liability waiver When Client declines MSP Backup Recommendation 2024

Published 4 months ago5 min readSLA Best Effort...

Liability waivers when a client declines your backup recommendation will be the discussion of today's article. We will discuss how useful liability release forms actually are likely to be as well as giving some examples on how a liability waiver fits in with your cyber-security insurance policy.

Failed Back ups do not hurt as much as failed data restoration. If you are looking for the best back-up strategy then our articles ranging from the most costly backup solutions to the cheapest back-up solutions can help arm you with knowledge aimed at helping service providers avoid the pitfalls that come with a very unreliable backup solution:

I will also discuss how documentation can help IT consulting services manage and maintain data recovery solutions effectively as it specifically relates to this topic.

Technical record keeping is also an essential aspect of the IT industry whether it be liability waivers discussed here or the steps involved on how your cloud backup solution is assembled so that others can fault find in a time effective fashion . It enables IT consulting advisors to manage and maintain the IT infrastructure of their clients effectively.

We have years of experience in working with service providers to document their processes and procedures and there is no area more important to a service provider than how their clients' backups and disaster recovery system are documented.

When To Use Client Liability Waivers

A client liability waiver or customer release form is used by a service provider when a backup recommendation has been made to the client and they have refused the recommendation.

You would also only tend to use a client liability release form if there was a risk that the client's refusal increases the risk and that they may seek legal damages from the service provider due to not having the implemented recommendation put in place.

Bullet Proof Client Liability Waivers

They do not exist. As reasonable people we tend to think the legal system is also reasonable and say for instance you have had 3 meetings with your client regarding the seriousness of enabling 2FA and each time they have said no.

You then give them a backup liability release form that explains the risk involved and they tick the box they understand the extra risk and then sign it, you are in the clear right? Bullet proofed your situation and eliminated any need to worry about that problem anymore right? WRONG!

You could have the best client liability waiver in the world and have it signed in triplicate and all you have done is reduce the risk of being sued by your client if that issue that you raised so many times actually occurs. You may have strengthened it a small amount or a large amount or in some cases due to nuances and complexities in the law that common sense does not reach, it could make things worse.

Legal System Is Incremental In Nature

It is not like at the movies where one key piece of information is shown and boom, you win and everyone sees that it was the shady client trying to shaft you, no, most of the time it will be because a service provider has put in place a deep defense across multiple layers and not a single piece of paper and one signature.

Your Knowledge Is What Gets You Sued

Say your client says to you “This password on my computer to login, remove it immediately you savage little peasant and while I am at it, make sure it auto logs in to my Windows 10 and I want my password removed from my phone as well, you have 10 minutes to comply”

No amount of trying to explain to him works so you print off a client waiver form and insist that he signs it. You think that you are now in the clear and are out of a difficult situation.

A month later a suspicious looking character manages to slip past the reception and accesses his open mail client and asks Jenny the accounting lady to transfer 50K to a specified bank account urgently which she does.

A month later you get sued because the client wants compensation because his personal computer was set up to allow anyone to access it. You walk into the courtroom like superman with the client liability release form and present it like it is some type of forcefield.

It may help you depending on what state in the US you are from however it could also be used as toilet paper as well. Ultimately you implemented something that goes against backup industry best practices and likely a number of regulations and you are the expert who knew this.

It is why you had the liability waiver in the first place because you knew it was wrong. So the strength of your client liability waiver could turn out to be wishful thinking.

My analogy is that of a dr, you go in and demand 5 times the dose of a drug that your dr knows full well will be harmful to you. If he whips out a liability waiver and gets you to sign it and you end up with permanent damage, how do you think that will go? If the dr is liable then how come we as service providers should get a free pass?

Fire The Client?

It is starting to get to the point now where as a service provider, you need to look very carefully at the clients you bring on and even consider firing poorly performing clients. Sure while you are smaller you may not have much to lose but as your business starts to turn over millions of dollars a year, now you have a lot to lose and all it takes is a frivolous lawsuit or two and you are back working double shifts at Wendy’s

I have plenty of experience with service providers of many sizes and while working on their documentation systems I will be looking for ways to improve profitability for the client and so I alway run the Connectwise Manage effective rate report and I will tell you right now, it is nightmare fuel across the board.

You cannot get zero dollars effective rate for a client but I have seen plenty of large clients of service providers bringing in under a $1 per hour effective rate meaning for every hour the supportdesk has worked for that client, the service provider has earnt a dollar.

Then you will get a quiet client who gets the cheapest service package, maybe a monthly AV and remote monitoring for one computer, you know the type, unassuming, makes you want to be a better man, likely retired but used to own his own business, paying you $300 a month and I will often find those type of clients with an effective rate over a long period of $150 per hour.

So sometimes the clients that keep you the busiest also keep you the poorest and those clients you neglect, they are sometimes the best and most profitable.

The idea of any lawsuit is not to win it, it is not to be involved in one in the first place because they are very expensive. There are some great tools about now that allow you to vet potential clients including the number of times they have been involved in litigation.

As an example, if I found out a potential backup client had been involved in initiating 5 lawsuits in 10 years then they would not ever be my client. They may be valid reasons, they may have won every case, it does not matter to me because I would run a mile, in actual fact, the more they won, the faster I would run.

For an existing backup client, a signed liability waiver may be enough to get them to step back from the brink of taking legal action. Remember we are dealing with human beings here (most of the time) If you can demonstrate that you offered a better backup solution that would have prevented the issue at hand and they refused it, chances are it will give them something to think about.

Depth Of Defense

I look at client liability waivers as a small defense against the general risk to my business and not a magic bullet. Definitely use them when a client refuses a recommendation and you intend on keeping the client but understand it is only a small part.

Understand they may not help if they contradict state regulations or best practices.

Your best defense of course is a good cybersecurity insurance policy. An organization much larger than your own can run you into the ground without even needing to win. The cost to litigate will often destroy smaller service providers and even if you win, you still may lose everything.

Conclusion

Client Liability Waivers can be a valuable component of a total risk minimization strategy for your service provider but it is not a Wonka golden ticket as many believe. Depending on the state you live in and sometimes the state the client lives in, they may mean next to nothing.

It is worth consulting with whoever wrote up your MSA as well as your insurance broker to ensure whatever liability release you present to the client is not going to break any regulations in your jurisdiction and it will not interfere with the defense strategies that are already in place.

Also utilize other informal defense mechanisms such as regular newsletters and direct mail so that you are both educating your clients on risks they face as well as being seen to be educating your clients on technology risks.

I also highly recommend taking a look at Joseph Brunsman’s YouTube channel as he is a specialist cyber security broker and has a great reputation among other service providers. He knows more about technology insurance than I ever could.

We have a number of other backup articles specifically related to clients listed below that will provide you with more detailed information on a number of related topics:

https://optimizeddocs.com/blogs/backups/backups-client-index

Our team specializes in strategies for IT assistance providers and we assist in improving profit margins through standardization and consistent record keeping strategies, so you can be confident that our content is tailored to your needs.

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