Reflection on Claims

The last two years have been challenging for the community and the Legal Profession, with the onset of a global pandemic.

Many firms were required to adapt their working environments with staff moving to more flexible work models that included working from home. In addition, practitioners were also required to adapt to new court processes with appearances and mediations conducted remotely via Microsoft teams. Despite the challenges and disruptions, I am pleased to say that the Tasmanian Professional Indemnity Scheme remains in good shape with an overall reduction in the current number of claims. The following article provides a summary of the types of claims that the scheme has managed and an overview of a significant claim that has been defended by the Scheme for over 18 years.

Overview of the types of claims and notifications
The profile of the types of claims and notifications that the Scheme is managing has not significantly deviated from previous years. Currently, the transactional work of conveyancing and commercial law leads the way constituting 50% of the claims this year.

The types of transactional claims can be summarised as follows:
Commercial Law

• alleged breaches of fiduciary duty;
• conflicts of interest;
• failures to consider all legal implications; and
• drafting errors

Property/Conveyancing

• conflicts of interest;
• alleged failures to properly draft, execute or serve a document;
• failures to exercise, register or renew a right or option; and
• cyber fraud

Claims relevant to Wills and Estates, have increased slightly this year and can be summarised as follows:

• failures to properly draft;
• failure to have the client sign the notes and/or a Will;
• conflicts of interest;
• failures to consider all legal implications.

Litigation

• Claims relevant to Litigation are reduced this year and can be summarised as follows:
• missed limitation periods; and
• failure to consider all legal implications.

Resolution of a Significant Claim
I am pleased to report that the Scheme has seen the conclusion of a long running claim that has been actively defended for over 18 years. The claim was successfully defended by the Scheme all the way to the High Court with the Applicant failing to succeed in an Application for Special Leave.

The background to the claim involved the Plaintiff who operated a nursing home in Hobart. On or about the 6 August 1997 the approval for the Plaintiff to operate the nursing home was revoked pursuant to s 44(2) of the National Health Act.

The Plaintiff commenced a claim in the Supreme Court of Tasmania that was cross vested to the Federal Court. The Plaintiff alleged that a number of Legal Practitioners ( five defendants in total, 4 insured by the Scheme) failed to advise on the steps available, including injunctive relief, to prevent the revocation of the nursing homes approval. The Plaintiff subsequently claimed that it lost entitlement to Commonwealth benefits with respect of the residents of the nursing home and was effectively prevented from becoming an approved provider of aged care services because no prior bed approval.

The Scheme is now undertaking steps to recover costs that will see a significant reimbursement to the insurer.

This claim serves as an excellent example of the commitment of the Scheme and the engaged panel lawyers to defend those claims that are defensible and lack merit.

COVID – Impact on Claims
In my introduction I have briefly mentioned the impact of the pandemic on the claims landscape in Tasmania. Currently, the Scheme has not seen an increase in claims due to the pandemic. We have only had one claim relevant to issues associated with the pandemic. This claim arose from a conveyancing matter where a significant delay arose relevant to the execution of documents. The background to this claim involved one of the parties residing overseas and the delay in the postal service to deliver the documents due to the pandemic.

Recently, I attended our National Risk Managers conference and the feedback provided from other jurisdictions was that an increase in claims had been observed in a number of jurisdictions due to the pandemic. The types of claims that have been reported are as follows:

• Transactional regret: claims by clients who have entered into deals which they have come to regret alleging that their lawyer failed to alert them to or advise them about some aspect of the deal.
• Cyber Fraud: claims arising out of the transition of the workforce to working from home, often seen in smaller firms who have not had the IT infrastructure to manage the remote working arrangements.
• Litigation: The key issue in this area has been relevant to missed limitation periods.

Take home messages arising from the claims
It is never too late to undertake a review of your practice and risk management. Healthy risk management practices lead to better outcomes for clients, less stress for you and fewer claims under the policy.

Some suggestions based on the claims managed by the Scheme are as follows:

• Care should be taken when drafting any document. All documents should be checked and re-checked. A small error, a missing or a wrong word can lead to a poor outcome for a client and they will look to you to rectify or compensate them for their loss.
• Practitioners should be aware of all time limits that apply to any matter that they are instructed in.
• Practitioners should ensure that they develop appropriate procedures within their respective firms when handing over a file that has been managed by another practitioner.
• Every practitioner should ensure that basic administrative routines including regular file reviews and reminder/resubmit systems are in place.
• If you are going to act for more than one party in any matter you must make sure that you are familiar with the Legal Profession (Solicitors’ Conduct ) Rules 2020 Rule 15 and comply with it.
• Practitioners should recognise and have a strategy to deal with any matter where they act for both parties or where a conflict occurs or emerges in a matter.
• Client communication and avoiding unnecessary delay for the client is important. Unhappy clients make complaints to the Legal Profession Board (LPB). The Law Society’s PII policy in Tasmania does cover a practitioner’s legal costs and expenses arising out of any legally compellable attendance at any investigation, examination or enquiry. Those costs are only claimable from the date that a hearing is convened. All costs associated with the preliminary investigations of the LPB before a determination is made to convene a hearing are not covered. The claim is subject to an excess and the limit on any one claim is $100,000.
• Wills and Estates can be a complex area and only experienced practitioners should work in this area. All practitioners should have a key risk checklist that should be complied with on all Wills and Estate files.
• Cyber fraud, all firms should have a cyber fraud management policy in place and regular education for staff.

Fleur Dewhurst
Lawyer
Professional Indemnity Insurance Scheme – Claims Manager
PO Box 79, Lauderdale TAS 7021
0427 800 030
fleurcd@fleurdewhurst.com.au