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10 December 2010

It is not unusual for your client to approach you to directly engage a variety of other consultants required for a project. Indeed, this can be a very common practice. It is important to note however that by complying with such a request you will increase your exposure on that project by virtue of the contractual relationships you enter into with your sub-consultants. It is for this reason that you must very carefully consider whether you wish to take on this role.

By being the party who contracts with the other consultant (rather than your client directly) you are setting up a situation whereby your sub-consultant has contractual responsibilities to you rather than your client. Leaving aside the fact that by virtue of your contract with the sub-consultant you will be legally obliged to pay the sub-consultant’s fees (even in the event that this payment is not forthcoming from the client), the relationship between you and the sub-consultant also means that if ultimately the client is unhappy with the work being done by the sub-consultant, you are the client’s first point of call for complaint. The effect of this is that if there are problems you will always be involved. Perhaps to a much greater extent than you might like!

Claims made by clients solely based on the fact that you engaged the sub-consultants are far from rare. Often it is impossible for a client to make a claim with respect to the unsatisfactory performance of your sub-consultant without involving you, and while you may not have contributed in any material way to the substance of the complaint, you will be responsible for it.

If a matter is litigated, the additionally assumed responsibility for the performance of your sub-consultants will manifest as a claim directly against you which will require an active defence. This will usually involve a claim by you against your sub-consultant in order to mitigate your liability to your client. You may be successful in transferring full exposure to your sub-consultant in the proceedings but this will still come at a cost to you both in terms of time, inconvenience and or course, legal fees.

If a matter is not litigated it is in your very best interests to attempt to broker a resolution between your client and your sub-consultant at the earliest stage possible and on terms acceptable to both parties. Often facilitating a “round table meeting” or a “without prejudice conference” is the best way to do this at first instance, particularly in circumstances where all the relevant parties are still on good terms.

Should you find yourself caught up in a dispute regarding the performance of your sub-consultant, it is vitally important that you notify your insurer of the circumstances and then take all the assistance you require from your claims manager. Remember, often a proactive approach right at the beginning of a dispute can make a world of difference to the maintenance of commercial relationships and hopefully result in a positive and fair outcome for all involved.

For further information in relation to the pros and cons of engaging sub consultants, please refer to the claims department or the excellent “Risk Rule” – Liability for Sub-Consultants – prepared by our Risk Managers.