Simple, practical steps to help lawyers avoid professional indemnity claims

In brief - Many professional indemnity (PI) claims arise from three common pitfalls

Three of the most common oversights giving rise to PI claims against lawyers are:

• Not appreciating the indispensible nature of file notes
• Failing to identify the source of your instructions properly
• Accepting a longstanding client's assurance that "everything is under control" without taking independent steps to ensure that your legal obligations are fulfilled

File notes and written client advice

Most legal practitioners will agree that documenting instructions received from a client is an ordinary prudent task undertaken in the proper maintenance of a file. However, this task is often overlooked, particularly in busy practices.

This means that when lawyers are faced with a claim, it is difficult for them to reconstruct the past and piece together the events leading up to the claim because of a lack of written material.

Maintaining contemporaneous file notes ensures that you have an accurate record of your client's instructions, enabling your colleagues to implement the instructions or advise on them. These notes also act as an effective risk management tool if a dispute arises later.

Similarly, if you follow up verbal advice with written advice, this can help to disprove any subsequent suggestion that you have failed to advise your client adequately on the matters in question.

It also ensures that your client knows what course you intend to adopt in implementing their instruction. The client may alter their instruction if they disagree with the proposed course or are wary of the risks or costs associated with it.

Make sure you identify the source of your instructions

It is important to ensure that the person who is giving you the instruction has the proper authority to do so. This not always clear in cases where, for example, you are taking instructions from a company client via its director, or where you are acting for a husband and wife.

Does the director have the authority to provide you with instructions? Have the husband and wife given you authority to take instructions from one or the other?

You must satisfy yourself that the person giving you instructions has the requisite authority and also ensure that your client has the same understanding regarding this authority.

Be wary of client assurances that "it's all under control"

It is not rare to come across a legal practitioner who has longstanding, loyal clients for whom he or she has acted for many years. This does not mean that the relationship of trust between the solicitor and client extends to a point where the solicitor's legal obligations are diminished.

It is not uncommon for solicitors to accept reassurances from such clients that the client will personally fulfil certain tasks, without the need for the solicitor's involvement.

Consequently, the solicitor can be left out of the loop to a large degree. If problems emerge later, the question arises of whether the solicitor has in fact fulfilled their retainer.

You should always be cautious about relying too heavily on a client's assurances without taking independent steps to ensure that your legal obligations are fulfilled.

How to stay out of trouble

• Always document instructions received from a client in writing, either by making a file note or by providing a written advice to the client confirming the instructions you have received. To be on the safe side, do both.
• If you intend to take a particular course to fulfil your client's instruction, put it in writing. Verbal instructions can be forgotten or misunderstood, but the written advice can be called upon later if needed.
• Acknowledge that while you may have a rapport with longstanding clients and may agree to their performing certain tasks in your stead, this does not eliminate the need for you to fulfil your legal obligations.