From the desk of Nahom Gebre
When clients require that title ownership and copyright of the instruments of service are transferred to the client, and if the design professional chooses to agree to the transfer, we typically recommend that the client agree to the following in exchange for the transfer:
- The client acknowledges the documents are project-specific and are not intended for reuse on other projects.
- That any reuse by the client without the involvement of the design professional will be at the client’s sole risk.
- The client agrees to defend, indemnify, and hold the design professional harmless from any claims brought against them arising out of the reuse.
- The design professional has the right to reuse standard details of the contract documents.
It is important that design professionals carefully review such language. In a recent contract review, I came across the following clause:
Client may reuse the Work Product without notice to or permission from Professional and will owe no compensation or consideration to Professional for such reuse. If Client makes any alteration to the Work Product without the consent of Professional in connection with any reuse by Client, Client shall defend, indemnify and hold harmless Professional against claims arising solely out of such alteration; provided, however, nothing herein shall be deemed to release Professional from liability for that portion of the Work Product prepared by Professional. [emphasis added]
At first glance it may seem that the client has provided the design professional with the recommended indemnity provision. However, note that the indemnity obligation is only limited to “any alteration to the Work Product” in connection with the reuse without the consent of the design professional. There is no indemnity obligation for a claim that arises from the reuse of the unaltered instruments of service.
It is essential that design professionals read contract language carefully (especially client-drafted clauses) as part of their risk management practices. It may appear that you have an important protection from your client when in reality it is not worth much. In this case it would be prudent to ask the client why they limited their indemnity obligation. What do they intend to do with the documents after this project is completed? Do they intend to reuse the work product on another project? Their answers to these questions, along with the answers to all the other questions/issues you have due to your detailed review, will help you gauge your potential exposure to the risks involved.