Special Focus: Professional Indemnity 2014 | Page 4
Special Focus: Professional Indemnity
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International clients are increasingly
demanding upfront proof of insurance
for sums insured far exceeding the legal
minimum, and law firms are increasingly
responding by obtaining such coverage.
Margarida Lima Rego, Morais Leitão,
Galvão Teles, Soares da Silva & Associados
PII policies for lawyers in Spain are significantly less
expensive than most other European countries. He says:
“In fact, we estimate that of the 10 countries we covered
for the report (Austria, Belgium, France, Germany, Italy,
the Netherlands, Poland, Spain, Switzerland and the
UK) only lawyers in Poland enjoy lower premium rates
for PII.”
It is a slightly different story in Portugal. Dores says
that while an excess of capacity was driving Spanish
pricing downwards, Portugal has fewer insurers
offering PII. “The PI market is largely handled by the
Lawyers Bar collective insurance programme, Ordem
dos Advogados,” she explains. “The pricing of this
scheme is probably the best barometer of the market
conditions in Portugal.”
According to the Council of Bars and Law Societies
of Europe (CCBE), PII schemes are obligatory for
individual lawyers and law firms in Portugal. Under
Ordem dos Advogados rules, the association grants
each individual registered lawyer minimum coverage of
€150,000 (additional coverage can be purchased on top
of this). The minimum PI coverage needed by a law firm
is 50 percent of the amounts billed by the firm in the
previous year.
“Portuguese lawyers are subject to the general civil
liability rules which apply to all citizens,” according
to the CCBE. “The nature of civil liability applying to
client-lawyer relationship is still discussed by scholars.
However, major jurisprudence tends to consider such
liability to be contractual or non-contractual depending
on the concrete situation. Thus, if the lawyer fails to
perform or performs defectively the obligations arising
from the mandate he or she may by be held liable
according to contractual liability rules – if, on the other
hand, the lawyer commits an offence harming the
interest of his client, then only non-contractual liability
rules may apply.”
Take precautions
However, though professional indemnity cover is
competitively priced and wider coverage is increasingly
available, Iberian lawyers are reminded that there are
some basic precautions that can be taken to reduce the
risk of being subject to a claim. There are also steps that
can be taken to ensure deadlines are kept, which will
54 • IBERIAN LAWYER • May / June 2014
also minimise the risk of a claim.
Transparency and due diligence
are important, especially for
firms with large headcounts and
international exposure.
“It is important that internal
protocols are in place in order
to identify potential conflicts of
interest,” Benito says. “This is
particularly the case in larger
firms, where these conflicts can
frequently arise given the volume
and size of their clients.”
In Spain, Ruiz observes that legal professionals’ liability
is ordinary liability, specifically liability by negligence
or fault. Therefore, in legal professions, the work must
meet the diligence level required in each case, which is
greater than the usual “prudent man” in article 1104 of the
Spanish Civil Code, as established by the Spanish Supreme
Court Judgment dated February 4, 1992. He adds that this
involves: “Keeping [clients] promptly informed, obtaining
their written consent for any actions to be performed,
sharing opinions regarding draft contractual or procedural
writs and having them participate in everything related to
defending their interests.”
Dores encourages firms to inform clients about
the pro and cons of their case. “Judges will tend to
hold the lawyer liable if they are not able to prove
that they informed their client about the risks of their
cases,” Dores explains. “Thus, it is important that the
information of the risk of the case is communicated in
writing to the clients.”
This is echoed by Jose Pimentel, partner at DAC
Beachcroft Spain, who says: “Give clear advice, be
proactive in the handling of the cases and take a prosettlement attitude, when applicable.”
Martínez stresses that lawyers should always inform
clients about the actual probabilities of success and
about the possible costs involved, such as paying
the other party’s legal costs if the case is not upheld:
“Lawyers must be very careful when issuing opinions,
inserting disclaimers regarding the information that has
actually been provided.”
Experts also emphasise the importance of experience,
ensuring that academic education is complemented by
practical know-how as it is younger lawyers that are
more likely to make mistakes.
Eduardo Albors, director of Albors Galiano Portales,
concludes: “This knowledge about how to handle claims
accomplishes one of the essential ingredients of how
due diligence applies – the other important ingredient
is more connected to the general understanding about
the service side of the work to perform, in which the
lawyer’s approach is to be framed by the knowledge
that the main goal is to provide the best service possible
to protect the client’s interests.”
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