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Dealing with Unjust Claims

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A client has taken or is threatening to take adverse action against you — but you (or your workers) haven’t done anything wrong. How do you protect your company against unjust claims? And what can you do to prevent future problems?

Documentation and proper insurance coverage are essential elements for companies to safeguard themselves against such claims, according to Jayne Ressler, an expert in employment law and associate professor of legal writing at Brooklyn Law School in Brooklyn, New York.

“All client communications should be documented, with the time, date, and topics discussed included. Email communications should be filed and stored. Another essential for employers is to carry Employment Practices Liability Insurance (EPLI). These policies protect organizations from accusations of wrongful acts committed against customers, clients, vendors, and suppliers. Importantly, these policies also provide coverage against wrongful acts committed by third parties against the insured’s employees,” Ressler explained.

Attempt to Reach an Amicable Resolution

With proper documentation in place, companies are in a better position to defend themselves against unjust claims. This is especially true for claims that arise from tensions that have been brewing for weeks, months or longer. However, some unjust claims hit companies totally out of left field – and are triggered by apparently trivial circumstances, according to Ressler.

“Unfortunately, almost anything can give rise to an unjust claim. Something as slight in a company’s view as an unreturned phone call or a harmless – again, in a company’s view – joke can have broad consequences,” Ressler insisted.

The good news is that oftentimes a situation that has the potential to become an ugly, unjust claim can be reconciled by making a simple outreach to the client. Doing so can frequently deescalate the situation, avoiding adverse legal action altogether, according to Ressler.

“The first step should be to talk directly with the claimant and see what the complaint is all about. Oftentimes these complaints are more a result of feeling ‘disrespected’ than they are of an actual business problem. Companies must assure their clients that they are indeed respectful of them, which includes being respectful of their time. Companies must also assure the client that the complaint will be taken seriously and followed up upon, and then actually do just that,” Ressler stated.

The Customer Is Always Right (Sometimes Even when They’re Not)

Depending on the circumstances, a company’s insurance carrier may recommend going along with a client’s wishes, according to Ressler.

“If companies carry an EPLI policy, which I strongly encourage, their carrier will advise them on the best course of conduct, which might very well include settling,” Ressler explained.

While company owners may understandably resist biting the bullet to give way to a client making an unjust claim, doing so may allow the company to keep a good customer. The potential for future business with that client can offset the initial financial hit companies take by acquiescing, according to Ressler.

“Clients should be asked how they would like to see the problem resolved, and if their solution is reasonable, companies should comply, even if the claim is unjust. Employees should always maintain good relationships with clients, and should definitely abide by the ‘the client is always right’ motto, In the long run, it’s better to lose a few dollars or go the extra mile, than it is to stand on principle. ” Ressler insisted.

When the Customer Is Truly Wrong

Sometimes, despite a company’s best efforts, a customer insists on making an unjust claim and a reasonable settlement isn’t possible. In such cases, settling is out of the question. Instead, obtaining top notch legal advice is called for, especially if the company isn’t properly insured, according to Ressler.

“If the problem still persists, the company might consider turning to a lawyer for advice.
For companies without such a policy (EPLI), they should always contact a lawyer,” Ressler stated.

Of course, the best way to prevent unjust claims is to prevent them. One way to do so is by taking a pass on client or customer who gives indications that there will be future problems, Ressler suggested.

“Businesses should not be afraid to turn away potential clients if they feel that the fit isn’t right. Sometimes there are red flags regarding the potential client before a deal is even reached. Businesses should heed these warning signs. In the long run, it’s more advisable to forgo the short-term profit to prevent the longer-term headache,” Ressler insisted.

Disclaimer: This article describes general situations concerning companies facing unjust claims from clients or customers. It is not intended to represent legal advice. Please consult with an attorney in your jurisdiction with specific questions concerning your company’s circumstances.

Audrey Henderson

Posted In: Legal, Management, Money, Uncategorized

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