professional liability risk profile analysis€¦ · streeton consulting provided substantial input...

Professional Liability Risk Profile Analysis

lawmutualwa.com.au

Contents

Executive Summary 1

Introduction 2

Methodology 4

Summary of Findings 5

Claims Review Findings 6

Risk Polling Findings 8

Next Steps 10

Prepared for

Prepared by

Reviewed by

General Manager, Law Mutual (WA)

Law Mutual (WA) Professional Liability Risk Profile Analysis | Page 1

The purpose of this report is to inform insured practices of key risk concerns relating to different practice size, specialisations and experience and for Law Mutual (WA) to target its risk management services for insured practitioners accordingly.

In 2015 and 2016, Law Mutual (WA):

• studied all 196 claims for the period 2011-2014 to understand key causes and how claims correlate to practice size and area of law;

• polled over 2,200 practitioners to identify priority professional liability risks and control practices in the conduct of legal matters.

This report provides outcomes of the review and observations for the risk management strategy at Law Mutual (WA).

The findings show:

• general consensus amongst practitioners on key risks across all phases of a matter;

• small and mid-sized firms have a disproportionately large number of claims, particularly mid-sized firms (six to nine practitioners);

• of 196 claims, five areas of law account for 86% of claims, and small and mid-sized account for 76% of these claims;

• large firms (10 or more practitioners) have a stronger formal control environment over key risk areas with corresponding lower claims record;

• the best performing firm size with respect to claims (10-15 practitioners) also have the highest uptake of critical controls; and

• more experienced practitioners are more concerned about matter and client screening, and relationship management, while less experienced practitioners are more concerned about the quality of service delivery and close-out.

The findings support a risk management strategy focused on:

• addressing the specific needs of different cohorts: by firm size, areas of practice and experience of practitioners;

• progressively addressing topics identified in claims and risk profiling as of highest concern; and

• developing a more comprehensive approach to supporting insured practices through control guidance, education and in-house support to address key risks, their causes and control weaknesses.

To implement this strategy, Law Mutual (WA) is developing risk management services with the following features:

• A prioritised education schedule, focused on a series of risk themes that reflect the consensus risk concerns among Law Mutual (WA)’s insureds;

• Special attention given to those cohorts (both firm size and specialty) that analysis show to have particular exposure with regards to the risk in focus;

• Seminars and other educational material will adopt a uniform approach as to how professional liability risk management is described and applied;

• Continual surveying and polling of insureds to understand their risk concerns and ensure that control guidance developed by Law Mutual (WA) is fit for purpose and reflects best current practice;

• Ongoing development and publication of Law Mutual (WA) control sets for risks in focus, with targeted control sets for small, medium and large firms, and other cohorts that require them;

• Practice Management Guidelines and Matter Management Guidelines are being developed that will provide insureds a comprehensive set of principles to control professional liability risks at both a practice and matter level; and

• In-house review and support for some firms, utilising the Practice and Matter Management Guidelines and relevant risk control sets.

Executive Summary

| Law Mutual (WA) Professional Liability Risk Profile Analysis

Overview

A key objective of Law Mutual (WA) is to support better risk management within insured practices in order to reduce claims and improve the reputation of the legal profession. Until now, Law Mutual (WA)’s risk management support (principally in the form of a two-hour seminar compulsory for all insureds) has taken a ‘one size fits all’ approach.

However, as expressed in its Risk Management Policy, Law Mutual (WA) is committed to “recognising the diversity of needs amongst our Insureds and engaging with them accordingly” – different firms have different needs when it comes to risk management support. By understanding those needs, Law Mutual (WA) can focus its risk management support on those firms, risks and controls that will deliver the best outcomes in terms of reduced claims.

To enable this, in 2015 Law Mutual (WA) embarked on two exercises, aimed at producing a better understanding of the following questions:

• Whattypesoffirmsaremostsusceptibletowhattypesofclaims?

• Whattypesoffirmshaveareasofparticularcontrolweakness?

The first of these exercises – the Claims Review – reviewed all claims for the 2011/2012 to 2013/2014 insurance years and recorded the areas of law and allegation for each claim.

