New code includes a stricter regime to minimise errors, especially in residential property transactions

Zurich Professional has welcomed the new Solicitors’ Code of Conduct 2007 and particularly rule 5 which deals with business management.

The professional negligence claims reported to Zurich Professional show that some solicitors continue to make the same mistakes year after year.

For the sixth year running, errors in residential property and re-mortgages were the most frequent source of notifications in the 2005/2006 insurance year.

They accounted for 35% of all the claims and circumstances notified. Commercial property accounted for 11% of all notifications.

Andrew Nickels, risk manager at Zurich Professional, said: “Rule 5 imposes strict requirements on principals in firms to ensure that adequate supervisory systems are in place.

"Given the basic nature of the errors that give rise to most property related claims and the tendency of some firms to use unqualified people for parts of the process, it is to be hoped that a greater emphasis on supervision will lead to a reduction in claims against conveyancers.”

Errors in litigation made up 22% of all claims and circumstances notifie, according to Zurich.

The vast majority of these related to missed time limits, with missed limitation periods, the most common problem, followed by failing to effect service of the claim form in time.

“The new Rule 5 imposes strict requirements on principals in firms to ensure that adequate supervisory systems are in place

Andrew Nickels, risk manager at Zurich Professional

Nickels commented: “It is clear that most negligence claims against litigators are caused by a lack of effective critical date management.

" It is to be hoped that the new code of conduct will encourage firms that are at risk of such claims to review their existing diary systems and to ensure that all fee earners know how to use them and are using them appropriately”.

Zurich Professional said that while company/commercial claims made up only 4% of all notifications, often this was far outweighed by the value of the claims that result.

Large commercial law firms were some of the first to readily embrace risk management, yet the claims reported to Zurich Professional by such firms demonstrated that more could be done.

Even where complex transactions are frequently involved, it was usually lack of attention to detail that led to mistakes.

Such mistakes included: incorrect drafting of documentation, not checking wording or formulae; solicitors failing to identify their client or failing to identify conflicts of interest; and failing to define the scope and limits of the retainer.

Nickels said: “Our claims experience shows that while it is important to have systems and processes in place to minimise risk, systems in themselves are not enough.

"A culture of effective risk management has to be embedded within the firm. All fee earners need to be aware of the risks on the files in front of them and should assume personal responsibility for ensuring that mistakes are not made.”