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sfa/99: protecting against bad payers

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As a member of the riba committee which drafted the new architect/client agreements sfa/99 and ce/99, may I comment on the many questionable points in Sue Lindsey's Legal Matters column, 'sfa/99 reflects decade obsessed with getting paid' (aj 15.7.99)?

Architects, unlike lawyers, have comparatively few clients, each of whom pays a relatively large proportion of a practice's income in any given year. Failure to receive a payment can be very painful, even fatal to a practice. As Ms Lindsey must know, a practice in such a predicament suffers a triple blow: first, it is financially weakened by the non-payment; second, it has to fund an expensive legal action against the recalcitrant payer (as Ms Lindsey's colleagues charge £135-£350 per hour, this makes it even more problematic); third, the weakened practice may have a security or costs order made against it, requiring it to pay into court a sum to cover the client's costs in the event it loses. No wonder, in the past, few architects felt they could afford to take action against bad payers, no matter how good a case they believed they had.

The new agreements seek to redress this imbalance by preventing clients seeking security for costs and by providing for the architect to be indemnified by the client for its full legal costs and the architect's own time spent in collecting a debt. Ms Lindsey fails to mention that, even when a practice succeeds in legal action against a client, it normally receives only about two-thirds of the money it has spent on legal fees and no payment for the considerable time it has spent itself in chasing the bad debt. As architects' time (and skill) is all they have to offer, it seems only fair that they should be reimbursed for this additional time.

Another provision prevents a client from raising a spurious negligence claim merely to withhold payment. If he or she truly believes that an architect is negligent, then they must run a negligence claim as a separate action.

A new riba conditional-fee scheme, negotiated with solicitors sj Berwin, allows architects with good cases to run a debt-collecting action paying only 20 per cent of the legal fees as the case progresses.

Ms Lindsey mistakenly hypothesises that the profession feels it needs protection against medium-size clients. This is untrue. These provisions were left out of sw/99 in order to simplify this form and because it was assumed that small jobs would not produce bad debts that could cripple a practice. Large clients may have their own forms but my advice to any architect is to seek to introduce these provisions into any contract it is offered.

The number of new forms that the profession has had to issue over recent years reflects regrettably changing attitudes towards payment together with new legislation affecting architects. Does Ms Lindsey really believe that we should operate with forms of agreement which ignore this?

Ms Lindsey wonders if clients will wish to make amendments to the payment provisions. We have been using them in our own contracts over the last two years, and have negotiated a number of contracts with clients' solicitors. Not one has even commented on them.

Ms Lindsey feels sfa/99 'tilts the playing field'. It tilts it only against bad payers, not responsible clients.

Stephen Yakeley, Yakeley Associates, London N1

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