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#492: The Possibility of Liability Comes With Your Recommendations

Posted By Mark Haas CMC FIMC, Tuesday, February 1, 2011
Updated: Tuesday, February 1, 2011
Am I liable if I make a recommendation that doesn't work out for my clients?

Yes and no. You are always going to be held "professionally" accountable (or measured) by your client based on your performance. Whether there is a presumption of legal liability depends on the kind of consulting work you do and how you position it with assumptions, disclaimers, etc. This is both a business and legal question. For the legal portion consult your attorney and check out The Consultant's Legal Guide published by Jossey Bass/Pfeiffer.

Tip: As a matter of good business, make sure you have both boilerplate disclaimers and qualified recommendations. Larger consulting firms have more to lose than independents simply as a matter of financial resources/exposure. Errors and Omissions insurance can be a useful risk mitigation strategy, at least to moderate the downside financial exposure incurred with a litigious client.

© 2011 Institute of Management Consultants USA

Tags:  legal  recommendations  risk analysis 

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Michael E. Cohen CMC MBA says...
Posted Wednesday, February 2, 2011
Why do you say that large consulrting firms have more to lose than independents? If they are dealin gin the same functional area that is suject to risk wiht regard to recommendations, I'd say that independents have more to lose, as a problem on one contract could wipe them out. The issue is not one of size, but the type of business and client sector. Another factor is whether the independent is consulting directly with the client or throuhg a prime contractor. In suhc cases the risk is sometimes, but not always, absorbed by the prime.
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