Producer statements – what's your company policy?
A number of recent court determinations and professional complaints have re-emphasised that the authors of producer statements, and their employers, can face significant liabilities when the work associated with the producer statement is judged to not be up to acceptable standards.
This guidance note prepared by Adam Thornton, Structural Engineer (emeritus) at Dunning Thornton, details how firms and individuals can navigate issues that may arise as the result of issuing producer statements.
Litigation, complaints and prosecution related to issuing producer statements
Liabilities can accrue in three ways:
- Commercial litigation from contact or tort, primarily affecting the consulting firm
- Professional complaint, primarily affecting the author/signee but with legal/defence costs usually met by the employer
- Criminal prosecution under Section 40 of the Building Act (limited to PS4s), affecting both author and firm
The following guidance is for both firms and individual engineers, in respect of the need for professional indemnity and support, that may arise as a result of issuing producer statements.
Who currently authors producer statements?
Consulting firm ownership and structure take many forms from sole practitioners to privately owned practices, to publicly owned international corporates. Anecdotal evidence suggests there is a wide range of who signs/authors producer statements for consulting firms, from ‘any chartered engineer’ to ‘designated directors/principals’ only. It is also apparent that few firms have firm/written policies as to who is authorised to sign on behalf of the firm and/or how to appropriately mitigate the liabilities that ensue.
What should firms and individuals consider when authoring producer statements?
Control and review of producer statement authorship should be a considered aspect of a robust quality assurance system. From the firm’s viewpoint, the management need to have confidence that opinions issued on their behalf are done so by appropriately qualified personnel with appropriate QA review. A firm’s reputation will suffer as a result of complaint or prosecution against an employee.
From the employee’s viewpoint, they should have a clear understanding of what measures are in place to support them, in the event of a claim, complaint or prosecution. Such protection measures potentially need to continue after the employee has ceased working for the firm.
Matters of risk versus reward can be relevant, for example, owners/shareholders may be better positioned to control risk and mitigation. This would suggest policies where directors sign producer statements in preference to employee engineers. However, there are some firm structures where this will not be practicable.
Do firms need a policy around this – and what should be included?
- All firms should have written producer statement signing policies.
- Such policies should include a list of authorised signatories, specific to discipline, complexity, and limits on work value and/or Limit of Liability.
- All signatories should be specifically authorised, in writing by firm management, ideally within the author’s employment contract.
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An author’s employment contract should list the protective measures/insurances in place for the firm and for the individual. For example:
- Professional indemnity insurance
- Statutory liability insurance
- Legal cost cover for professional complaints
- Including limits of cover, excesses and legal costs
- A clear understanding of on-going liabilities (for the individual and for the firm) and insurance cover after the individual ceases to be employed by the firm