4 Strategies to Maximize Your Odds of Winning a Professional Liability Lawsuit

Once a liability lawsuit is filed, you and your lawyer become a team. They know the law and have experience defending small-business owners in Professional Liability Insurance claims. You know your business and your relationship with the plaintiff. These different perspectives need to come together to create a successful defense.

You can make that happen and increase the chance of winning a professional liability lawsuit with these four steps:

  1. Mocument everything.
  2. Maintain clarity.
  3. Listen to your lawyer.
  4. And be honest with yourself. 

#1: Document Everything

Good recordkeeping is the cornerstone of a good defense, and it should start way before you have your day in court. Remember that without documentation, it's just your word against your client's. That means the fate of your case may hinge on which party is more likable, and that's a roll of the dice you want to avoid.

To make sure your documentation can properly support a legal defense, be sure to:

  • Get everything in writing now. "Whether one party fails to understand all the terms of an agreement or whether business partners are in a dispute, they boil down to he-said / she-said battles," says Gina Bongiovi (@LawyerGina), founder of the Bongiovi Law Firm. "The best way to prevail in these situations is to document, document, and document some more."
  • Send confirmation emails. A follow-up email after a client meeting or phone call might seem like overkill, but it's the ounce of prevention that may save you a pound of cure. One "agreement recap" email gets everyone on the same page and provides a date stamp that may prove valuable if you're sued.
  • Hire a lawyer. Because of financial pressures, "owners often abstain from having a lawyer involved in the drafting process or agree to a deal even though the terms are unfavorable," says Robert Stetson, an attorney with Bernkopf Goodman LLP (@BernkopfGoodman). Work with a lawyer when you first draft or sign contracts to prevent mistakes that can expose you to significant liabilities and litigation costs later.

Stetson also recommends training your next generation about proper documentation. "There's no one-size-fits-all approach for ensuring the integrity of client conversations and agreements," he says, "but once a small business identifies what works, it must ensure that its practices last."

#2: Maintain Clarity

The people who decide your case – either a mediator or jury – may not know the nitty-gritty specifics of your industry or business, so don't assume they are subject-matter experts. To help make your case crystal clear for them, give your defense team plenty of documentation that can be readily understood. Keep in mind that documentation that is extensive but difficult to grasp may make the jury more sympathetic to a client who says they couldn’t understand the contract in the first place. To keep your documentation clear from the outset, be sure to:

  • Identify jargon and explain it.
  • Write contracts, agreements, and proposals in plain English.
  • Make contact obligations clear and precise with no room for subjectivity.
  • Include date and time stamps.

Perhaps the best piece of advice is to think like a lawyer when you're creating documents and communicating with clients. Ask yourself, "Could a lawyer – preferably mine – use this as evidence if I am sued?"

How Email Documentation Saved the Day

A computer company was revamping its client’s computer system. To implement the changes the client wanted, the computer company recommended the client upgrade their entire system, noting that the client’s software wouldn’t run at maximum efficiency without the improvement. The client refused. When the software was operational, the client saw that their whole system needed to be upgraded and sued the computer company. Luckily, the company had email documentation of all the recommended upgrades. The emails helped the computer company because they demonstrated that the client failed to implement their recommendations.

#3: Listen to Your Lawyer

Following your lawyer's lead during a lawsuit is usually the quickest way to a resolution. Think about it this way: you don't go to the courthouse very often. But your lawyer? They know the lay of the land, the people in it, and the expectations those people have. Listening to them makes sense.

While some small-business owners may question the loyalty of carrier-provided legal representation, remember that you're still the lawyer's client. That means they have a professional and ethical obligation to defend you, even if the carrier is footing the bill.

Before you consider outside counsel, make sure it's worth it. According to Michael S. Eisenbaum, a lawyer with Gray-Duffy, LLP in California, "If the carrier is raising significant coverage issues on the claim or the claim potentially exceeds the value of the insurance policy, then it is wise for a company to consult an independent attorney."

#4: Assess Your Situation Honestly

No one can blame a small-business owner for getting angry when they've been smacked with a liability lawsuit. However, strong emotions can be counterproductive, so Robert Stetson recommends business owners perform a cost-benefit analysis. "Take a step back and view the dispute as a business problem rather than a legal problem," he says. You might start by asking yourself…

  • Why am I going to court?
  • How will the time spent on a lawsuit impact my business?
  • Can I afford to see the suit to the end?
  • Did I make a mistake?

That last one is a tough question to answer, but it may be the most important one to think about, according to David Lilenfeld (@DavidLilenfeld), intellectual property lawyer and founder of Lilenfeld PC. "You’ve got to be able to look yourself in the mirror and say, 'I made a mistake,'" he says. "And not only 'I made a mistake,' but, 'I’m going to do what I can to make it right.'"

Of course, you can settle even if you think you are in the right. In fact, settling is often the smartest and most cost-effective move you can make – unless you count avoiding court altogether. Turn to the next section for tips on preventing professional liability lawsuits.