Technology to the rescue?

Technology has increasingly become an integral part of doing legal business, yet its potential as a risk management tool has not always been fully exploited. How can existing systems be best utilised to help address common causes of complaints and claims? What risks does the technology itself introduce, and how can these be mitigated?

Mitigating communication risks

Technology has changed and continues to change the ways in which many solicitors communicate with clients.

Several risk management articles in the Journal have highlighted the fact that lack of or ineffective communication lies at the root of many complaints and claims against solicitors. Respondents to a Marsh survey of the profession revealed that communication-related risks were reckoned to account for about 40% of claims.

Claims and complaints frequently involve allegations relating to:

• disputed advice or instructions;
• failure to keep the client informed;
• failure to manage client expectations, particularly relating to timescales, outcomes or costs.

So do current communication technologies impact positively or negatively on the risk of communication failures?

Responsiveness

Wifi, 3G and Bluetooth enabled laptops, PDAs and iPads have enabled a genuinely portable office environment. Important issues can be instantly communicated to clients, questions raised and discussed, and instructions sought. As a result, the facilities exist that have the potential, for example, to make it easier to keep clients updated or to seek authorisation for a particular course of action with them, thereby reducing the risk of complaints and claims arising from lack of communication, perceived delays, or acting beyond their authority.

File management

The Master Policy insurers and panel solicitors continue to emphasise the critical importance of a comprehensive file in avoiding or defending a claim. An allegation by a client that important advice was not tendered may be difficult to refute, or a defence by a solicitor that an alleged instruction was never given difficult to affirm, where there is no evidence on file.

Email exchanges can provide a convenient and effective record of issues discussed and actions agreed. Sending clients an email summarising the conclusions of a telephone conference or face-to-face meeting, for example, serves as a file note confirming:

• that a meeting took place;
• what issues were discussed; and
• what actions were agreed and instructions given.

It also provides the client with an opportunity to flag any misunderstandings which may have arisen and address any matters where they do not agree with the outcomes of the meeting as summarised.

Combined with an effective document management system, email can form part of a comprehensive e-file, which, subject to secure backup, cannot be lost or mislaid; is accessible to others; can be accessed (including for auditing) and updated remotely; can link relevant source documents to emails and letters; and offers enhanced search capabilities over either a paper file or a traditional electronic folder system.

Any system which facilitates a comprehensive file being maintained should assist in defending any claims and complaints.

Reducing risk of oversights and omissions

Oversights and omissions account for the majority of Master Policy intimations. Intimations and claims may arise from:

• failure to identify, check or verify a salient fact;
• failure to consider a particular risk issue;
• missing a critical date;
• failure to report critical information.

Case study

The firm acted for Random Developments Ltd in the purchase of a development site. It transpired, when the building work had started, that the firm had omitted to obtain servitude rights for the provision of utilities to the site.

What technological solutions are there which may help avoid oversights and omissions?

Workflow or case management systems

A checklist approach. Workflow systems can provide an automated decision tree which can serve to prompt fee earners to consider a range of issues. They act as a checklist for key issues: a conveyancing workflow programme might prompt a series of questions to be addressed relating to servitude rights, for example.

Well-designed workflow systems reduce the risk of a particular issue being forgotten or ignored, by requiring the fee earner to follow through each stage of a transaction, in order, and, in the process, posing the relevant questions.

More complex systems may create pre-populated documents and forms using approved styles, thus reducing, if not entirely eliminating, the risk of drafting errors and omissions.

Managing critical dates. Consider this case study:

Melvin alleges that his solicitors are to blame for the fact that his personal accident claim is now time-barred. It transpires that the solicitor concerned had miscalculated the date and entered the wrong date in the diary.

A wrongly diarised date can be more dangerous than no date at all. A case management or workflow system may prompt consideration of the necessary questions in order to minimise the risk of the wrong date being identified and diarised.

