How to safeguard your business against claims of professional negligence

If you’re in the business of offering services, then you’re constantly at risk of being on the receiving end of a claim for professional negligence. This risk is particularly acute for professional advisers such as solicitors, accountants, architects or financial advisers.

Professional negligence claims can be very damaging for any business, not just in terms of money but also in terms of reputation. Even an allegation of professional negligence is costly in terms of the time and effort required to investigate and, if it appears baseless, defend against it.

Professional firms are always on their guard against the risk of negligence claims. But even with utmost vigilance, claims can still arise occasionally. However, there are some things firms can do to mitigate the risks.

Keep records

It may be laborious, boring and time-consuming but keeping comprehensive and accurate records is crucial. A well-ordered archive of every aspect of the firm’s professional work, including correspondence, documents, notes of meetings and even records of conversations, forms the basis for a robust defence in any legal proceedings. In fact, well-maintained records can be used to repudiate a baseless claim of negligence before it does too much damage.

These days, many (if not most) communications and documents are created in digital formats, so the process of archiving and organising is, in theory at least, easier and less labour-intensive than ever.

Stick to what you know

Disciplines such as law or accountancy are so vast now and encompass so many things that it is simply impossible for one person to be sufficiently familiar with every aspect of it. Hence, the majority of professional advisers will specialise in one particular subject or area. In other words, they are specialised.

Specialist professionals are well-advised to stick to what they know. Any specialist professional who is tempted to ‘dabble’ in an area that is outside their particular field of experience is just asking for trouble. The chances of them making a mistake are very high. It’s practically inviting a claim. So, if you have a speciality, work it.

Manage client expectations

All professional advisers know that they are really in the business of selling themselves. Getting new clients can be very challenging in the highly competitive professional services sector. Consequently, some professionals may be tempted to ’oversell’ themselves by making lavish and unrealistic assurances to the client about what they can achieve. They may land the client but, at the same time, they have also created a rod for their own backs, having made a promise that they cannot possibly fulfil.

This does not, per se, amount to professional negligence but it may well leave the client feeling short-changed and that, in turn, could lead to an accusation of professional negligence.

One should try to be positive and upbeat but always remain realistic about what can be achieved and always remember to advise the client about potential downsides, pitfalls and risk factors. Above all, never promise something that you are unlikely to ever be able to deliver.

Communication is key

Communication is vital to any business or pretty much any activity and it is crucially important with clients. Maintaining a regular line of communication with the client can help to identify potential problems before they blow up and nip them in the bud. Furthermore, regular communication will tend to foster a better relationship with the client. All it takes is regular email updates or maybe a friendly call.

On the contrary, a failure to maintain regular contact with the client can often lead to misconceptions or the adviser being unaware of developments in the client’s situation which should be known and taken into consideration. Moreover, the client feels as if they are being left in the dark with no knowledge or understanding of what, to them, may be an abstruse and mystifying process. A lack of communication can often lead to feelings of frustration on the part of the client and that may increase the risks of a negligence claim or some sort of official complaint.

Insurance is vital

All professional advisers should have in place a policy to cover against professional negligence claims, known as professional indemnity insurance. For some, such as solicitors, this is mandatory. But even if it is not mandatory for your particular field, it is highly advisable because it protects the business against claims by clients of poor advice or negligence.

Furthermore, you should always ensure that the insurer themselves are reputable and solid and highly unlikely to collapse or go into administration, leaving your firm without cover. You should also ensure that the level of cover is sufficient to cover any likely damages awarded.

If you are a professional adviser or offer professional services and a client has made a claim of professional negligence against you, then it is vital that you immediately seek advice from a specialist professional negligence solicitor. Even if you are a lawyer, you are unwise to try to battle the claim yourself without the benefit of an experienced and objective legal adviser.

For further information and trusted legal advice regarding professional negligence, get in touch with us at Carlsons Solicitors.