The second exercise – conducted during Law Mutual (WA)’s annual risk management seminars – polled practitioners on risks of greatest concern and levels of control implementation.

To implement these exercises, Law Mutual (WA) engaged risk management consultants MYR Consulting, the author of this report.

Streeton Consulting provided substantial input into the risk and control profile for practitioner’s professional liability risk. This profile was the basis of the polling.

By comparing claims, risk and control results across different cohorts (by size of law firm, area of legal specialty and years in practice) it became possible to identify areas of relative risk concern and control weakness for certain cohorts, as described in the body of this report.

This information will be used to tailor Law Mutual (WA)’s risk management services so that insured practitioners receive support that is relevant to their risk profile.

Insured practices

For the purpose of the review, insured firms were categorised by number of practitioners. The table following shows the different categories and the percentage of total insured practices these represent.

Firm size Descriptor% Law Mutual (WA) insureds

Sole practitioner Small firm 18

2-5 practitioners Small firm 28

6-9 practitioners Mid-sized firm 13

10-15 practitioners Large firm 13

>15 practitioners Large firm 28

Area of law

The table following shows the areas of law used for claims and risk analysis. Where there is a significant number of claims, the secondary area is used to further breakdown the claim.

Commercial

• Consumer

• Loans

• Contract insolvency

• Corporate

• Intellectual property

• Insurance

• Mining, energy and resources

Family

• Child support and custody

• Matrimonial

Wills and Estates

• Will creation

• Probate

Tax

• Land

• Payroll

• GST

• Capital gains tax

• Stamp duty

Environmental advice

Industrial relations advice

Property

• Sale/purchase/lease/conveyancing/ mortgages

• Town planning/other government approvals

Personal Injury

• Medical negligence

• Motor vehicle accidents

• Workers compensation

• Public liability

• Criminal injuries compensation

Trust

• Creation

• Operation

• Advice

Criminal representation

Defamation advice

Immigration advice

Administrative approvals and advice

Other

Introduction


Type of allegation

Allegations that formed the basis of claims were categorised as follows:

Primary Secondary

Conflict of interest

Former client

Current client

Practitioner’s own interests

Other

Breach offiduciary duty

Fraud

Confidentiality

Failure to advise claimant to seek independent legal advice

Statutory duty

Trust account issue

Negligence in understanding, applying or advising on law

Missed limitation period

Failure to exercise, register or renew a right/option

Inadequate advice on pursuing/settling matter or action

Pleadings/conduct of trial defective

Failure to properly draft, execute or serve (non-trial) document – error in law

Failure to adequately consider full tax or other financial implications of advice or action

Negligent advice regarding risks arising from loan or solicitor's guarantee certificate

Failure to adequately consider full legal implications of advice or action

Negligence in processInvestigation/discovery of facts inadequate, including identity of defendant or other party

Failure to properly confirm instructions/advice before acting or delay in following instructions

Other Other

Defamation Defamation

Conducting a legal matter

For the purpose of the review, a standard approach for the conduct of legal matters was developed. Risks and controls were reviewed against this structure.

PhaseScreen prospect

and matterEngage client

Provide andmonitor service

Close and manage after-care

Reach in principle decision to accept or reject matter

Achieve shared understanding and binding agreement on scope, costs and fees and services

Deliver agreed services to professional standards and to client satisfaction

Confirm completion of agreed services and respond to post completion developments

Identify the prospective client

Understand key facts and client objectives

Obtain detailed instructions Check legal requirements met

Understand nature of legal need

Explain options for achieving objectives

Provide advice on conduct and potential outcomes of matter

Check scope and services in agreement to deliverables

Communicate approach and capability

Explain rights, obligations and requirements

Undertake further investigation Render final bill

Screen prospective client Scope services and fees Conduct legal research Confirm matter closed

Screen capability to conduct matter

Make disclosures and obtain consents

Draft and lodge documents Archive documentation

Decide to accept or reject matter

Sign costs agreement Provide representation File transfer (if required)

Confirm engagement Engage experts Answer post completion enquiries

Communicate with client and other stakeholders

Render invoices

Pu

rpo

seK

ey a

ctiv

itie

s


Claims review methodology

A review was conducted of each claim for the 2011/2012 to 2013/2014 insurance years.

