides of a lawsuit should have their own lawyer, parties in a dispute like this should have their own engineer. I think this is reinforced by the fact that the property owner brought it up.

Thanks for that. I agree with most of it other than it being a conflict of interest. See my previous post. Yes, both parties probably should have independent council of sorts.

I'll explain to them that my first commitment is to the health and safety of the public - generally to be interpreted as the occupants of a structure - but that I'm being paid by somebody who has an interest in the problem going away. If they take me at my word and agree, then I'll move forward. If they don't, I step back and let them hire their own engineer.

This is pretty much verbatim how I handled this before starting the thread. I'll try to post a version of that here. There very first thing I said to my contractor client on the phone was: I'll try to help but it remains to be seen whether or not the owner will see me as truly "independent".