When you operate your own professional practice, you’re a trusted go-to guru for your clients. Whether you’re an architect, engineer, attorney, consultant, or other professional, your clients rely on your specialized knowledge and expertise.
That said, your unique practice involves a host of operational, reputational, and financial risks. When a conflict comes up, a client can sue for professional negligence or lack of fiduciary duty, file complaints with regulators and state associations, and wreak havoc with your operation.
Unfortunately, it only takes one small error to put your practice at risk.
In the hustle and bustle of daily business, it’s all too common for professional practices to skimp on their own operational and risk management needs. That can lead to errors that can grow into costly lawsuits.
Fortunately, you can significantly reduce these errors and take more control over your unique risks by systemizing everyday functions. Systemization helps you:
- Avoid errors made through judgment calls
- Show that your firm thinks through its processes, allowing better business decisions
- Put strong checks and balances in place that will enhance operational excellence
- Foster consistency and reliability
Here are seven processes you should systematize to minimize risk:
- Client / project selection. Don’t reinvent the wheel with every new client and project. A consistent system of reviewing and choosing the right clients and projects for your practice minimizes the chance of making poor decisions.
- Contracting. Manage expectations from the beginning by having a consistent contracting process. That includes clearly identifying and communicating the scope of the project, billing procedures, limit of liability provisions, indemnification, retainer and disclosure agreements, and other details. Have all contracts reviewed by your legal counsel.
- Managing expectations with proactive communication. Too many lawsuits and liability claims arise out of a simple lack of communication. Make it a staple of your practice to engage in open, honest, transparent, and clear communication with clients. Have consistent processes and templates in place for staff to regularly communicate with clients and vendors. You’ll promote open and trusting partnerships while avoiding potentially costly misunderstandings.
- Keeping data safe. 62 percent of professional service firms report that cyber threats are their #1 risk according to the 2017 Traveler's Risk Index for professional services. You need processes and systems in place to control how data is collected, stored, and used, and how online transactions are handled. That includes regular staff training on cyber threats.
- Onboarding and discharging employees. Your hiring practices and processes for firing employees and conducting exit interviews when they quit are key to avoiding costly employment practices liability claims. This also includes your practice of changing passwords, access codes and locks when key employees leave.
- Using company vehicles. Many professional practices have staff that use personal vehicles for business, so it’s crucial to have a consistent system for conducting DMV background checks and training staff on policies and procedures.
- Keeping your online presence updated. Your website or social media profiles could be the first contact clients have with your firm. But these tools aren’t doing any good if they’re full of outdated or inaccurate information. In some cases, outdated information on your website can lead to lawsuits. Make someone on your team responsible for the monthly review and update of your online platforms.
Don’t forget one last key area of controlling your risks – protecting yourself with the right insurance. Your general business insurance won’t cover lawsuits for negligence in performing your services, so you need specialized professional liability insurance. At Heffernan Insurance Brokers, professional practice insurance is one of our specialties. Contact us today.