Any small business or independent contractor can be sued for compensation by a client. With an ever-increasing compensation culture, it’s happening all of the time.

While being properly protected with strong professional indemnity insurance should be a top priority for savvy business owners, it’s also important to do everything possible to reduce the risk of being sued in the first place.

The Insurance Octopus has put together a few key tips on how to avoid getting into a nightmare legal situation with a client.

Manage expectations

Many misunderstandings come about as a result of expectations not being met. If you fail to carry out what’s expected of you, a client could have grounds to sue for professional negligence. The best way to avoid such a scenario is to draw up contracts before going ahead with any work. This way, both parties have a clear idea of what to expect.

Besides having contracts, it’s also essential to be thorough at the briefing stage – ensuring you have all of the relevant information necessary to carry out your job. By having everything laid out and signed off at the beginning, this also provides protection should a client insist this wasn’t what they asked for at the end of a project. If you can prove that the brief provided by the client was followed accurately, this can be used in your defence if an unjustified dispute arises.

Ideally, the briefing stage should allow for changes and amends to be made at different stages, but this isn’t always possible with tight timeframes so some flexibility is needed to meet the requirements.  Keeping the communication channels open is also a major factor in building successful client relationships. Whether this entails having weekly meetings to go through the work already carried out or sending the odd email to provide a general update on the project, it’s good practice to gauge how well the project is going in the client’s eyes at regular intervals.

Quality work

This might be an obvious one, but even the most experienced of professionals have off days. If you’re not at your best due to illness or other issues, it’s vital to ask yourself if you’re able to carry out work to your usual high standard. If the answer is no then speaking to the client and delaying a deadline by a few days will most likely be a much better option than carrying out work that is below par and riddled with mistakes.

It’s tempting to soldier on due to concerns about seeming unreliable, but the quality of your work should always take precedence and most clients would be reasonable when situations like this occur.

Similarly, if you’ve taken on too much and are struggling with the workload, consider finding some support to help you reach your deadline. While you’ll earn less due the extra help, at least this will enable you to keep a handle on providing quality work. Low quality work will probably be rejected by the client anyway and could lead to a compensation claim if they lose money or suffer other damages as a result of a shoddy job. If this happens, you’ll be relieved to have professional indemnity insurance in place to cover the potentially huge legal costs.

Avoid high-risk clients

Being approached by a potential new client can feel amazing – especially if the work is ongoing.  However, there are a lot of time wasters and difficult people out there that should be avoided. If alarm bells are ringing when a new client is proving to be awkward and uncompromising in the early stages, then you need to ask yourself: is this worth the risk?

If a client comes across as too much trouble or is disrespecting your profession by trying to negotiate the price down too much, it may be worth doing yourself a favour and walking away. Trust your instincts: if something feels wrong, it probably is. Choosing clients that you can build a healthy relationship with is what should be strived for.

One of the best moves you can make for your business is arranging professional indemnity insurance. This way you’ll have peace of mind in knowing that you’re in a position to deal with any compensation claims head on.

Is your business insured? If not, contact The Insurance Octopus today to find out what essential cover you need.

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