Raising the game

Analysis of claims experience and underlying causes indicates that many claims could have been prevented if, in addition to having more effective risk management systems and practices, there had been a greater level of awareness of risks. As well as introducing and enhancing these systems and practices, it is critical that risk awareness is maximised by appropriate risk management training. As with all training and development programmes, there is a need to plan and monitor its effectiveness.

Case study

A medium sized firm had never had a claims or complaints problem. This situation had prevailed for several years without the partners adopting any specific risk management focus. They had not, for instance, felt it necessary to nominate a risk management contact for the firm and, while they attended CPD events in their own areas of practice, none of them had attended the Risk Management Roadshow or other risk management training events.

Over a relatively short period and for no immediately obvious reason, the firm’s Master Policy record deteriorated and for the first time in years, partners found themselves regularly discussing client complaints at partners’ meetings. That prompted one partner to be assigned responsibility for devising a plan to address the situation and to be the practice’s nominated risk management contact.

The partner contacted the Client Relations Office at the Society and the Master Policy team at Marsh who were both able to provide guidance, and soon had a plan ready to present to his partners and, with their wholesale approval, put into action.

The first step was to get together as much information as was available on each of the individual claims, complaints and “near misses”. This was looked at methodically from the point of view of ascertaining the underlying cause, and giving specific consideration to systems, procedures or disciplines which could have prevented each identified problem.

It emerged that a combination of factors accounted for the firm’s deteriorating record. In one case, a critical message had not been passed on to the solicitor handling a transaction that the client had changed her mind about a property purchase. Missives had been concluded, committing the client to the deal against her wishes. In another case, where the firm had acted in a family-funded purchase transaction, a relative of the firm’s client was claiming that he had been relying on the firm to protect his position. In the absence of clear evidence to the contrary, the firm was in some difficulty in defending the claim.

If there was any singular factor which was common to all of the situations reviewed, whether claims or complaints, it was that none of them showed any evidence of lack of technical knowledge.

Under new management

As part of the risk improvement action plan, some additional risk controls in the form of systems, procedures or disciplines were agreed to be appropriate, for example:

A more thorough and consistent approach to terms of engagement (and non-engagement) so as to be clearer about who the firm is acting for and what the firm is and is not taking on responsibility for.

A review of how telephone messages are recorded and passed on for attention and how unscheduled sickness and other fee earner absences are addressed.

The most significant element of the action plan was the introduction of a risk management training programme. Whatever the changes made in terms of new/amended systems, procedures and disciplines, these needed to be supported by risk awareness and practical risk management training. The review of claims, complaints etc made it clear that there could not necessarily be a system or procedure which addressed all situations that could potentially arise in the course of handling a wide range of work. What would make a difference, however, was having everyone throughout the firm alert to potential risk areas.

A positive experience

The other partners readily agreed with the conclusion that everyone in the firm should receive some risk management training on a rolling basis. A training plan and training programme would be devised and kept under review according to individuals’ needs. Training requirements would be identified by reference to review of claims, complaints and “near misses”; as part of the induction process for new recruits to the firm, whether fee earning or support staff; and as part of the annual staff appraisal process.

In the first instance, the partners agreed:

• The newly nominated risk management contact would attend one of the annual Risk Management Roadshows – this was seen as a valuable opportunity to learn from other firms’ experiences of addressing the issues.
• The risk management contact would then re-run the roadshow as internal risk management workshops for all fee earners and certain key support staff using the training materials prepared by Marsh.
• Each practice area would run a risk management workshop using training materials available from Marsh specific to each practice area. Each would be encouraged to create its own action plan to address points arising out of the discussion of practice area-specific case studies and discussion topics, and to allocate responsibilities along with timescales for implementation.

Support staff would also take part in a workshop recognising the important part that they have to play in continuous improvement of the firm’s risk profile.

It became clear early on how much the support staff were able to contribute. Arising out of their first workshop alone, several practical risk management points emerged. For example secretaries suggested how they might assist fee earners with the practicalities of conducting physical file reviews, the cataloguing and structured review of approved style and profoma documents and ensuring that telephone messages from clients would be attended to. The telephonist/receptionist suggested emailing messages rather than relying on delivery of handwritten notes.

