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Civil Litigation Section

Risky business: how to avoid claims in civil litigation

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Peter Hey, director at professional indemnity insurers Libra Managers, highlights some of the key risk areas which have given rise to some of the most expensive and time-consuming claims against civil litigators - and how you can avoid them.

The pressures of work in a busy litigation department can easily give rise to minor errors with significant consequences. A mistake may be costly, particularly if it is not identified and addressed promptly and appropriately.

In this article, we highlight some of the key risk areas which have given rise to some of the most expensive and time-consuming claims against civil litigators.

Where do the risks arise? 

Over the past couple of years, the majority of litigation-related problems we have seen arise from commercial litigation (19 per cent of notifications) and personal injury (19 per cent). Following closely behind is clinical negligence work (14 per cent) and professional negligence litigation (13 per cent). 

If an error occurs in a high value dispute, the consequences can be particularly costly. This perhaps explains why the cost of resolving matters is the greatest for commercial litigation (amounting to 27 per cent of the cost of notifications). If bad habits are repeated across high volume work, significant losses can also arise (22 per cent of the cost arises from personal injury work). 

Broadly speaking, the majority of claims against civil litigators derive from two main error types: 

  1. Breakdowns in client communication and expectation management
  2. Missed limitation dates or other time limits. 

However, there are a number of things you can do avoid or mitigate these two types of errors. 

Client communication and expectation management  

  • Identify and record at the outset what the client is trying to achieve. Keep this under review. 
  • Be focused in your client selection, not least in relation to professional negligence work. Clients who have brought a claim against one former adviser have already lost a degree of trust, so may be quick to make similar allegations about their new firm. Taking on clients who rely on conspiracy theories or have previously instructed a series of firms in respect of a single grievance can be a very risky endeavour. 
  • Scope / update your retainer. An accurately scoped retainer can be incredibly helpful when defending a law firm from allegations of negligence, particularly when it clarifies what issues you are investigating (and in respect of whom). If the scope of work evolves, consider issuing a fresh retainer letter outlining the scope of the new work. 
  • Review your strategy periodically, as the cost / benefit analysis may change. It is all too common for a client to say: ‘Had I been properly advised, I would not have taken the matter so far.’ The client should be sent written confirmation of the strategy review and updated estimate. Instructions on key steps should be recorded. 
  • Review your inherited files. This is crucial. Key instructions and issues can often be overlooked by not reading the files fully. Relying on a skim read or on the most recent information on file is hazardous and often costly. 
  • Record and communicate advice clearly. Clients often focus on positive advice, ignoring the negative elements. Record all advice clearly in a well-ordered file, and communicate in terms that the client can understand. The decision in Proctor v Raleys Solicitors [2015] EWCA Civ 400 demonstrates the potential importance of meeting and discussing key issues with clients to ensure they understand the advice being given. Effective attendance notes of such discussions are crucial. Here are some basic tips: 
    • Consider, what is the note for? A transcript is rarely necessary, but key advice given and instructions received should be recorded. Recording the time, date and all parties involved often proves useful. 
    • When on the telephone, we tend to write down only what the other person says. Summarising key points in advance of the call into paragraph form and then noting responses after each paragraph assists with the call structure (useful with difficult clients), and helps ensure all key advice is given and recorded, and the client’s response / instructions are logged. 
    • Emails to the client in lieu of attendance notes can be useful. It is often best to explain that the email will be forthcoming. These can greatly assist in rebutting allegations that key advice was not communicated or understood. 

Missed time limits 

The most common problems we see are: 

  • Getting the limitation date wrong. It is a good idea to look for and diarise against the earliest possible date that limitation may expire, not the last possible date the client might get away with. The limitation analysis should be subject to discussion and supervision (this can be peer to peer, or even top down if a partner is conducting the analysis). Fresh eyes may spot fresh issues. It can help to document the rationale applied and when so doing, expressly question whether there is a different (earlier) date that may arguably apply. 
  • Suing the wrong legal entity. If this is done shortly before expiry of limitation this can be particularly problematic, as by the time the error is identified the correct defendant may have a limitation defence. Clients do not always correctly recall the precise legal entities involved, so the identity of all relevant parties should always be verified with reference to documentary evidence, and Companies House checks (for example). 
  • Overlooked limitation date. Limitation analysis should be undertaken at the earliest possible stage. New instructions must be reviewed promptly for any immediate limitation concerns. Some case management software products have excellent diary alerts which escalate to senior colleagues as dates draw near. Files should be peer-reviewed to ensure compliance with diary procedures. We have seen instances of limitation expiring because fee-earners were off sick and there was no central diary or alert system in place. Files moving to your firm with lateral hires / firm acquisition should have first a clear and agreed limitation date and a key date list ready for review and diary entry. 
  • Procedural errors. We have seen limitation defences arise from a party paying an incorrect fee, or omitting a payment entirely. Defective service is also a key issue. Challenges on technical grounds remain commonplace, so it is crucial that all fee earners keep up to date with the CPR and any changes to them. 
  • Defective standstill agreements. These should be drafted with care. Does the definition of dispute adequately address the necessary cause of action? Do the parties in the agreement include reference to all the correct legal entities? 
  • The ‘ostrich defence’. This turns small problems into big ones. Fee-earners should be encouraged to speak up if an error occurs, as there is frequently a ‘cure’ if prompt action is taken (having due regard to your obligations to your client and insurers). Judges are usually more inclined to favour corrective steps taken promptly – see Clearway Drainage Systems Ltd v Miles Smith Ltd [2016] EWCA Civ 1258. 

We have seen firms radically improve on a record of missed time limits through a focused approach to training and pragmatic risk management, such as centralised diary systems. As with all procedures, however, diary systems only work if fee-earners use them as intended, so a regular peer review of files to ensure 100 per cent compliance is crucial. 

Of course, the above is not an exhaustive list of problems and solutions. In conclusion, engendering a culture of support in busy teams, with clear procedures, well-ordered files, combined with deploying some simple risk management steps, can greatly assist in improving both the client experience and a firm’s reputation. 

Disclaimer

Since Libra Managers act as agents for professional indemnity underwriters, our comments are necessarily given from a professional liability and loss prevention perspective only.  You may well consider it appropriate to obtain further views and advice on this subject either internally or externally.

 

Register to attend the Civil Litigation Section’s Autumn Conference, 28 September 2017.

Lord Justice Jackson will be delivering the keynote speech following his recommendations on fixed recoverable costs.

Full programme and book your place

 

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