Eurojuris Congress Risk and the business of law Professional liability and risk November 6 th, 2009 Sandra Neilson (-Moore) Law firm practice leader Marsh FINPRO

1 Marsh Professional Liability Risk Consequences  Small € complaints and claims  Dissatisfied client / lost client  Individual stress and confidence damage  Partner time / cost  Waived fees and free work  Reputational damage / lost client / lost new business / lost referrals

2 Marsh Professional Liability Risk Consequence Large € claims  Large client loss / dissatisfaction / loss of reputation / waiver of fees  High profile damage to individual reputation and confidence  Very expensive in cost to firm and increased insurance costs  The media

3 Marsh Other Factors  Media more intrusive  Conflict and excessive fees ‘scandals’  Regulators seeking impressive ‘scalps’  Current economy worrying – the ‘blame’ culture  International exposures – can you defend yourself in different jurisdictions?

4 Marsh Where Do Serious Claims Come From?  Poor choice of client (identifying client, screening client)  Drafting errors in commercial contracts / tax / transactional / math  Scope of engagement – ‘Mission creep’  Poor note keeping, recording of instructions, managing expectation  Economic failure of client / client’s transaction  Partner fraud / personal disintegration / time pressures

5 Marsh How to prevent?  Take risk seriously  Be sure – no cutting corners  Smell test – can you defend your actions objectively  Is it worth it in the long run?  Is it worth the firm’s reputation?

6 Marsh When it happens  Identify quickly and act  Damage control (internal and external)  Don’t panic and don’t hide  Control but no arrogance  What is the right answer, legally, morally, publicly?

7 Marsh How Do Law Firms Manage Professional Risk?  Culture – induction, manuals, reiteration, open door philosophy  Value and trust before greed and profit  Pride in doing the job well  Good rewards and positive reinforcement  Good people, doing good work

8 Marsh Above All  Avoid the avoidable – pay attention to the rules  But when it does happen  Hire good advisers and listen to them  Keep the high ground, manage the media, manage the internal damage

9 Marsh Discussion What claims against law firms are you aware of in your jurisdiction? What do you do in your firm, to prevent claims against you? What is your perception of claims activity in your jurisdiction?