The situation

You’re scanning the local paper and see your client, a home inspector, is being sued.

He gave a two-storey home the A-okay, but it seems he overlooked the old pipes and shut-off valve. The pipes burst, and since the new homeowners couldn’t stop the flood quickly, the basement’s holding two feet of water. It’ll cost thousands to repair, and the owners are angry.

Your client’s likely embarrassed and may not want to discuss the matter. How do you bring it up delicately?

The article questions your client’s professionalism and credibility. What you’ve read could be one-sided, so ask to hear his version of the story.

Sensitive conversations like these require you to be an active listener. You need to nod, smile and make eye contact. These actions send visual cues that keep your client talking and get you the details you’ll need to provide help. Find out if your client has errors and omissions, or general liability insurance. This will cover him if he’s found negligent.

But his business may still be in trouble because his reputation is at risk. If he needs a lawyer to review his case, offer names of a few who specialize in business law.

Also review your client’s accounts. Detail what assets are in his name, the company name, or held jointly. Corporate accounts (if any) might be affected if he loses the lawsuit. He needs to know exactly what his business is worth. And he’ll need assurance that his personal accounts and assets are properly segregated from the business.

Show him which accounts he can take money from if he needs to while doing the least damage to long-term investing plans. Look at which assets can be liquidated easily, and suggest an order of redemptions based on his needs and cash flow. Then detail the tax implications of selling each of those assets.

Try these questions:


I saw the article about the house. How are you doing?


What the heck happened?


You probably have a lot going on. Is there anything you need from me?


Are you going to stay in business?


When can we get together to review your portfolio so you have a good grasp of what’s liquid in case you need it?


Do you know your legal bills are going to be through the roof?

Pay special attention to which assets he wants to, and needs to, protect. Dipping into an RRSP to keep the company afloat may work in the short term, but it means taxes will be withheld when deregistering.

He should also consider revised business projections and budgets for coming years in case the lawsuit negatively impacts revenues.

5 ways to sharpen your listening skills

  1. Let the client finish his sentences

  2. Resist distractions

  3. Remain calm

  4. Ask clarifying questions

  5. Be non-judgmental

Rosemary Smyth is a Victoria-based coach with Rosemary Smyth & Associates and author of 101 Success Tips and Strategies for Financial Advisors.