A lawsuit following an E&O claim against your business can be detrimental to your financial stability and reputation. Defense costs can easily climb upwards of $100,000 and in approximately a quarter of these lawsuits, the defendant has done nothing wrong. Even following the law completely won’t eliminate your chances of being sued, so it’s important to purchase E&O insurance if your business serves customers, clients or patients. The good news is that you may be eligible for a discounted rate if you actively take steps to reduce your risks of an E&O claim. You can do just that by trying the following methods:
· Use proper paperwork: Using the standardized forms for your industry is always better than creating your own. These forms already include pertinent information that has been scrutinized and approved by the industry. Paperwork includes contracts, disclosure forms, agreements, etc.
· Review transactions: Ask a trusted associate to review documents and transactions before signing to catch any potential mistakes. Fix them immediately and draw up a new document to be signed.
· Maintain files: File any and all documents related to a contract or transaction, including emails and notes taken during verbal conversations. It’s even a good idea to send such notes to clients after a phone call or meeting. Keeping extensive files allows you to build a defense more easily, if needed.
· Document policies: Written customer service policies make it easier to serve all customers/clients by the same standards, which reduces their risk of getting upset over unfair treatment. It also shows the organization of your business.
· Hire qualified employees: Your staff should be fully licensed and insured whenever possible and/or necessary. A qualified staff is less likely to err and more likely to recover should an error occur.
· Stick with what you know: Don’t offer advice about topics you’re not familiar with. If a customer takes that advice and it fails, they can come back and sue you for the damage it caused. If you’re not sure how to assist a customer/client, maybe another employee is more familiar with the topic at hand.
· Hire a lawyer: Bring in a lawyer to examine potential risk areas from a legal perspective. He or she can advise you on how to better manage risks to keep you out of legal trouble.
· Educate yourself: Continuing education is important, especially in industries that change or evolve often. Taking courses, or even reading industry news, shows your commitment to the industry and allows you to run your business within the law.
Risk management is a crucial piece of every business. Call Dealey, Renton & Associates at 626-844-3070 for more information on Los Angeles professional liability insurance.