Many of the UK's largest clients are threatening to put consulting firms out of business by demanding unlimited liability cover, the Association for Consultancy & Engineering (ACE) warned this week.
The ACE is urging its members to boycott companies and organisations demand excessive insurance. 'Some clients are demanding unrealistic levels of liability cover from consultants in the belief that this insures them against potential loss,' said ACE chief executive Nelson Ogunshakin.'Several clients are serial offenders, asking for unlimited liability on even small projects.'Those demanding unlimited liability are national regeneration agency English Partnerships, developers Bovis and Grosvenor Estates. The North West RDA is singled out for a special mention - and numerous local authorities.ACE has also named clients that set such high limits on claims against their consultants that they would do terminal damage to all but the biggest firms. These include Welsh Assembly, developer Redrow, and Network Rail which require cover up to £10M.Ogunshakin warned that claims exceeding the value of a consultant's professional indemnity insurance would put it out of business: 'If a consultant goes out of business as a result of one client's claim they won't be around when the next one comes along,' he said.None of the companies or agencies named were able to respond as NCE
went to press.Ogunshakin urged clients to agree a cap on liabilities.'If a client refuses to negotiate a cap then the consultant should ask themselves whether they want to work for them. They may be better off walking away,' he said.'At a time when it's increasingly difficult to find people to do work, it's not sensible for clients to constrain themselves by asking for unlimited or unrealistic levels of liability.'Clients need to sit down and agree a cap on liability so that they have a choice of the best firms, not just those willing to risk everything for the sake of winning work.'