5 Ways Technology Consultants Can Manage Their E&O Exposure
As a tech consultant, you work hard to give your clients what they want. It’s how you keep your business afloat. However, many clients don’t understand how technology works, and that knowledge gap is where risk blooms. If clients have unrealistic expectations, it can lead to frustration and lawsuits.
You can manage your client’s high hopes and your own E&O risk through contracts, communication, dispute resolution, careful work, and E&O coverage. Check out these five tips for more details.
E&O Risk Management Tip #1: Use Contracts with Everyone
The temptation to forego written contracts may be strong when you’re first starting out. Your early clients are often acquaintances or friends, and the same is usually true for your subcontractors and part-time help. That familiarity can make contracts seem unnecessary.
Here’s the problem with that: people tend to remember events in a way that best suits their needs. When both you and your client only have your memories to work from, settling disputes can get downright unpleasant. They may even escalate into E&O lawsuits.
But a written contract keeps everyone on the same page and manages expectations. Make sure your contract details…
- The scope of the project.
- Each party’s responsibilities.
- Important deadlines.
- Your fees.
Contracts are valuable in all of your business dealings. Use them with clients, employees, 1099 contractors, and subcontractors. While you’re at it, you may want to require contractors to have their own technology Errors & Omissions Insurance so they can address their work mistakes.
Check out our free sample legal contracts to get started.
E&O Risk Management Tip #2: Communicate Clearly and Frequently
When a client hires you to complete an important job, they probably expect some waiting period before they see results. But if weeks pass and they get nothing but radio silence? They might start to wonder what's going on.
Communicate with your client to help put their mind at ease. Check in often and be sure to:
- Send updates when things change, even when they change for the worse.
- Send an email confirming any verbal exchange with the client so you have a record of how the project progressed.
Don't forget to amend your contract to reflect changes in the project’s scope and make sure your client signs off.
E&O Risk Management Tip #3: Create a Complaint Resolution System
Unfortunately, a lot of tech consultants won’t be ready when their clients complain. According to our 2015 survey, only 47 percent of Tech Insurance customers have written client complaint policies in place.
Why is a complaint resolution system so valuable? Think about it this way: what’s the last thing you want to do when a client is unhappy? If you said, “Talk to them,” give yourself all the points. But when you have specific steps to follow, navigating the issue is much easier.
Creating a system for handling complaints doesn't have to be complicated. You can type up a single-page resolution policy that requires you to:
- Acknowledge and document the complaint.
- Investigate the complaint.
- Resolve the complaint.
- Communicate the resolution to the client.
- Follow up in a timely manner.
Documentation is key here. If a complaint turns into a lawsuit, you have a record of your attempts to resolve the problem.
E&O Risk Management Tip #4: Double Check Your Work
We know. That kind of sounds like elementary school, but your third-grade math teacher was right. It pays to double check. You may be surprised at the number of errors you can catch.
Check your work against your written contract to be sure you lived up to your end of the bargain.
E&O Risk Management Tip #5: Get Technology E&O Insurance
You can do everything right and still be named in a frivolous lawsuit. When that happens, Errors and Omissions Insurance can be a lifesaver. Also called E&O, the coverage helps you handle legal disputes by helping you pay for:
- Attorney fees.
- Court-ordered judgments.
- Investigation costs.
Lawsuits, even the ones without merit, cost time and money, but E&O Insurance can minimize the financial burden. Protect your business and apply for coverage online.