It’s perhaps easiest to start with the one thing not to do when a client threatens to sue you: ignore them. Although a threat is a long way from an actual lawsuit, taking the threat seriously will allow you to prepare for whatever may follow.
Even if you don’t believe your client’s claim has any merit or doubt their willingness to follow through with their threat, informing your professional liability insurer is an important first step in protecting yourself.
Will a call to my insurer cause my rates to go up?
In short, no. Insurers want their clients to let them know about possible suits, even if they seem unlikely to progress, because getting ahead of the problem can often lead to a less costly resolution.
“When considering what to report to your insurer, err on the side of oversharing,” says Joe Barnard, Director of National Programs for ProDefender. “It’s in the insurer’s interest to provide you protection from the very beginning.”
What information should I provide to my insurer?
The more information you can provide about the potential claim, the better your insurer and its professional liability attorneys will be able to defend you against it. When you make your first call to your insurer, be prepared to give, at minimum, your name and business name, contact information, policy number, and a brief description of the facts surrounding the claim.
As you know, keeping detailed records will best enable the insurer’s professional liability attorney to defend against a potential lawsuit. In addition to records of your interactions with the disgruntled client, be sure to keep records of your communications with your insurance company about the claim. Timely reporting to your insurer is important in making sure the issue will be covered, if necessary, so be sure to keep track of when you make contact with them and what you discuss.
What will my insurer do if I’m not actually sued?
Including your insurer in conversations about potential lawsuits gives them the opportunity to advise you every step of the way. The insurer can appoint an attorney to work with you on deciding how best to respond to your client’s claim. You may be advised merely to wait and see what the client does, while continuing to keep records of your interactions.
In the event a claim is filed, your malpractice attorney can be better prepared to respond, having had the opportunity to discuss the facts of your case with you and determine whether it’s best to move to dismiss the case, countersue, propose a settlement, or simply answer the claim and provide a defense.
“Additionally, your insurance provider can help you defend against professional complaints, even when they don’t become lawsuits,” Barnard says. “This is an important benefit, given that it’s far easier (and free) for a client to file a complaint against you with your state bar association or disciplinary board.”
If you’re not insured through ProDefender, check the terms of your policy to make sure you have this valuable benefit.
Having professional liability insurance gives you peace of mind when things don’t go as well with your clients as you would like. Don’t make the mistake of waiting before enlisting your insurer help you protect yourself and your business.
If you don’t yet have professional liability insurance, don’t wait any longer. Contact ProDefender to discuss potential gaps in coverage and get a quote. Even if your licensing agency doesn’t require it, an errors and omissions policy gives you valuable protection for your business—now and in the future.
For more information on the importance of having E&O insurance from the very beginning, read our article, "Why New Attorneys Shouldn't Wait to Get E&O Insurance."