Q: When can an advertising agency be sued?
A: In reality, an advertising agency can be sued at any time. A client, independent contractor, or other third party could have beef with you and file a lawsuit.
To make matters worse, lawsuits don't even have to be well-founded. There are countless lawsuits in which clients sued their ad agency after delivering a project that was exactly what the client wanted and signed off on. Some clients are simply impossible to please.
Even if you're merely following a client's orders, you could face a lawsuit. Common lawsuits against media firms include cases over:
- False advertising.
- Intellectual property.
- Other advertising injuries.
Say your client wants you to produce an ad campaign that includes a statement about how their product is superior to a competitor's. The competitor could sue for defamation — they could sue both you and your client.
That's part of the risk that ad agencies face. You can get caught in the crossfire between your clients and the other parties they upset.
These risks lead many advertising professionals invest in agency insurance to cover the cost of lawsuits. On the low end, a copyright infringement can cost $5,000, but on the high end, these cases routinely reach six-figures or more. Your agency insurance can shield you from having to pay for these costs out of pocket.
See "Do ad agencies need different insurance?" to learn more about the coverages other advertising professionals purchase.
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