Good Practice

Conduct and service; Risk management; Question of ethics

CONDUCT AND SERVICE

The danger of assuming

Complaints to the Office for the Supervision of Solicitors are frequently caused by solicitors correctly identifying when the client needs an explanation of the costs implications, but then failing to give a full explanation, or giving an explanation the client cannot understand.

In the more obscure circumstances, this is understandable - if not excusable.

But it is completely inexplicable in regard to such events as the imposition of the statutory charge.

Complaints often arise because the charge has not been explained in a way that enables the client to understand the implications, or the client has not received a full explanation - or both.

Frequently, such circumstances arise where a firm takes over a case from another and relies on the explanation that the first firm gave, which turns out to have been defective in some respect.

This was the situation when a firm took over from another firm, at a late stage before the scheduled hearing date, issues relating to a contact order and financial matters following a divorce.

The client already had a legal aid certificate, which was transferred to the second firm, and the first firm had written to the client with an explanation of the statutory charge.

However, the first solicitors had not made it clear that costs the respondent was ordered to pay, but which could not be recovered from him, would be included in the amount subject to the statutory charge.

In the event, the respondent was ordered to pay about one-third of the solicitor's costs, but failed to make payment.

When a charge was imposed on the complainant's property for the whole of the solicitor's costs, including the irrecoverable element, she complained.

To make matters worse, the solicitors failed to notify the debt recovery unit at the Legal Services Commission that the matter of recovery of costs needed to be pursued.

Indeed, it appears that they assumed the legal aid authorities would automatically institute recovery proceedings, and protested that they had no instructions with regard to recovery.

Whatever the case, the complainant had no clear idea of the position with regard to recovery.

She had understood the solicitors to say that they would pursue enforcement by means of an attachment of earnings application and thought she had confirmed her instructions to them to do so.

This story illustrates the dangers of relying on another solicitor's explanation of issues you would normally cover yourself, and then failing to make sure the client fully understands the situation.

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.

Lawyerline

Facing 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

Too much work - could it be bad for your firm?

Every business organisation strives to be successful, but should that success be judged purely on fee income.

Success can sometimes be at the expense of profitability.

Over the last few weeks we have considered a number of the underlying failures which are often found to be the root cause of notifications to professional indemnity insurers.

Following on with this back-to-basics theme, this week we will focus on the issue of 'work overload'.

With both competitive and commercial realities exerting a negative influence on pricing, the obvious answer seems to be increase productivity, but is this the only answer?

To some extent, modern technology has also contributed to this problem.

E-mails, faxes, voicemails invite an almost immediate response, failing which, disagreement and disruption often ensues.

Perhaps one way to control the 'I need this now' avalanche is to limit when such information is made available, provided it doesn't lead to deficiencies in service levels.

Management of client expectation is a risk management core value.

An analysis of a firm's claims record often provides an invaluable window through which the juxtaposition of the efficiency versus revenue dilemma becomes clearly visible.

The story unfolds.

Upon examination it was evident that many of the notifications reported to the firms' professional indemnity insurers originated from two particular individuals.

The firm considered that, fortunately, most were capable of being resolved within the firm's excess, or by offering a discount on rebate on fees charged.

However, the accumulative total was in excess of 35,000, not including the additional expense of the time and disruption associated with dealing with the issues.

Two of the claims also required financial support from the firm's professional indemnity insurers which attracted penalties when the firm renewed its policy.

Both of the solicitors were highly regarded individuals who for a number of years had regularly exceeded their annual fee targets and were rewarded with substantial bonuses.

Investigating the claims files revealed a catalogue of errors and oversight, critical dates overlooked, delays, errors of judgement, file management failure, all unintentional but perhaps a manifestation of the desire to seek pecuniary benefits.

A chimerical account perhaps, but at what price should efficiency be sacrificed for fee income?

This column was prepared by the Alexander Forbes Professions risk management team.

QUESTION OF ETHICS

Q I am a practising solicitor.

I have been approached by an immigration adviser, not registered with the Office of the Immigration Services Commissioner, asking me to supervise her immigration work.

Is this permitted?

A The Law Society would not advise you to do this.

The reason she wants you to supervise her work may be to avoid her being registered with the Office of the Immigration Services Commissioner.

It could be difficult for you to fulfil that role adequately without breaching Law Society practice rules - for example rule 4, which limits the work which can be done by a solicitor employed in the business of a non-solicitor.

To 'front' for the immigration adviser could, in itself, be professional misconduct.

In the meantime, if you have a problem we suggest you telephone professional ethics for further advice.

Q I refer clients to another firm of solicitors and am paid referral fees.

Do I have to treat the fees as commission and account to the client under practice rule 10?

A No, you do not have to comply with rule 10, as such an arrangement is permitted fee- sharing under Law Society practice rule 7.

But it is good practice to disclose to the client the basis on which the referral is being made.

Please note

The Solicitors' Publicity Code 2001 replaced the Solicitors' Publicity Code 1990 on 16 November 2001.

It also repealed Law Society practice rule 11 (names used by a firm).

The new code requires all firms to put 'regulated by the Law Society' on their notepaper.

Practitioners can postpone this until 1 January 2003 but only if they continue to comply with the 1990 code and the old practice rule 11.

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.