A presentation for the students in the University of Toronto's Internationally Trained Lawyers Program. The topics covered include information on LAWPRO and the LAWPRO policy; common malpractice claims and how to avoid them; how to make the student-lawyer transition; and how to start and build a thriving law practice
1. LAWPRO Information
& Practice Advice
Dan Pinnington,
Director, practicePRO
Lawyers’ Professional Indemnity Company
Post ITLP Preparation & Advice
March 23, 2012
2.
3. Agenda
• LAWPRO information
• Student-lawyer
transition tips
• Practice building tips
• Resources
• Questions
15. What is LAWPRO?
• Full-fledged licensed insurance company
• Independent and distinct from Law Society of
Upper Canada
• Governed by Ontario Insurance Act, Ontario
Corporations Act, and other applicable
legislation
• Insure 22,800 Ontario practitioners
• Excess and title insurance
16. What is ‘private practice’ and who
must have LAWPRO coverage?
• Lawyer members of LSUC practising in a firm or
as sole practitioner & providing their legal advice
& services to clients
• Who is exempt?
– Articling students (Covered by supervising lawyer)
– In-house corporate counsel, lawyers employed in
government or education, or lawyers working or
volunteering in legal aid clinic etc. (i.e., employer is
client)
– Lawyers working outside law or retired
– Lawyers exercising their mobility rights
17. Mandatory LAWPRO
policy coverage
• Liability insurance for claims arising
as a result of an error, omission or
negligent act in the performance of, or
the failure to perform, Professional
Services for others
• Full policy at www.lawpro.ca
18. Details on LAWPRO
policy coverage
• Standard 2012 base premium $3,350
– Usually paid by firm
• Individual coverage
• Provides for indemnity and defense
• $1M per claim; $2M in aggregate
• Claims made policy
19. Other options
• New lawyer discount:
– 50, 40, 30, 20% over first four years in practice
• Discount if exclusively criminal and/or
immigration: 50%
• Part time option: 50%
• Note: Maximum discount is 50%
• Choice of deductible
– Standard is $5k
– Premium adjustment for other deduction options
20. Exclusions
• Claims:
– Arising out of lawyer’s dishonest,
fraudulent, criminal or malicious acts
– By an employer
– Arising out of investment advice,
unless the advice is the direct
consequence of legal services
21. Exclusions – cont.
– Claims arising out of business
ventures or investments not directly
related to practice of law
– Claims by insured, spouse or partner
who has a beneficial ownership of a
business
– Legal fees or accounts
– Most fines or penalties
– Punitive or aggravated damages
22. Other insurance
protections available
• Enhanced coverage for counterfeit certified cheques
and bank drafts
• Innocent party
– Re dishonest acts of lawyers
– Required or optional depending on practice
• REPCO
– Real Estate Practice Coverage Option
– Required of all lawyers practising RE law in ON
• Excess
– Coverage above LSUC mandatory program
– Usually on a firm basis only
– Available from LAWPRO and others
– Consider your exposure and get it if appropriate
• See LAWPRO website for more information
23. Jurisdiction and geography issues
to keep in mind
• Advice/work regarding US or other foreign law
– Not covered by LAWPRO policy
– Remember that malpractice coverage is not
mandatory in many jurisdictions
• Mobility provisions in place
– Generally can practice in other Canadian jurisdictions
– As practical matter home policy responds
– Some limitations: See LSUC website for details
• Territorial provisions
– Limitations on “Performance of professional services
