Don’t trust your memory

The story is probably apocryphal but it makes a point that is surely worthwhile from a risk management point of view. Don’t rely on your memory when there is a far better and more reliable way of checking facts, particularly if the facts are critical. Consider the following –

Case study

A solicitor was contacted by his client about exercising an option as tenant under a commercial lease. The client knew that there was a specific point during the term of the lease at which his option to extend the term of the lease could be exercised but he couldn’t recall the detail and had mislaid his copy of the signed lease. The solicitor remembered the terms of the lease very clearly. He undertook to write to the client confirming what had to be done and he dictated a letter to the client and a note to his secretary to look out the closed file. The letter was produced for the solicitor’s signature that afternoon along with the file which included copies of the numerous drafts of the lease although not the final version. Before despatching the letter, the solicitor quickly scanned the file and drafts and he was satisfied that his recollection of the position was correct.

The letter to the client could have been more specific. It simply confirmed the client’s understanding that there was an opportunity at the forthcoming anniversary to exercise his option to extend the lease and requested instructions so that he could “notify the landlords” agents and attend to the various formalities’. The client gave the go-ahead and the solicitor issued the notice exercising the option prior to the anniversary.

The landlords’ agents responded by pointing out that the relevant lease provision required notice to be given not less than one month prior to the anniversary whereas the notice had been received less than a fortnight before the anniversary. The landlords were quite prepared to extend the lease but they demanded a substantial payment for doing so.

Being in control

After that adverse experience, the solicitor concluded that perhaps his memory wasn’t infallible after all and that it simply isn’t safe to rely on his recollection of the terms of the lease and a superficial perusal of the file and superseded draft documents. He and his colleagues had a very constructive discussion about what had gone wrong, what lessons could be learned and how things must be dealt with in future to minimise the risk of a similar occurrence. They agreed that the same sort of situation could have happened in almost any area of the firm’s work and that the lessons learned were applicable to everyone in the practice.

It was agreed that, in order that the firm remained in control rather than running unacceptable risks, the following action points should be applied in all client work –

• Whenever it is important to be accurate about particular facts, do not rely on one’s memory – trust only the file and the principal documents (or copies).
• At the stage of concluding a transaction – whether a purchase, a sale, a lease – review the file and documentation and make a clear note for the file summarising action that needs to be taken to conclude matters in relation to the transaction itself or that may need to be taken in the future should the client wish to exercise options (to terminate, to extend, to vary, etc.).
• The note should identify critical dates and other critical information such as the arrangements for service of notices.
• Make the client aware of these critical points and be absolutely clear as regards responsibility for taking action and for instigating the relevant procedures.
• If appropriate, record deadlines, with suitable count down dates, in all relevant diary systems.

Whenever taking instructions from clients, be clear about the action that requires to be taken by whom and by when; make clear the role that the client must play; and explain the consequences of failure to take certain action by specified dates

Better Client Care & Practice Management

The Society’s ‘Client Care manual’ includes a valuable section on managing time limits and reference to it is recommended. The following are excerpts -

“Who is affected by time limits?"

Everyone is the short answer. Whether one is the managing partner in charge of administration, having to ensure proper notice is given to terminate contracts relating to the office, lodging certificates to comply with Accounts Rules; a court practitioner with deadlines to meet for lodging writs, adjustments or appeals, citing witnesses etc; a conveyancer with dates of entry to meet; (the list is endless); all of us in practice carry on our day to day work with the pressure of time limits looming over us. They are an unavoidable part of legal practice. The failure to meet time limits is also one of the most common causes of claims on the Master Policy.

Recording

There is no good keeping a time limit in your head……..

Tell the client

This has two effects. Firstly, it lets the client know when he or she can expect some action and secondly, it acts again as an aide-memoire to yourself….”

Practice Management Systems

We all need all the help we can get to stay in control of work – in control of files, timescales and workloads. There are various practice management systems which potentially help practitioners and their staff in these respects. These systems can include bespoke case management applications designed to meet specific requirements but even standard packages offer benefits including automation of centralised diary, supervision, escalation and file review. Various controls can be built in to these applications which help to ensure that defined procedures are followed and timescales complied with.

The information in this page is (a) intended to provide guidance on matters of practical risk management and not on issues of law and (b) is necessarily of a generalised nature. It is not specific to any practice or to any individual and should not be relied on as stating the correct legal position.

Alistair Sim is Associate Director in the Professional Liabilities Division at Marsh UK Limited (e-mail : Alistair.J.Sim@marsh.com)