Conduct and service

Legal aid eligibilityThe problems caused by the duty imposed by Law Society practice rule 15 to consider a client's eligibility for legal aid, prompts the question of what a solicitor should, or should not, do to fulfil their duty in this respect.

It is important because it can have severe financial repercussions for the client.In the following case, the solicitors were clearly aware of their responsibilities, but appear to have taken it upon themselves, no doubt for the best of motives, to do more than was necessary - a decision that was to have disastrous results for the client.The solicitors were consulted by a woman who wanted to start divorce proceedings against her husband.

Later, the client complained that although the solicitors knew she did not have much money, they failed to advise her to apply for legal aid and did so only later, by which time the solicitors had been acting for several months and she had incurred significant costs.The solicitors' response was that they had considered the client's eligibility for legal aid but had concluded she was ineligible on financial grounds at that time.

Only later, when the financial situation changed, did they think she would be eligible and advised her to apply.It transpired that the solicitors' initial view was based upon the client's interest in the equity in the former matrimonial home.

That situation had only changed because of the subsequent decrease in the value of the property and an accumulation of mortgage arrears.It was also true that the solicitors had written to the client at the outset of the matter, indicating that she was not eligible for legal aid owing to having excessive capital, and had written again once they considered the situation had changed.The problem was that the matrimonial home would potentially be in dispute in the proceedings.

As such, it would have been discounted in the assessment of financial eligibility.The moral is that, unless solicitors are prepared to take the risk of acting as legal aid assessors, in which case it is imperative that they know the rules, they would be wise to let the client make an application and let the Legal Services Commission reject it.

In such cases the client should also be advised of the limits of the work that the solicitor will be able to undertake until the application has been determined.l Every case before the adjudication panel is decided on its individual facts.

These case studies are for illustration only and should not be treated as precedents.

LawyerlineFacing a service complaint? Need advice on how to handle it? Contact Mike Frith at LAWYERLINE, the support service offered by the Office for the Supervision of Solicitors, tel: 0870 606 2588.

Risk management

Protection against notificationsAlthough one cannot be definitive, probably eight out of ten negligence claims against solicitors could be avoided through the development of a risk management culture within law firms.

The simplest things can result in claims being made against a solicitor and frequently such aspects are not normally perceived as important.

Below are examples of issues that firms need to appraise for effectiveness to combat against the potential for something going wrong.l Sensitive time dates - these may sound trivial, but they are not, and they are still the dominant cause of claims.

All departments within firms should maintain a procedure or system, whether electronically or manually, where all deadlines are noted and a reminder is given to whoever is responsible for tasks being completed on time.

A good example of the potential problems caused by delays and missed deadlines would be with property deals.

Our research has shown that most notifications made against solicitors are for property work - both residential and commercial - undertaken, and the knock-on effect of missed key dates has varied from extra interest being charged on deals to actual negotiations falling through.

l People management - understanding what a client expects is an area into which many solicitors need to put more time and effort.

For example, a solicitor will see a telephone call to a client to update them as a waste of the client's money, but often not to make the call is perceived by the client as being forgotten.

Understandably, this is not seen to be a priority for many practices, and pressure from workload and from seniors can mean that it is often overlooked.

Yet keeping a client happy and feeling that they are 'in the loop' can counteract a lot of problems further down the line.l Give realistic advice - as opposed to simply doing what the client wants.

Be realistic regarding the client's expectations, fully explain the process and procedures involved, and the implications of the work.

It is always prudent formally to record what is agreed to avoid any misunderstandings at a later date.

Always use a retainer letter for this purpose.

l Workload - this should not be more than can be dealt with.

There is enormous pressure within firms for solicitors to take on more and more billable work, but this is pointless if the result is having a claim made against you, and the firm losing more money than it has has actually made.

Solicitors need to be realistic both in terms of how much work they can take on, and how many man hours a case may need.

Clients do not understand the machinations of a law firm, and delays of any sort will only infuriate them.There are of course many different reasons for claims being made against solicitors, but these are some of the most common causes.

A stringent set of risk management procedures is not just a good idea anymore, it is now a necessity.This column was prepared by the Alexander Forbes Professions risk management team.

Question of ethics

Q I remember reading in the Gazette that firms which act as insurance intermediaries may have to join the General Insurance Standards Council (GISC) unless a waiver is granted to solicitors.

What is the position?A GISC's plans to become, in effect, a mandatory regulator have been affected by a decision of the Competition Commission Appeals Tribunal, and by a more recent statement by the Treasury that the Financial Services Authority (FSA) will become the statutory regulator for insurance intermediaries in 2004 (see [2002] Gazette, 4 January, 4).

The Treasury's decision follows the making of the European Insurance Mediation Directive.

As a result, the GISC membership will remain voluntary until regulation is taken over by the FSA.

The Law Society will enter into discussions with Treasury and the FSA on the position of solicitors who act as insurance intermediaries.

Q I have heard that the Office for the Supervision of Solicitors can now charge me costs in some instances, for dealing with a complaint that is upheld against me.

Is this right?A Yes.

In July 2001, the Council of the Law Society decided that costs should be paid by solicitors who have had a complaint upheld against them.

Matters considered by the OSS after 1 February 2002 which result in an adverse finding, and which relate to conduct or regulation matters, will be subject to these provisions.

The date on which this will apply to service complaints from clients has still to be decided.

Additional information on this was set out recently (see [2002] Gazette, 7 February, 40).

l Question of ethics is compiled by the Law Society's professional ethics guidance team.

Send questions for publication to Austin O'Malley, the Law Society, Ipsley Court, Berrington Close, Redditch B98 0TD; DX 19114 Redditch;tel: 020 7242 1222.