In brief - Many professional indemnity (PI) claims arise from
three common pitfalls
Three of the most common oversights giving rise to PI claims
against lawyers are:
Not appreciating the indispensible nature of file notes
Failing to identify the source of your instructions
Accepting a longstanding client's assurance that
"everything is under control" without taking independent
steps to ensure that your legal obligations are fulfilled
File notes and written client advice
Most legal practitioners will agree that documenting
instructions received from a client is an ordinary prudent task
undertaken in the proper maintenance of a file. However, this task
is often overlooked, particularly in busy practices.
This means that when lawyers are faced with a claim, it is
difficult for them to reconstruct the past and piece together the
events leading up to the claim because of a lack of written
Maintaining contemporaneous file notes ensures that you have an
accurate record of your client's instructions, enabling your
colleagues to implement the instructions or advise on them. These
notes also act as an effective risk management tool if a dispute
Similarly, if you follow up verbal advice with written advice,
this can help to disprove any subsequent suggestion that you have
failed to advise your client adequately on the matters in
It also ensures that your client knows what course you intend to
adopt in implementing their instruction. The client may alter their
instruction if they disagree with the proposed course or are wary
of the risks or costs associated with it.
Make sure you identify the source of your instructions
It is important to ensure that the person who is giving you the
instruction has the proper authority to do so. This not always
clear in cases where, for example, you are taking instructions from
a company client via its director, or where you are acting for a
husband and wife.
Does the director have the authority to provide you with
instructions? Have the husband and wife given you authority to take
instructions from one or the other?
You must satisfy yourself that the person giving you
instructions has the requisite authority and also ensure that your
client has the same understanding regarding this authority.
Be wary of client assurances that "it's all under
It is not rare to come across a legal practitioner who has
longstanding, loyal clients for whom he or she has acted for many
years. This does not mean that the relationship of trust between
the solicitor and client extends to a point where the
solicitor's legal obligations are diminished.
It is not uncommon for solicitors to accept reassurances from
such clients that the client will personally fulfil certain tasks,
without the need for the solicitor's involvement.
Consequently, the solicitor can be left out of the loop to a
large degree. If problems emerge later, the question arises of
whether the solicitor has in fact fulfilled their retainer.
You should always be cautious about relying too heavily on a
client's assurances without taking independent steps to ensure
that your legal obligations are fulfilled.
How to stay out of trouble
Always document instructions received from a client in writing,
either by making a file note or by providing a written advice to
the client confirming the instructions you have received. To be on
the safe side, do both.
If you intend to take a particular course to fulfil your
client's instruction, put it in writing. Verbal instructions
can be forgotten or misunderstood, but the written advice can be
called upon later if needed.
Acknowledge that while you may have a rapport with longstanding
clients and may agree to their performing certain tasks in your
stead, this does not eliminate the need for you to fulfil your
The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
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