The process for undertaking the review was as follows:

Develop data set

• Law Society body of knowledge• MYR data• Streeton Consulting expert input

Review files • All claims files• Legally qualified consultant

Capture data• Area of law• Allegation• Size of claim

Collate and analyse results

• Claims in each area of law• Claims against each category of

firm size• Claims by nature of allegation

Risk polling methodology

Polling was undertaken during Law Mutual (WA)’s annual risk management seminars. A series of two hour seminars were conducted over the period September 2015 to May 2016 and used interactive polling technology to capture polling results.

The seminar concept was to engage with practitioners to stimulate thinking, and through use of voting technology identify collectively and by category, the risks and controls seen as material to the practitioners.

Law Mutual (WA)’s professional liability Risk and Control Map formed the basis for polling. It maps 18 key professional liability risks and related critical controls in each of the four phases of a legal matter (screening, engagement, delivery, close-out).

For each phase, participants were:

• shown key generic risks, asked to select the risk of most concern to them personally. Results were then displayed and discussed; and

• shown a selection of controls and asked to select all controls that they considered to be adequately implemented in their firm. Results were then displayed and discussed.

The process is summarised as follows:

Generic risk and controls

• Law Society body of knowledge• MYR data• Streeton Consulting expert input

Categorisepractitioner

• Size of firm• Years of practice• Legal specialisation

Legal service process

• Screening of prospect and matter

• Engaging client• Providing and monitoring service• Closing engagement and

managing after-care

Conduct poll• Highest risk concern against

each phase of the legal service process

• Controls in place at practice for each identified risk

Collate and analyse results

• Risk and control data logged against categories

• Outlier data results highlighted for further scrutiny

Methodology


Claims

The claims profile shows:

• Of 196 claims, five areas of law account for 86% of claims, and firms with up to nine practitioners account for 76% of these claims;

• The five areas of law are:

• Commercial;

• Personal Injury;

• Property;

• Family; and

• Wills and Estates.

• Over 75% of all claims arise from five key allegations:

• missed limitation period;

• error in drafting, execution or service of documentation (non trial);

• failure to consider legal implications of advice or action;

• failure to exercise rights (options, extensions, renewal etc); and

• conflict of interest.

• Sole practitioners have a high claims record in relation to employment law, wills and probate and commercial matters;

• Small and mid-sized firms have a high claims record in relation to family law and personal injury matters;

• Mid-sized firms have a disproportionate number of claims and significantly less formal control than firms with slightly more practitioners; and

• In small and mid-sized firms there is a strong correlation between claims relating to acceptance of unsuitable and high risk matters and the lack of formal control identified in risk polling.

Risk

The risk polling profile shows:

• There are five key risks of common concern across all practitioners:

• When screening a client and matter, accepting unsuitable or high risk matters;

• When engaging a client, inadequately scoping work;

• When providing and monitoring the legal service, substandard delivery of legal services and missing deadlines/limitation periods; and

• When closing out the matter and providing after-care, a failure to complete the service and close-out actions.

• Experienced practitioners, of more than nine years practice, are more concerned with the risk of accepting unsuitable matters and inadequate scoping of work; and

• Less experienced practitioners, with between one and four years practice, are more concerned with the risk of substandard delivery of legal services and closing out a matter than more senior practitioners.

Control

The control polling profile shows:

• There is a wide discrepancy between the uptake of formal controls, which generally correlates to firm size;

• Most practices have a low level of formal control over continuous management of client expectations throughout the conduct of a matter; and

• Many sole practitioners lack formal control over the commencement and closure of legal matters.

Overall

Looking across all outcomes we see:

• general consensus amongst practitioners on key risks across all phases of a matter;

• small and mid-sized firms have a disproportionately large number of claims;

• large firms have a stronger formal control environment over key risk areas with corresponding lower claims record; and

• the best performing firm size with respect to claims (10-15 practitioners) also have the highest uptake of critical controls.

Summary of Findings


Overall findings

There were 196 claims made against insured practices during the period. The claims comprised 273 allegations in total.

Of these 196 claims, five areas of law account for 86% of claims, and firms with up to nine practitioners account for 76% of these claims.

