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Get ready for trouble

Malpractice liability claims are on the rise in a range of areas, and with clients readier to sue than ever, you need to make your firm lawsuit-proof.

We spoke to a number of insurance executives and other malpractice experts, and collected this list of tips and strategies for keeping your firm out of court.

For more, see our feature story on liability issues.

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Make risk management part of your culture

Staff at all levels need to be aware that carelessness can get you in serious trouble, and they need to be able to recognize the warning signs of potential liability.
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Focus on fraud

An overwhelming number of liability cases and lawsuits allege failure to detect fraud. Train your staff to stay on the lookout for fraud, and encourage them in developing high levels of professional skepticism.
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Use engagement letters

Clients often expect much more from you than you’ve actually promised – and having an engagement letter that accurately describes the scope of the engagement can prevent juries from siding with the client. Some firms go so far as to issue a new letter every year on recurring engagements.
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Document all communication with the client

This includes even off-the-cuff advice – you need to be able to be able to prove what, exactly, you said or communicated to a client. One particular area where this is important is when there is a change to the scope of the engagement.
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Stay within your area of expertise

Experts note that they frequently see lawsuits brought against firms that have ventured in new service offerings that they’re not skilled at. If you’re not qualified in an area, study and learn it before accepting work in that space.
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Be vigilant about client acceptance and retention

The best way to protect yourself against bad clients is not to let them become clients in the first place, and the second best way is to get rid of them before they become serious problems.
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Educate and train all staff on issues in the profession

As much as possible, that is – put a special focus on issues related to the engagements they work on, because any member of your staff could potentially be the source of a malpractice suit.
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Protect yourself against cyber-security risks

Hire an outside IT consultant to assess your firm’s vulnerabilities, and suggest fixes – and then implement the fixes, and make cyber-security a priority. You have too much valuable client data floating around your firm to take any chances with it.
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Have honest partner conversations to ferret out bad clients

No one likes to fire clients – particularly their own clients – but almost every partner has a ticking time bomb of a client waiting to damage the firm. It’s important that partners honestly assess their entire book.
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Buy good professional liability insurance

Since being sued is not a question of if, but when, having policies that are up to date and cover all the different areas where your firm practices is crucial.
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Maintain a relationship with a good attorney

Besides being useful if you’re actually called into court, they can give you guidance on better engagement letters, handling troublesome clients, and all the other things you need to do to stay out of court in the first place.
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