Recently I was contacted by an Insync client who had received an official letter from his end client who was refusing to pay the balance of his invoice for services received, sadly an all too familiar occurrence for Professionals.
Still, I thought that by sharing the outline of the story it might help others avoid a Professional Indemnity claim, or worse yet, costly legal bills.
Local Web Developer Runs into Trouble
Our client is a long-established web services company specialising in all areas of web development, mainly working for local traditional businesses based within 20 miles of their offices.
This particular contract was for a local dentist who required a website and associated SEO services to optimise their site on Google and other search engines.
Our client met with the dentist and went through their requirements before producing initial drafts of the website.
The Dental practice loved their ideas and commissioned the work to begin – excellent news, right?!
Regular Updates Keeps The Client in The Loop
Everything started well, the dentist signed his purchase order and made an initial deposit payment and work commenced.
Over the following few weeks, our client provided regular updates of the site development, and the dentist was pleased with the progress.
Soon after, the site was completed and put live.
Our client completed the SEO such as Google Local listings and sent the final invoice for settlement.
A job well done – or perhaps not?!
Alarm Bells Ring After Unpaid Invoice
Thirty days later, our client noticed that their invoice remained unpaid.
After a couple of calls and unanswered emails, alarm bells started to ring, surely a dentist hadn't run into financial difficulty?
Two weeks later, our client received a letter from their client stating that they would not be settling the balance of the invoice as business had not increased at all since the launch of the site and they did not appear at the top of the search engine listings as they had "been promised".
Contractual Disputes Main Form Of Professional Indemnity Claims
According to our Partners Hiscox, over 50% of PI claims from Web and IT Professionals are resultant from contractual challenges or misunderstandings and this example is a classic case.
Our client had completed the works to his exact interpretation of the Dentists requirements. However, both parties clearly had very different views of what the end result would look like.
Our client had specified clearly the work he was carrying out and has a standard "terms of business agreement", which he felt was water-tight.
Legally, this is correct, but by not fully explaining what might be obvious to most, a misunderstanding had occurred.
PI Insurers To The Rescue
Fortunately, a formal response from our clients PI Insurers to the dentist cleared things up, and the matter has been closed.
The Insurer also offered to review the client's Terms of Business and made a couple of suggestions to tighten-up any loopholes.
Still, in reality, the critical lesson is to discuss with the client their exact requirements AND expectations before any works commence.
The other lesson is to ensure you have the right level of Professional Liability Insurance in place which extends to cover full civil liability losses such as this incident.
Fortunately, our client had the right cover, but when was the last time you reviewed your policy?
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