Claims by area of law

Other

Trusts

Tax

Wills and Estates

Family

Personal Injury

Property

Commercial

31%

16%16%

11%

12%

9%2%3%

Commercial claims account for one third of all claims. Most claims in commercial law arose from alleged breaches of fiduciary duty, conflicts of interest, defects in trial conduct, and failures to consider all legal implications. Sole practitioners and mid-sized firms (six to nine practitioners) were overrepresented.

Property claims account for one sixth of all claims, and arose mostly from alleged failures to properly draft, execute or serve a document, failures to exercise, register or renew a right or option, and failures to consider all legal implications. Small firms (Sole and two to five practitioners) were overrepresented.

In relation to personal injuries, which account for one sixth of claims, nearly all allegations arose from missed limitation periods, failures to exercise, register or renew a right or option, defects in trial conduct and inadequate investigation of facts. Small and mid-sized firms were overrepresented.

Claims relating to Wills and Estates account for 12% of all claims, and arose mostly from alleged failures to properly draft, execute or serve a document, failures to exercise, register or renew a right or option, or failures to consider all legal implications. Sole practitioners were overrepresented.

Family law claims account for 11% of total claims, and arose mostly from alleged missed limitation periods, defects in trial conduct and failures to follow or confirm client instructions. Mid-sized firms were overrepresented.

Claims by firm size

The chart shows that while small and mid-sized firms account for 59% of total Law Mutual (WA) insured practices, they account for 76% of total claims. The group with the highest relative % of claims are mid-sized firms (six to nine practitioners).

Firms with 10 or more practitioners account for 24% of total claims with firms comprising between 10 and 15 practitioners having 7% of all claims during the period.

Claims by allegations made

Tax or financial implication error

Poor advice on pursuit or settlement

Investigation or discovery defect

Trial preparation or conduct defect

Fiduciary duty breached


Not exercising rights

Legal implications not considered

Non trial documentation error

Missed limitation periods 23%18%

15%11%11%11%11%

9%8%

7%

Claims Review Findings

5

10

15

20

25

30

35

Law Mutual (WA) Insureds Law Mutual (WA) Claims

22%

18%

28%

32%

22%

13% 13%

7%

17%

28%

Small Firms Mid-sized Large Firms

SolePractitioner

2-5Practitioners

6-9Practitioners

10-15Practitioners

>15Practitioners


Allegations made by firm size

The graphs shows the top 10 allegations overall and by reference to each firm size. It emphasises the overall theme that most claims relate to practices with fewer than 10 practitioners and particularly six to nine practitioners.

Note: A claim may have more than one type of allegation.

Focus areas by firm size

The graphic below shows that for many allegations, small and mid-sized firms have disproportionately high numbers of claims. By contrast there are few claims, and none which are disproportionately high for firms 10 or more practitioners.

0

10

20

30

40

50

Error in tax/financial advice

Poor adviceon pursuit/settlement

Error inprocess

Non trialdocument error

Defectivelegal advice

Defectivepleadings/

trials

Not exercisingoptions/

rights

Limitationperiod missed


Conflict ofinterest

Sole Practitioners 2-5 Practitioners 6-9 Practitioners 10-15 Practitioners >15 Practitioners Total

Num

ber

of

clai

ms

Type of Allegation

Primary Allegation

Secondary AllegationFirm size (practitioners)

1 2-5 6-9 10-15 >15


Former client

Current client

Practitioners own interests


Fraud

Confidentiality

Failure to advise claimant to seek independent legal advice

Statutory duty

Trust account issue

Negligence in understanding,

applying or advising on law

Missed limitation period

Failure to exercise, register or renew a right/option

Inadequate advice on pursuing/settling matter or action

Pleadings/conduct of trial defective

Failure to properly draft, execute or serve (non-trial) document – error in law

Failure to adequately consider full tax or other financial implications of advice or action

Negligent advice regarding risks arising from loan or solicitor's guarantee certificate

Failure to adequately consider full legal implications of advice or action

Negligence in process

Investigation/discovery of facts inadequate, including identity of defendant or other party

Failure to properly confirm instructions/advice before acting or delay in following instructions

No claims

Claims, but low or proportionate

Claims are disproportionate


Overall findings

At each phase of a matter, practitioners share the same priority risk concern across nearly all practitioner categories.

