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Eurojuris CongressRisk and the business of lawProfessional liability and risk

November 6th, 2009

Sandra Neilson (-Moore)Law firm practice leaderMarsh FINPRO

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Professional Liability Risk Consequences

Small € complaints and claims

Dissatisfied client / lost client

Individual stress and confidence damage

Partner time / cost

Waived fees and free work

Reputational damage / lost client / lost new business / lost referrals

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Professional Liability Risk Consequence

Large € claims

Large client loss / dissatisfaction / loss of reputation / waiver of fees

High profile damage to individual reputation and confidence

Very expensive in cost to firm and increased insurance costs

The media

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Other Factors

Media more intrusive

Conflict and excessive fees ‘scandals’

Regulators seeking impressive ‘scalps’

Current economy worrying – the ‘blame’ culture

International exposures – can you defend yourself in different jurisdictions?

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Where Do Serious Claims Come From?

Poor choice of client (identifying client, screening client)

Drafting errors in commercial contracts / tax / transactional / math

Scope of engagement – ‘Mission creep’

Poor note keeping, recording of instructions, managing expectation

Economic failure of client / client’s transaction

Partner fraud / personal disintegration / time pressures

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How to prevent?

Take risk seriously

Be sure – no cutting corners

Smell test – can you defend your actions objectively

Is it worth it in the long run?

Is it worth the firm’s reputation?

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When it happens

Identify quickly and act

Damage control (internal and external)

Don’t panic and don’t hide

Control but no arrogance

What is the right answer, legally, morally, publicly?

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How Do Law Firms Manage Professional Risk?

Culture – induction, manuals, reiteration, open door philosophy

Value and trust before greed and profit

Pride in doing the job well

Good rewards and positive reinforcement

Good people, doing good work

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Above All

Avoid the avoidable – pay attention to the rules

But when it does happen

Hire good advisers and listen to them

Keep the high ground, manage the media, manage the internal damage

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DiscussionWhat claims against law firms are you aware of in your jurisdiction?

What do you do in your firm, to prevent claims against you?

What is your perception of claims activity in your jurisdiction?