Q: We would like our contracts to limit our liability. Are there any suggestions for a direct way to limit our liability? Can we use an indemnity clause to limit our contractual liability?

A: This question presents an interesting scenario in terms of mixing limitation of your contractual liability with a party you contract in contrast to the concept of indemnity, which limits a party’s liability or loss as a result of claims made by third parties, people who you do not contract with. If you wish to limit your liability with the party that you have the contract with then you are dealing with a contract clause that is called an exculpatory clause, not an indemnity provision.

A party can draft a contract clause to limit its liability with the other contracting party. There are some basic rules that must be taken into account when drafting an exculpatory clause. Basically, for an exculpatory clause to be enforced, the language must be clear, unambiguous, and explicit to the effect that one party intends to release or limit the liability of the other. Note, exculpatory clauses are strictly construed against the party to be relieved of liability and the law disfavors attempts to avoid liability from ones’ own wrongs. If you wish to limit your liability with the other contracting party through your contract, it is best to retain a competent lawyer in your jurisdiction to do the same. These are not easy or simple clauses to draft to be effective.

In contrast to an exculpatory clause, an indemnity clause relates to claims of third parties that may be made for which you seek to be indemnified or defended. A common term is a hold harmless clause. What the indemnity or hold harmless clause does is protect the contracting party from suits, claims, or losses from third parties. In the typical design and construction project, the engineer would be protected and held harmless from claims from third parties such as contractors or subcontractors. An exculpatory clause would necessarily limit liability to the third parties.

Q: I have been retained as an expert witness on a number of occasions, including testifying as such. I always charge my standard professional fees for my expert witness work. I also have been subpoenaed to testify where I was not an expert engineer, but instead was the retained project engineer. In those cases when I have been subpoenaed to testify in my capacity as a project engineer, not an expert, I do not receive expert fees. Is there an explanation?

A: It is frustrating for many engineers to find out that when they are forced to testify or defend their work that they created for a project that they cannot get their professional fees for testifying. In fact, they often complain that the paltry sum they receive, the standard witness fee, barely covers their transportation cost to and from the deposition or the courthouse. In the capacity of an expert, the engineer is hired as a professional and is paid as such. The law generally provides that experts are to be paid their usual and customary fees.

The amount of a "witness" fee and if a witness can charge for time varies from jurisdiction to jurisdiction. Generally, whether the witness is an expert or layperson, if the witness is testifying to facts which they are a party to or observed and not offering professional opinions, they are generally only entitled to the statutory witness fee. However, most lawyers recognize that both professionals and non-professionals lose a substantial amount of income having to participate in a trial or deposition, which is often scheduled and rescheduled disrupting many appointments and work.

No one likes to lose pay for their services, so what can be done? The best thing to do is to call the lawyer who is subpoenaing you to testify and request that you be paid your usual and customary fee because this is only fair due to the loss of income for undertaking the task required. Many lawyers are amenable to paying a reasonable amount of money above and beyond the witness fee to assure timely cooperation and to avoid putting the person testifying at an economic disadvantage. The object is to be fair and reasonable. Generally speaking, there is no way to force payment beyond the statutory fee if you are forced to testify as a percipient witness as opposed to an expert witness. Your obligations as a witness, if subpoenaed, are to show up and testify as truthfully as your ability permits. While it is true that testimony often requires preparation, there is no obligation to prepare. Lawsuits are an inconvenience for all involved, including those who are not parties to the action.

Michael J. Baker, Esq., is a partner in the Cerritos, Calif.-based law firm of Atkinson, Andelson, Loya, Ruud & Romo. He is an expert in design and construction contracts, mediation, and litigation. Please send him your legal questions via e-mail at mbaker@gostructural.com.

The answers to the questions provided herein, although intended to be accurate, authoritative, and informational, may or may not accurately reflect the law in your jurisdiction or where you do business. In providing answers to these questions, it should be recognized that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional licensed in your jurisdiction should be sought. The information provided herein is for informational and hypothetical purposes only.