Freelance web programmers deal with a lot of uncertainty. They often piece revenue together from a patchwork of client contracts and may not know what project they'll be working on in a week.
With all this uncertainty, you should make sure your business is doing what it can to limit the financial uncertainty caused by lawsuits. Over the last few years, the cost of data breach lawsuits has skyrocketed, according to infosecurity Magazine.
Before we go over how you can prevent lawsuits, let's look at five common things web programmers can be sued for.
- Security flaws. Whether you're an app developer, cloud programmer, or web designer, data security is a huge part of the work you do. Recently, hackers were able to install malicious code by exploiting weaknesses in android apps and unprotected Wi-Fi, according to a report from ArsTechnica. If you develop a piece of code hackers exploit, you could find yourself in a Cyber Liability lawsuit.
- Failure to deliver part of a project. In 2009, an Australian company hired a developer to build a database of flight information and prices they could use to sell tickets à la orbitz.com or kayak.com. However, they sued the web developer for "delivering the product late and without all the required functionality." Delays and malfunctions happen. That's a part of any job, but can be especially true of programmers who are tasked with building complex, functional web services. When businesses hire a web programmer, they expect perfect functionality. That's a hard standard to deliver time and time again.
- Trademark or copyright infringement. Graphics, music, video, and a host of other media can all be copyrighted. You can even be sued for copying HTML or website design from someone else.
- Lost profits. Let's say a client wants to roll out a new web service and hires you to oversee the project. Once it's finished, if the new web service doesn't attract new business, the client could sue you, claiming your product was deficient.
- Miscommunication. Sometimes a client is simply disappointed in your work. Often this happens because of miscommunication. The client thinks they are getting one thing, but ends up getting something else.
How Programmers Can Prevent Lawsuits
While you can't prevent all lawsuits, there are a number of ways you can reduce the risk of your business being sued, including...
- Secure your business with strong contracts. Include language in your contracts saying you can't be sued for lost profits. Privacy Policies and Terms of Use agreements may protect you from some lawsuits over security breaches. For examples of what other language to include in your contracts, download our free sample IT contracts.
- Form a corporation or LLC. If you're an independent contractor, you should think of incorporating or forming an LLC. These legal structures protect your personal assets from any legal liability your business is found to have: while your business can still be sued, your personal assets are safe from collection for settlements or judgments.
- Know which insurance policies cover your liabilities. Cyber Liability Insurance protects you from data security lawsuits, but won't cover lawsuits over miscommunications, lost profits, or failure to deliver on time. Those liabilities are covered by Professional Liability Insurance (aka Errors and Omissions Insurance). Trademark and copyright infringement are covered by General Liability Insurance.
- Build strong customer relations. This is the last item on our list and perhaps the simplest. Communicating clearly with your clients and maintaining a friendly professional demeanor will go a long way toward preventing lawsuits.
The best risk management strategy is one that incorporates all of these elements: you reduce your risk by improving legal protection (strengthening contract language and incorporating), updating insurance coverage, and paying attention to customer relations. To learn more about your liabilities or to receive a free quote on IT business insurance, contact a TechInsurance agent.