outside Canada”
24. LAWPRO insurance coverage when
you leave private practice
• $250k run-off
– Automatic and at no cost
– Not reinstated (intended for rest of life)
• Runoff Buy-up (RBU)
– Top-up to $500k or $1MM
• Temporary Leave of absence
– Up to 2 years (or 5 years family/medical) &
not working
25. Premiums match risk
• We operate to be commercially viable
• Risk rated program in which the highest risk
areas of the bar pay premiums that closely
match their claims experience
– $50 Civil Litigation and $65 Real Estate transaction
levy
– Average $20 million in transaction surcharges
annually
• If we have made indemnity payment a claims
surcharge can apply
26. Insured’s obligations
• Promptly report claim or circumstances which
might give rise to a claim
• Assist and Co-operate
– Do not admit liability or settle except at your
own cost
• How to Report to Claim:
– Complete an online notice report
– Call the LAWPRO New Claims Coordinator
– Notify LAWPRO in writing
27. LAWPRO’s obligations
• LAWPRO has 2 obligations
– Duty to defend
– Duty to indemnify
• What to expect
– Prompt, personal contact from a claims examiner
– To be defended by experienced knowledgeable
counsel
– To be involved and consulted
• Matters are repaired, settled or vigorously
defended
28. LAWPRO claims by error type
(claims by count % for 2000-2010)
Other
Fraud 6%
Conflict 3%
6%
Clerical Communication
6% 34%
Fail to Know Law
12%
Inadequate Time
Investigation 17%
16%
See LAWPRO Magazine article on biggest claims risks
29. LAW PRO Claims Count by Area of Law
1997 to 2007
100%
90%
80%
70% Corporate
Plaintiff
Claim Count (%)
60% Real Estate
Defence
50% IP
Tax
40% Wills/Estates
Labour
30% Family
Other
20% PL
CO
10% RE
DE
0% IN
Solo 2 to 5 6 to 10 11 to 25 to 75 Up LA
24 74 FA
WI
Firm Size TA
Other
30. LAWPRO Claims Count by Error Type
1997 to 2007
100%
90%
80%
70%
Claim Count (%)
60% Communication
Time & Deadlines
50% Law or Tax Error
40% Investigation/Discovery
Clerical & Delegation
30% Conflict of Interest
20% Other
C
10% T
0% IDF
L
CO
10
5
24
+
74
lo
75
D
to
So
to
to
to
2
O
6
11
25
Firm Size C
T
IDF
31. Steps for avoiding
a malpractice claim
• Formal file opening procedure
– Conflicts check, written retainer with clear scope
• Conflicts
– Follow firm procedures religiously
• Systems normally catch them
• Ignored because poor judgment/greed
– Listen to your instincts - Who is your client?
– You can't judge your own conflicts
– Take appropriate action when real or potential conflict arises
• Manage/control client expectations from the start
– Process and procedures
– Anticipated timing
– Prospects for success/potential outcomes
– Anticipated costs/disbursements
32. Steps for avoiding
a malpractice claim (2)
• Don’t assume client understands everything
• Explain consequences of decisions
• Keep client informed
• Confirm information, instructions, advice and
work done in writing
– But not everything
• Get signed directions on major decisions
• Detailed contemporaneous dockets
– Telephone conference with client re instructions not to
do bylaw search
• Use tickler system for limitation periods/tasks
33. Steps for avoiding
a malpractice claim (3)
• Know the facts
• Don’t rush or take shortcuts - dig deeper - ask yourself:
• What does client really want need?
• Read between the lines
• Is there anything unusual?
• Is there something that doesn’t add up?
• Know the law
– Watch for tax issues
• Use written offers to settle
• Put case in properly
– Evidence Act notices, expert reports etc.
• Send interim and final reporting letters
• Don't sue for fees!!
