Lancer Insurance
Wednesday, November 29, 2023


legal ease Over the course of the past year, I have attempted to provide a few practical solutions to operators, which—if done properly—will help to substantially reduce risk to your company. These strategies are effective, easily performed, and very low-cost. My professional experience has given me a unique perspective on risk management, as I have employed all of these strategies both as an operator and as a litigator dealing with these issues on a daily basis; as a result, I only suggest things that have worked and will not overly burden your ability to do business. This article will continue along those lines, discussing safety and maintenance documentation, as well as the accompanying pitfalls.

In the event you are sued, you will most likely be held to one of two standards of care, depending on the facts of the particular case. The basic standard of care dictates that you must act as a reasonably prudent operator. Should the court decide that you are a common carrier, you may be held to a higher standard requiring that you “do all that human care, vigilance, and foresight reasonably can do under the circumstances to avoid harm to passengers” (California Jury Instruction).

Regardless of the standard applied to your particular case, what documentation for your vehicles and employees should you have in place to assist the attorney defending your case? The answer: It depends.

When I am asked by companies to review this matter for them, I focus on two primary issues: the size and complexity of the operations; and the resources available to both implement the program and ensure compliance. Generally, the smaller the company—and the more involved the owner—the less documentation is necessary.

Any programs in place to document employee training and vehicle maintenance should first address what the company needs in these areas to operate more efficiently. Further, it should be determined if such documentation meets the company’s needs for safety and, ultimately, litigation. Therefore, by doing what is necessary to professionally operate your business, you will also be practicing effective risk management. This should be a no-brainer.

For example, an owner-operator who has one or two vehicles will likely have very well-maintained vehicles, and will be able to personally testify to their maintenance history and any mechanical issues. He probably drives the cars every day, owns them, and usually makes sure they are in great shape—as he is dependent upon the vehicles’ reliability for his livelihood. These operators usually trust the care of their fleet with one shop, from which maintenance records can be easily obtained. A database for maintenance and complex inspection forms won’t benefit his business and likely won’t increase safety.

Moreover, this operator probably would not use the forms even if he had a policy to do so, creating more risk than reward. It is also likely that such an operator may not need any employee training documentation as he likely has few or even no employees.

On the other hand, a company with 100 vehicles and 200 chauffeurs definitely needs more structure. The owner is not involved with driving or maintaining the vehicles, may not hire or train chauffeurs, and may delegate these tasks to managers or other employees. In this case, the company will likely benefit from having robust documentation systems in place, as this will also assist the company should an accident occur.

Structured record-keeping has business benefits in addition to litigation-defense benefits. Documenting employee training will allow management to ensure that each chauffeur understands the company’s policies, operating methods, driving philosophy, and customer service. Clearly, knowing that each has been informed and trained will lead to brand consistency, operational efficiency, driver accountability, and customer satisfaction. The side benefit is that if your company is sued, these documents will greatly assist attorneys defend your firm.

“Structured record-keeping has business benefits in addition to litigation defense benefits.”

Documenting vehicle inspections or maintenance will likely also lead to savings because your system ensures that vehicles are regularly serviced, which can prevent a small issue from growing into a major repair. Again, the side benefit from such documentation is that responding to attorney requests for vehicle history and maintenance documents will be simple and easy, and proves you are meeting the standard of care.

The major pitfall from a litigation perspective is that if you decide to have a written policy regarding either employee training/hiring or vehicle inspections and maintenance in place, you must make sure that the system is being practiced or you will subject your company to greater liability than if you had no system in place at all.

Keep in mind two key strategies when deciding what to include in your companywide documentation policy: Mandate only the documentation that you consider important; and appoint someone in the company to audit the documentation consistently to ensure compliance or outsource compliance and auditing.

I see many companies that have standard operating procedures for everything, from 200-page manuals to daily inspection forms that are five pages long. In general, defending these companies in litigation is a nightmare, as a plaintiff’s attorney only needs to find one or two procedures that weren’t followed, or an incomplete inspection form, and his job is made simple. His argument is that you weren’t following your own procedures and, thus, you are liable. Never mind that your own procedures aren’t required by law, aren’t normal in the industry, and, even if followed, would have had no appreciable impact on safety. Additionally, you have made your own job far more difficult by trying to implement a complicated plan without the necessary resources to do so. This may work in cases where a company has a dedicated maintenance system and staff—but in most cases, it will not. A majority of small companies would benefit from a “less is more” approach to manuals that promotes safety but is still manageable.

A better plan is to have simple, straightforward training and maintenance programs that cover the important points and document them in a clear and easy fashion. Then make sure that the plans are followed; if you exceed those programs, all the better. In addition to making your job easier, you will also make your attorney’s job easier, since you will be able to provide a clear plan for training, inspections, and maintenance, and will be able to supply all of the backup documentation at the outset of litigation.

The most important step in any training or maintenance documentation plan is being sure that it is followed. This can be a tedious task that often is overlooked until it’s too late. You may have the greatest inspection program in place, only to find out when you get sued that the employee charged with completing the inspection forms never did so or did so in an incomplete fashion. Fortunately, this problem is easily rectified.

Either appoint a responsible person in your company to ensure compliance or outsource a firm to audit the documentation on a regular basis. There are many database programs available to assist with compliance, or you can develop your own using a simple spreadsheet or database. Follow up with the employee to make sure the review of the documentation is completed on a regular basis and any deficiencies have been corrected.

You can also outsource auditing or compliance. With regard to maintenance, many dealerships with fleet management services will provide all the necessary documentation free of charge as an incentive to obtain your service and repair business. Attorneys and accountants will also provide these services and guarantee compliance with documentation. While this may seem like an expensive option, I believe you will recoup these costs by ensuring operational efficiency even before considering any litigation benefits. A side benefit of outsourcing is that you may be able to look to the firm if an error is found that leads to liability on your company.

To sum up, develop easy-to-follow programs to document training, inspection, and maintenance, and regularly audit plans to ensure compliance.

In closing, I want to review the suggestions provided by this column, and hope that you make it a New Year’s resolution to get all—or at least some—of these tasks accomplished in 2016:

1. Ensure that you have indemnity agreements with all of your affiliates that provide you with a defense and complete indemnity should they have an accident while completing a farm-out;

2. Check that you have additional insured endorsements in place for all affiliates;

3. Consider using passenger liability waivers for tour and party bus rentals;

4. Make sure you have written contracts in place regarding all of your important business arrangements that clearly document the business terms of the agreement and liability for failure to comply with the agreements;

5. Put simple documentation in place for employee training and vehicle inspection and maintenance, and make sure the procedures are followed and audited; and

6. Confirm that your human resources program is compliant with all state and federal laws (see more tips for this on p. 112 in “HR Coach”).

If you feel any of the above are too difficult or complex to complete on your own, outsource the task to an attorney or accountant. The extensive benefits greatly outweigh the limited costs involved—better yet, you will be able to sleep at night. Have a safe and profitable 2016! [CD0116]

Disclaimer: The foregoing is provided solely as general information, is not intended as legal advice, and may not be applicable within your jurisdiction or to your specific situation. You are advised to consult with your attorneys for guidance before relying upon any of the information presented herein.

Patrick O’Brien was the owner of and is currently on the board of Panama Luxury Limousine in Panama City, Panama, and an attorney with Daniel Crowley & Associates in California. He can be reached at