If your client threatens to make a claim or actually makes a claim against your firm or you, it can be all too easy to panic! It can be a very concerning time and often, you may not understand how best to begin defending your position.
Below, we set out some top tips to consider which may assist in taking the stress out of a fraught situation:
Notify your insurer
If you are placed on notice of a claim, it is important that your insurer is notified as soon as possible. The policy will demand a prompt notification and so it is important that is adhered to so as to avoid insurers potentially refusing to cover the claim.
Notification of a claim must be made irrespective of any personal view regarding the merits of the same, your liability or the amount involved.
If a complaint and/or claim is made, it is important for the firm to consider notification requirements under the policy and 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.
As a general rule, if you have to ask yourself whether a matter should be reported or not, then it probably should be!
Do turn your mind to your regulatory duties when you consider what information you provide to your insurer relating to your client/former client upon notification. 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
It is human nature to be defensive if an accusation is made. However, mistakes do happen and when they do, it is important they are recognised and addressed. Acceptance of a problem at an early stage, can enable significant costs to be saved and may also preserve a client relationship!
It is important that you do not make any admissions without insurer’s consent. An early engagement with your insurer when a claim has been intimated or made is therefore crucial so that together a strategy towards resolution can be agreed upon.
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.
Ensure that you do not destroy any papers
As soon as a claim is intimated you should be mindful of your obligations in relation to the preservation and disclosure of documents which may be relevant to the subject matter of the claim. The formal term ‘Disclosure’ is used by the court for the process of the exchange of relevant documents by the parties during the course of litigation.
The obligation to preserve any relevant documents extends to all documents which may be relevant to the claim. It 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, text messages etc. 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 rh 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 resulting in criticism by the court and adverse inferences potentially being drawn. You could also face costs sanctions should the claim be pursued to litigation.
It is paramount that you understand your disclosure obligations and adhere to the same.
Prepare a clear chronology of the factual background giving rise to the dispute
Memory can fade over time and so when a claim is made, 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 person had involvement, acted or advised in the underlying retainer giving rise to the claim, consider each of them preparing 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.
Putting things right – Conflict
When things go wrong it is human nature to want to take steps to put things right. However, you will need to consider carefully whether you are 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 significant risk of an own interest conflict.
Engage with insurers as to any remedial steps you may wish to take or your client is insisting you make. It is important you consider your obligations under the policy alongside your own regulatory obligations under the Code of Conduct.
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