Coaches - are you liable for poor business decisions made by your clients?

As a coach, your entire business is built around helping people.

But what happens if in the course of trying to help - a coaching client makes a poor business decision? In this age of blame shifting, they’re likely to point the finger at you.

Did you know that regardless of the context or intent of your advice, without proper and clear documentation stating otherwise, you could find someone claiming against you for losses resulting from this poor business decision.

Your entire business could be destroyed though the actions (or inaction) of one client…that you were trying to help!

But I have business insurance. Doesn’t that cover me?

Unfortunately, business insurance may not cover you for this kind of claim and many an unwitting business coach has found out the hard way that insurance may not cover you in the event of legal action if you have not taken adequate steps to explicitly state what you are NOT responsible for and where your liability ends. This is especially so if the advice that you have given could be construed as being professional advice, like financial or legal advice, when you are not qualified to do so. It is prudent for you as the service provider to limit this liability, otherwise it is far more open to suggestion that you should be responsible.

>> Download the Progressive Legal Package for Coaches

Your insurance may cover you for claims by your clients for a business decision, but many people haven’t read or understood their policy and don’t know what they are covered for or not (as we see is so often the case with many kinds of insurance, like home or travel cover!)  If you have a professional qualification, make sure you have the relevant professional indemnity insurance as well.

Even if insurance cover is adequate, a claim will still make for a messy, drawn out process that will take you away from your business and drain your energy and resources. It will turn into a war of words and a he-said, she-said scenario. A Court or Tribunal will more often than not take the side of a consumer in the absence of clearly written (and also fair) terms and conditions and disclaimers.

Having tight and tailored Terms and Conditions and disclaimers can often make a difference between a claim being made and not. When clear provisions can be pointed out to a claimant, it can often dissuade them from pursuing a claim, and thus your contracts can act as a shield.

Limiting your exposure

Having clear and unambiguous Terms and Conditions and appropriate, legally sound Disclaimers is the only way to truly limit your exposure. Nothing can completely absolve you from liability but clear provisions can go a long way.

When it comes to monies, ensuring clients know what they are paying for, how long they are signing up for, what they should expect to receive, and procedures for payments, cancellations etc. should all be explicitly documented. Cooling-off periods, entire agreement clauses, termination provisions, cancellations policy and process, credit card authorisations are all examples of where things need to be crystal clear.

This may seem heavy and even a little 'scaremongery' but as the coaching industry continues to grow with more and more businesses looking at engaging coaches for their specialist knowledge, expertise and mentoring skills, having the right agreements in place is the only way to ensure the relationships do not turn sour if a client makes a poor business decision.

What legal documentation is needed?

For business coaches and any individuals who are helping others in any kind of advisory capacity the following is key documentation to ensure you have in place:

1) Specific and tailored Terms and Conditions for all client contracts (and not borrowed from Google! - every business is different no matter how similar they may seem on the surface and these T&Cs need to reflect your particular delivery methods, program parameters, confidentiality, ownership/use/licence of any intellectual property created, indemnities etc.) Most contracts we find (even ones legally drafted) don’t cover coaches for what they are doing.

2) Comprehensive Disclaimer/Waiver outlining the limits of your liability and the limits of your responsibility for how advice is taken and used.

3) A Privacy Policy to fully disclose the ways that you will gather, manage and use client’s data and what methods you will use in order to protect this data and the client’s privacy .

>> Check out the Legal Shield Coaching Package which includes creation of all of these key documents, on-going access to a specialist business lawyer and much more for a VERY affordable price!

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Want to secure the future of your business today? Get in touch with Progressive Legal for honest and affordable legal advice. We are personal, accessible, approachable, transparent and passionate. We aim to be your long-term advisor not just a transaction like the traditional law firm. 

This article is meant to be informational only and should not be taken to constitute legal advice. Specific legal advice should be obtained for each individual business to make sure it is correctly applied.

Ian Aldridge
Principal Lawyer
Progressive Legal - Law for Entrepreneurs
1800820083
[email protected]
www.progressivelegal.com.au