Professional negligence claims – from long ago

When I give talks about professional negligence issues and how to avoid claims, I comment about how much time can pass between the alleged act and the claim being made. Some people assume that all such claims are made promptly. In practice this is not always the case.

I recently became aware* of a case where an accountancy firm was sued for negligence as regards the entries they included on a client’s tax returns in the early 1990s – about 15 years ago. The alleged negligence only came to light in 1997 and there was an out of court settlement in 2001. That was not the end of the matter though as a complaint was also then made to the relevant Institute in 2002 suggesting that the individual accountant may have brought discredit on himself, the Institute and the profession. It seems to have taken a further 5 years to progress matters due to some lengthy delays in the correspondence process. Even without such delays the complaint still refers back to events of ten years earlier.

It’s a sad fact of life that professional advisers may get a rude awakening some long time after the events about which a complaint is made. This is why I encourage advisers to do all they can to minimise the prospect of professional negligence claims. And in this regard, having a good defence is not sufficient. That may enable one to avoid a successful claim but the pain and anguish of dealing with a claim in the first place is such that it’s best to do all one can to avoid them.

I have written a 10,000 word ebook drawn from my talk on How to avoid professional negligence claims, containing tips and risk management advice for accountants in practice. You can buy the book or download a summary for free here>>>

* For the avoidance of doubt, I should stress that I became aware of this case due to my possible role as an expert witness!

by

Sandwich feedback

Ambitious professionals often need to be effective managers.  With this in mind a useful approach for providing constructive feedback to staff can be to adopt the sandwich approach.

  • Top slice:  Something positive.
  • Filling: Something constructive.
  • Bottom slice: Something else positive.

It’s important though to keep in mind your objectives in providing feedback.  These probably include:

  • To motivate the person concerned;
  • To encourage them to keep up the good work;
  • To help them to close the gap between the present level/standard of their work and the level you (and probably they) want it to be;

Thus, on the one hand, we won’t want to demotivate the person by over-emphasising the filling – the constructive element of the feedback.  Equally though it’s important that we don’t make the sandwich with doorstep chunks of bread.  When someone does that no one can taste the filling.  In the same way it’s important not to over over-stress the positive feedback such that the constructive words get forgotten.

In professional firms most staff want to develop and to progress.  They value constructive feedback so it’s important to be able to provide this in a helpful and motivating way.  The sandwich approach can be a useful structure that reduces the prospect of demotivating the person concerned.

How do you like constructive feedback to be delivered to you?

by

The value of testimonials (part one)

I don’t remember when I first learned about the power of testimonials in the context of professional services. It was probably about twenty years ago – long before it became common place.

For many years I have encouraged accountants to collect testimonials and to use them for marketing purposes. I explain to the accountants how to obtain testimonials in a professional way and how to overcome common concerns if they need to collate some to start the ball rolling.

In my case I have a page of testimonials on my website. In each case I have included the full name of the person who gave the testimonial.I must admit though that I have not made the most of them as they are all in one place and not given a context. Thus it’s not clear which testimonials refer to which of my services or talks. Proof I’m not perfect (as if further proof were required!).  I am also very proud of the kind recommendations I have been accumulating on my Linkedin profile.

Why are testimonials so valuable in the context of professional services? Quite simply because they are the next best thing to a direct referral. Many professionals claim that they get much of their work through personal recommendations and I can believe that.They often claim that advertising is not really worthwhile.They may be right.

But there is, what I call, a disconnect here. When they advertise (and I include website material as part of the advertising mix) they are communicating with people who don’t know them. Equally these prospects may not know any existing clients.But those prospects could read testimonials from existing clients if these were easily available on the website and in other marketing materials.

Without testimonials the marketing messages are mere assertions.Testimonials can bring these assertions to life. They can act as the next best thing to a personal recommendation or referral. They need to be believable. They need to be relevant and they need to be authentic.

I’ll continue this theme in future blog posts.

Like this post? You can now obtain my 10,000 word ebook containing loads more marketing insights, short-cuts, tips and advice aimed specifically at accountants. You can buy the book or download a summary for free here>>>

by

The “you never know” syndrome

I once worked with a guy (let’s call him ‘Sam’) who went to lunch with anyone and everyone; he attended more one to one meetings with other professional advisers than anyone else I have worked with. His intention was clear BUT the level of his work referrals never seemed to warrant the time and effort he put into his networking activity.

