We live in very litigious times. Individuals and businesses alike are exposed to the advertisements of law firms, as well as news stories about ongoing lawsuits. This constant exposure has the effect of making litigation seem to be a normal practice. With people and businesses so willing to go to court, you should take measures to protect yourself and your consulting business from litigation.
Formalize All Agreements with a Contract
Verbal agreements only exist in the minds of yourself and your client. What both of you think you are agreeing to could be two different things. Human memory can't be counted on to remember the multiple points of an agreement, especially if it is complex. Therefore all agreements should be clearly expressed in written form as a contract. If your consulting services are well defined, have a lawyer help you set up boilerplate contracts tailored for your specific services. 
Maintain a Good Relationship with All Customers
A good relationship starts with excellent communication skills and professional behavior. Part of your professionalism is to resolve complaints promptly. Ignoring them causes anger and guarantees that you won't get repeat business from your client. It also increases the risk of a lawsuit should something go wrong.
A great method of generating good will with your client is to find small ways that you can over-deliver. These could be "extras" thrown in free of charge as a way of thanking them for their business.
Be Willing to Compromise
When a misunderstanding arises between your client and yourself, it can usually be cleared up through a discussion of the contract. However, if the misunderstanding becomes a disagreement, consider compromising and coming to a settlement with your client even if you did nothing wrong. For most situations, settling in court is not worth the time and cost.
Get E&O Insurance
When all else fails, a good errors and omissions (E&O) insurance policy helps protect you in the event that you are sued by your client. Any lawsuit arising from a mistake, omission or even negligence on your part may be covered. Most policies will take care of legal costs as well as settlements that arise from a client's lawsuit against you.
Everyone makes mistakes. It can happen to you or to one of your employees, and mistakes in a litigious society can be costly. Don't wait until it's too late to insure your business.
Get the coverage you need. Call Jack Lee Fong Ins Agency at 415-956-3990 for more information on Memphis business insurance.