This is the July 2019 edition of PDHengineer’s monthly series of Ethics case studies titled What Do You Think? This series is comprised of case studies from NSPE archives, involving both real and hypothetical matters submitted by engineers, public officials and members of the public.

Your peers and the NSPE Board of Ethical Review have reviewed the facts of the case as shown below. And, here are the results.

A Review of the Facts

Ted, a non-engineer retains Engineer Mary, a consulting engineer, to perform design services in connection with a waste-water treatment facility. Mary performs the design services and Ted reviews the documents prepared by Mary. Following review, Ted makes the judgment that the documents prepared by Mary contain errors and omissions. Ted terminates his relationship with Mary. Ted then contacts Engineer Lou and proposes an arrangement whereby Lou will review the work prepared by Mary and identify errors/omissions contained in the documents in contemplation of a suit for breach of contract. Lou’s fee will be dependent upon the ultimate court judgment or settlement made with Mary. Lou accepts the assignment under the terms proposed by Ted.

Was it ethical for Lou to accept the assignment under the circumstances described?

Here is the result of our survey of your peers:

81% not ethical. 19% ethical.

Applicable NSPE Code References:
Code III.6.a: Engineers shall not request, propose, or accept a commission on a contingent basis under circumstances in which their judgment may be compromised.

Discussion

The BER refers to several previous cases in coming to a conclusion regarding this case. In Case 73-4, an engineer, a specialist in utility systems, offered to industrial clients a service consisting of a technical evaluation of the client’s use of utility services, including recommended changes in utility facilities and systems and renegotiation of rate schedules forming the basis of the charges to the client. The engineer was compensated by his client for these services solely on the basis of a percentage of money saved for utility costs. The Board concluded that this arrangement was ethical.

In BER Case 65-4, the Board determined that it would be unethical for an engineer to enter into a contingent contract under which his payment depends upon a favorable feasibility study for a public works project.

In BER Case 66-11, an engineer expert was retained by an attorney to provide expert analysis and advice on the technical reasons for a failure which led to certain damage. It was proposed by the attorney that the engineer be compensated on the basis of being paid a percentage of the amount recovered by his client. If the judgment was in favor of the defendant, neither the engineer nor the attorney would be paid for their services. The Board concluded that it was not ethical for the engineer to provide technical advisory services or serve as an expert witness in a lawsuit on a contingent basis. The Board stated that under the facts, the engineer “could not ethically serve on a contingent fee basis because his conclusions might be influenced by the fact that he stood to gain financially by having his conclusions coincide with his personal interest in his remuneration, which is dependent upon his client being successful in the litigation.”

In reviewing the facts and circumstances in the present case, The Board followed the reasoning in BER Cases 65-4 and 66-11. It is apparent that Lou is being placed in a position of identifying errors/omissions in Mary’s work in order to pressure Mary into a settlement which will result in a fee for Lou. By finding no errors/omissions in Mary’s work there would be no fee. These circumstances appear to be just the very factors for which Code III.6.a. was intended to guard against.

This case is different than BER Case 73-4, which involved the engineer’s compensation being based on the money saved by clients for utility costs under circumstances which do not appear to involve a significant possibility of a compromise in judgment. In this case, the nature of the services and the related contingency arrangement suggest a strong possibility that the engineer’s judgment could be compromised or at the very least create the appearance of being compromised.

A couple of other things to note about this case:
1) The contingency contract with Lou may disserve the interests of the client because it could call into question the credibility of Lou’s testimony.
2) Ted, the client, was not an engineer and thus there is a possibility that Ted’s opinion regarding errors/omissions may not be based on a reasonable foundation. This factor in addition to the others cited should raise a question in the mind of Lou as to the facts and circumstances involved in the proposed work to be performed.

The Ethical Review Board’s Conclusion

It is not ethical

It was not ethical for Lou to accept the assignment under the circumstances described.

BOARD OF ETHICAL REVIEW
John F. X. Browne, P.E. William A. Cox, Jr., P.E. Herbert G. Koogle, P.E.-L.S. William W. Middleton, P.E. William F. Rauch, Jr., P.E. Otto A. Tennant, P.E. Robert L. Nichols, P.E., Chairman

*Note-This opinion is based on data submitted to the Board of Ethical Review and does not necessarily represent all of the pertinent facts when applied to a specific case. This opinion is for educational purposes only and it should not be construed as expressing any opinion on the ethics of specific individuals. This opinion may be reprinted without further permission, provided that this statement is included before or after the text of the case.