IT consultants face spiralling litigation

IT contractors in the UK are significantly more likely to be sued by clients, with professional indemnity claims surging more than 40 per cent in the past four years.

Specialist indemnity insurer Hiscox reported that it handled claims with a combined value of almost £5m in May alone.

Claims included accidentally wiping a client's data, supplying software that infringed someone else's intellectual property rights, failing to integrate a new system and delivering a system that did not meet the client's brief.

"Companies are far less willing to let mistakes go. It's a general movement in the way business is being conducted," said Sam Franks, an underwriter with Hiscox.

"There is a risk that companies will sue first and try to sort out problems later."

But managing risk in an appropriate way can help contractors avoid litigation.

Making sure that projects are well documented, knowing who is responsible when things go wrong, dealing with complaints in an appropriate way and getting legal advice from a solicitor who understands IT law are all recommended.

According to Hiscox, of the 50,000 or so IT contractors in the UK, approximately two thirds have professional indemnity insurance.

"But simply buying professional indemnity isn't enough," said Franks. "You need to make sure that it is specific to the IT industry, covering breach of contract and supply of software."

Aidan Lawes, chief executive at the IT Service Management Forum, suggested that the Hiscox survey highlighted the need for greater professionalism across the IT sector, and called for the British Computer Society to take the lead.

"We are making progress but it is still painfully slow," he said.

David Roberts, chief executive of Corporate IT Forum, added that IT as a profession is still very immature.

"We'd like to see the development of some sort of yardstick that can be put against people within IT to say they meet a certain standard. The image of IT as a quality profession does not exist," he said.