Once correctly entered, the case management system may automatically flag up (and escalate where necessary) when key dates are approaching or if specific tasks have not been actioned timeously, but these controls should not entirely take the place of review meetings and adequate supervision.

Technology risks

Email risks

Email has been embraced because of its immediacy. However, this same trait also provides greater opportunity for an ill-considered response to be sent in the heat of the moment, or a confidential email to be inadvertently “replied to all”.

To minimise the risks of inappropriate or over-hasty emailing, many adopt a discipline of reading a printed draft of the email before sending it. Is it addressed to the correct addressees? Does it include the correct attachments? Does it say what you meant it to say, and in an appropriate tone?

Particularly if a comprehensive paper file is not maintained concurrently, solicitors should ensure that their backup procedures are sufficiently reliable to ensure that emails and documents are not lost. For more information on this, and other aspects of business continuity planning see “Preparing for disaster” (Journal, November 2009, 40).

Clients and solicitors alike can fall into the trap of assuming that an email sent is an email received and read. The absence of an “undeliverable” response does not guarantee that an email has been received on the intended recipient’s computer. Nor is email necessarily read immediately, let alone acted upon.

Case study

Richard, an assistant in the litigation department, had just returned to work after a four-week absence due to illness. He was pleased to find that all his incoming mail had been answered and his cases progressed during his absence. He was particularly pleased that a difficult case involving his client Eason Reid Ltd had been settled, following a letter from the client instructing that an offer be made to the claimant. However, when Richard opened his email, he was horrified to find hundreds of unread emails, including one from Eason Reid’s managing director rescinding their instructions to make the offer in settlement. The email had been sent the day after the letter but was received in Richard’s inbox before the client’s letter was received and acted upon.

Consider how your own systems and procedures would cope in similar circumstances.

Can colleagues access your inbox and voicemail in case of unexpected absence? Do you have access to your email and voicemail to enable an out-of-office message to be put on or updated remotely? Do your terms of business address how instructions (particularly urgent instructions) should be communicated? Some have their email configured to issue an acknowledgment which states that emails are not necessarily read immediately, and that urgent issues should be followed up by telephone.

Data security risks

Data security seems rarely out of the news. The disadvantages of modern working methods in this respect seem all too clear:

• The portability of laptops, BlackBerries and memory sticks is also their Achilles heel. They are taken out of the office as a matter of course and can easily be stolen, mislaid or forgotten. A statistic was quoted in the Risk Management Roadshow materials this year to the effect that somewhere around 4,500 memory sticks were left in items of clothing taken to drycleaners in the last year (Credant Technologies survey, January 2010).

• Data can, of course, also be stolen without any physical loss. Data transmitted over the internet is susceptible to being hacked, and in the same survey, Credant Technologies identified that one fifth of solicitors’ questions acknowledged that lack of encryption meant that confidential data could be compromised by hackers.

• There is a plethora of data security technology available, from the simplest password protection, through tracking systems for laptops and telephones, and data and email encryption, to sophisticated secure site technology for electronic deal rooms and the like.

• Loss of client data could be a significant claims risk for a firm. Consider whether your own technology is adequately protected. For more advice on how to combat data security risks, read David Buchanan-Cooke’s article “Data security begins at home” (Journal, November 2008, 38).

System implementation and maintenance

Whether it is a document management system, case management system, a knowhow resource or a database, IT resources are only ever as good as the information within them.

These are not “set and forget” technologies, but rather must be regularly maintained if they are not to become dangerously out of date.

Technology is not a risk-management panacea. It has to be carefully planned and thoroughly implemented and maintained. But with an awareness of the risks which each technology brings, solicitors can now harness a wealth of management and client relationship resources which can help prevent claims and complaints.

Calum MacLean and Marsh

Calum MacLean is a former solicitor in private practice who works in the Financial and Professional (FINPRO) National Practice at Marsh, the world’s leading insurance broker and risk adviser. To contact Calum, email: calum.maclean@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.

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