10 Steps for Service Professionals to Consider When Facing a Malpractice Claim

Previously Published in Northern Nevada Business Weekly.

We service professionals should be scared of malpractice claims, especially when you consider these recent cases featured in the news. For example, a jury rendered a $91 million verdict against a Miami-based accounting firm for negligence in auditing its client’s financials. A New Jersey law firm secured a $525,000 jury award against a health club for failing to properly train a member who paid for fitness training services and suffered a serious injury. Another jury recently rendered a $700,000 verdict for negligence against a road construction contractor. According to the Kaiser Foundation, nearly 10,000 medical malpractice claims were paid in 2011, totaling more than $3 billion.

If you work in a service industry, the chances are that you or your business will, at some point in time, be subjected to a malpractice claim. Even if you mount a successful defense, the cost and stress accompanying such a claim are undeniably taxing.

Should you or your business ever face a malpractice claim, consider the following 10 steps:

#1: Report the claim to your malpractice insurer even if a lawsuit has not yet been filed. Failure to report could lead to a denial of coverage. Check your policy’s required notice provisions, limits and deductible. Also, review provisions relating to the selection of counsel to defend you.

#2: Alert others involved. Notify only those who need to know. Review the lawsuit and request each person’s cooperation as the case moves forward. Refrain from discussing strategy with anyone outside the presence of counsel.

#3: Hire an outside law firm that specializes in malpractice cases. Professional liability is a specialized area and you want someone who knows the rules, procedures, experts and standards for causation.

#4: Hire subject matter experts. Make sure the firm you hire has attorneys experienced in the specific practice area involved in your case.

#5: Assign a point person. Ideally, your company’s general counsel should be the primary contact for outside counsel. If you do not have an in-house attorney, appoint someone in upper management to serve as the designated point person.

#6: Watch your words. Avoid discussing the case unless directed by your attorney. Hiring an outside law firm helps make clear what is privileged.

#7 Issue a gag order. To avoid potentially damaging and embarrassing comments, practitioners should avoid written and verbal case discussions, including email and social media communications. Regularly remind staff and employees the gag order extends outside the office, too.

#8: Save information related to the case. Get your IT department to help make sure you meet your preservation obligations on all documents and electronic data as early into the claim as possible.

#9: Fix mistakes. Ignoring problems will not make them disappear. Address the issue right away to avoid more trouble. Sometimes a conflict of interest arises and you need to recuse yourself. You may also want to pursue ongoing ethical training to help identify and confront potential issues before they lead to a lawsuit.

#10: Stay calm. Lawsuits can take an emotional toll while a resolution is being reached, which can sometimes take years. To the best of your ability, try to find ways to remove your emotional attachment to the claim, so that you can make the best possible business decisions in helping to resolve it.


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