Phase Priority risk

1. Screening prospect and matter

Accepting an unsuitable prospect or matter or not identifying a high risk factor

2. Engaging clients

Inadequate/incomplete scope of work creates wider than intended obligations to client

3. Delivering service

Missed limitation periods and other deadlines

4. Closing out Matter not completed, services not fully performed, steps still to be taken result in unrecognised ongoing duty of care

0

10

20

30

40

50

60

70

80

Closing outDelivering serviceEngaging clientsScreening matter

Key risk Critical control – overall Critical control – lowest Critical control – highest

Although there is alignment across practitioners on the priority risk in each phase of a matter, the graph shows:

• A relatively low overall uptake of the critical control for each key risk;

• A significant discrepancy between uptake of critical controls over each key risk.

Phase 1 – Screening prospect and matter

Duty triggered prematurely

21% 16%

63%

Accept unsuitable matter

Miscommunicate practice capability

The priority risk at screening phase was Acceptinganunsuitableprospectormatterorfailingtoidentifyahighriskfactor. This reflects practitioners recognition that identifying and managing high risk prospects and matters (including by refusing the work) is the most effective and efficient way to manage professional liability risk.

When we further analysed implementation rates for the critical control – Firmhasclearguidelinesforscreeningclient/mattersandidentifyinghighriskfactors – we saw a very strong correlation between firms with low implementation rates and those firm categories with overall high claim rates.

Phase 2 – Engaging client

Onerous terms of engagement

Conflict not recognised

Unclear service scope

Matter accepted prematurely

Client representative has no authority

Unclear who acting for

12%17%

6% 4%

14%

47%

The priority risk at engagement phase was Inadequate/incompletescopeofworkcreateswiderthanintendedobligationstoclient. This reflects practitioners recognition that good scoping upfront greatly reduces all subsequent risks associated with inadequate legal advice or drafting, which typically arise where ‘scope creep’ takes a practitioner outside his area of expertise.

When we further analysed this risk’s critical control – Thoseresponsiblefordoingsohavetheprocesses,timeandcapabilitytoproperlyscopeandestimatecosts – we saw that smaller firms (less than 10 practitioners) have lower implementation rates than larger firms, and proportionally higher claims for inadequate legal advice or drafting.

Phase 3 – Providing service

Poor conflict management

Acting without clear instruction

Failure to meet deadlines

Substandard legal work

39%

40%

7%

14%

The priority risk during delivery – Failuretomeetdeadlines/Missedlimitationperiods – mirrors the most frequent allegation for claims (24% of all claims).

It is more difficult to draw a correlation between this risk and claims data and the implementation rates for this risk’s critical control –Diarisationandremindersystem.

At 64%, the overall implementation rate for this control is higher than any other control, and even higher among those categories of firms that would appear most exposed to the risk (firms of six to nine practitioners, and firms that specialise in personal injury are most prone to these claims accounting for 62% of all claims relating to missed limitation periods).

Risk Polling Findings


There are a number of possible explanations for this finding. The missed limitation claims might simply be arising among the 36% of practitioners who still do not have a diarisation control. Alternatively, claims might be arising against firms that have implemented a diarisation control, but have not supported it with training, or a continually updated understanding of relevant limitation periods.

In any case, given the large number of claims arising from this allegation, there is scope for Law Mutual (WA) to work with practitioners to better understand causes, and develop a comprehensive set of controls to reduce the risk of a missed limitation period. In particular, this support should focus on:

• Firms of six to nine practitioners;

• Firms that practice personal injury law.

Phase 4 – Close-out and after-care

Mismanagement of complaint

New obligations triggered

Inadequate matter records

Premature close-out - duties

Matter not completed

45%

11%

17%

12%

15%

The priority risk for closing out a matter and after-care is:

• matter not completed;

• services not fully performed; and

• steps still to be taken result in unrecognised ongoing duty of care.

There is a relatively low uptake of the critical control for this risk (49%) which comprises a formal process and checklist for closing out a matter, ensuring completion of promised services and appropriate advice on required steps to be taken after the matter concludes. This is particularly the case for smaller firms.

