Manage Your Claims before They Manage You

Abstract

Claims demanding money or additional services due to damages allegedly caused by negligent performance of professional services are a fact of life in the engineering consulting business. But how your firm manages these claims can impact its profitability, in terms of the indirect, unreimbursed expenses incurred when responding to a claim; the critical time lost in managing the professional practice and strategic direction of the firm; and the emotional trauma experienced by everyone involved. Effective claims management requires little more than common sense, good business judgment and the resolve to stay involved in the process. This article briefly outlines the steps a firm should take in the immediate aftermath of a claim and what it should avoid doing (e.g., admitting any liability or responsibility for the alleged damages, attempting to identify who is responsible, or attending meetings arranged specifically to discuss the claim). The article then offers guidelines on how to establish effective internal claims management procedures. One point person within the firm should have overall responsibility for managing claims and must be able to create a budget that details how much dealing with the claim will cost and interact closely with counsel on a defense strategy.