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"Malpractice" Insurance for Consultants and Consulting Firms

By Jeromey ·
I wanted to throw this discussion out there to see what types of responses would be generated.

I was thinking back to a time when I worked for a small consulting firm.

My firm was hired to resolve a disk space issue on an old SCO UNIX box. At this particular time, the client did not want us to add more disk space as they were phasing the box out. They only wanted us to clear disk space such as old log, temp, and user files.

A colleague of mine was asked to perform the task of finding and removing old files. Logged in as root, he ran his find command. Forgetting he was at root (/), he decided to run "rm -rf *".

He quickly realized what he had done but it was too late. Most of root (/) and etc (/etc) had been removed.

Speaking with management, they suggested that he contact the client and ask for a back tape or the original installer disks indicating to the client that some files needed to be restored that were removed in error.

Now my old firm charged the client for all the extra work that was a result of the administrators? error. My thought was that the firm should have eaten the cost of the mistake and only charged the client for clearing the disk space.

Now that my story has finished, my thought was maybe consultants (consulting firms) should carry some sort of "Malpractice" insurance to assure clients that they are covered should anything happen to the clients systems.

A company that hires a consulting firm or even just a single consultant have no assurance that the work will be completed with no incompetence.

Just my thoughts. What are yours?

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Interesting thought

by HAL 9000 Moderator In reply to "Malpractice" Insurance f ...

Generally when someone makes a mistake like that they or the company that they work for carry the costs involved {well here anyway} but I suppose that if you where to advertise the fact that you actually carried insurance for this type of thing you would not only get the blame for everything that happens {Like we do now anyway} but you would be spending so much time in court that you wouldn't be able to make the insurance payments.

That's just my thoughts on what you asked but I think it would only make the present situation worse as you would be unwilling to perform any work at all just in-case doing exactly what you where asked to do removed something that they wanted latter. They would just pass the blame for their mistake back to you and make you legally responsible for their error. After can you honestly tell me of one end user who actually says I mucked it up? From my experience I get a phone call from a company that I may not have needed to visit for 2 - 3 months and the first thing I'm asked is "What did you do to muck-up our computers" it doesn't matter that you have not been there for months you just get the blame. The last time that I got this was last week and when I arrived there I found a "New" computer well at least not one that was ever there before as they brought it in from home connected it to the Internet through their poorly setup network and when it got a Virus Infection I got the blame because I didn't install any AV product on a machine that I knew absolutely nothing about.

I don't think it would work effectively for anyone but the Legal profession who never are out of pocket for anything.

More to the point do you think there is a need to increase the income of the Legal Profession as well as the numbers? With the extra staff initially required they would eventually be forced into becoming Ambulance Chasers for the IT industry I can just see the adds now "Where you upset by your IT consultant? Did you get what you asked for? If you got exactly what you asked for and it doesn't do the job you want it to why should you be to blame after all you did employ a Professional to do the job didn't you so you should have got a workable solution.

Sorry but in any case like that you would be dammed if you did and dammed if you didn't. It would be a "No Win" position to be in and mean the end of IT consultants and the loss of their expertise which is required by these companies even if they already have their own IT section they always need outside Consultants to do the work that they are not setup to handle.


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It's becoming more common

by Salamander In reply to "Malpractice" Insurance f ...

It's becoming more and more of a common practice in U.S. government projects to require service providers to obtain a surety bond as part of the bid process for IT projects. It's similar to the surety bonds required in the construction industry, basically requiring that the service provider will meet the contractual requirements and obligations.

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Errors and Omissions

by ProcessGuy In reply to "Malpractice" Insurance f ...

What makes you think consulting firms don't have insurance?

Every contract I've worked on as an independent consultant (either direct or subcontracted) has required my corporation to carry technology Errors and Omissions insurance. This is just a blanket requirement of most contract boilerplates, and is no reflection on the competence of the contractor.

If you are a regular employee of a consulting house, your work should be covered under the firm's E&O policy.

In actual practice, errors have to be rather significant in terms of unrecoverable monetary loss in order for a client to want to take legal action.

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