KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Comments on what’s special about gross negligence and should alarm co be liable for its own negligence
February 6, 2020
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Comments on what’s special about gross negligence and should alarm co be liable for its own negligence from January 22 and 24, 2020
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Ken
            Re: Unnecessary risk taking and Negligence or Gross Negligence
            Nationwide Alarm Company has been in business for 49 years.  For more years than I would like to mention we operated as a DBA; we were lucky.
            We have always used Kirschenbaum contracts.
The article on should alarm companies be liable for their own negligence is the best advice I have ever read for just about every alarm company.  When your customers refuse to sign your contracts explain this article to them. You will prevail or should simply refuse to do business with them.
            Some companies don’t want to pass up the lure of the RMR money. 
They ignore the exposures and risks. 
            And when it comes to collections, when you do not get paid for work you started or completed try taking the client to court without a properly executed contract.  I have seen it many times in court;  your claim is dismissed; simply thrown out your awarded  Big Fat $ 0
            No contract It is equivalent to rolling the dice in Vegas.
            It could end up costing you a lot more the entire value of your company.
There is no further need to worry about negligence or gross negligence for that matter. You’re out of business!
JPL President
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 Ken,
            Your comments on Negligence and Gross Negligence in your January 22, 2020 commentary were very important and informative.  In my opinion (including the trade magazines) cyber security management is perhaps the biggest problem facing our industry today, and it strikes to the heart of your contract.  A breach by an alarm company or central station of the information that they hold on each of their customers would be catastrophic to their business.  Does such a breach fall into the “Gross Negligence “category or just “Negligence”?  I have assumed that each contract, so affected, would likely have an Exculpatory clause and the other language that your Best-in-Class contracts include.  As I read your commentary, an alarm company suffering such a breach would defend their position by directing the judge to the exculpatory clause in your contract.  The judge may well claim that the breach is gross negligence because the alarm company cannot satisfactorily demonstrate that they comply, or have made every effort to comply, with all the state and federal rules regarding data and privacy protection.  It is my opinion that the alarm company can avoid the gross negligence issue if they can show that there in an independent third party that actively reviews their company operations, and issues a certificate of compliance with those regulations.  This is similar to what UL does with their certification.  Also, there is the risk that the insurance company will not pay a claim for recovery if there is gross negligence.
      There are a few cyber consultants who can audit and mediate a company’s operations to determine if they are in compliance, but there is only one I have found that will publicly certify such compliance, thus providing cover against gross negligence and facilitating insurance recovery.  That company is InfoSafe.  Would you agree, that such certified compliance would, indeed , keep the specter of gross negligence at bay.
     Thanks for all that you do to keep our industry on the straight and narrow road to success.
 Tony Smith
Security Funding Associates
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Response
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    A claim that proceeds to a lawsuit is no joke and could be large enough to cripple or destroy your company.  There is no excuse to be operating without proper up to date contracts.  You cannot depend on your insurance company; your first layer of defense is your contract.  A proper contract will dissuade a claim and will enable you, or your carrier, to successfully defend the claim or lawsuit.  Update your contracts today:  www.alarmcontracts.com
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com