Communication and Consultants Professional Liability Issues

Big Business Building

Practitioners in consulting companies need consultants professional liability insurance to protect them and their business from risks not typically covered by general commercial liability policies. Marketing consultants know and understand many of the inherent risks associated with their industry. After all, their clients are counting on them to give their company a positive presence and make them more marketable, and therefore, more profitable.


Perception is everything, but it only takes one small mistake in a marketing campaign that ends up damaging a client’s reputation and potentially ending a great business relationship. Quite often the offshoot is that clients end up feeling that filing a lawsuit is the best way to reclaim money lost due to errors or omissions their consultant made while performing professional services.


For example, let’s say that a client hires an agency to create a new marketing campaign to promote a new product. But that campaign backfires and becomes embroiled in controversy, causing damage to the client’s image, sales, and reputation. Well, then the client likely will end up angry and bitter, may cut off communications entirely, and get his or her lawyer involved.


That’s where professional liability insurance, also referred to as “errors and omissions” or “E&O” insurance comes in. Professional liability insurance is available to consulting businesses if one of their clients should claim that they’re responsible for any financial losses.


Avoiding potential litigation


The simplest way for a management or marketing consultant to avoid a client-initiated lawsuit is by maintaining communication. This is a time for maintaining clarity regarding the client’s needs. Being provided with a clear and concise contract, including expectations and outcomes for both parties, will provide the essentials for a successful business relationship.


Get everything in writing and avoid any future conflict


If any changes are made along the course of the project, be sure to provide the client with progress and status reports to keep them informed. Providing written, up-to-date timelines is a good way to let the client know what to expect and when to expect it.


Be upfront with clients about potential obstacles


Before contracts are signed, give clients detailed written descriptions about any possible risks or complications that could negatively impact or delay the project. Most lawsuits stem from the following issues:


  • Improper documentation


  • Improper fact verification


  • Missed deadlines


  • Misrepresentation of facts


  • Breach of nondisclosure, and


  • Loss of data, improper procedures or negligent handling of data


Communication and documentation are two keys to a successful consultant-client relationship, and consultants professional liability coverage is an important tool when the relationship goes awry.


photo credit: Bradley Wells cc