The support staff enjoyed these sessions and were enthusiastic about playing a part in the firm’s risk management plan. They encouraged effective teamwork and all of them acknowledged how stressful it had been when a claim or complaint had blown up and how frustrating when they realised how the problem could have been avoided.

Risk management training

In addition to providing valuable management CPD, training provides a combination of risk management benefits, ranging from raising awareness of the risk issues faced in day-to-day work to actively encouraging individuals’ participation in the development of risk management systems based on their own experiences.

Risk management reference/training materials. There is ample risk management material which is suitable for training purposes. This includes monthly Journal articles on a wide range of subjects – email supervision risks; business continuity planning; identifying underlying causes of claims; due diligence on practice mergers and acquisitions; conversion to LLP; commercial property risks. There are the risk management book Ensuring Excellence: Even Better Practice in Practice; the Society’s Better Client Care and Practice Management manual; and the Society’s Risk Management Flowchart and Procedures. The Risk Management Roadshow training materials prepared by Marsh comprise case studies and discussion topics covering a wide range of risk and risk management issues. These are available from Marsh as well as further practice area-specific workshop materials including commercial property risks, litigation risks, conveyancing risks and trust and executry risks.

Risk management training events. The annual Risk Management Roadshow series of events is staged at various locations around the country and videolinked to outlying districts. Approaching 300 practices have taken up the opportunity of attending each of the recent series. Those attending have almost universally confirmed the value of attendance and the majority have committed themselves to rolling out in-house training based on the roadshow materials, as well as introducing enhancements to their existing risk controls.

Update provides further risk management training and education opportunities in the form of the new Risk Management for Paralegals and Support Staff event; the risk management session of the Practice Management course (for new partners/principals); and Surviving and Prospering as a Sole Practitioner.

On a more ad hoc basis, risk management seminars and workshops are available to faculties and associations and to individual practices.

<>New training programme documents

Marsh will shortly be issuing a set of documents comprising:

• Guidance note
• Risk management training plan
• Schedule of risk management training events and materials

These documents are aimed at identifying how training may be undertaken; and demonstrating how training (whether targeted at roles/individuals or for the benefit of all personnel) may be planned.

The training programme plan includes a risk management training plan outlining core elements of risk management training. The plan is designed to assist in:

• identification of relevant events and materials;
• process of planning risk management training;
• monitoring the effectiveness of training.

The plan is not a prescriptive document. It does not intend to imply that the events and materials listed are “approved” or “accredited”, nor that any of the suggested events is compulsory. Each practice will require to decide for itself which courses and materials would be most appropriate. The training plan is intended to assist with the planning and scheduling of external and in-house training.

Supplementing the training

The training plan contains certain core elements which most practices should be seeking to achieve and thereafter update. By analysing the practice’s own record of claims, complaints and “near misses” (by reference to underlying cause(s) and contributory factor(s)), it will be possible to identify any additional risk management training requirements applicable to individuals, teams, departments or all personnel. Such further, targeted, risk management training requires to be incorporated into the plan.

Alistair Sim is a Director in the FinPro (Financial and Professional Risks) Practice at Marsh, the world’s leading risk and insurance services firm. e: alistair.j.sim@marsh.com. The information contained in this article provides only a general overview of subjects covered, is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insureds should consult their insurance and legal advisers regarding specific coverage issues. Marsh Ltd is authorised and regulated by the Financial Services Authority.

Stamp Duty Land Tax delays – Update

Judging from the overwhelming anecdotal evidence, the process of obtaining SDLT certificates has become even more problematic than when the subject was last touched upon in this column in January.

What has emerged since then is that rather than there being a single, common factor accounting for the difficulties that solicitors are experiencing, there are in fact a number of contributory factors.

The Society is actively engaged with the Revenue in tackling the various aspects of the overall problem, and guidance from the Society’s Tax Law Committee on submission of SDLT returns and a report on the new online facility feature in the Property section of this issue.