Keep it in the family
A review of the family law claims experience, and risk management controls to mitigate the risk of claims and complaints
After property/conveyancing, litigation continues to be the second-highest cause of claims. Within those litigation intimations, family law work is the second-highest cause of claims by type and number. However, intimations to the Master Policy insurers relating to family law have remained fairly consistent over the past five years. But what aspects of family law practice continue to cause claims, and what can be done to minimise the risks? This article considers recurring themes in the claims experience which are worth reviewing from a risk management perspective.
The principal causes of claims include:
- failure to advise/incorrect advice;
- drafting errors/omissions;
- failure to implement terms of divorce/separation;
- failure to follow/dispute regarding instructions;
- missed critical date/delay.
Failure to advise
Mrs A instructs solicitors to draft a separation agreement. The work is undertaken and a separation agreement is executed by the parties. Some time later, the solicitors receive a claim from Mrs A advising that as a result of their failure to advise her on pensions sharing, she has been prejudiced and suffered loss as a result.
Claims have arisen from alleged failure to advise on a range of aspects associated with separation and divorce. These claims occasionally arise due to a lack of knowledge of the law, but, as with most claims, the cause is generally not a lack of knowledge but rather an omission by the solicitor to ensure that full advice is provided, and confirmed in writing to the client, on all aspects of the instruction. If the advice is provided orally over the telephone or at a meeting, it is important that this is recorded on a file note, minutes of meeting, or summarised in a letter. Sometimes the solicitor will be adamant that advice on the relevant matter was given, but it will be difficult to defend any subsequent claim if the file does not contain a written record of the advice given.
If the client, for whatever reason, chooses to proceed contrary to his or her solicitor’s advice/recommendations, full information should be provided in writing along with the advice/recommendation, and the client should be required to confirm formal instructions. The practice of some solicitors is to have the client sign a duplicate of the letter in question.
General risk management points relating to failures to advise include:
- checklists/questionnaires – as an aide-mémoire to prevent possible oversights;
- terms of engagement – consider using terms of engagement to address the mode and frequency of communications with the client and the manner in which instructions should be provided.
Solicitors acted for Mrs B in drafting a separation agreement. It had been agreed that an insurance policy would be assigned to Mrs B. The assignation was executed and intimated. Subsequently, the policy was cancelled because the ongoing premiums were not paid. There was no provision in the agreement requiring Mr B to continue to pay the premiums. Mrs B intimated a claim against her solicitors.
Drafting errors and ambiguities are a feature of claims in most practice areas. Often, as in the case study, the underlying cause of what is described as a drafting error is in fact a failure to anticipate a risk and protect/advise the client against it. In this type of case, a checklist detailing potential risks and worst-case scenarios can be useful as an aide-mémoire on the file.
Delay/failure to implement agreement
As part of the financial settlement relating to her divorce, title to the former matrimonial home was to be transferred to Mrs C. Unfortunately, the solicitors acting for Mrs C overlooked, or delayed, carrying out the required conveyancing work. Mr C’s estates were sequestrated before the conveyancing was completed. Mrs C made a claim against her solicitors.
Claims of this nature often arise following the bankruptcy, or death, of a spouse who is obliged by the terms of a settlement to transfer property or make payments to the other spouse in order to implement the terms of the financial settlement or divorce decree.
Oversights of this sort can arise in most areas of practice. From a risk management perspective, a variety of measures may be appropriate, including a pre-closure file review to identify outstanding matters and anything which requires to be diarised for later action or consideration, checklists and conducting regular file audits/reviews.
Managing critical dates
Solicitors are instructed by Mr D in relation to divorce proceedings that have been raised against him by his wife. Due to oversight, a notice of intention to defend is not lodged timeously by the solicitors. Although the solicitors mark an appeal, it is refused and Mr D intimates a claim against them.
Missing critical dates continue to be the cause of claims. It goes without saying that practices require a reliable diary system with adequate countdown warnings of impending critical dates. However, practices need to go further in order to manage critical dates effectively. An analysis of time bar claims shows that such claims rarely arise as a result of poor diary systems. Common underlying causes also include:
- failure to enter the relevant date in the diary;
- miscalculation of the relevant date;
- failure to look at the diary;
- absence/failure of systems of supervision/file review/file audit which could have detected the above errors;
- inadequate systems to deal with absence/illness of fee earner;
- no/inadequate systems regarding file handover procedures from one fee earner to another.
The firm’s systems and procedures for managing critical dates need to address all of these issues.
Most areas of practice (whether employment, tax or agricultural holding) involve some unique time limits that are potential risk management traps. For family law practitioners, there is a one-year time limit to be aware of. Section 28 of the Family Law (Scotland) Act 2006, which covers financial provision where cohabitation ends otherwise than by death, requires any application to be submitted no later than one year after the date the cohabitees cease to cohabit. In order to meet this strict deadline, solicitors should ensure that the date is accurately calculated and properly recorded.
It may be useful to complete the Marsh e-module on Managing Critical Dates, which can be found, along with several other e-modules on a range of risk management topics, on the Marsh website for Scottish solicitors (www.marsh.co.uk/login/lawscot). Login details are required to access the website.
If you require a reminder of these, or have any difficulty logging on, please email Nada.Jardaneh@marsh.com
Nada Jardaneh and Marsh
Nada Jardaneh is a former solicitor in private practice, who works in the Finpro (Financial and Professional Risks) National Practice at Marsh, a global leader in insurance broking and risk management.
The information contained in this article provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult their insurance and legal advisers regarding specific coverage issues.
Marsh Ltd is authorised and regulated by the Financial Conduct Authority.