Special Focus: Professional Indemnity 2014 | Page 2

Special Focus: Professional Indemnity

More clients suing for negligence
The number of court cases
involving professional
negligence claims
against lawyers in
Iberia is increasing
due to clients
being better
informed about
their rights, law
firms employing fewer fee
earners and more junior lawyers
increasingly being used on cases
and deals. So how can law firms
reduce the risk of being sued for
negligence?
Concern has been mounting that
professional negligence claims against
lawyers in Iberia are on the rise, with
anecdotal evidence suggesting that in
Spain, for example, the last decade has
seen claims against lawyers increase
almost three-fold. One of the factors
thought to be behind the rise is the impact
the recession has had on the way in which
law firms work.
Ana Dores, XL Group’s senior
professional indemnity underwriter for
Iberia and Latin America, believes that
law firms have made substantial changes
in terms of the number of lawyers they
employ and, while this made firms more
competitive, at the same time it has raised
concerns for insurers. “Less personnel
are handling the same or even a greater
workload, and less experienced lawyers
now represent a higher proportion of the
teams,” she says. “This, obviously, could
potentially have an impact on the number
of errors and omissions, and consequently
there are more claims.” And the bad news
for law firms is that the risk of being on
the wrong end of professional negligence
claims is set to increase. Dores says: “This
is especially a risk in the coming years as
activity levels rise as expected due to the
improvement of economic perspectives.”
As such, law firms deciding to use more
inexperienced lawyers increases the risk of
a negligence claim. This is because most PI
claims are often based on relatively simple
errors by lawyers rather than firm-wide
gross misconduct allegations.
“Most of the professional indemnity
52 • IBERIAN LAWYER • May / June 2014

claims are due to fiscal advice,
procedural issues, and issues relating to
patents and trademarks – in general in all
those areas where there are deadlines,”
Esteban Manzano, director general at
Markel International in Spain says.
lnsolvency administration, which is a
common trend amidst the financial crisis,
is one area highlighted by Manzano as
giving rise to claims.
Claims increase nearly three-fold
So by how much are claims increasing?
Juan Antonio Ruiz, a litigation partner at
Cuatrecasas, Gonçalves Pereira, says that
while there is no empirical information
collected, searches in case law databases
show that courts would decide around
30 cases a year on lawyers liability in the
1990s, but that in the last 10 years, courts
are deciding around 80 cases per year.
However, he adds: “These figures are
misleading, given that legal databases
have broader access to court decisions
now than they had in the 1990s. Our
perception though is that claims against
law professionals have increased, not
only because the literature says so, but
because it is common knowledge in the
professions that this increase is real.”
Virginia Martínez, associate at Hogan
Lovells, highlights three common grounds
for a professional indemnity claim. The
first is negligent advice provided by a
lawyer to their client, such as the failure to
inform a client about the low probabilities
of success relating to a claim or an appeal.
Other frequently cited reasons for a claim
include the failure to file a claim within
the prescription or limitation periods –
for example, a tort liability action must
be exercised within a one-year term
beginning from the date of the damages
– and failure to file an appeal within the
term given by law.
Litigious work is the main source of
professional negligence claims against
lawyers in Spain and Portugal. Ruiz
says complaints against lawyers were
uncommon until a few years ago but have
been increasing in relation to instructing
legal proceedings. “The following
circumstances of lawyers’ liability stand
out: allowing substantive prescription or
expiry periods for submitting complaints
to elapse; allowing procedural periods for
answering complaints or filing appeals
to elapse; not giving clients information;
omitting relevant requests or elements
from legal writs; and failing to return
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