A major point overlooked by Richard Steer in his article Buyer Beware (13 November) is that all partners and directors in consultancies have a duty under their professional indemnity (PI) insurance policy to take all reasonable precautions to prevent losses or liabilities arising in connection with the insured risks
Practices that regularly bid at fee values not commensurate with adequate resource levels and create their own claims situations as a result, may find they and their clients are without cover when it comes to the crunch!
Reckless fee bidding seems to be prevailing. In previous recessions many practices had unlimited financial liability. Has the comfort of limited liability status added to the recklessness? Are partners with no risk whatsoever if the organisation becomes insolvent also having an effect on fee values? Also, what will happen to the firms that have priced at ludicrously low levels when the market picks up and salary levels increase? Will they survive?
Consultants who have clients who “know the price of everything and the value of nothing” need to educate their clients in respect of the risks they are taking when choosing the lowest price without researching how it has been computed.
Stephen Roberts, Rider Hunt, Newcastle upon Tyne