Risk Management articles for surveyors
When commercial pressures dictate the way you work...
by Tim Prior LLB AIRM, Senior Risk Management Consultant
Do the pressures of panel valuations see you carrying out work in half the time it should take? Are some files less than a complete record of the client’s requirements, particularly where they have changed? It may be all quiet at the moment but don’t let a lack of claims now lull you into a false sense of security.
Understandably, many shy away from thinking about negligence. Those that do think about it probably only do so when they come to renew their professional indemnity insurance, with a quick trawl around the office to see if anyone is aware of potential issues.
So if commercial pressures result in you taking shortcuts today, will you be counting the cost tomorrow? Two points should be borne in mind:
Firstly, a buoyant property market can mask problems. Anyone working 15 years ago will remember the disastrous consequences for surveyors of the property recession in the late 80s. Lenders suffered multi-million pound losses on repossessed properties and trawled through their books for cases where they could blame either the surveyor or solicitor. Vast numbers of the resulting negligence claims were pursued successfully.
Playing the numbers game and hoping that only a fraction of the work in your surveying department generates complaints could see you stacking up problems for the future. Just one high profile claim can have a serious impact on your reputation.
But it is not only a buoyant market that can mask potential problems. Innocuous looking cracks in a period property, the widespread use of composite panels in a large industrial unit, or undiagnosed asbestos or other deleterious materials can all lead to claims. Sometimes it is as simple as working with out of date technical information or precedents.
Which leads on to the second point …
Potential claims can lie hidden for many years. Although claims can only generally be pursued for six years, the worst-case scenario is that a claim could be pursued up to 15 years after the work was done.
Where those very commercial pressures dictate that you have to carry substantial workloads, it is unrealistic to assume that you will be able to remember individual properties. It is not uncommon for matters to come to trial many years after the work was done. For example, it was nine years in Farley v Skinner 2001 and seven years in the recent case of Preferred Mortgages v Countrywide Surveyors 25/7/2005 where the surveyor’s field notes proved invaluable.
Unless your file provides a complete record of the work that you did, you and your insurers will be on the back foot in fighting off any claim. Your files need to be a complete record of field notes as well as reports and schedules, important conversations with clients and others, and any comparables relied on when valuing that unusual property.
Risk management is not about looking for negligence claims. It is about managing uncertainty. The better you understand the risks facing your business, actual or potential, the fewer surprises will be waiting in the wings. Sleep well.
October 2005
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Travelers Insurance Company Ltd.