By AIA Contract Documents
Architecture firms are undoubtedly facing a challenging and uncertain future in the face of the COVID-19 pandemic and related economic downturn. While experts and forecasters may disagree on some of the specifics, there is general agreement that the construction industry will take a serious economic hit in 2020 (and likely beyond) as the country navigates the COVID-19 pandemic and the various stay-home orders designed to protect the public health. According to the AIA Consensus Construction Forecast Survey (CCFS) conducted on April 6th, the 2020 forecast for non-residential construction spending has been adjusted downward from a modest predicted growth rate of 1.5% to a fairly sharp predicted decline of 11%. The unfortunate result is that many firms are experiencing a dearth of new work as well as abandoned, or stalled, projects. This reality means that many firms will need to look for creative ways to retain staff if they want to avoid more harsh austerity measures such as staff furloughs and layoffs. Even with the industry-wide decline in construction spending, however, there may be an opportunity for firms to find that creative solution.
According to the CCFS, certain sectors of the industry are predicted to overperform the overall market for 2020, creating a likely scenario that some firms will see their workloads increase (or at least not decrease) depending on the nature of their practice. In some cases that workload may even outpace a firm’s capabilities. Given the uncertain economic times, however, those fortunate firms may be reluctant to add additional employees. As a result, there is a potential opportunity if the right firms can find a way to connect with one another to fill the gap.
In response, the AIA is leveraging its existing AIA Career Center Jobs Board to provide a free platform for firms in need of additional capacity to fulfill increased workload to connect with those firms experiencing a decreased workload. To access the Career Center, please go to AIA Career Center.
Connecting the right firms, however, is only the first step. The two firms still need to arrange how they will work together on a project. The exact details of the working relationship will depend on the specific project circumstances and should be established in consultation with legal and insurance counsel. Once those details are agreed to, they should be documented in an agreement, and AIA Contract Documents publishes a few documents worth considering.
The AIA publishes two consultant agreements of note in this regard, AIA Document C401–2017 Standard Form of Agreement Between Architect and Consultant and C402-2018 Standard Form of Agreement Between Architect and Consultant for Special Services. Architects are quite familiar with consultant agreements as they are commonly used to hire consulting engineers on projects, and the AIA’s standard form consultant agreements are most often used for that purpose. They are also suitable, however, for use when a firm is hiring a consulting architect, making them an excellent option to use if one firm is looking to increase its capacity to meet project demands by hiring another architecture firm to supplement its workforce.
AIA Document C401–2017 is an agreement to be used by the Architect, and the Consultant providing services to the Architect, to establish their responsibilities to each other and their mutual rights under the Agreement. The biggest distinguishing feature between C401 and C402, is that C401 ties the Consultant to the terms of the Architect’s agreement with the Owner (the “Prime Agreement”) via a flow down provision. The result is that, with respect to the Consultant’s scope of work, the Consultant under C401 is responsible to the Architect to the same extent the Architect is responsible to the Owner under the Prime Agreement. While it is always important, when utilizing C401 to hire a Consulting Architect significant care should be taken in defining the Consulting Architect’s scope of work. Doing so will avoid confusion or overlap with the services to be provided by the Prime Architect.
If the Consulting Architect is being hired to provide a more discrete set of services, such as modeling, planning, kitchen design, elevators, fire protection etc., the Prime Architect may want to consider use of AIA Document C402-2018. As noted above, C402 does not flow down the entire Prime Agreement to the Consultant and necessarily establishes the terms and conditions relative to the Architect and Consultant. Additionally, C402 requires the Parties to provide a full description of the Consultant’s services, again because it is not relying on the scope provided in the Prime Agreement. As with any description of services, the greater the detail provided the better.
As noted above for both C401 and C402 a detailed description of the Consultant’s services will be of paramount importance. It may not be necessary, however, to start these descriptions from scratch. The AIA publishes a number of Scope of Services documents that describe, in detail, specialty services an architect can provide on a project. Accordingly, they can be utilized as a valuable starting point for describing and defining a set of services the Consulting Architect will provide on a project. The AIA’s Scope of Services documents include:
These scope documents are written primarily for use with an Owner/Architect agreement, however, with minimal editing they can be revised to accommodate a Prime Architect/Consulting Architect relationship. Again, these documents describe services architects frequently perform making them ideal for use under these circumstances.
While the relationship that would be created between two Architecture firms is most likely that of a Prime Architect hiring a Consulting Architect for an existing Project, there are other possibilities. For example, two firms could connect in an effort to jointly pursue a Project. In that case, they may want to consider entering into a Teaming arrangement, and in so doing should consider using AIA Document C102™–2015 Standard Form of Teaming Agreement Between Team Manager and Team Member for the Purpose of Responding to a Solicitation and Pursuing a Project.
C102-2015 is intended to allow multiple parties to form a team to provide services necessary to submit a proposal, in response to a solicitation, for a shared opportunity. If the team is awarded the project, the party designated as the team manager will contract directly with the owner for the project. Each team member has a separate agreement with the team manager for services or work to be performed on the project, the terms of which will have been negotiated in advance with an agreement for such services or work, and made a part of C102 as Exhibit A. When the team manager enters into an agreement with the owner for the project, C102 terminates and the agreement between the team manager and team member, attached as Exhibit A, becomes effective.
Another possibility, although less likely, would be a situation where two architecture firms create a joint venture to complete a Project. AIA Document C101-2018, Joint Venture Agreement for Professional Services is intended for use by two or more parties to provide for their mutual rights and obligations in forming a joint venture. It is intended that the joint venture, once established, will enter into an agreement with the owner to provide professional services. It must be noted, however, that joint ventures are complicated entities and raise a number of complex legal, insurance, and practice questions. Joint Venture arrangements should not be undertaking lightly or without the advice of legal and insurance counsel.
*AIA has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.
 The AIA Consensus Construction Forecast is developed by a panel including leading nonresidential construction forecasters in the United States from Dodge Data & Analytics, IHS Economics, Moody’s Economy.com, FMI, ConstructConnect, Associated Builders & Contractors, Wells Fargo Securities, and Markstein AdvisorsSurvey.
 The use of the Career Center platform does not create an agreement between the AIA and any other party, or between third parties who use the platform. Firms should contact a competent legal professional for advice related to federal and state employment laws, internal human resources policies, any tax and professional liability insurance implications, and other potential issues, relating to the use of this staff sharing platform. Firms should also discuss any contemplated arrangements with their Professional Liability Insurance representative.
 Unlike a situation where an Architect hires an engineer as a Consultant to provide engineering services, the delineation between duties and responsibilities between a Prime and Consulting architect are not inherently clear. Accordingly, in structuring the working relationship, the parties will need to be mindful of licensing laws, regulations, code requirements and other issues related to delegation of design responsibility and the requirement to maintain responsible control.
 For further discussion on the differences between C401 and C402.