A malpractice lawsuit brought against an accountant or firm can be a devastating blow. Lawsuits can take years to complete, all the while opening up possibilities of losing clients and losing trust. When people search online for a new firm, search engines may populate search results for a firm or a specific accountant with everything related to a lawsuit. Having a firm’s name attached to this can put a large dent in large businesses and maybe even shut the doors on small ones.
With all that in mind, it’s crucial for accounting firms of all sizes to invest in coverage like accountants professional liability insurance that’s meant to protect against lawsuits and other legal battles. However, with or without coverage, there are steps that a firm or an accountant can take to prevent or fight against malpractice claims that may come in.
For all new clients, this is a good rule of thumb. But even for existing clients accounting firms can take the time to go back over and get to know who they’re working with. Just a quick Google search will help to better understand who you have on your roster and get to know their history a bit. Consider any professional risks that may possibly play out from what you learn.
Know Your Client’s Business
Knowledge is power. When you’re sued by a client over malpractice, you will be the one facing hard questions. If can go a long way to better know just what your client is all about to avoid being left in the dark when it comes to litigation. This will put a firm in better position to offer a client advice, consulting, or more services.
There are some CPA’s who, when sued, show that they are still owed a lot of fees for their work. Clients must pay when services are rendered, no questions asked. When a CPA has to demand payment, clients usually cook up ways to bring allegations against that CPA or firm. Struggling and fighting over getting paid for services can sometimes turn out to be drawn out and time-consuming, and lead to bitterness. Finally, always make sure what you are offering as far as work is delivered in a timely manner. This will only help guard against any allegation that you did not stick to the agreed-upon schedule and scope of the project(s).
Be sure to keep everything in writing and backed-up digitally. From letters to contracts, amendments in services to new terms being added, taking the steps to guard against malpractice claims and lawsuits can be the different between keeping your name and business intact and losing clients down the road.