If your business advises other companies on professional matters and strategy, have you considered what can happen if you get things wrong?
Even the best business minds can make mistakes, misread situations or have ideas backfire due to bad timing. In the age of the internet, where information is released rapidly and near-impossible to retract, mistakes spread quickly and attempts to counter this often make things worse. High stakes mean that recriminations fly when things go wrong, as everyone scrambles for a scapegoat. If a bad outcome can be traced back to a blunder on your business’ behalf, you could find yourself facing legal action.
The best way to protect yourself against future disasters is, of course, to avoid putting yourself in a position where you are deemed culpable. This doesn’t mean shirking your responsibilities as a consultant, it means making sure that you are in constant communication with clients at every stage of the process, so that they understand any limits and caveats to your advice and recommendations. Any work that you carry out for them directly should be completely signed off before anyone else sees it – with a paper or email trail to prove it, should this ever be contested. No one is immune to error, but setting cut off times for changes and insisting that clients do the final proof of all materials helps to instill a sense of joint responsibility and makes everyone more alert to mistakes.
You also need to protect yourself against problems that do slip through the net. Companies can sue suppliers if they can show that the advice or service they were given caused them to lose money. Even if you are acquitted, the costs of defending yourself can be crippling. Making sure that you have professional indemnity (PI) insurance means that your legal costs are covered if you are charged with professional negligence, so your business should be safeguarded from financial catastrophe. This makes PI a must for consultants and expert advisers.
“Professional Indemnity cover is a must have for consulting firms offering their services and advice to clients. In the event that your advice is poor and your client holds you responsible you will be liable for any costs incurred, which could damage your business financially,” said James Dunning of the Insure Group.
“PI will protect you against any claims made by your clients for any such eventualities. A good policy will also cover you for costs of the claim and any additional fees for defending the claim.”