• Don’t wait until end to ask how you did
– Once a year off the clock chat
48. Types of communications errors
• Failure to follow client’s instructions
• Work promised, but not done
• Often he said, she said…
• Failure to obtain consent/inform client
• Work done without instructions
• Implications of decisions/actions
• Poor communication with client
• Who looks after what
50. Inadequate discovery
or investigation of facts
• Not digging deep enough
• Examples:
– No property/pension valuations on
matrimonial file
– No medical reports on personal injury matter
– Not asking about spousal status/assets on will
matter
– Not doing title search on commercial lease
52. Categories of difficult clients*
• Angry/hostile
• Vengeful/with a mission
• Over-Involved/obsessive
• Dependant
• Secretive/deceitful/dishonest
• Depressed
• Mentally Ill
• The difficult client with the difficult case
• Client who is unwilling to accept, follow or
believe any of the lawyer’s advice
* From paper by Justice Carole Curtis
53. The 2/3 Rule
All your clients/matters should do at least
two of these three things:
• Interesting and challenging matters
• People you enjoy
• Pay you
2/3
55. The different types of tasks
Urgent and Important but
important not urgent
1 2
3 4
Urgent but Not urgent and
not important not important
Stephen R. Covey's book, The 7 Habits of Highly Effective People
56. • Motion today • LAWPRO premium
• Court filing due due next month
tomorrow • Employee issues
• Real estate closing • Collecting ARs
• Marketing
1 2• Exercise/time off
3 4
• Calls/emails • Trade press
• Most interruptions • Television
• Other people imposing • Did the Leafs win?
on your time • Facebook updates
62. How bad cheque frauds work
• Contrived legal matter
• Basic goal: have you run
fraudulent certified cheque
through your trust account
• You disburse funds on the bad
cheque
• Fraudster gets real money
• You get shortfall
63. Common types
• Bad debt collection
• Spousal support collection
– “Collaborative law participation agreement”
• Business loan
• Inventory purchase loan
• IP licence agreement payment
• Refund of retainer/deposit
64.
65.
66.
67.
68. More info on fraud prevention
• www.AvoidAClaim.com blog
• LAWPRO Fraud Fact sheet
• Report suspicious matters to
fraudinfo@lawpro.ca
• CALL FOR HELP
• www.practicepro.ca/fraud
69. Technology
is essential
See top legal technologies paper
89. Contact Info
Dan Pinnington, BSc, LLB/JD
Director, practicePRO, LAWPRO, Toronto, Ontario
(416) 598-5863 or 1-800-410-1013
dan.pinnington@lawpro.ca
www.practicepro.ca and www.lawpro.ca
Follow LAWPRO and practicePRO on Twitter
Connect with me:
– Linkedin: Dan Pinnington
– Twitter: danpinnington
– Facebook: Dan Pinnington
– Google+: Dan Pinnington
– Legal OnRamp: DanPinnington
Notas del editor
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Sometimes our insureds get into trouble b/c they get a little bit over their head
Sometimes, despite best intentions, claims sneak up on them
Sometimes they run straight into a claim that should have been fairly apparent due to warning signals
And to fair, sometimes the real dangers should have been obvious, but is a bit hidden
And as you all know, lawyers do make mistakes that lead to claims
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Inc’d 1990 by LSUC to provide its mandatory pgm ins’c licensed across Can Originally run largely as a Claim Dept of the LSUC Since ins crisis of early ’90s, has been run independently and distinctly from the LSUC parent Mandatory program insures the approx 22,000 lawyers in private practice in Ontario Also provides Excess (ON) and title insurance (Can)
lawyers/clients far more mobile
Fail to inform 40 Client consent 38 Poor communication 22 Ascertain deadline 37 fail to calendar 28 fail to react 10 procrastination 25
Claims COUNT by area of law and firm size MAIN POINT – area of law work varies a great deal by firms size Area of law reflects what you’d expect given work being done at different firm sizes more real estate at smaller firms, less as firm size increases Less family as firm size increases More litigation at the midsized firms More corporate & tax at large firms Most IP at boutiques and larger firms
Claims COUNT by error type (what insurers call description of loss) and firm size MAIN POINT – notwithstanding very different types of work at firms of different sizes (ie previous graphs) – the types of errors are are largely the same, regardless of firm size. People make the same mistakes and systems breakdown in the same ways regardless of firm size 3 rd and 4 th ranking at largest firms makes law errors #3, otherwise law would be 4 th like other firms sizes KEY POINT: Communication & time management account for about 50% of all claims at all firms This is why lawyer/client communication and time management are so important from risk management point of view This is why CLE/CPD that is solely substantive law focused misses the point SEE SLIDES AT END FOR MORE DETAILED DESCRIPTIONS AND EXAMPLES OF THESE TYPES OF ERRORS
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