Published in the Law Society Gazette, 3rd July 2017
In the context of insurance and professional negligence, the major topics of debate within the legal profession are whether the SRA’s proposals to reduce the minimum level of cover from £3m or £2m to £500k and the run-off period from six years to three are appropriate.
But relatively little energy is directed at avoiding negligence claims in the first place.
Cybercrime is a major source of concern. The fraudsters are becoming more sophisticated; each week emails encouraging recipients to click on attachments containing malware become more plausible. The answer has to be education. The SRA has focused on ‘Friday afternoon’ frauds often involving residential conveyancing, but the problem is much wider. The Metropolitan Police Cyber Protection team does a great job; it offers training and ongoing support. No professional firm should practise without an effective firewall.
It has been suggested that the losses caused to the profession by cybercrime amount to millions of pounds every month. Most comments which I have seen address fault, liability and the availability of insurance cover. Some insurers see cybercrime as a marketing opportunity.
Far more attention needs to be focused on discovering and publicising exactly what has caused each loss with a view to reducing the risk of recurrence. Many lawyers have heard the old tag about those who cannot remember the past being condemned to repeat it. A more sophisticated approach to improving performance by learning from mistakes is explained by Matthew Syed in Black Box Thinking. This book should be compulsory reading for any lawyer responsible for risk management.
In almost every area of human endeavour, there is an irresistible trend to specialisation. I am a partnership lawyer and an employment lawyer. While these two areas of law have certain aspects in common, partnership law is a separate and discrete area of practice. Yet more often than you might think employment lawyers seek to apply to partnership disputes concepts which are only relevant in an employment context. I have seen no evidence to justify or disprove my suspicion that negligence claims are often a result of solicitors giving advice which goes beyond their personal expertise and experience. (In any event, it must make sense for law firms to specify in engagement letters and terms of business not only what they will do for a client but also what they will not do.)
Here is an opportunity for the Law Society and the SRA. In my opinion, authorised insurers should be required to publish detailed information and analysis about behaviours which have given rise to claims. That could lead to a reduction in professional negligence actions.
Ronnie Fox is a consultant at Fox & Partners, London