Client is threatening to sue me. Here's what happened: I recommended they switch from Rate GS-2 to Rate TOU-GS-3 based on my analysis of their load profile. They made the switch. Three months later their bill went UP because their actual usage pattern didn't match the 12-month historical data I used — they added a second shift that changed their load profile. Now they want the rate difference back plus damages. Do I call my E&O carrier?
Client threatening lawsuit — E&O process
Call your E&O carrier immediately. Even if you don't think the claim has merit, you are obligated under most E&O policies to report potential claims as soon as you become aware of them. The carrier will assign an adjuster who will review the situation. In the meantime, do not admit fault, do not offer to pay anything, and do not communicate with the client about the dispute without your carrier's guidance. Document everything — your original analysis, the data you used, your recommendation, and the client's decision to switch. The client chose to add a second shift after your recommendation, which is an operational change you couldn't have predicted. Your analysis was correct based on the data available at the time.
Randy's right — call the carrier NOW, before doing anything else. And don't panic. Most threats don't turn into actual lawsuits, especially when the facts are on your side. Your analysis was based on historical data and the client made an operational change after the fact. That's not your error. But let the insurance company handle the response.
This is why I always include a disclaimer in my recommendations: "This analysis is based on historical usage data. Changes in operational patterns may affect projected savings. The client should notify the auditor of any planned operational changes that could affect the rate analysis." Doesn't prevent lawsuits but it documents that you qualified your recommendation.
Called the carrier this morning. They're assigning an adjuster. Also adding Derek's disclaimer language to all future recommendations. Appreciate the fast responses — this was stressful.
Hang in there. This sounds like a case that goes nowhere once the facts are reviewed. The client changed their operations after your recommendation — that's not your fault.