Draft proof

Drafting is a skill that lawyers need to learn. It’s required in all fields of law whether you are producing a lease, a commercial contract, a will or an agreement for division of the financial assets of a divorcing couple. Insurers know that whatever the transaction, drafting mistakes can be made – however, depending on the error, some may be more expensive than others.

If we examine some of the common causes of claims which may end up in an insurer’s statistics under the heading “Drafting error,” a good many of these are not, in fact, mistakes made by the lawyer but instead are simple typing errors which could have been corrected. All documents benefit from careful review, and it is good practice to have a second pair of eyes scan the document to ensure clarity.

Typographical errors

One of the most common types of drafting errors is simple typographical errors such as paragraphs incorrectly numbered, the wrong personal pronoun in wills (he/him instead of she/her), or misspellings of key names or addresses. Many documents today are produced using styles or precedents, and this introduces a whole new opportunity for error. For example, the wrong paragraph is used, or more commonly a new paragraph is cut and pasted into a document, and the typist inadvertently pastes over and thereby deletes a paragraph that was meant to be retained.

Even more risky is the tendency for fee earners to produce their own documents. While most lawyers will have a computer screen and keyboard on their desks, very few have had formal training in either typing or document production. Unless you have to type your own documents, it’s a job best left to those with expert skills.

Good drafting, poor thinking

Errors are also made in documents by having the right clauses but the wrong content. For example, a lease may be absolutely perfect, but if the property described in it is not the one intended, it will be ineffective. The firm which drafted a commercial sale agreement was entirely happy that they had covered all the issues that were needed – and so they had, but unfortunately the contract was produced in the name of the subsidiary and not the parent company, which actually owned the property concerned. It was ineffective as the subsidiary had no title to the property that it was purporting to transfer. As so often happens when these types of errors are made, this only came to light when the purchaser company went into administration, and the selling client wanted to enforce the agreement but was unable to do so.

Perhaps more difficult both for lawyers and insurers are the claims which arise where it’s clear that the fee earners concerned had done their utmost to try to meet the client’s needs. A lawyer may have sat up late at night, chewing pencils in concentration, and then produced sparkling clauses which might have won prizes in an essay competition. If only they had checked them. One of the easiest – and most often ignored – risk management tips is to work through any clause to ensure that the meaning is clear, accurate and makes sense.

A classic example of this is the tenancy agreement which read: “Any increase in rent will be made on the first Thursday of April each year.” It went on to say: “We will not increase your rent less than one year after any previous increase.” The lawyer who had gone to great trouble to render this in crystal-clear language had simply not referred to a calendar and checked that it worked. If they had done so, then they would have realised that “the first Thursday of April” each year is one calendar day earlier than the previous year. The two clauses were totally incompatible.

The only solution to this is to do a few test runs on any operative clauses. It is important to work out dates, count periods of notice, and ask the “what if” question. Wills are particularly problematic as both the testator and the drafter generally envisage a likely course of events, and often both will fail to take into account the possibility that a younger beneficiary could die before the testator, and thus their gift may fall into residue. Always test out the possible outcomes, no matter how unlikely they may seem.

Reading matters

Avoiding drafting errors is not difficult, but it is tedious and time-consuming. Fee earners under pressure to complete the next bit of work are always going to find it difficult to devote enough time to review something they wrote last week. One of the fundamental issues with reviewing drafts is that you will see what you expect to see. In other words, if you drafted a clause, then you will read the clause in the way that you meant to write it, even if that is not what has been typed. The best solution is to have drafts read by a colleague who will look at it with a fresh mind and fresh eyes. While this is a time investment, the outcome is well worth the effort.

Spellchecks may pick up obvious anomalies, but they will not identify words used in the wrong place, such as “there” and “their,” nor will they identify in the will where the word “husband” has been incorrectly used instead of “wife”. They certainly won’t pick up the lease which does not provide for maintenance of the common parts of the building, or the missing clause.

If you are using styles or precedents, then always check that the right clauses have been inserted – in the right place – and that other important clauses were not inadvertently deleted in the process. Don’t forget that subsequent clauses may refer to paragraph numbers. Failure to renumber correctly could lead to an operative section being ineffective, because the paragraph number to which it refers is no longer relevant.

There is no substitute for careful checking and rechecking of detail, but if you have good client identification procedures in place, then you should be able to avoid the classic trap of issuing proceedings, assigning leases or transferring shares in the name of the wrong corporate client. All too often, the error is not discovered until one or other of the companies has become insolvent and a debt is being claimed. Of course it is not just with corporate clients where this can arise, but it is a particular problem with registered addresses and multiple identities.

Another tip is to avoid relying on someone else’s drafting. It is easy to assume that because a lease, for example, has been assigned several times, the content must be satisfactory. It might simply be that all the previous solicitors have made the same assumption, and you could be the first to spot that the repairing provisions are defective or that it purports to grant title over land that the head landlord doesn’t own. Housing developments are notorious for this sort of defect and failure to reserve parking spaces or access rights, or lack of provision for repair and maintenance of common parts, is quite common. And insurers still occasionally see the “helicopter” lease where the only access to the property would be by air, because no rights of way over common entrance areas have been reserved!

Get support

Training your support staff to understand and identify drafting risks, using styles/precedents correctly, and having procedures for reviewing and checking documentation are all ways which help you reduce the risk of errors. Legal work involves words and documents, and there is always going to be a risk of error.

In many cases where the parties’ original intentions are clear, errors can be resolved without too much difficulty and at relatively low cost, so if you think something has gone wrong, contact your insurer via the brokers. The insurers will be able to advise you whether they think there may be negligence, and may well be able to authorise urgent remedial action. Reporting a potential claim protects your firm, whereas delay in notifying a matter can not only mean it is more difficult to resolve, it could also lead to insurers reserving their position if they believe that the claim has been prejudiced by your delay.

If the worst happens and you do get a claim (or a near miss), then consider it as a lesson in risk management. Review what went wrong and think about ways to avoid this happening next time, such as implementing staff training, new procedures or a team discussion. Negligence claims are very rarely “just one of those things”, and if something good is to come out of a bad experience, then consider analysing what went wrong, no matter how painful it may be.

Olivia Burren is a solicitor and senior risk management consultant at Master Policy co-insurer Travelers