Although few disputes between clients and professionals are resolved through litigation, many clients demand that the design professional contractually waive any future right to litigate before a jury. Clients often want to set up a dispute resolution process that ends with a bench trial—allowing a judge to both decide the facts and apply the law to the dispute.
From a professional liability coverage perspective, a policyholder can waive its right to a jury trial if done by contract before any dispute arises. But it might not be in the best interest of the professional to do so.
During Schinnerer’s 54th Annual Meeting of Invited Attorneys—a continuing education program for defense counsel, in-house counsel, and risk managers who represent Schinnerer policyholders—two legal papers were presented on this subject and a robust debate ensued. Policyholders can download the papers to learn more about the factors in determining whether litigation should proceed before a judge or a jury.
In any specific dispute, a design firm will want to discuss with its defense counsel and claims specialist the pros and cons of each litigation option. That, of course, is not possible if the right to a jury trial is abolished by contract. So a firm facing a client’s request to waive a jury trial during contract negotiations might consider the following:
- If the client is insistent, it might be possible to use agreeing to waive rights as a bargaining tool to change other aspects of the contract, perhaps by modifying an over-reaching contractual indemnity obligation or including a limitation of liability provision.
- If the design firm is insistent on not waiving the right, a decision can be made during any dispute to agree to a bench trial based on the specific characteristics of the dispute.
- If the right to a jury trial is preserved, negotiating an early and less costly resolution method for the dispute might be facilitated.
In any contract negotiation, it makes sense to preserve one’s rights. It is critical that any waiver of those rights be discussed with legal counsel because what might appear to be a simple decision could have significant ramifications on the exposure of the firm. And if preservation isn’t possible, try to carefully negotiate an exchange of rights; little can be gained by mere acquiescence to a client’s demands.