Ethics

[Andrew Garulay, RLA]

I have read posts by designers on many message boards, including this one, where they proudly announce that they get a kick back from a contractor by getting them a installation job for one of their clients.

 

This is not only unethical, but it is criminal. Do you agree that this is unethical and criminal, or not?

[Rob Halpern]

I think that whether it is ethical or not has to do not with the transaction but rather with the transparency to the client.
If the client is misled into believing that the designer is referring them to the best contractor around, rather than to one with whom he does business, that is unethical. If the professional connection is acknowledged, then what is the ethical problem?

[nca]

I think it’s OK in the residential world as a sales commission. Also, rather than collect a straight commission, wouldn’t it be better to call i a CA fee or something like that?

In the public realm I’ve seen this happen in the form of referrals, which is just good business–We recommend a GC or architect and in turn, maybe 6 months down the road they recommend us. It’s basically the same thing. We’re not going to go out and seel another consultant or contractors services for cash though.

At the same time, I think it’s unfortunate that many landscape designers cant sell their time directly instead of rolling it into the contractors bid.

[Andrew Garulay, RLA]

I should clarify. If you are paid by the client and make recommendations of who to hire, do you believe that you do not have an obligation either ethically or legally, to notify the client that you are receiving compensation from the contractor? … Whether residential or commercial.

[Zach Watson]

Personally, I would not have a problem with receiving a kick back from a contractor for pointing the client in their direction, as long as the quality of the work is high and the client and the contractor are happy both with the price and the work. A contractor might be competitive but figure a lower profit line for the purpose of gaining future work through the designer. Now the designer could do the same thing the contractor did and give the client a kick back for the purpose of gaining word of mouth recognition. As long as I’m not trying to deceive the client or creating sub-par work I have no problem with a kick back.

[al fathi]

there’s nothing criminal about it. unethical, maybe, but even that is debatable.

[Andrew Garulay, RLA]

Does anyone believe that if you are hired by a client as a designer or landscape architect and asked to refer or recommend contractors, that you are then an agent for the client and obligated to try to work in the best interest of the client in doing so?

If that is the case, would it not be a conflict of interest to recommend contractors who are paying you with money or gifts?

As an agent, you certainly are acting on behalf of the client if you bring in contractors that you know and have worked with in the past. It would stand to reason that the contractor has also found it in his customer’s best interest to recommend you as a designer. Working with people that work well with you is in the best interest of the client. However, if you are also being compensated by that contractor it is absolutely unethical and illegal if you have not received consent in writing from your client.

It is tort law rather than criminal law. As a representative of the client, you are what is called a fiduciary. A fiduciary is someone who has taken to act on behalf of someone else (the principal). You must put the principal’s best interests first and not profit from this duty unless the principal consents. That is not ASLA or any other organizations take on it, but common law. They need to do a better job at teaching this in school, apparently.

ASLA and other organizations are more direct about it. ASLA specifically states this in their professional ethics ” Members shall not accept compensation for their services on a project from more than one party, unless all parties agree to the circumstances in writing”. That is not a unique rule, it is simply stating what is common law (probably because so many people don’t seem to know this).

If we want to be respected as a profession we have to at least understand basic legal and ethical conduct. This is an area that does separate us from other professionals because for some reason a lot of us don’t know these things. We absolutely should know this stuff.

[Zach Watson]

I’ll revise my statement from before, given that I have only worked as a draftsman for a company and have never gotten into the monetary aspect of the business. After asking my father-in-law who has been a contractor/mason/estimator for many years, he said, legally accepting money like that is right on the edge of criminal, but ethically it is wrong. Given his experience in the field and his success, I will default to him and will follow his course of action in the future.

[nca]

You’re talking about prior written agreements though really.

If a contractor and a designer agree to compensation for selling their services unbeknownst to the client while also collecting a service fee from the client that would certainly be unethical and probably criminal in my book.

BUT, if there is no prior written (or verbal i suppose) agreement between the contractor and designer, but a ‘kick-back- is awarded later on good will then it’s a little more grey, but I could see how this could be considered an unetical if not illegal bribe.

A smart designe would probably charge for all their time at their regular rate directly to the client instead of trying to recoop fees later in my opinion.A smart designer might also account for some CA fee in their proposal to the client because even in the first scenario I would expect the contractor to anticipate some involvement of the designer in construction–whether it be painting edge lines, flagging trees, or choosing plants. But this should be charged to the owner not the contractor. But I would say that its probably OK for the contractor to retain the designers services this way too considering the designer is no longer in the employ of the owner technically once the design is finsihed.

I know that many landscape companies award commission to their designers of anywhere from 5-15% of construction, sometimes regardless if they are in the direct employ of that company. I see your point with this, but it’s so common I dont know what to reallythink about it. We’ve already come to the conclusion that ASLA is far out of touch with whats happening in practice. What does this have to do with academic curriculum? In re-reading the responses I thought all of them were logical and didnt necessarily violate any of the statutes wyou outlined later.

So where are you going with this?

[Andrew Garulay, RLA]

If you are working for the contractor it is understood that you also represent the interests of the contractor. It is only when you are working directly for the client that there is a conflict.

If you sell them a design as an independent designer and then give them a price for you and your sub(s) to build the job you are acting as a contractor and it is again understood that your business interest is your own.

It is when you sell design services and then assist in finding a contractor who is also paying you that it becomes a conflict.

All of these scenarios are perfectly fine both ethically and legally with full written disclosure to the parties involved.

The knock on academia is that so many people are not taught enough about contract law that so many of us do not understand when we are doing illegal things.

The whole reason that I brought it up is that I have seen several designers/LAs discuss kick backs openly on messageboards who have no idea that they are doing wrong. I wanted both to take the pulse of that here in this group and to spread awareness as well.

[Zach Watson]

Thanks for the post, I want to be on the up and up in everything I do because if it is not then there might be clients that are lost in the future because of something that I do not know or understand. Great topic, I learned something about the profession that I did not previously know.

[nca]

Good Topic.

Thanks for bring this up.

[Author]

Posts