Special focus: Professional indemnity
work is vulnerable to professional
indemnity claims because there are
strict deadlines to file submissions,
writs and appeals with courts. The
failure to meet these deadlines
cannot be remedied generally and
leads to the dismissal or rejection of
the client’s action.
“Clients have ceased to see the
lawyer’s role as an obligation to
provide means and now see it as
an obligation to produce results,”
Martínez adds. “When the lawyer
loses a case, the client can feel
tempted to try to obtain the same
results by suing his or her lawyer.
The same applies, for instance, on a
deal – a clause drafted by a lawyer
signifying obligations unexpected
or undesired by the client can be the
basis for a future PI claim.”
In Portugal, previous judicial
decisions would indicate that
litigation seems to be by far the
riskiest type of legal work in
Portugal, according to Lima Rego.
“The type of action or omission that
seems to trigger the most lawsuits
is that of missing a deadline within
judicial proceedings,” she says.
“Deadlines such as those applicable
to the right to submit a statement
of defence or the right to appeal
appear to be the most common –
in any case, when comparing our
jurisdiction to others we would say
that the number of negligence claims
against lawyers is still fairly low.”
Lawyers buying more
professional indemnity cover,
says insurer
Lawyers are buying an increasing
amount of professional indemnity
insurance according to Santiago
Garaizábal Valle, sales director for large
accounts at insurer Caser Seguros.
“Lawyers´ prudence has increased in
recent years with regard to buying
insurance,” he says. “This has had
an impact in that there has been an
increase in the amount of secondary
insurance that is purchased to provide
a greater degree of coverage in
addition to the basic coverage offered
by the lawyers bar associations.” He
adds that, as a result, Caser Seguros is
developing new policies for lawyers,
which are mostly “professional
indemnity insurance for law firms and
D&O insurance, among others”.
54 • IBERIAN LAWYER • May / June 2015
“
Even so, lawyers
Over the last ten years we
say examples
have witnessed an increase in
of the recurring
negligence claims against legal
problems that lead
advisors.
to many of the PI
claims against firms
Margarida Lima Rego
include: allowing
Morais Leitão, Galvão Teles,
substantive
Soares da Silva & Associados
prescription or
expiry periods
(MLGTS)
for submitting
complaints to
all precautions when advising
elapse; allowing procedural periods
clients. “Keeping [clients] promptly
for answering complaints or filing
informed, obtaining their written
appeals to elapse; not giving clients
consent for action to be taken,
information; omitting relevant
sharing opinions regarding draft
requests or elements from legal
contracts and procedures, and
statements; and failing to return
ensuring their participation in
documentation provided by clients.
everything related to defending
their interests,” Ruiz comments.
Need for vigilance
“These are the criteria and steps
Ruiz says: “Other potential areas of
to follow to reduce the risk of
liability for lawyers not connected
professional indemnity claims.”
to legal actions include giving
Muñoz Villarreal, recommends
inappropriate tax advice and wrong
four key areas of good practice:
advice on acquiring properties that
proactivity and close contact
do not meet the legal requisites to
with clients, including regularly
be used for the use intended by the
reporting to clients with updates;
purchasers.”
realistic and clear advice on the
While insurance is critical in
relevant case and all its possible
protecting lawyers´ and firms´
outcomes; strict observance of the
interests, Martínez says lawyers
deadlines in litigated cases and of
need to be vigilant with regard to
the applicable limitation periods in
standards and internal processes
non-litigated cases; and not taking
in order to avoid having to use
any step without the client’s express
their PI policies. She adds that this
authority.
approach should be adopted from
Benito also suggests that firms
the very outset of an instruction.
put adequate firm-wide procedures
“First and foremost, lawyers must
in plac e so the risk of a PI claim
be very careful when issuing a letter
is reduced. “In order to identify
of engagement or undertaking
potential conflicts of interest, it is
any kind of work,” Martínez says.
important internal protocols are
“Proper disclaimers – regarding the
updated and in force,” he says. “It
information that has been actually
is the way that law firms are able to
provided or the purpose of the
control their risk – currently, most
instruction, for instance – must be
claims are caused by advice related
used.” She adds that lawyers should
to financial matters and breaches of
always inform their clients regarding
judicial deadlines.”
the probability of their action being
Manzano, who warns lawyers
successful, as well as telling them
about future exposure in relation to
about the costs that the exercise of
issues such as cyber and anti-money
an action may incur, such as paying
laundering, suggests applying
the other party’s legal costs if the
“basic risk management principles”,
lawsuit or appeal is not upheld.
starting with an internal risk
Lawyers should also focus on
assessment of their own professional
following existing legislation.
negligence exposure, their historical
In Spain, for instance, legal
claims and previous incidents. “In
professionals are subject to
other words, learning from their
ordinary liability, that is liability
own experience,” he concludes.
by negligence or fault. Therefore,
“Quite an obvious thing to do, but
their work must meet the diligence
professional firms do not always
level required in each case, taking
pay enough attention to it.”
”
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