Geographic Information System Liability Issues

by Kenneth R. Wortley

The author is a licensed agent and broker for Wortley/Poole Professional, Philadelphia, with more than 20 years experience in the insurance industry, special expertise in risk management and knowledge of the construction industry. He is an affiliate member of chapters of the AIA, ASPE and PSMA.

GIS, Geographic Information System, is used by public bodies or private entities to manage a variety of resources in a universal and integrated manner. For example, it could be a combination of land, developments and other plans for developing more advanced planning concepts; for utilities to plan community growth or for analysis of environmental impacts to residential growth. Rather than just being another data collection process for design professionals, it helps them do more advanced planning since it integrates various technologies and practices for new ways to model and analyze information and resources.

GIS combines traditional consulting disciplines ranging from planning, engineering, photogrammetry, etc., with a host of "new" technology, including geography, cartography and other computer sciences. It can be referred to as the science of spatial information.

Spatial information involves anything that takes up geographic space or has geographic distribution. Spatial data can include features from the environment as well as intangible or abstract features related to human use and geographic analysis.

Uses of GIS are continuing to be discovered. Anywhere the infrastructure is underdeveloped or damaged, GIS can help accelerate planning and reconstruction.

Liability Issues

The variety of work for firms practicing in the GIS field can involve:

• Design of database management systems and the subsequent management of these databases
• Software and/or equipment recommendations
• Installation of software and/or equipment
• Client training
• Follow-up support
• The actual sale of software and possibly hardware.

This wide range of services demonstrates the need for clear discussions with clients about scope of services, both to be performed and not to be performed. Expectations of outcomes, i.e., what the user will be able to accomplish, is also extremely important. GIS is an example of the "sun and moon" promise vs. delivery dilemma that can easily lead to unfulfilled expectations.

The exposures can encompass more than just professional liabilities. Furthermore, unless addressed properly, there are exposures that are either uninsurable or outside the intent of conventional professional liability coverage.

Professional liability insurers do not contemplate covering the significant (and potentially uncontrollable) economic risks that can be associated with computer-related practices. It is not their intent to pick up these risks without seeing that the consultant has in some way negotiated some form of cap to the risk. However, any contractual arrangement with the client will not be binding on "third parties." The "downstream" economic consequences of an error can be catastrophic compared to the planned work.

There is also product liability risk if any sale of software or equipment is undertaken. Product liability laws follow a different standard known as strict liability. Under strict liability doctrines, negligence is not a requirement and does not have to be proven. The rendering of a professional service, even with the delivery of documents, is still considered to be professional in nature and in this context negligence can be an additional issue. If equipment or software is sold by the consulting firm, relying on an assumption that you are protected by the actual manufacturer of the equipment or software is a false hope.

An often overlooked exposure is actual damage to property and the associated aftermath when an employee is in physical control of client property. The initial physical damage can then subsequently lead to other exposures such as data damage.

Risk Management Guidelines

There is no question that the single most important risk management tool for GIS consultants is the professional services agreement. This contract can address most of the issues discussed above, including (but not limited to):

• Scope of services, reiterating both the services to be performed and the work not to be performed
• Limitations of liability
• Elimination of liability for consequential damages
• The risks involved in the delivery, conversion and formatting of various information and media
• The re-use, multiple use, or use following alteration, by the client, or any use by anyone else not authorized by the consultant
• The client's duties and responsibilities (such as complete back-up of information, your right to rely on any supplied information as true and accurate, etc.).

However, it must be realized that a contract is only a tool. And as with any tool, it has its limitations in that it only manages a risk. A contract or an insurance policy will never eliminate all exposures.

In simple terms, the key to elimination of risk is to take as many preventative steps as early as possible. Such precautionary measures will then accomplish two goals at once. They will, to the extent possible, eliminate certain risks. This could even be done in such a manner as to build it in as a scope step, thus you get paid to protect yourself!

Some of these early measures would include:

• The requiring of the client to back up data prior to any work by a consultant
• Duplication of any data by your firm prior to actually using it
• Staff training
• The arranging of the client's insurance to be extended to cover any equipment or software while in your possession
• Reviewing all material ranging from client communiqués to contracts by counsel knowledgeable in the field
• Bringing in any outside consultants early and making sure the client is aware of their role.

Another fundamental point is the importance of communication. Team discussions with everyone - the client, your personnel and any outside suppliers and consultants - as active participants will also help to reduce problems. It reinforces the value of everyone in the final success.

The risks discussed here are not insurmountable. They reinforce the need for proper discussions with the client of the value of the services rendered and the associated risks that consultants face.