Social Media: New Wave or Tsunami?

Blogs, Twitter, Skype, YouTube, Facebook, LinkedIn…. Social media are unavoidable. But whether and how you use them can either enhance your firm’s success or land you and your firm in court.

Many firms have a presence on Facebook and LinkedIn. Some include buttons for Facebook and Twitter on their homepages. To the extent that you use these and other social media for interactive communications with clients and prospects, your firm may be exposed to claims for libel, copyright infringement, invasion of privacy, and other causes of action.

For example, what if a client writes on your Facebook wall that your services make your competition look incompetent—and names those competitors? That compliment could have a downside. How long can that disparaging comment stay there before your firm “owns” it? And how soon after that will your competitor sue you for libel?

What if you tweet that you’ve just landed a big contract, and the information was supposed to be kept confidential for a while? What if the other party to the contract sues your firm for releasing the information prematurely?

The problem with social media is that they are so easy to use. There’s often not time, in a busy day, to think before you pull the trigger. And sometimes that can mean shooting yourself in the foot.

The other problem is that coverage for these and other gaffes is somewhere between slim and none under many insurance policies. For example, the standard commercial general liability policy excludes libel suits that result from an electronic bulletin board or chatroom if your firm hosts, owns, or controls the site. Unfortunately, the policy does not define either “bulletin board” or “chatroom,” but it’s not too much of a stretch to see your Facebook page as qualifying. While your firm clearly does not host or own Facebook, it certainly controls the content on the firm’s page. And if that’s the way your insurer sees it, any claim will most likely be denied.

There are other liability policies available. Some are specifically designed to cover such technology-related risks, and some professional liability (errors and omissions) insurance policies may provide some coverage as well. To be sure that your firm is adequately protected against claims arising out of social media, you need to raise the issue with your insurance broker and get answers specific to your insurance program. An insurance broker who specializes in risk management for design and construction firms can provide meaningful advice on identifying your social media risks, pointing out insurance coverage gaps, and procuring appropriate insurance coverage.

In the meantime, your firm should have a formal policy for using social media, including who is and is not authorized to make any changes to your Facebook and/or LinkedIn page, who is responsible for monitoring such sites to be sure no negative information is posted, who can and cannot tweet on behalf of the company, and so on. And the policy should include real penalties for disregarding the rules. The same insurance broker who helps you identify your firm’s risks should also be able to provide your firm with sample policies and procedures.

Meike Olin, CPCU, CIC, CRM
Director of Marketing
Ames & Gough