Navigating Negligence Claims in Law Firms
Mitigate retainer management errors and manage negligence risk
Professional negligence claims against law firms remain a high-risk area, and in an analysis published by Travelers, some notable trends have emerged that firms should be aware of.
According to the article, when Travelers reviewed insurance claims related to law firm clients over the past six years, it found that over half of these claims stemmed from residential conveyancing and private client work, including Wills, Trusts, and Probate. Although the volume of conveyancing claims has decreased, their severity has increased, particularly in cases where missed Stamp Duty Land Tax (SDLT) deadlines resulted in cost repercussions for clients.
However, negligence claims involving Wills, Trusts, and probate have seen a sharp increase. Factors such as an ageing population, increased dementia diagnoses, and the challenges of remote document execution during the COVID years are all said to be contributing to a surge in disputes over mental capacity and undue influence. These issues are contributing to an increase in contentious probate and inheritance claims from aggrieved or concerned beneficiaries.
What are the main causes of these claims?
Upon reviewing past negligence claims across both areas, Travelers identified that retainer management errors seem to be an “error hotspot”. These include failures to follow client instructions, missed deadlines, and inadequate professional service. According to Travelers, these errors are mainly down to distraction, and often stress, fatigue, and burnout are behind them.
Philippa Wilklin, senior risk management consultant at Travelers Europe, said, “We suspect this trend correlates with the increasing use of technology in our personal and work lives,” and added, “Multiple technologies can make it more likely for people to miss something or make mistakes that might be catastrophic at some point in the future.”
How can firms mitigate retainer management errors and manage negligence risk?
To reduce exposure to negligence claims and prevent the unintentional drift towards risk, firms should focus on:
- Creating a Risk-Aware Culture - Ensure staff feel confident about reporting mistakes and near misses without fear of blame. This helps identify unsafe practices before they escalate.
- Establishing Monitoring Systems to Identify Signs of Unsafe Drift – Pressures to meet deadlines and control costs may unintentionally increase a drift towards risky behaviours. Establishing effective monitoring systems, clear policies, and regular training can help maintain safe working boundaries.
- Proactively Supporting Mental Health – Recognising the signs of burnout early and providing meaningful support is essential. A healthy working environment, where staff feel supported, is essential to maintaining high standards of client service and regulatory compliance.
For a more detailed overview of how to manage negligence risks, speak to one of our specialist brokers who can help assess your firm’s exposure and recommend appropriate cover.
Source: To Manage Negligence Risks, Law Firms Can Minimise Distraction
Legal Industry Insurance Broker Specialists
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