If your client threatens to make a claim, or makes a claim against you or your firm, it can be all too easy to panic. You will naturally be very concerned, but you might not understand how best to begin defending your position.
Below, we set out some top tips to help take the stress out of a fraught situation:
Notify your insurer
If you are placed on notice of a claim, your insurer must be notified as soon as possible. Your policy will typically demand a prompt notification, and adhering to this is essential to avoid insurers potentially refusing to cover the claim. It may well be helpful for you to liaise with the firm’s broker who can assist with any queries that may arise regarding notification.
Notification of a claim must be made irrespective of any personal view regarding the merits of the claim, your liability, or the amount involved. As a rule, if you have to ask yourself whether or not a matter should be reported, it probably should be!
When you consider what to provide to your insurer relating to your client (or former client), be mindful of you regulatory duties. Consider the duty of confidence and privilege – especially if no formal claim has yet been advanced. The client may have intimated an intention, for example, to make a complaint or claim. In that event, consider whether there has been any express or implied waiver of confidence/privilege.
Consider the claim neutrally
When an accusation is made, it is natural to be defensive. However, mistakes do happen – and when they do, they must be recognised and addressed. Accepting a problem at an early stage can enable save significant costs in the long term, and may even preserve a client relationship.
Crucially, do not make any admissions without insurer’s consent. By engaging your insurer as soon as a claim has been intimated or made, you can work together to agree upon a strategy to resolve the claim.
Do not enter substantive correspondence with the claimant without insurer’s permission. It is likely insurers will wish to approve all correspondence before being released.
Do not destroy any papers
As soon as a claim is intimated, you are obliged to preserve any relevant documents extends to all documents which may be relevant to the claim.
This obligation is not limited to only such documents that support your own defence. The obligation extends to documents which you once had in your possession but may no longer have, as well as those actually in your possession. It also includes documents which you have the legal right to possess such as documents held on your behalf by third parties (e.g. an accountant).
The term ‘document’ includes not only hard copy paper documents (both originals and copies), and handwritten items such as telephone or personal attendance notes, but also electronic documents and any other means by which information is stored such as e-mails and text messages. It includes computer hard drives, disks, databases, mail servers, video or audio tape. Information stored and associated with electronic documents known as metadata may also form part of disclosure if the claim is pursued.
You must not destroy or delete any documents relating to the dispute. All routine destruction procedures must be suspended until the end of the dispute. Do not amend documents that exist and may be relevant to the claim.
Failure to properly secure and preserve documents may be extremely prejudicial to your case. It could result in criticism by the court and adverse inferences potentially being drawn. You could also face sanctions should the claim be pursued to litigation.
The formal term ‘disclosure’ is used by the court for the process of the exchange of relevant documents by the parties during litigation. It is paramount you understand and adhere to your disclosure obligations.
Record a timeline of the dispute
Memory can fade over time. When a claim is made, take the time to prepare a clear chronology of the factual background giving rise to the dispute. It can greatly assist if you write down everything you can remember that may not have been documented as clearly as possible. Such a chronology can prove invaluable as any claim progresses, and will assist with any defence and witness statement that may be required during any litigation process.
If more than one person was involved, acted on, or advised in the underlying retainer giving rise to the claim, ensure each of them prepare their own chronologies.
Pre-Action Protocol for Professional Negligence
The Protocol is designed by the court to enable the parties to engage in detailed correspondence about the claim in the hope of avoiding costly litigation. Failure to abide by the Protocol can lead to costs sanctions should litigation ensue. If a client or former client wishes to make a claim, they ought to be reminded of their Protocol obligations which will include service of a Letter of Claim which requires any claimant to set out various details regarding any claim being advanced. Upon receipt of any Letter of Claim, there are timeframes to be adhered to in terms of a response. The Letter of Claim must be acknowledged within 21 days with a substantive response failing due within 3 months of the formal acknowledgement.
Sometimes the first you are aware of a claim being made is when you receive either a Preliminary Notice of Claim or Letter of Claim served under the Protocol. Upon receipt of the same, it is important that you swiftly inform your insurer so that an agreed strategy can be reached regarding responding to the same within the Protocol timetable.
Take care before putting things right
When things go wrong, it’s understandable that you might want to put things right. However, you must consider carefully whether you’re able to advise on any remedial options, or continue to act for the client on any remedial steps, given your duty not to act where there is an own-interest conflict, or a significant risk.
Engage with insurers as to any remedial steps you may wish to take, or if your client insists you take certain steps. Consider your obligations under your insurance policy, alongside your regulatory obligations under the Code of Conduct.
Key tips for minimising the risk of a claim
To minimise the risk of a claim and to give yourself the best defence should a claim be made, consider implementation of the following during any client retainer:
Keep comprehensive contemporaneous attendance notes of all meetings, discussions and advice given to clients
Ensure you have a good diary system to avoid missing dates or agreed timescales
Consider the usage of checklists as aide memoirs
Do not underestimate the power of a clear and concise engagement letter which sets out the scope of the retainer
Maintain good communication with your clients and follow up meetings/telephone discussions in writing
Encourage a culture of openness in respect of potential claims or problems
For further information, reach out to a member of our team.
