For those institutions carrying out building projects at the moment the recent news that the holding company of Currie & Brown was in administration at the time of its acquisition by Middle East-based consultant Dar Group raised fresh concerns that there may be more victims of this period of economic instability. The insolvency of a consultant can be as harmful to a project as that of the main contractor. Well-drafted documentation is essential to protect an employer, as is ensuring that all requests for payment are justified.
Employers must therefore ensure that the forms of appointment on which they sign up their consultants provide them with as much protection as possible from the effects of insolvency. For example, appointments should contain robust "termination at will" clauses and copyright licences (unfettered by any dispute over unpaid fees) should continue beyond termination.
As a practical aside, consultant's fees should, where possible, be set out in the appointment in a comprehensive fee schedule rather than just a lump sum.
Finally, employers should liaise with their project managers to ensure that all payment requests are in line with the work actually carried out and the fees set out in the appointments. If an insolvent consultant is paid for services that it had not carried out, it is highly unlikely that the employer will be able to recover overpaid fees.