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10 “Get Out of Court Free” Cards

Accountants Professional Liability Insurance Adviser

10 “Get Out of Court Free” Cards

Ten ways to keep your firm from getting sued for professional malpractice.

Want to keep your firm out of court, and keep your professional malpractice insurance premiums low? These 10 tips from Rickard Jorgensen, president and chief underwriting officer of Jorgensen & Co., can help.

  1. Have the expertise to provide the services you offer. Beware moving out of your comfort zone to “round out” service to a client.
  2. Be cautious of emerging high-risk areas, such as SEC attest and financial institutions, investment funds, etc.
  3. Manage client expectations at the outset, and throughout the engagement. Don’t make unattainable promises or predict outcomes.
  4. Screen new clients and do background checks. There may be a scary reason why a potential client is switching accountants.
  5. Include a mediation clause in all engagements. Even better, if possible, include a limitation of liability clause.
  6. Where you have access to client funds, carefully supervise your own employees. Consider purchasing an employee dishonesty bond with a third-party (client coverage) extension.
  7. Be aware of what is a reasonable fee — especially when dealing with trusts, or unsophisticated, elderly or otherwise vulnerable clients. Someone else may see it as gouging.
  8. Do not create conflicts of interest by investing in clients, loaning to clients, or borrowing from clients.
  9. Do not sue for fees. Ever.
  10. Always get an engagement letter, and be alert for engagement drift — do not perform additional services for a client without a new engagement letter or signed rider.

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