Developing good risk management from the start of your legal career can help you avoid a claim. The Law Institute Journal (Jan/Feb 2016 90 (1/2) LIJ, p.70) explains:
- Continue to learn about risk management throughout your career.
- Take time at the beginning of each matter to consider any risk management issues.
- Don’t delay raising any risk issues with a partner or supervising lawyer.
Claims occur across all practice areas in firms of all sizes and against lawyers of all levels of experience, so effective risk management is a vital part of training for young lawyers.
Receiving a claim can be stressful and damage your confidence. It can also affect your professional credibility and personal reputation. It is well worth starting your career with sound risk management practices and continue to focus on best risk management practice throughout your career to minimise the risk of a claim.
Don’t think of risk management as something that needs to go on a time sheet − think of it as investing in yourself.
LPLC claims data has identified the following circumstances where young lawyers get caught out:
- delay in finalising a matter
- failing to understand the legal issues
- failing to properly scope the work to be done and carving out areas which are not part of the retainer
- failing to properly communicate with the supervising lawyer and/or client
- failing to identify a conflict.
Here is an example of a claim where a young lawyer fell into some of these traps.
A firm received instructions to take action against a sharebroker who, the client alleged, invested in certain shares which ultimately resulted in a loss to the client. Some of the alleged misconduct of the broker occurred about four years before the firm received initial instructions.
Once the partner in charge of the file had undertaken further inquiries to establish the extent of the loss, preliminary advice was sought from an expert as to possible losses.
After a discussion with the client about the preliminary expert report it was agreed that a more detailed report would be obtained.
A junior lawyer was left to request documents from the client and coordinate obtaining a full written report from the expert.
After a letter was sent to the client requesting further documents, there was nothing on the file for more than a year when the expert’s report was finally received. Further correspondence occurred with the client and the junior lawyer was asked to draft a letter of demand. It took three months to produce the first draft and a further two months for the final draft. After the letter was sent there were some negotiations with the other side before it was pointed out that most of the claims were now time barred.
The client brought a claim against the firm which was settled with a substantial payment to the client.
Most of the delay occurred before the final expert’s report was received. It seems that the junior lawyer either didn’t chase the client up enough to produce the documents or didn’t chase up the expert for the final report or both.
It is a trap for young players to expect clients and experts to do what is asked in a timely manner.
There are a number of things the young lawyer and the partner could have done to avoid this claim.
- When the young lawyer received the file they could have checked for any possible limitation periods and marked them in their diary as well as their supervising practitioner’s diary.
- They could have chased the client and/or expert up reminding them of time limits.
- The partner should have scheduled regular follow-up meetings with the young lawyer to discuss the progress of the file.
Here are some other LPLC recommendations for young lawyers wanting to be effective risk managers.
- Ensure you comply with the firm’s and any client’s risk management policies and procedures.
- When delegated work, clarify what you need to do if unsure.
- Take responsibility for aspects of the file which you have been delegated. Sometimes this means reading the entire file so you get the big picture. This will usually help you focus on the limited task you have been assigned.
If you discover an error on a file speak up immediately. LPLC has seen claims prevented where a young lawyer has picked up an error and advised the principal.
Keep relevant and legible file notes, remembering it is a note to the file, not to you. Consider using a device to record conversations, subject to any firm policies.
This column is provided by the Legal Practitioners’ Liability Committee and is reproduced from the Law Institute Journal (Jan/Feb 2016 90 (1/2), p.70.