Consulting Best PracticesRisk Management

3 Legal Risks for IT Consultants to Heed

IT consulting is the chance to become the actual reason that businesses are able to use technology to succeed. That is pretty exciting stuff. What is less exciting—and somewhat scary to think about—is the risk that comes with this responsibility. In an article for TechRepublic, Moira Alexander discusses three legal risks to account for during your consulting engagements:

  • Unaddressed cybersecurity risks
  • Non-compete agreement violations
  • Insufficient financial preparation and record-keeping

Planning for Problems

Cybersecurity is an issue for everyone these days, but especially you as an IT consultant. You must build smart security protocols and processes. And beyond that, you should seriously consider getting cyber liability insurance, which can protect you and clients both during a security breach. As you do this, research the differences between first-party liability and third-party liability. (Alexander details this more in the full article.)

Another thing to watch out for is non-compete clauses and the various different forms that type of law might take across states. Such clauses are actually illegal in some states now, but if you find one in your contract, you may want to talk to a lawyer about what it fully entails. The last thing you want is a lawsuit as the result of a misunderstanding.

The final risk Alexander highlights is a familiar one—sometimes people get into consulting without enough upfront preparation:

Quitting your job to run your own business prior to landing enough clients to pay the bills is a major financial risk. “Before putting in your two weeks’ notice and striking out on your own, make sure to have clients lined up on the sidelines,” [Jeff Somers, president of Insureon,] said. He suggested moonlighting while you’re still employed. “Taking on a few clients at a time and gradually building your book of business makes the jump a lot less risky,” he said. You should build up a financial cushion to last a few months in case your business doesn’t take off as fast as you envisioned.

For further elaboration, you can view the original article here: https://www.techrepublic.com/article/3-legal-risks-all-freelance-it-pros-should-plan-for/

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