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Case study 5
Practice E had acted for Mr Bigg for
several years. An extremely
demanding client, he produced
regular work for the firm’s commercial
team. When Mr Bigg’s aunt died, the
client partner promptly introduced
one of his trust and executry
colleagues, assuring Mr Bigg that his
aunt’s estate was in good hands. The
client partner was shocked when,
months later, he received an email
from Mr Biggs with a veritable tirade
about the
length of time
it was taking to
wind up his
aunt’s estate and
alluding to loss of an
investment opportunity as a result
of the “delay in receiving my
inheritance”. The email concluded:
“If it takes the firm six months to
wind up a simple estate, I have to
question the firm’s ability to handle
my other business properly”.
No Master Policy claim arose in
this case, but a significant client
relationship may have been damaged –
perhaps a significant client lost. If only
the client had been given an indication
of likely timescale and factors that
might affect the timescale.
Case study 6
Practice F received a letter claiming for
losses sustained by a former client “as a
result of having been committed to
missives to purchase prior to
concluding a contractual bargain to sell
her existing property”. The letter went
on to allege that the former client had
not been properly advised by Practice F
of the contractual nature of the
missives process, and had not realised
that by concluding the bargain to
purchase she could not escape without
penalty from the contract to buy.
If only there was a record of the
client being given a clear explanation
before conclusion of the implications of
missives being concluded – and a record
of the client’s instructions to proceed.
Conclusions
What can you do to avoid the
communication problems illustrated
in these case studies? Keep in mind
the following points when meeting
with and reporting to clients, and
consider these points when reviewing
your files:
Is significant advice recorded in
writing (and, where appropriate,
acknowledged by the client)?
One of the concerns currently
www.lawscotjobs.co.uk
The Society’s Insurance Committee has
identified three categories of claim
(based on the frequency, severity, or
avoidability of claims) which it believes
the profession should be specifically
targeting:
Break notice defects
break notices not being served in
accordance with the terms of the lease
and therefore being ineffective
CML Handbook breaches
lender claims alleging breach of CML
Handbook reporting requirements
Overlooked securities
& inhibitions
claims for inhibitions or postponed
securities which have not been
identified from searches undertaken,
including form 12 and form 13 reports
The committee believes that the
adoption of effective risk management
being expressed in relation to the
impact of the recession is that clients
experiencing changed circumstances
and financial pressures will be
prompted to re-examine advice given
by solicitors, settlements achieved
and contracts documented and, with
the benefit of hindsight, allege that
risks should have been anticipated,
that they should have been better
protected, that a better
deal should have
been achieved for
them. Responding
to this sort of
allegation will be
assisted by having a
well documented file as
well as a clearly defined
scope of engagement.
Has the client been kept
regularly updated in
accordance with the terms of
engagement? Is legal jargon
avoided so far as possible?
Getting terms of engagement
right is one of the ways of
avoiding claims and complaints.
During more challenging
economic conditions, when
clients may be more inclined to
dispute fees, and challenge the
service provided, it is particularly
important to ensure that clients are
Alistair Sim and Marsh
Alistair Sim is a former solicitor in private
practice who works in the FinPro (Financial
and Professional Risks) National Practice at
Marsh, the world’s leading risk and
insurance services firm. To contact Alistair,
email: alistair.j.sim@marsh.com .
The information contained in this article
provides only a general overview of
subjects covered, is not intended to be
taken as advice regarding any individual
situation and should not be relied upon as
such. Insureds should consult their
insurance and legal advisers regarding
specific coverage issues.
Marsh Ltd is authorised and regulated by
the Financial Services Authority.
absolutely clear about the scope of
your engagement for the particular
transaction and the terms on which
services are being provided. A number
of claims alleging negligence have
arisen in response to proceedings
raised for payment of the solicitors’
fees where there has been no evidence
of prior client dissatisfaction.
Has the method of charging been
agreed with the client in advance and
set out clearly in terms of
engagement/business? Is the client
kept advised of changes in expected
costs and the reasons for this?
Has the client been kept regularly
updated in accordance with the
terms of engagement? Is legal
jargon avoided so far as possible?
Three top risk management targets
measures could effectively eliminate
the incidence of these claims.
Identify possible gaps in your
systems and procedures, and prioritise
the actions you/your firm will take to
address them.
Impact of effective communication
on top three targets
How could improved communication
have a beneficial impact on the
targeted categories of claim?
Ineffective break notices may be
attributable to “process errors” where
notices have been served too late or by
the wrong method, but in some cases
they are attributable to
“communication errors or omissions”.
The tenants’ solicitors may be unaware
of a change of landlord, but the tenants
certainly ought to know. Making sure
the client fully appreciates the vital
importance of naming/serving notice
on the correct landlord is essentially a
matter of effective communication.
CML Handbook breaches:
process failure or communication
failure, or both? Allegations being
made by lenders at this time include
that solicitors have failed to report facts
in accordance with the CML Handbook.
In some of these situations, it may have
seemed to the solicitor unclear whether
it was strictly necessary to report
particular facts because (a) the lender
must be assumed to be aware of the
facts already, or (b) it was unclear
whether the lender would consider the
facts material and therefore expect the
facts to be reported. As far as the
Master Policy insurers are concerned,
the prudent approach to be adopted is
“If in doubt – communicate!”
December 09 theJournal / 41