Solicitors' contract errors hit insurers

Mistakes in commercial contracts account for around a quarter of the value of all professional negligence claims against solicitors, figures have shown.Leading insurer St Paul - which underwrites a quarter of the legal market - said research into its own experience during the first year of the open market, indicated that commercial claims amounted to 47% of the total value of claims, even though they represented just 12% of the number of claims.Conveyancing accounted for by far the largest quantity of claims, at 38% of the total, but their value was 26% of the total.Most commercial claims, both by number and value, relate to mistakes made in drafting, approving or advising on contract terms.

This accounted for 35% by number and 56% by value of all commercial claims.Two distinct categories stood out in conveyancing, arising from both residential and commercial transactions.

Residential searches and enquiries, together with assignment of commercial leases, accounted for 25% of all conveyancing claims by number and 23% by value.More encouragingly, St Paul said that claims from lending institutionsremained low.

Claims manager Ian Bryant said: 'They may not happen that often, but when they do, commercial claims can be devastating.'Meanwhile, the figures showed a decline in claims reaching court.In the last year of the Solicitors Indemnity Fund (SIF), there were 51,077 outstanding claims, of which 12,906 had been handed to panel solicitors to deal with.

Generally, the SIF did this only when legal action was under way.

So, 25% of outstanding claims were being litigated.However, the new St Paul figures show that only 4% of all complaints resulted in legal action.In part, this huge reduction arises from the fact that solicitors now have to report all cases, even when they consider that a complaint might arise, so less are likely to result in legal action.But a St Paul spokesman added: 'We attribute the very sharp decrease in cases actually litigating to the Civil Procedure Rules and pre-action protocols - especially the claims against professionals protocol.

These are encouraging more cases to settle.'By Jeremy Fleming