LAWPRO Information & Practice Advice

Dan Pinnington, Director, practicePRO

Lawyers’ Professional Indemnity Company

Post ITLP Preparation & AdviceMarch 23, 2012

Agenda

• LAWPRO information

• Student-lawyer transition tips

• Practice building tips

• Resources

• Questions

malpractice claims

4/5

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

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

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

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

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

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

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

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

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”

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

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

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

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

LAWPRO claims by error type (claims by count % for 2000-2010)

Other6%Fraud

3%Conflict6%

Clerical6%

Fail to Know Law12%

Communication34%

Time17%

Inadequate Investigation

16%

See LAWPRO Magazine article on biggest claims risks

LAWPRO Claims Count by Area of Law 1997 to 2007

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Solo 2 to 5 6 to 10 11 to24

25 to74

75 Up

Firm Size

Cla

im C

ou

nt

(%) Corporate

PlaintiffReal EstateDefenceIPTaxWills/EstatesLabourFamilyOtherPLCOREDEINLAFAWITAOtherPlaintiffReal EstateCorporateDefenceFamilyWills/EstatesLabourTaxIPOtherPlaintiffReal EstateCorporateDefenceFamilyWills/EstatesLabourTaxIPOtherPlaintiffReal EstateCorporateDefenceFamilyWills/EstatesLabourTaxIPOtherPlaintiffReal EstateCorporateDefenceFamilyWills/EstatesLabourTaxIPOther

LAWPRO Claims Count by Error Type 1997 to 2007

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Firm Size

Cla

im C

ou

nt

(%)

CommunicationTime & DeadlinesLaw or Tax ErrorInvestigation/DiscoveryClerical & DelegationConflict of InterestOtherCTIDFLCODOCTIDFLDCOOCTIDFLDCOOCTIDFLDCOOCTIDFLDCOO

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

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

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

Tips for making the student to lawyer transition

A quick review of the options

Honestly assess what makes sense for you

What makes you unique?

Get networking

Use interview questions to sell yourself

Are you ready for sole practice?

Be prepared to adapt

Tips to help you succeed

in the practice

of law

Start with a budget and

business plan

Create a marketing plan and take time to

market every day

Pick an area of law you are passionate about. Specialize.

Don't dabble

Keep clients happy

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

Learn to listen

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

Beware of difficult clients

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

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

Tasks and time management

Urgent and important

Urgent but not important

Important but not urgent

Not urgent and not important

1 2 3 4

The different types of tasks

Stephen R. Covey's book, The 7 Habits of Highly Effective People

• Motion today• Court filing due

tomorrow• Real estate closing

• Calls/emails• Most interruptions• Other people imposing

on your time

• LAWPRO premium due next month

• Employee issues• Collecting ARs• Marketing • Exercise/time off

• Trade press• Television• Did the Leafs win?• Facebook updates

1 2 3 4

Get sufficient retainer at start

Replenish retainer when it runs out

If clients don’t replenish retainer or pay outstanding accounts…

Bill something every week

Bill matters at milestones

Be prepared for unexpected things

Prepare a disaster plan

Beware of bad

cheque fraud

and other frauds

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

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

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

Technology is essential

See top legal technologies paper

Get a mentor

Connect with peers by joining OBA or local law association

Family, relatives and community

What goes around comes around: So be nice!

Take care of yourself

Have a life outside law

Create a strategic plan

Places to learn more:

www.practicepro.ca

www.lawpro.ca

practicePRO Lending Library

LSUC Resource Centre

LSUC/OBA Solo & Small Firm Conference

May 31-June 1, 2012

ABA Law Practice Magazine

2 final thoughts…

It will be the same. It will be different.

Trust your instincts.

Good luck!

Thanks and questions please!!

www.titleplus.ca

www.lawpro.ca

www.practicepro.ca

Contact InfoDan Pinnington, BSc, LLB/JDDirector, practicePRO, LAWPRO, Toronto, Ontario(416) 598-5863 or 1-800-410-1013dan.pinnington@lawpro.cawww.practicepro.ca and www.lawpro.ca

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Connect with me: – Linkedin: Dan Pinnington– Twitter: danpinnington– Facebook: Dan Pinnington– Google+: Dan Pinnington– Legal OnRamp: DanPinnington