Introduction
Law firms will no doubt be considering the risks to their practices as a consequence of Covid-19 and ensuring that they are in the best possible position to deal with those risks now, with an eye to their potential impact on renewal of professional indemnity insurance in November.
Best practice
Covid-19 has had a significant impact on the way we work and on the many demands placed on owners and employees of law firms. Many law firms have people working remotely and/or have closed their offices to clients but continue to work behind closed doors. Some law firms have had to make the difficult decision of laying people off. There have also been impacts on many services that are crucial to our work – for example, the Courts' Service, the PRA and PIAB.
There are certain steps that law firms should take to address the particular risks arising in these unprecedented times. These include:
- a clear policy on working remotely and the protection of clients documents and data whilst working remotely
- a clear policy on IT security and warnings about the increased prevalence of cyber crime at this time as criminals may try to gain access to a firm's systems via a remote worker ;
- a clear policy/procedure to ensure that the highly sensitive data solicitors hold is properly protected;
- procedures recommended by the Law Society to ensure that client monies are kept safe from potential cyber-attacks; and
- if staff have been laid off, that there is a proper handover of files.
- that, given caring obligations which many people have in the present circumstances either for small children, home schooling or looking after vulnerable adults, employees have sufficient capacity to work effectively and are supported in communicating if they cannot meet all their work commitments so that work can be reassigned if necessary.
There are also risks which are specific to various areas of law. Below, we consider some of those areas bearing in mind that most professional negligence claims arise in the context of litigation and conveyancing.
Litigation
Solicitors should ensure that litigation deadlines, including the Statute of Limitations, appeal periods or deadlines contained in pre-emptory Orders, are not missed. They should ensure that all diary reminders continue to be monitored while remote working is the norm ideally by way of a centralised diary system so that in the event of illness or other absence all members of the firm have access to the diary.
While many solicitors are using this time to try to settle claims over the telephone and plaintiffs may be anxious to settle in circumstances where their income has been cut, plaintiffs' solicitors should ensure that their clients are clearly advised of the merits and value of their claim in writing in advance of any settlement discussions and that clients are kept clear informed throughout those discussions. They should also ensure that all communications with their clients are captured in writing in particular if a plaintiff wishes to accept an offer which the solicitor thinks is below the value they could achieve. The risk otherwise is that plaintiffs could try to revisit the settlement at a later stage claiming that it was at an undervalue or they were not correctly advised.
Plaintiffs' solicitors should also take this time to review their file lists and identify any dormant litigation files to ensure that there is a legitimate reason why the claim has not progressed and that there has been no delay in acting on client's instructions. Defendants' solicitors may use this time to assess whether there have been delays in prosecution of claims that might warrant an application to strike out the proceedings.
Conveyancing
There are specific risks in conveyancing at this time. During the last recession in Ireland, we saw solicitors being sued by their clients when those clients had entered into a contract to purchase property but – because a financial institution withdrew a loan offer – the client was unable to complete and was sued for specific performance.
Arising out of that crisis, the Law Society's Conveyancing Committee recommended in 2009 that solicitors acting for purchasers where a loan is required in order to complete the purchase transaction insert a special condition (or amend their usual form of special condition regarding loan approval) to provide that the contract and the completion is subject to the purchaser’s loan approval being in place at the date of completion in a sum sufficient to allow the purchaser complete the contract.
There is a risk of history repeating itself in the current crisis and, therefore, solicitors should have regard to potential risk and take steps to minimise them.
Solicitors acting for vendors should also make sure that they have correctly advised their clients in relation to conveyancing transactions and possible specific performance proceedings that might flow from them. Again, in the recession, there were claims against solicitors for failing to bring specific performance proceedings in a timely manner which resulted in the defendant not being a mark.
Law for Businesses
In our experience, this type of work tends not to attract the same level of claims as litigation and conveyancing, however, there are certain areas that will present unique challenges in the current Covid-19 crisis. For example:
- In relation to employment law Solicitors should make sure that they are familiar with the government supports available to employers so that they are in a position to advise their commercial clients in relation to their obligations towards employees.
- Solicitors will also be called upon to advise corporate clients on issues that flow from having to close their business – for example business interruption insurance, rights and obligations as between landlords and tenants and the meaning and application of force majeure.
- They should also make sure that corporate clients (and specifically directors) are made aware of their Companies Acts' obligations, including the holding of meetings.
Conclusion
Each firm is different, and each firm will be responding to the Covid-19 crisis in their own unique way. However, each firm should spend some time considering its response to the Covid-19 crisis. Taking steps now will put firms in a much better position when it comes to professional indemnity renewal in November 2020.