There were probably a number of reasons for his lack of success and some of them may have been specific to Sam.I remember his catch-phrase whenever he went off to meet one of his new contacts:“Well, you never know” he would say.And to an extent Sam was right. What you don’t go for you’re unlikely to get. It’s just that Sam only seemed interested in what he could catch there and then. If his new contacts were not able and willing to refer a client to him immediately he forgot about them and moved onto the next prospective referrer.

This always struck me as a wasted opportunity. If a new professional contact does not immediately refer work to you it is worth reflecting on the reason for this. It’s easiest to do so by putting yourself in their shoes. Are you able to refer work to them immediately? Why should it be a one way street?

Once you have devoted time and effort to a proper discussion after an initial meeting you have a choice:

1 – Treat the time as wasted and move on* (as Sam used to do); or

2 – Consider that discussion as an investment of your time in developing a longer-term relationship that could yield referrals in the future.

My preference is always for the second option – unless I’ve taken a dislike to the person concerned (or vice versa I suppose).This is why I distribute a regular newsletter. It’s to keep my name in the frame and to remind my contacts that I’m a helpful sort of guy.

*In many professional firms the only ongoing communication follows from the new contact’s business card details being added to the marketing database for newsletters and the like. Does anyone ever consider whether or not these are really going to enhance the relationship and lead to new work referrals?

Edit 2013: You can get my 10,000+ word book specifically for accountants who want to Network more effectively. Just click here for full details>>>

If you would like to book me to speak on the subject at your in-house conference or training session, do get in touch. There’s an outline of my talk on ‘How to ensure your networking activity is successful’ here>>>  

by

Do you hope, pray or train?

It has been said that personal development in a professional environment is largely a matter of common sense.

Employers will spend a fortune in an effort to ensure that ambitious professionals keep upto date with technical developments. But when it comes to maximising the professionals’ potential to do their job, to progress and to get more done, little time or money is invested.  The largest firms will often have formal partner development programmes but smaller firms do not have the need to invest in such formality, neither do the legal, finance and tax departments of large corporates who also employ ambitious professionals.

The consequence of this is that managers and senior managers often have great technical skills but their wider business skills are not honed. This is likely to hold them back from feeling fulfilled, achieving partnership status or otherwise progressing in their job .

There was a time when professionals were routinely categorised as finders, minders or grinders. The finders went out and developed new clients and brought in the business; the minders looked after the relationship with those clients; and the grinders were the ones who did the detailed technical work. There is also a fourth category: Binders – those who keep (bind) the team together working effectively and who set a good example themselves.

If we accept that CPD training is generally focused on technical development then this covers only the ‘grinders’ quadrant of a potential partner’s development. That leaves Finding, Minding and Binding.  If no one invests in this the only hope of achieving personal development and fulfilment at work is to hope or pray.  So many business skills are thought to be common sense but I tend to think it’s unfair to assume therefore that they should also be common knowledge.  What do you think?

by

Why is management a struggle?

I saw a delightful definition the other day:

All too often the reason managers struggle is because they are responsible for a whole gang of people that they probably didn’t pick, may not like, might have nothing in common with and who perhaps don’t like them much.

Given how often this is what ambitious professionals have to cope with it is no surprise that they sometimes struggle to build trust and confidence in the team. Motivation will also be a struggle and delegation may not be as effective as would be ideal.

When I created a mentoring programme for ambitious professionals in 2007 I encapsulated these issues under the broad heading of ‘Binding’ – as distinct from Finding, Minding and Grinding.

Why do you think managers struggle and what differences do you perceive as between managers in practice and those working in commerce or the public sector?

by

Due Diligence before Admission to Partnership

I would like to have attended the workshop on this subject run by the Association of Partnership Practitioners on Tuesday evening. Unfortunately I had a prior commitment so had to decline the invitation. I wonder if any of the speakers or contributors to the debate talked about the Google impact or that of online networking groups?

If I were on a partnership selection panel I would want to know as much as possible about candidates for partnership in my firm. Indeed I would probably run a ‘Google’ search on prospective new partners in any firm where I was a partner. After all I generally Google anyone I’m meeting for the first time.

Rarely does a Google search reveal anything untoward but with the rising popularity of online forums and networking sites there are an increasing number of other ways to perform online ‘due diligence’ before allowing new people to join the partnership. In addition to a general web based ‘search’ anyone can look you up on LinkedIn, on Facebook, on MySpace and on any other online networking community to which you might belong.

I would expect that HR departments of larger firms have staff who belong to and are familiar with each of the main online communities so that they can check out prospective partners.

