Don’t panic—follow these tips instead
The word “lawsuit” has the power of sending most folks into a frenzy. Being sued can cost you thousands, even tens of thousands of dollars; and for small business owners, losing a lawsuit can also mean having to shut down your company. Before you panic, take a deep breath and realize that there are ways to combat (and even win) a professional liability lawsuit.
Be proactive before there’s trouble
Everyone knows that prevention is the best medicine. When it comes being sued, the best defense is starts with taking precautionary measures ahead of time. There are many ways you can safeguard yourself and your company before a client even thinks about filing a claim. Consider implementing signed contracts and communicating any changes in price or product immediately with your customers. In the event that you’ve done all you can to prevent it and you still get sued, you still have the ability to build a strong case.
Just like you’d provide a service order to a client that details what you are going to do for them, you should make sure you have a similar system for your own business. Each project you do should have its own file that shows what you were contracted to do, the charge for your services, and the expected length of the entire process. In addition, you should have clients sign off on your cost estimate and the project itself. When you have documentation that shows you and a client were in agreement about every aspect of the project, you have a better chance of winning in the event you are sued. This includes documents such as:
• Written and signed contract for services
• Invoices and sales receipts
• Printed copies of all email correspondences between you and the client
• Written documentation of any project changes with client’s sign-off
Creating a paper trail can help you win a case because it shows that you’ve done exactly as you promised to do. In a professional liability case, it’s not uncommon for someone to sue because they feel whatever they asked for was not delivered as promised. Accurate and comprehensive record-keeping, although tedious, can save you!
Get a qualified professional liability attorney
You’re an expert at what you do and your attorney should know professional liability law inside and out, upside down, and backwards. Find one that will be your partner and advocate for the protection of your company and your livelihood. To help him or her, make sure you keep all documentation organized and easily accessible. Be upfront and honest about everything that’s transpired; even if you’ve made an error. Honesty is always the best policy and, when it comes to building your defense, your attorney needs to know absolutely everything.
Be real about what’s happening
Being sued is downright scary. But if the client has a valid argument, you may want to consider discussing a settlement or coming to an agreement that will make the lawsuit go away. Sometimes a client just wants validation and will be willing to accept a compromise. Can you redo the project, refund their money, or offer a replacement? If the client is determined to sue and you feel you may have erred or at least be partially to blame, it’s a good idea to assess how much a legal battle will cost you versus just settling. Going to court can also have negative consequences on your company’s reputation, so think long and hard before stepping into the ring.
Make sure you’re protected
When you’re slapped with a professional liability lawsuit, your best defense is to have the right insurance coverage to protect your business. A professional liability policy won’t help you win—but it will ensure that you don’t lose your company. Adequate coverage will cover court and attorney fees, any settlement or judgment charges, and any other costs related to the lawsuit.
It’s never easy to face a lawsuit, even when you know you are in the right. But if you follow these tips and make sure you have the right insurance, you stand a better chance of winning.
Talk to us about professional liability insurance and any other business insurance solutions that you need. As a leader in the industry, we provide a wide array of products for small and medium-sized businesses and can customize a solution for your company.