Control profile

Overall, firm controls are weakest for:

• Managing client expectations, and the risk that clients will be dissatisfied with the conduct or outcome of their matter (and so choose to bring a professional liability claim);

• Managing the close-out of an engagement, and the professional liability risks that arise during close-out and after-care.

Professional firms typically focus their control efforts on the delivery of their core services, so it is not surprising that the two areas of general control weakness among firms relate to client expectations and close-out and after-care. Yet research has found that when lawyers who have faced an action are asked where the missed opportunities lay in preventing the claim, many cite “better managing client expectations”. So there is a clear opportunity here to support insureds with a structured approach to the management of client expectations.

The information currently captured on claims does not allow us to analyse whether control weaknesses at close-out or during after-care are giving rise to actual claims. This issue should be addressed when Law Mutual (WA) begins to capture risk management information on claims, and if a link is found, further support provided to insureds with regards to these

controls.

Controls – Weakness by firm category

The two firm size categories most susceptible to claims are also the two categories with significant areas of comparative control weakness.

Sole practitioners have comparatively weaker controls at the commencement and closure of matters. In particular, implementation is significantly lower for the following controls:

• A policy that no advice given or work done until formal acceptance by client and firm;

• Clear guidelines for screening client/matters and identifying high risk factors;

• Cost agreement or other written evidence of shared understanding between lawyer and client as to client objectives, scope of work/exclusions, basis of charging, costs estimate and other service terms;

• A standardised work process for matter completion/checking for loose ends;

• Protocol to retain copy of file before it is released to client or another firm; and

• A practice of providing written confirmation to clients of termination or withdrawal from engagement and implications for client.

Firms of six to nine practitioners have comparatively weaker controls when compared to firms that are slightly larger (10 to 15 practitioners). In particular, implementation is significantly lower for the following controls:

• A policy that no advice given or work done until formal acceptance by client and firm;

• Clear guidelines for screening client/matters and identifying high risk factors;

• Intake processes are able to flag any new clients or matters that are accepted without prior screening or clearance;

• Workload management and resource allocation (no one overloaded or under resourced);

• Review, approval and sign off protocols (formal review and decision points before moving to next stage or delivery of work product);

• Protocols for use, selection, engagement, and monitoring of resources and external experts;

• Standardised work processes includes points at which client instructions must be obtained; and

• Incident escalation and handling protocols, including recommending independent advice and notification to Law Mutual (WA).

Even more than sole practitioners, firms of six to nine practitioners account for a disproportionate number of claims against Law Mutual (WA) insureds, so this long list of controls is of particular interest. Could it be that when firms grow to six to nine practitioners, they outgrow the less formal controls that might serve smaller firms, but do not yet have in place the formal controls required by a larger organisation? Supporting mid-sized firms to develop control frameworks appropriate for the size and complexity of their business is another opportunity for Law Mutual (WA) to improve risk management outcomes.


Strategy

The overall findings in this report support a risk management strategy focused on:

• addressing the specific needs of different cohorts: by firm size, areas of practice and experience of practitioners;

• progressively addressing topics identified in claims and risk profiling as of highest concern; and

• developing a more comprehensive approach to supporting insured practices through control guidance, education and in-house support to address key risks, their causes and control weaknesses.

To implement this strategy, Law Mutual (WA) is developing risk management services as outlined below.

Prioritised education schedule

Law Mutual (WA) will develop and implement a prioritised education schedule, focused on a series of risk themes that reflect the consensus risk concerns among Law Mutual (WA)’s insureds. Special attention will be given to those cohorts (both firm size and specialty) that analysis shows to have particular risk exposure or control weakness with regards to the risk in focus.

The table on the following page sets out the prioritised risk themes, along with related claim trends and control weaknesses for all firm sizes and a sample of firm specialties.

Firms in cohorts that have related adverse claims trends or control weaknesses will be encouraged to attend relevant risk theme seminars.

While past seminars have been presented as standalone topics, going forward, risk management education will provide insureds with a uniform, mutually reinforcing approach as to how professional liability risk management is described and applied. In particular, Law Mutual (WA) will develop the following:

• Law Mutual (WA) Risk Management Standard Definitions

Standard definitions for risk management and practice management concepts.