Indeed, the same is probably true as regards any job applicant these days.

And the key question for ambitious professionals is whether your online postings, comments and profiles support and echo your job application and partnership admission papers? If you have revealed your real self online but carefully edited your CV to give a different impression, don’t be surprised if you are found out. If you’re lucky you may still make it to the interview and just get asked about who is the real you. In other cases your online persona may result in your name being removed from any shortlist. I haven’t heard of it happening yet to any ambitious professionals seeking partnership but it won’t be long.

by

Tax Careers

I’ve been looking at the stats for this blog and noticed that a number of people are directed here because they are searching for information about ‘tax careers’. This posting therefore seeks to provide some useful pointers.

If you are new to the world of tax and/or are looking to move to or from the public sector you will find loads of useful information and links on the TaxWorking website. This is a joint venture between various professional bodies, public sector bodies and professional firms of various sizes.

There are also two magazines that contain job ads and useful articles principally targeted at younger tax professionals. I have mentioned each of them in previous postings when I have been featured or quoted in them:

Tax Careers

Taxation 2

Finally some further links that may be of interest:

The ICAEW guide to a career in tax

The CIOT guide to a career in tax

The Facebook Tax club for younger tax professionals

by

The value of detailed fee quotes and bills for professional work

It’s been a while since my last blog post on the subject of billing and fees. What has inspired me to return to the subject? Well, I’ve just had my car serviced and I was impressed with the sensible way that the garage both managed my expectations and the way they prepared their fee notes. I think there are lessons here for all ambitious professionals.

Having booked the car in for a service and MOT I received a phone call from the garage to advise me that the car needed a fair amount of additional work doing. This didn’t really surprise me as the car is 15 years old!

The garage owner ran me through the list of things that would be required and estimated the aggregate cost could be as high as £1,000 plus VAT. I asked for a firm quote which he then gave me the next day. The service would be £205, the MOT £50 and the extra work including labour and parts together would be £740. Together with VAT this would take the total cost to £1,164.43.

When I collected the car I received two invoices. One for the service and MOT. The other for all of the additional items and work. The total came to the same figure as I had already been quoted.

When I complimented the garage owner on the way the extra charges had been communicated to me and shown on a separate bill he told me why they do things that way:

1 – They always try to over-estimate what the extra costs will be so that customers get a pleasant surprise that the actual cost is less then the estimate;

2 – They always breakdown their estimates to distinguish the key elements BUT they always end a conversation by referring to the aggregate charge as they know that customers only focus on the last figure they heard. In my case that would have been £740 rather than £1,164.43.

3 – They always show the extra costs on a separate invoice so that customers do not get confused as to the charges for regular services etc. In this case I know that the basic charge is nearer £200 then £1,100 which is important if I was considering getting comparative fee quotes for similar work.

I think that many ambitious professionals could adapt these excellent practices to good effect. How would that work in your office for example?

by

Websites for professional firms (part two)

A few weeks ago I posted the first of my observations and advice concerning websites for professional firms.

When I consult with ambitious firms I invariably check out their websites beforehand. Some are good. Some are lousy. Some don’t exist and some are almost indistinguishable from those of other firms who have bought the same web package.

I always ask the same key question:
Who is your audience for the website?
For most firms IT IS NOT for clients.
The real target audience, whose needs should be satisfied normally includes:
– prospects who have been recommended to the firm ;
– prospects who have found the site when searching online;
– ambassadors and advocates of the firm and the partners eg: bankers, solicitors and other networking contacts who want to check out what the partners have told them about the firm.

It’s also for suppliers and prospective suppliers. AND a commonly overlooked but often very important audience, being PROSPECTIVE STAFF. These days almost anyone worth recruiting will have a look at a potential employer’s website. Does yours contain anything that makes your firm stand out as being a more attractive place to work than whoever you are competing with for good quality staff?

Why do I think a website is NOT for clients?
Because, in most cases you want them to get in touch and to speak with you when they need your help. If they can access all the help they need via your website you are less likely to secure additional paid work. You are less likely to be able to help them to clarify their enquiry and to determine whether or not you can help.

There may be cases where accountants are playing a strong ‘volume’ game and DO want to discourage phone calls. For them it makes sense to share lots of content on the web. It may also make sense in other cases as well but if a firms’ website contains loads of material that does not encourage the user to contact the accountant for relevant advice, there will be plenty of lost opportunities.

You have to decide what it is you want your website to do. And the starting point is always: Who is the audience? What will they want and what do you want to tell them?

by