Risk management is learning what the risks are and taking appropriate precautionary measures. For example, if the weather forecast calls for a 60-percent chance of rain, carrying an umbrella would be wise. As far as the current economic forecast is concerned, the chance of rain is a lot more than 60 percent, and if you don’t prepare, getting wet will be the least of your worries.

Remember when times were really good? When your first-stringers were so rushed or so tired that they made an unusual number of mistakes? When you had to over-rely on your second- and (heaven help us) third-stringers to get the work done? Still, you avoided most claims, often because your clients were so busy or had much more valuable things to do with their time than coming after your firm for $20,000 or $30,000—a.k.a., nickels and dimes.

Well, now that times aren’t as good, don’t blithely assume that clients will continue to forgo the pursuit of the nickels and dimes they have to spend because of your mistakes. And do not assume that—even when they know the mistakes aren’t yours—they will forgo the opportunity to bring a meritless claim against you in hopes of collecting something to cover their project’s unbudgeted shortfall.

How could they get away with that? It’s pretty easy, actually: They retain attorneys who retain "hired-gun" experts. Such an expert identifies alleged failures to comply with the standard of care and the attorney uses those "findings" to justify a claim. You receive the complaint, call your insurer, and hear, "Look, if you can settle it for less than $50,000, do it, because that’s less than what it will cost you to prove you did nothing wrong. And besides, you may not prove that."

Given that bad economic times encourage people to apply to their benefit the gamesmanship inherent in litigation, what do you do? Take litigation out of the mix. Insist that your contract include an accommodative alternative dispute resolution (A2DR) provision that excludes litigation and (except as a final measure) arbitration (also an adversarial approach that relies on lawyers and gamesmanship). Typical A2DR procedures include mediation, negotiation-then-mediation, and resolution by experts. If the client rejects A2DR, what does that tell you about the client? More important, what do you do about it? Consider King Arthur’s advice (as given in the movie "Monty Python and the Holy Grail"): "Run away. Run away."

That brings up the next point: Client and project selection. When times are tough, you face increasing pressure to accept just about any client and project. You know that’s the wrong thing to do, but optimism hisses in your ear, "Relax. It’ll be OK this time." In other words, the same conditions that encourage you to relax your acceptance procedures leave you vulnerable to the type of clients that might take advantage of the engineers they hire.

So what type of risk management guidance does this insight suggest? Among other things, be aware of your own humanity and its weaknesses. Review your client and project acceptance procedures; apply them rigorously to learn more about each client and project. If it’s a new client, you must ask questions such as, "Whom have you retained before for these services?" and "Why aren’t you using them now?" And, of course, check with the firm that’s been abandoned.

Do not assume a client is OK because it offers repeat business. Unbeknownst to you, the client could be desperate. Remind the appropriate people in your firm that, "We don’t do unbeknownst." Be sure your people are up-to-date on how the client organization has been faring recently. And in all cases, ask for project details. Be wary of a client’s blind optimism, and do not under any circumstances agree to do that which you don’t have sufficient experience, time, or budget to do.

And that brings up the next point: Engage in a comprehensive contract-formation process. This means not only extensive discussion, but also detailed delineation of the scope of service, indicating what you will and will not do. If, as an economic measure, the client wants you to omit or dilute a given service, be certain to warn your client of the consequences, and to record that warning in writing.

Once you have a detailed scope in place, it’s much easier to determine an appropriate schedule and budget, keeping in mind how important it is to under-promise so you can over-deliver.

Do not set the fee until you have developed your general conditions, of course, because they affect your risk, and your risk should affect your fee. Will your agreement include A2DR and limitation of liability provisions? If not, how will you account for their absence? And don’t forget how important it can be for your contract (or agreement-formatted proposal) to also include a description of the project in as comprehensive terms as you have available, as well as definitions of key terms (such as substantial compliance and certification).

If your focused approach surprises client representatives because they have never before experienced that approach with you or others, explain that tough times could convert both your organizations into targets for third-party claims, a risk you designed your contract-formation methods to avert.

When it comes to implementing the scope, be sure you incorporate into your activity an appropriate degree of review. You, your client, and others involved in the project cannot afford or tolerate minor omissions or errors.

Remember, in tough times a risky business becomes even riskier. Deal with it by adopting the kind of prudent, risk-aware management that is always worthwhile, no matter what the forecast may be. That’s good advice—come rain or shine.

John P. Bachner is the executive vice president of ASFE, a not-for-profit association that provides programs, services, and materials to help geoprofessional, environmental, and civil engineering firms prosper through professionalism. Visit ASFE’s website at www.asfe.org.