LePatner & Associates

The Legal Environment

from
The Interior Design Handbook
© 2001 McGraw Hill, New York

By Barry B. LePatner, Esq. and David J. Pfeffer, Esq.

INTRODUCTION

Over the past twenty years, design professionals have increasingly encountered a series of challenges from new and varied areas of legal complexity and exposure. In recent years, the design world has been forced to address increasing liability for claims ranging from sick-building-related illness, Americans with Disability Act violations to the more common extra work and delay claims by owners and contractors. In addition, interior designers and other design professionals in many states have been exposed to increased civil and criminal liability for practicing in jurisdictions without a license as well as charges for the unauthorized practice as a professional.

It is troubling enough for designers to consider the personal and professional losses they might incur if they must defend a legal claim. But legal exposure presents a concrete financial risk, too, even when a designer is covered by insurance. At the same time that legal claims against designers increased in frequency and complexity, the costs of defending designers against these claims has skyrocketed. The costs of defending a claim too often exceed the potential liability of the claim itself. Even when the designer has liability insurance to cover a claim, the diminishing coverage, exhausted by the costs of one's defense, may not leave enough insurance left over to pay the claim. In the face of a diminishing liability policy-which is what most design professionals have-a designer can be personally liable for a large portion of the costs of a claim even if the settlement or judgment amount was originally within policy limits.

Even though the risk and costs of liability may seem overwhelming, designers can protect themselves if they are aware of the types of liability they face and what they can do to avoid becoming involved in legal action. This section focuses on those areas of the law posing increased liability to practicing interior designers and other design professionals. Included in this discussion are practical steps for interior designers to take in order to avoid liability. As a related matter, this section also sets out a discussion addressing certain business and legal complexities facing the design world. Though this chapter is not intended to be viewed as a summary of every area of liability faced by an interior designer, it is the intention of the authors to sensitize practitioners to the need to take appropriate steps, from a business and contractual standpoint, that can limit or eliminate such liability. Because it is not practical to discuss the law and practices of every jurisdiction, design professionals are advised to obtain the assistance of experienced local counsel.

LICENSING

During the recession of the early 1990s, many architects began to complain that interior designers were usurping the licensed field of architecture, i.e. practicing a profession for which they were not authorized by strict professional training. In order to avoid legal exposure because of licensing issues , interior designers must not only become familiar with the licensing laws and rules in the state where a project is located, but also be able to distinguish the difference between the services they can legally perform and those services they cannot perform.

Licensing issues can have serious consequences for designers, financially as well as personally. In recent years, the number of complaints filed against designers for practicing without a license has increased dramatically. Interior designers could be prosecuted in criminal court under penal statutes for unauthorized practice, and in addition they now face the possibility that a client will sue them for monetary damages for the unlicensed practice of interior design, architecture, and engineering. Even if they are not sued, designers are likely to find that a court will refuse to enforce the designer's claim for the payment of fees, if the court finds that the designer performed professional services without the required license.

Perhaps the most important step designers can take is to understand what services they can perform in a particular state. The distinction between permissible and impermissible services is not always as clear as it seems. Licensing laws concerning interior designers commonly stress the difference between interior design and the practice of architecture and engineering. These laws place responsibility for the building systems, i.e. mechanical, electrical, plumbing, life safety, with the architect and engineer who are licensed by state law to seal and stamp drawings for this portion of a project. In New York, for example, the law emphasizes the difference between interior construction "not materially affecting the building systems" and design services that affect building systems. The clear intent is that the latter shall fall within the practice of architecture and engineering. Elements such as cabinets, lighting, and shelving usually fall within the ambit of the interior designer's permissible scope of work. Where an interior design firm's services included designs for floor elevations, changes in walls and openings, and supervision of the general contractor, a New York court found that the interior designer engaged in the unlicensed practice of architecture and noted that "there is a thin-but plain-line between 'interior design' and 'architecture' services."1 The court held that "the preparation of plans and supervision of construction work are the usual functions of an architect."

In comparison, Florida focuses on the difference between structural elements and nonstructural interior elements of a building. The Florida Board of Architecture & Interior Design defines "Interior Design" as:

Designs, consultations, studies, drawings, specifications, and the administration of design construction contracts relating to nonstructural interior elements of a building or structure.... Interior design specifically excludes the design of or responsibility for architectural and engineering work except for specification of fixtures and their location within interior spaces.

The Florida Board defines "Architecture" as:

The rendering or offering to render services in connection with the design and construction of a structure or group of structures which have as their principal purpose human habitation or use, and the utilization of space within and surrounding such structures.

Where interior design documents are prepared by a registered interior designer in Florida, the Florida Board requires the interior designer to include a statement on the plans that "the document is not an architectural or engineering study, drawing, specification, or design and is not to be used for construction of any load bearing framing or walls of structures, or issuance of any building permit, except as otherwise provided by law."

Designers who practice beyond the scope of a license often incur serious civil and criminal consequences. Not only do these designers lose the opportunity to make a valid defense to an owner's malpractice claim, but in states such as California, Illinois, and New York, those who practice without a license commit a crime that subjects them to penalties such as imprisonment, fines, and the revocation of their properly-obtained license. Likewise, a designer who unlawfully uses another's title or stamps a drawing could also be subject to penalties. Most states, and the rules promulgated by the American Institute of Architects, require a design professional to report any instance of licensing law violations to the appropriate regulatory bodies.

Interior designers must be careful not to mistakenly hold themselves out to the public as being able to practice beyond the scope of their license. Most states not only prohibit the unauthorized practice of the professions but also proscribe a non-licensed individual from holding himself or herself out as a licensed person. In California, New York, and other states, an interior designer or interior decorating firm cannot include the term "architect" or similar word in its name or on its advertising material, including business cards or other material which may indicate to the public that the firm is qualified to practice architecture or engineering. Care must also be taken to avoid using terms such as "architectural," "construction supervision," and similar expressions.

To avoid liability for unlawful practice, designers should inform their clients of the services their firm will be performing and specifically exclude all architectural or engineering services. When drafting an interior design agreement, careful attention must be paid to ensure that the interior designer's services do not go beyond the allowable definition of interior design. This information should be included in the written agreement with the client so there will be no misunderstanding concerning the services to be performed.

1 Marshall-Schule Associates, Inc. v. Goldman, 137 Misc.2d 1024, 523 N.Y.S.2d 16 (Civ. NY 1987).