This is the 4th instalment in a series of 10 articles where we attempt to categorise chronologically and thematically the list of things you will need to start your architecture practice, and furnish it with the glimpses of insight we’ve accrued during the first three years of our architecture practice, Mihaly Slocombe.
4. The law
When: Immediately
Importance: Critical
Cost: Moderate
Difficulty: Moderate
Boring but important, to get started in your new architecture practice you will need to address a number of legal requirements. Many architects skip elements of this step, possibly judging that the legalities are time consuming and obstruct true creativity. Be wary of anyone who tells you to “just start working and worry about the law later”. The whole point of the law is to have it set up right from the beginning: we take the view that true creativity flourishes when we’re not worried about being uninsured, having a poor client agreement or getting sued.
The following list is only relevant for Australian readers; for everyone else we recommend you check your local tax, registration and insurance legislation:
- You need to incorporate a company, create a partnership or at the very least register as a sole practitioner with an Australian Business Number. We opted to set up our practice as a company. It was more expensive but offered the greatest financial flexibility and legal protection: its very purpose is to protect its directors and staff from being sued. A simple company will cost in the order of $2,000 to establish.
- You need to be a registered architect in the State or Territory where you are practicing. Registration as an individual costs around $200 a year.
- You need to have professional indemnity insurance. It is a requirement for registration and is designed to protect you in the case of professional negligence. We use M and R Insurance Brokers and pay $1,350 a year, though for comparison’s sake, Architeam offers an interesting cooperative insurance package that is cheaper but requires you to donate some time each year to various activities.
- Public liability insurance is also a good idea and protects you in the event that a guest hurts herself in your studio or if you and your staff damage something outside your studio. It costs around $400 a year. If you have staff, you will also need WorkSafe insurance, which is designed to protect you and your staff should you or they get hurt.
- You need to have templates for contracts with clients, employees and builders. We have gradually and continuously refined ours to reflect the way we work and embody the lessons we’ve learnt from past mistakes. The Australian Institute of Architects have very good contract sets available for purchase, along with a vast array of useful practice notes available to members. The awkwardly named Blue Turtle Management and Consulting, whom we have discussed previously, also offers some useful contracts and templates tailored to the architecture profession.
Additional insurances and legislation requirements, of which there are many, can be addressed when you need them. There’s no need to pay for director’s insurance, register for GST or register to practice in other States and Territories any earlier than necessary.
Firstly, thanks for this great series. It’s proving very insightful for those of us thinking about taking the plunge sometime in the future.
What are the legal ramifications of producing designs + drawings privately for friends/family as a graduate architect (or student), and how far can a graduate go with a project on their own?
Hi James,
Thanks for your compliments and good question re. work as a student / graduate. If you’re talking about an opportunity you’re currently considering, congratulations! We actually built our first house for my parents while we were still students, so have some personal experience on this matter. First off and most importantly, we had a great time on the project. My parents were excellent clients and our builder, while not the most time-efficient, did a great job during construction. Some people might tell you never to work with friends and family, but as I mentioned in our recent post on clients, I can’t see why not. The risk that you do a bad job and get reminded of it forevermore is there, but the potential reward of getting reminded of a good job makes the risk very worthwhile. I say go for it. You will learn an extraordinary amount from the experience and have a built work to your name.
To help counteract our inexperience, we surrounded ourselves with a whole bunch of consultants, including a mentor, specification writer, environmental consultant, quantity surveyor and structural engineer among others. We also made use of the Institute’s practice notes on students commissions. If you’re a member, these can be accessed in full here.
If you’re not a member, the big things you need to think about are:
1. Your legal responsibility as a student / graduate architect is pretty much the same as an architect’s. This is true even if you don’t get paid for the work.
2. You should send a letter to your clients formally letting them know you are not a registered architect, so don’t have the approved qualifications, insurance and experience to offer full architectural services. This well help your clients understand who you are and what you can offer. It will also help protect you a bit if something goes wrong and you get sued.
3. You might also think about undertaking the work in conjunction with a registered architect. Our friend and colleague, Steve Rose did this quite successfully with Perkins Architects where we both used to work. Depending on your agreement with the architect, you might lose some autonomy in the design work, but will gain insurance cover, expertise and reduce your risk.
4. Even if you don’t do the project with another architect, I strongly recommend the value of one as a mentor. He / she can guide you through the totally unknown waters of town planning, documentation and building regulations. You might have to consider requesting your clients pay for this service.
5. Only architects, registered building practitioners and builders can submit documents for building permit approval. Your mentor / collaborating practice can help you here, otherwise you will have to get your builder to do it for you.
I hope that is of some help. I think there’s easily a full post in here… I will get onto it shortly and hopefully uncover some more useful advice.
Thanks for the reply and its a great help!
I know of many recent graduates who would benefit from it. I tend to agree about doing work for friends and family, definitely worth the risk. Especially when work is rarely going to come from other sources when starting out.