Still time to resolve

Now that we are well into the new year and Hogmanay is a distant memory, how are those new year’s resolutions going? Even if the new gym membership is still unused or the only “dry” thing about your January was the Sauvignon Blanc you’d opened by the second weekend, there are still plenty of risk management resolutions you can make and stick to this year.

1. Never accept a change of bank details by email

There have been some very substantial thefts by payment fraud reported under the Master Policy in recent years, often running into six figures, and recovery of such payments is very difficult. This issue is not going away, but there are steps that everyone in a firm can take to reduce the likelihood of these attempts succeeding.

Chief among these is that there should be a steadfast policy in every firm that a change in a client’s bank details will never be accepted by email alone. Fraudsters are becoming increasingly sophisticated in their ability to hack both email accounts and phones, and to mimic authentic communications, producing highly convincing fakes.

The ideal approach, of course, is to obtain bank details face-to-face early on in the transaction and make clear to the client that those details cannot be changed, no matter the reason. Where that is not possible, carry out your own verification, either by phoning the client on a number you know to be correct, or even better on a video call. If there is not enough time to do that or the client is being difficult about it, should that not be a red flag anyway? Whichever approach you take, keep in mind how easy it would be for a fraudster to intercept the communication and manipulate it to their own end.

Fraud can also be committed against the client themselves, with fraudsters claiming to be calling or emailing from the firm to advise of a change in the firm’s client account details. Include your firm’s account details in your letter of engagement and make clear to your clients that they will never change in the course of a transaction. Encourage them that they should always feel they can make contact with the firm if they have any suspicions at all.

These types of fraud can cost hundreds of thousands of pounds at a time, so the risk needs to be taken seriously.

2. Commit to monthly file reviews

A week is a long time in politics, but we all know that a month in legal practice can whizz by in no time. You might think it was only the other week that you updated a client or chased the other side, but it could well have been longer. A monthly (or more regular) review of each of your files is a no-brainer for keeping things from being forgotten about and clients from feeling neglected, but to be effective they do actually need to happen and be done properly.

Most firms will have an easy way to print off reports of all the files assigned to you or on which you have recorded time, so put a recurring appointment in your diary for the same day and time each month – the first Monday or the third Thursday or whatever works for you – to run one of them off and go through each file to make sure it is up to date. If reports like these are not easily produced, creating your own running note of work will quickly solve that, and will also be a useful starting point for holiday or handover notes.

Blocking out a specific window and forcing yourself to do the review when you said you would, will keep it from becoming just another item being kicked down your to-do list. And there is no need to worry about an unsightly gap on your timesheet – the time recorded for a few quick chasers or updates to clients will quickly add up to cover the time you spent.

A cursory look through the list to remind yourself will not be enough, however. You really do need to go into the file to see when the last progress was made, what you are waiting for and what upcoming deadlines you have noted.

If you delegate a lot, or your involvement is supervising a colleague, consider having the relevant colleague with you while you are going through the list, or arranging a catchup with them afterwards. The generous thing would probably be to give them some notice you will be doing it – that should save them some fluster and hopefully you some time.

3. Include a proper scope in your letters of engagement

A properly drafted letter of engagement has many benefits, from setting out what a client can expect from you to providing a strong first line of defence in the event of a claim. Rule B4 of the Law Society of Scotland’s practice rules sets out the minimum information it should contain, which includes an outline of the work you will be carrying out. Unfortunately, letters of engagement do not always set out a sufficiently precise scope of work. A poorly drafted scope can leave the solicitor open to accusations of failing to carry out work the client expected them to do – however reasonable or otherwise that expectation might have been.

Taking a house sale as an example, simply saying in your letter, “Dealing with the sale of your home” as the scope of work clearly will not be enough by itself. You would probably want to say something more like, “Acting in sale of Three Bears’ Cottage, Enchanted Forest, including negotiating and advising on terms of missives, exhibiting title and dealing with any enquiries thereon, preparing necessary conveyancing documents for signature by you, and settling sale”, and then adding, “Please note, we will not provide advice on any other matters such as personal tax implications, and you should take such advice thereon as you consider necessary.”

Of course, if your firm is capable of carrying out that work then by all means do so, but only if you have made it clear in your letter of engagement that that will be included. It is always better to be specific than to leave things ambiguous and risk an accusation that you failed to do something the client was expecting you to do. Err on the side of caution.

The Lockton Resource Centre at locktonlaw.scot has a handy guide to letters of engagement, including tips and sample wording that you can use.

4. Stop forgetting to write attendance notes

They are the easiest thing to forget to do after a phone call or meeting when there are instructions to be acted on or other files demanding your attention. However, a good attendance note is one of the best weapons in a professional negligence lawyer’s arsenal.

There was an example in an article from Brodies at Journal, March 2021, 44, where an action had been raised against a solicitor claiming that they had failed to follow the by then deceased client’s instructions in preparing her will, but was successfully repelled on the basis of a series of well-written file notes. These showed that in fact the testator’s instructions had changed without the daughter who made the claim knowing about it, and the note from the final signing meeting showed that the will had been discussed with the testator and that it fully represented her intentions. Without those file notes, though, the claim would have been very difficult to defend.

A good file note should give a reliable and credible representation of what actually happened, and should be produced immediately or as soon as possible after the meeting or call in question. Obvious elements are to note the date and the parties present at the meeting or on the call, but you should also make sure that the note accurately reflects the substance of the discussion, especially any specific advice that you give the client or any concerns you make them aware of.

Find a way of doing it that works well for you, be that dictating it to be typed up by a secretary or typing it yourself so you can edit as you go. Consider investing in proforma telephone notepads with spaces for the date, time, caller, file number and so on, which will allow you to make notes while on the phone which should still make sense afterwards. Make sure to fill in afterwards any extra details and a note of the advice you actually gave, before scanning it or filing it away.

Thinking about the executry example, it pays to imagine while writing or dictating the note that you will later need to rely on it in a claim situation, and think about whether what is being written will be sufficient.

If you have any concerns about the client disputing what has been discussed, send them a follow-up email or letter afterwards.

5. Complete your risk management CPD

Every solicitor is required to undertake at least one hour of risk management CPD per practice year, which can be a verifiable event or private study. The Society defines risk management as “a process of identifying, assessing and prioritising risks, which results in some form of action to control and manage those risks”.

Lockton will be looking to engage with solicitors to support their risk management activities. We will, of course, continue to produce relevant risk management content in addition to any targeted material produced in conjunction with the Society. Keep an eye out for risk management events and new online training over the next few months, and contact us directly if you would like any additional information.

There are a number of ways you can satisfy your CPD requirement. However you choose to do so, we hope that you will continue to think about the place of risk management in your practice and how it can help protect you, your clients and the profession from circumstances that might give rise to a claim.