If you want to minimize disputes with your clients and reduce the likelihood of litigation, avoid these “seven deadly sins” that represent the biggest sources of risk:
- Failure to carefully choose your clients and your projects. Client selection can help minimize the chances of a claim, especially since 62% of claims against design professionals in the Schinnerer program are made by the client. Investigate your client’s track record, financial capacity, and claims history. Also, recognize that some projects are riskier than others. Consider the project site and scope of services, relevant laws and regulations, and project delivery method.
- Failure to communicate with your client. More professional liability claims arise from poor client relations than from technical errors or mistakes. Failure to meet your client’s expectations will result in an unhappy client, which frequently results in claims and disputes.
- Practice outside your area of expertise. Working on projects with which you are unfamiliar, or working in new locations, can increase risk.
- Failure to consider quality control and peer review. Follow procedures, document every decision, and check every deliverable against project requirements. One of the best ways to minimize client dissatisfaction, anticipate problems, and control the quality of design documentation is by investing in an internal or external peer review.
- Failure to have a well-drafted professional services agreement. Use professional services agreements that fairly allocate risk to the party in the best position to manage the risk. Clearly define your scope of service and avoid creating potentially uninsurable warranties and guarantees.
- Sue a client for an unpaid fee. Suits for unpaid fees almost always result in counterclaims alleging negligent performance of professional services. Create clear payment terms, require your clients to pay in a timely manner, and take action to collect accounts when payments are overdue.
- Ignore a potential claim situation. Claims do not improve with age, and trying to resolve a claim by yourself may increase your ultimate exposure and could jeopardize future coverage. The Schinnerer program provides a team of risk management advisors, claims specialists, and independent defense attorneys to assist you. In addition, there is a pre-claims assistance program to help reduce the likelihood of a circumstance becoming a claim.