Interaction, guidance and tools

Law Mutual (WA) will continue to survey and poll insureds to understand their risk concerns and control activity. In particular during seminars, polling technology will be used to tap participants’ opinions and practical expertise on risks, their causes and appropriate controls.

As with the polling in this report, outcomes of this polling will be analysed by cohort, and then combined with other material to develop practical control sets for the risk in focus, with versions for small, medium and large firms, and other cohorts that may require it. New control sets will be made available to insureds, and added to Law Mutual (WA)’s online library.

Where control guidance includes a particular check list, template or procedure, Law Mutual (WA) may choose to develop the tool and make it available to insureds.

Guidelines and in-house support

The analysis in this report demonstrates a correlation between control implementation and incidence of claims. For some firms, Law Mutual (WA) will offer targeted, in-house support by assisting the firm to implement two management guidelines currently being developed by Law Mutual (WA):

• Practice Management Guidelines

A document that describes the general characteristics and requirements for structuring a legal practice and conducting critical activities to effectively deliver legal services. It is structured around management system requirements (Leadership, People, Information, Activity Management and Assurance).

• Matter Management Guidelines

A document that contains knowledge about widely accepted good practice in the delivery of legal services. It is structured around the core process for delivery of legal services (Screening, Engagement, Delivery, Close-out).

Risk management advisory

Law Mutual (WA) will also offer insureds a phone and email based risk management advisory service for any firms with questions around professional liability risks and controls.

Next StepsLaw Mutual (WA) Risk Management Services


All Insureds

Accepting unsuitable matters

Inadequate scoping of work

Failing to close-out matters

Substandard delivery of legal services

Missing deadlines including limitations

Mismanaging claim resolution

Commencing new matters

Client expectations management

Rights and Duties on termination and when matter is closed

Managing changing client expectations

Risk managing pursuit of fees

Area of Law

Commercial Detecting unscreened new clients

- Defective pleadings

- Inadequate pursuit or settlement advice

IR /employment

Screening prospects

- Scoping work

- Conflict resolution

Workload and resource allocation

Criminal Screening prospects

Detecting unscreened new clients

- When is a matter closed

- Incident escalation

Use of third party experts

Mismanage resolution

Litigation and ADR

Discussing matter and firm capability

Standardised work practice, planning and scheduling

Firm size

Sole practitioners

Screening and commencing new matter

Conflict of interest - Duties on premature termination

- Work that can be undertaken following a matter without commencing new matter

- File retention and handover - Incident escalation and management

- Defective pleadings and trial

- Breach of fiduciary duty

Documenting work scope and resolving conflicts

Review and sign off and use of third party experts

2-5 practitioners

- Duties on premature termination

- Work that can be undertaken following a matter without commencing new matter

Use of third party experts

6-9 practitioners

Standardised work practices and use of third party experts

Missed limitation periods

10-15 practitioners


Missed limitation periods

>15 practitioners

Commencing new matter

Conflict of interest - Breach of fiduciary duty


Risk Themes

Risk theme

Related claim trend

Related control weakness

Contact Law Mutual (WA) for further information. All enquiries are treated with the utmost confidentiality.

Street Address: Level 4, 160 St Georges Terrace, Perth, WA 6000

Postal Address: PO Box Z5345, Perth WA 6831

Phone: (08) 9481 3111 Fax: (08) 9481 3166

Email: [email protected]

Web: lawmutualwa.com.au

Disclaimer

This analysis is provided only for the information of practitioners and firms covered by the Law Mutual (WA) insurance arrangements. It has been compiled and written in line with professional expectations but the base data relied upon is limited in nature and the resultant analysis is subject to those limits. Accordingly, it is for general informational purposes only. It is not intended to be relied on for any other purpose and its use by any party, other than Law Mutual (WA), is not authorised. Law Mutual (WA), the Law Society of Western Australia Inc, MYR Consulting and Streeton Consulting expressly disclaim any responsibility or liability arising from or in connection with the use of this analysis by any party.

professional liability risk profile analysis€¦ · streeton consulting provided substantial input...

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