PROTECTING YOURSELF FROM A CLAIM ON THE HORIZON
By Attorney Robert A. Mich, Jr
May, 2012
By Attorney Robert A. Mich, Jr
May, 2012
Disclaimer: The information contained on this page is not legal advice. The information provided on this website is for general informational purposes and is not necessarily updated to account for changes in the law. You should consult with an attorney for legal advice regarding your individual circumstances.
Even the best and brightest professionals may be accused at some point in their career of having negligently provided services or having breached a contract. Upon first learning of such an accusation, many people will feel a sense of shock, confusion and perhaps even anger. It is important after the initial emotional reaction wears off to develop an appropriate strategy for how to best protect yourself moving forward.
The first course of action should be to consider contacting your insurance carrier to determine if there may be insurance coverage to cover the potential claim. This should be done even if the potential claim has not been presented in the form of a formal demand or lawsuit. Timely advising your carrier of a potential claim is not only a requirement of insurance policies but is a good practice. Insurance carriers also appreciate the opportunity to address potential claims during the so-called “pre-claim” phase. Claims adjusters and attorneys are often successful in responding to the potential claimant’s initial position and persuading them to not pursue the matter further, thereby saving everyone time and expense. Should the claim move forward into a formal demand or lawsuit, the insurance carrier will also be in a better position to investigate and evaluate the claim. Keep in mind that you have paid an insurance premium to gain the benefit of such protection in the event of a claim, so don’t be afraid to use it. In the event there is no insurance coverage, consulting with an attorney independently can also provide a similar benefit.
Another step which should be taken is to immediately place a “litigation hold” on all files (both paper and electronic) relating to the particular project in dispute. Preservation of documents at an early stage is critical because the passage of time will often dilute memories and the underlying documentation may be needed to resurrect what happened later on. If the claim should get turned over to a lawyer for handling, there may be documents that you did not consider to be on point but which may have a critical bearing on the case, and therefore you want to make sure to save those documents for future reference. Failure to preserve documents and electronic records could result in sanctions for “spoliation” of evidence. Burning a copy of all electronic files onto a CD for future reference is also a good idea.
Should litigation ensue, the claimant may eventually attempt to use statements by you or your employees in support of their claim. To minimize the potential for inadvertently providing your opponent with additional ammunition, it is also recommended that all communications regarding the potential claim occur through one source. Typically, this will be the professional or principal in charge of the firm, or an attorney. By directing all communications through one source, you are better able to maintain control over the dialogue and hopefully minimize the potential for sending the wrong message to the other side. Keep in mind that asking the potential claimant for additional information and documentation regarding the potential claim is not necessarily an admission that you have done anything wrong, particularly when coupled with a denial of liability. If you have doubts as to your ability to handle these communications, it’s advisable to bring in an attorney early on.
Many professionals at some point during their career face the unfortunate prospect of being a target of a potential claim. When that happens, recognize it is an indirect cost of doing business and take appropriate measures to protect yourself and your firm.
The first course of action should be to consider contacting your insurance carrier to determine if there may be insurance coverage to cover the potential claim. This should be done even if the potential claim has not been presented in the form of a formal demand or lawsuit. Timely advising your carrier of a potential claim is not only a requirement of insurance policies but is a good practice. Insurance carriers also appreciate the opportunity to address potential claims during the so-called “pre-claim” phase. Claims adjusters and attorneys are often successful in responding to the potential claimant’s initial position and persuading them to not pursue the matter further, thereby saving everyone time and expense. Should the claim move forward into a formal demand or lawsuit, the insurance carrier will also be in a better position to investigate and evaluate the claim. Keep in mind that you have paid an insurance premium to gain the benefit of such protection in the event of a claim, so don’t be afraid to use it. In the event there is no insurance coverage, consulting with an attorney independently can also provide a similar benefit.
Another step which should be taken is to immediately place a “litigation hold” on all files (both paper and electronic) relating to the particular project in dispute. Preservation of documents at an early stage is critical because the passage of time will often dilute memories and the underlying documentation may be needed to resurrect what happened later on. If the claim should get turned over to a lawyer for handling, there may be documents that you did not consider to be on point but which may have a critical bearing on the case, and therefore you want to make sure to save those documents for future reference. Failure to preserve documents and electronic records could result in sanctions for “spoliation” of evidence. Burning a copy of all electronic files onto a CD for future reference is also a good idea.
Should litigation ensue, the claimant may eventually attempt to use statements by you or your employees in support of their claim. To minimize the potential for inadvertently providing your opponent with additional ammunition, it is also recommended that all communications regarding the potential claim occur through one source. Typically, this will be the professional or principal in charge of the firm, or an attorney. By directing all communications through one source, you are better able to maintain control over the dialogue and hopefully minimize the potential for sending the wrong message to the other side. Keep in mind that asking the potential claimant for additional information and documentation regarding the potential claim is not necessarily an admission that you have done anything wrong, particularly when coupled with a denial of liability. If you have doubts as to your ability to handle these communications, it’s advisable to bring in an attorney early on.
Many professionals at some point during their career face the unfortunate prospect of being a target of a potential claim. When that happens, recognize it is an indirect cost of doing business and take appropriate measures to protect yourself and your firm.