Failure to manage professional negligence claims and risks can have an immediate and lasting detrimental effect on a law firm’s finances and continued existence. This includes policy excess payments, claims management costs, time and stress, and greatly increased professional insurance costs.

1) Alert yourself to risks and complaints sooner rather than later:

• Check credit control, not only to get in necessary cash to run your business, but also for the presence of difficulties that may give rise to claims or complaints.
• Establish mandatory reporting of claims and complaints as a core value for all solicitors and staff.
• Make sure each solicitor and member of staff understands what is an incident capable of giving rise to a claim, and that it is an essential part of your insurance policy that these be reported to the insurer as soon as they are discovered.
• Notify the insurer right away about complaints or incidents capable of giving rise to a claim.
• Be aware of when a moan becomes a claim or complaint.

2) Try to avoid troublesome clients who will bring nothing but claims and complaints:

• If the client looks too good to be true, they probably are.
• Go through proper client enquiries, including money laundering regulations. It could uncover a warning.
• Do not commit to huge amounts or work or risk on behalf of a client without first getting a feel for the client and analysing the nature of the problem.
• Don’t be afraid to ask previous solicitors to the client or colleagues for review. The reason for change of solicitor may be down to the client and not the previous solicitor.

3) Limit and define the work, retainer and risk:

Limit and define in writing the scope of the work, retainer and risk that you are prepared to take on for the client and notify the client of it in such a way that it is clear the client agrees. An example would be “we will look after aspects a, b and c of the transaction or litigation, but we note that your accountant Mr X is looking after your tax advice. Our retainer does not include tax advice in relation to this work.”

4) Be aware of the risk when a client is referred from within the firm:

Risk management is important in relation to a client referred from within the firm, particularly by a different department. When a client is being served in a related transaction or litigation by two different departments in the firm, be aware of potential risk in the other department. Be sure that there is good communication between each department on this risk, particularly regarding new information, developments, or instructions that might have an impact on the work in the other department and that might create a risk, if not known to that department. Ensure good cross-department email communication and also ensure that there is someone appointed to liaise for that particular client between both departments and to take charge of that risk.

5) Make good old-fashioned attendance notes, record phone messages, and record notes of risk:

• If ambiguity or a difference in recollection arises because an attendance note was not completed, the courts will lean against the professional who ought to have kept the note.
• A typed attendance note of telephone discussions and meetings are best, but they can also be recorded in other efficient manners such as emails, handwritten notes, time recording and so on.
• In particular, a note of all instructions, advices, and notes of risk should be taken down in writing and recorded in a reliable form.
• It is also important to note changes in instructions, changes in costs, or changes in the circumstances of a case.

6) Work with your insurer/broker:

• Report all incidents that are capable of giving rise to a claim, even if there is a nil reserve.
• Report regularly on claims or complaints.
• Show your insurer that you have a good internal system for resolving incidents capable of giving rise to a claim and complaint.
• Take advice and guidance from your insurer. They are experienced in risk.

7) Operate an internal complaints procedure:

Establish an internal complaints procedure and review it with your partners on a regular basis, including reviewing current or potential complaints and incidents capable of giving rise to a claim.

8) Avail of peer review

Peer review of two or three files each month, randomly selected, is a useful, non-contentious and low time-consuming system that helps manage risk.

9) Use an electronic diary and case-management systems:

Making use of an electronic diary and case management systems to record key dates, such as Statute of Limitations, and advices given as to those dates, are good risk-management strategies.

10) Talk through problems with partners and colleagues:

When a problem arises, seek the objective view of partners or colleagues on the issue. The problem file won’t sort itself under the desk!