Risk management

Managing claims

We have talked a lot about what solicitors should be doing as part of their risk management programme.

However, one area of risk management which is often overlooked is the actual management of the negligence claims levelled at your firm.

Do you know how many claims are made against your practice in a year? Do you know which areas of the firm are hit the hardest?

When we are visiting law firms to discuss their risk management programme, one of the things we often advise is that they have a designated person co-ordinating all claims and circumstances.

It is this person who should be informed of all, definite and probable, cases which may give rise to a negligence claim.

Once someone is tasked with synchronising all claims, you will have the statistics on hand to see exactly where your practice is falling down.

It may be that the majority of claims are for an area of practice where this is to be expected.

However, it might also highlight that one partner is being hit with negligence claims more than any other.

Once these statistics are at hand, you can see where your firm needs more thorough practice management procedures and, therefore, take the necessary steps to rectify the problematic areas.

Claims statistics form an intrinsic part of risk management.

When you are looking to renew your professional indemnity insurance it is these statistics which the insurer will want to see.

An insurer will judge you not only on the amount of claims made against your practice the previous year, but on how effectively you have managed your claims record in previous years.

It is unlikely that you will be penalised on reporting circulation.

However, it is important to identified the error so not to repeat it.

Another important factor is to make sure everyone in the practice knows who the claims co-ordinator is, so they can report potential problems that could lead to a claim.

It is also important that you have an open-door policy with regard to this person, so any partner suspecting they may be hit with a negligence claim is comfortable reporting the situation.

There is little point having someone in charge of reporting all circumstances if those in the firm dare not approach him.

Once suspected claims have been reported, the co-ordinator should inform the broker or insurer.

The earlier these circumstances are reported, the better, as early control may mean the problem can be managed without calling on the policy.

Insurers view their policyholders in a favourable light when they can see a pro-active approach has been adopted.

However, there is little point co-ordinating claims only to ignore the facts.

It is important that statistics are not only logged but analysed.

Good claims management can make all the difference to how your insurer views your firm and proper use of such information should enhance risk management procedures and benefit your firm.

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