How to respond to a professional negligence claim against your firm
Nicola Anthony, risk manager at Lockton, shares next steps for managing a professional negligence claim and top tips for minimising the risk
If your client threatens to make a professional negligence claim, or does make a claim against you or your firm, it can be easy to panic. You will naturally be concerned, but you might not understand how best to defend your position. Below, we have set out some top tips to help take the stress out of a fraught situation.
Notify your insurer
If you are placed on notice of a claim, your insurer must be notified as soon as possible. Your policy will typically demand prompt notification, and adhering to this is essential to avoid insurers potentially refusing to cover the claim. It may be helpful to liaise with the firm’s broker who can assist with queries regarding notification.
Notification of a claim must be irrespective of any personal view regarding the merits of the claim, your liability, or the amount involved. As a rule, if you have to ask yourself whether a matter should be reported, it probably should be.
When you consider what to provide to your insurer relating to your client (or former client), be mindful of your regulatory duties. Consider the duty of confidence and privilege, especially if no formal claim has been advanced. The client may have indicated an intention to complain or claim. In that event, consider whether there has been any waiver of confidence or privilege.
Consider the claim neutrally
When an accusation is made, they must be recognised and addressed. Accepting a problem early can save significant cost and may preserve a client relationship.
Do not make any admissions without insurer’s consent. By engaging your insurer early, you can agree a strategy to resolve the claim. Do not enter substantive correspondence with the claimant without insurer’s permission. Insurers will likely wish to approve correspondence before release.
Do not destroy any papers
As soon as a claim is intimated, you are obliged to preserve any relevant documents that may be relevant to the claim.
This obligation is not limited to only such documents that support your own defence. The obligation extends to documents which you once had in your possession but may no longer have, as well as those in your possession. It also includes documents which you have the legal right to possess once held or held by third parties. The term ‘document’ includes hard copy paper documents, handwritten items such as telephone or personal attendance notes, electronic documents, and any other means by which information is stored such as e-mails and text messages. Information stored and associated with electronic documents known as metadata may also form part of disclosure if the claim is pursued.
You must not destroy or delete any documents relating to the dispute.
Failure to properly secure and preserve documents may be extremely prejudicial to your case.
The formal term ‘disclosure’ is used by the court for the process of the exchange of relevant documents by the parties during litigation.
Record a timeline of the dispute
Memory can fade, so prepare a clear chronology of the factual background giving rise to the dispute. A chronology can prove invaluable as any claim progresses and will assist with any defence and witness statement that may be required during any litigation process.
If more than one person was involved, ensure each of them prepare their own chronologies.
Pre-Action Protocol for Professional Negligence
The Protocol is designed to enable the parties to engage in detailed correspondence about the claim in the hope of avoiding costly litigation. If a client or former client wishes to make a claim, they ought to be reminded of their Protocol obligations which will include service of a Letter of Claim which requires any claimant to set out various details regarding any claim being advanced. Upon receipt of any Letter of Claim, there are timeframes to be adhered to in terms of a response. The Letter of Claim must be acknowledged within 21 days with a substantive response failing due within 3 months of the formal acknowledgement.
You may first learn of a claim by a Preliminary Notice of Claim or Letter of Claim served under the Protocol. It is important that you inform your insurer promptly to agree a response strategy.
Take care before putting things right
You must consider carefully whether you’re able to advise on any remedial options or continue to act for the client on any remedial steps, given your duty not to act where there is an own-interest conflict, or a significant risk.
Engage with insurers as to any remedial steps you may wish to take, and consider your obligations under your insurance policy, and your regulatory obligations under the Code of Conduct.
Key tips for minimising the risk of a claim
- Keep comprehensive contemporaneous attendance notes of all meetings, discussions and advice given to clients
- Maintain a reliable diary system to track deadlines
- Use checklists as aide memoirs
- Provide clear and concise engagement letters which sets out the scope of the retainer
- Communicate with your clients and follow up meetings and telephone discussions in writing
- Encourage openness about potential claims or problems
For further information, contact Nicola Anthony, risk manager, Lockton.
