Team dynamic impacts risk management

Managing risk and learning from mistakes - The importance of a firm’s culture in risk management

A firm’s culture can determine how it responds to problems, claims and complaints. It can stop situations from developing into claims in the first place.

Consider the following message from a colleague:

“Did you hear about John in the conveyancing team? Apparently, he forgot to discharge a security in one of his conveyancing transactions last year. The lender still has an ongoing interest! John’s facing a disciplinary now and I think he’s being managed out of the firm, which is good if you ask me. Attention to detail is so important.”

Is this the sort of communication you might expect from a colleague at your firm? Hopefully not.

The truth is that everyone makes mistakes and to think otherwise is unrealistic. For managers, waving a big stick may not be the best idea. If recriminations follow every mistake, how will staff react the next time they make a mistake, or when they are stuck on a transaction? The simple answer is that they will be more inclined to conceal a mistake or sit on a problem rather than own up. A problem hidden is a ticking time bomb. A problem shared is often a problem solved.

But it’s not always easy to admit that you have made a mistake or that you need help. And it can be difficult to ask busy colleagues for assistance. Therefore, from a risk-management perspective, it’s critical that there is a ‘no fear’ culture within a firm, and a culture of trust at team level too. No one in your practice should be afraid to admit that they need help. As with all professional service organisations, legal practices should operate as a cohesive unit. In this competitive world, with fee targets and billable hours, it can be easy to view colleagues as rivals rather than allies. This can be detrimental not only to staff but also to the client’s interests. While a certain level of competition among colleagues might be healthy, all solicitors and staff should always be ready, willing and able to help each other. Lending a helping hand when you notice a colleague in need can make a substantial difference.

Early reporting is critical

When it comes to mistakes, early reporting is always key. The sooner a fee earner or staff member alerts their manager or supervisor, the better. Being warned early about mistakes, near misses or systems that do not work can be invaluable in resolving problems early – and can prevent issues from developing into claims.

Where a firm considers that a mistake might lead to a professional indemnity claim, it is important to intimate this to us as soon as possible. The Master Policy states there is a requirement to advise the brokers “as soon as reasonably practicable after becoming aware of circumstances which might reasonably be expected to produce a claim, irrespective of the insured’s views as to the validity of the claim, or on receiving information of a claim”.

To provide full protection to the firm, any claim or circumstance in which the firm might require the benefit of indemnity under the policy should be notified promptly. Notification will be taken as a formal request for indemnity under the Master Policy, with the result that all the various terms and conditions will apply.

There are clear benefits in early intimation and these have been outlined in a previous Journal article. And remember, notifying a circumstance does not affect your insurance premium if it never becomes a claim!

To notify a circumstance or a claim, simply email Lockton’s Master Policy team at masterpolicyteam@uk.lockton.com.

Learning from mistakes

As stated earlier, everyone makes mistakes. The key thing is to learn from them. After an error has been spotted (and hopefully rectified), it’s important to explore the different factors that enabled the incident to occur. This should not be about attributing blame but determining the principal cause of the mistake. In doing so, effective changes and prevention can be implemented to limit recurrence. Are there processes, policies or systems that could be put in place to prevent the incident from happening again? If a similar mistake has been made previously, are training sessions required for staff?

It’s crucial that firms create a positive environment to have these discussions and build a safe environment where staff are confident that they will not be judged for alerting a person to an underlying issue.

In relation to ‘getting stuck’ on a transaction, some firms adopt a ‘buddy’ system so that there is a colleague who can help when a fee earner is unsure of how to progress matters. This arrangement can operate on a reciprocal basis – files might be swapped on a no-blame, no-fear basis.

There are also invaluable support services available. It’s always worth getting in touch with the Law Society’s Professional Practice team of solicitors. Offering a confidential support service on practice rules and guidelines for Scottish solicitors, the team has a wealth of experience and deals with a wide range of enquiries from trainees through to managing partners.

LawCare also offers a free and confidential helpline that provides emotional support.

Simple strategies that can help

File notes – From a risk-management perspective, it’s always important that solicitors and staff document their work and commit matters to writing. Recording file notes will make it easier to work out what happened on a case or transaction.

Supervision – This is key for supporting solicitors and building trust and relationships. Supervise proactively; don’t wait for colleagues to come to you with problems. If staff are working remotely, is their line manager easily available to them if they need help?

Training – Is there training available for new starters, so that everyone knows how to report issues and that speaking up is encouraged?

File Reviews – It’s always worth considering having a system of review by colleagues or the partner responsible. Sometimes a fresh pair of eyes will spot something that the fee earner missed.

A positive and open culture

Legal work can be incredibly complicated. All professionals (regardless of their experience or stage in their career) need support from time to time. There is absolutely nothing wrong with asking for help. A practice culture where individuals feel they can admit to a mistake – or not knowing something – is essential for good risk management. A law firm should make every effort to build a relationship where individuals can bring issues, including mistakes, to the attention of their supervisor.

Written by Matthew Thomson, from Lockton