Claim Retrospective: Clients’ Unauthorized Use of Plans and Drawings or Seal and Stamp

Posted on 3/9/2017 by ASCE Insurance in Claims Liability Clients Documentation

Unfortunately, clients commonly use engineers' plans and drawings on subsequent projects without the engineer's permission. Even worse, clients have altered engineers’ plans and drawings before using them in subsequent projects, again without the engineer's approval. Shockingly, clients have even used an engineer's seal and stamp without their authorization.

Accordingly, it is important to investigate prospective clients to ensure they aren't the type to take advantage of you. Background checks are one of the easiest ways to vet a potential client. For lower risk projects, simply check the client's Better Business Bureau (BBB) rating—it's free! For medium to high risk projects, run a business information report through a trusted financial reporting firm, like Dun and Bradstreet. When performing a full background check, transience, lack of capital, several name changes in a short period of time, and criminal history are red flags to look for. If the potential client exhibits one or more of the aforementioned characteristics, it is best to deny your services or, at the very least, proceed with caution when entering into an agreement.

Though vetting potential clients will reduce the risk of a client reusing your plans and drawings without your permission, the situation is still a possibility. For a further layer of protection, include a provision in the client's written contract that clarifies that the engineering plans and drawings are your property and that the plans and drawings cannot be used for another project without your express written permission. By including these provisions in the contract, you will reduce your risk of any liability arising out of the unauthorized reuse of your plans and drawings.

Altering your plans and drawings or using your stamp and seal without your authorization is considered fraud. In these cases, you will likely have affirmative duties. These duties might include issuing a cease and desist letter, reporting the client to the engineer’s local licensing board and/or the state licensing board where the the altered and/or fraudulent documents are being used, and notifying those involved in the project in which the fraudulent documents are being used.

It's important to inform your insurance carrier if you become aware of a client's reuse or alteration of your plans and drawings and/or unauthorized use of your stamp and seal. Providing the insurance carrier with notice of these circumstances will help preserve the potential for coverage under your professional liability insurance policy if a claim arises.

We'd all like to believe that people are honest and ethical, but unfortunately, this isn't always the case. While it's important to trust your clients, it's also necessary to protect yourself and your career. If you approach prospective clients with caution and take the appropriate steps when clients misappropriate your work product and/or license, you will greatly reduce your risk of legal liability.