Pillar 3 of 6
Vendor Risk
Are your vendors a hidden liability?
Your subs and vendors help you deliver your work. But without the right agreements in place, they can also deliver your next lawsuit, and you'd be on the hook for it.
Most business owners assume that working with people they trust is protection enough. It isn't.
The Blind Spot
Every contractor you hire, every vendor you rely on, and every service provider in your supply chain is a potential source of legal exposure. If they get hurt on your job site, misclassify their own workers, deliver defective materials, or cause harm to your client, the liability doesn't always stop with them. It can follow the contract all the way to you.
This pillar is about building a legal wall between what other people do and what you're responsible for.
Real Scenario
Real scenario: A general contractor hired a subcontractor who injured a worker on-site. The sub didn't have workers' comp coverage, and the agreement didn't require them to. The injured worker sued the GC directly. With no indemnification clause and no insurance requirement in the sub-agreement, the GC paid $180,000 out of pocket for an injury they didn't cause.
What This Pillar Covers
Pillar 3 examines every third-party relationship in your business that could create unexpected legal exposure. We look at:
Written agreements with subcontractors and key vendors: Do they exist, and are they signed?
Scope of work and performance standards: Is everyone clear on what they're delivering?
Insurance requirements: Are your subs and vendors required to carry adequate coverage?
Certificates of insurance: Are you collecting and tracking them?
Indemnification provisions: Are you protected if a sub or vendor causes harm?
Worker classification: Are the people you're calling independent contractors actually classified correctly?
Intellectual property: Who owns work product created by vendors or contractors?
Single-source dependency: What happens if your key vendor disappears tomorrow?
What You Get From This Assessment
WITHOUT this assessment
• Liability for injuries, defects, or damages caused by people you hired
• Worker misclassification exposure—fines, back taxes, and penalties
• No recourse when a vendor fails to perform
• Intellectual property you created, owned by someone else
WITH a clean Pillar 1
• Indemnification provisions that push liability back to where it belongs
• Verified insurance coverage before any sub or vendor starts work
• Written agreements that define performance, payment, and consequences
• Worker classification documented and defensible
Watch the Video
Eric Jeppson breaks down the specific ways subs and vendors expose your business and the simple steps to close the gap before someone gets hurt or a claim is filed.
Your Next Step
The Pillar 3 Checklist walks you through every sub and vendor relationship in your business, in addition to questions to ask your lawyer. Score each item Red, Yellow, or Green, and leave with a prioritized action plan that tells you exactly what needs attention.
Get the Pillar 3 Checklist
Know exactly where you stand on Subcontractor & Vendor Risk. The Pillar 3 Checklist walks you through every critical item, with plain-English explanations, real-world scenarios, and action steps you can take today.
Or book a free 15-minute Legal Health Review → jeppsonlaw.com