As firms prepare for the most popular time to renew their PI insurance, there remain some common causes of claims which continue to impact the profession. Tom Bedford from DAC Beachcroft walks us through the trends his team have seen recently.
Who’s being targeted?
Property lawyers remain the main target for claims. Missed deadlines, particularly in the context of claiming SDLT relief during the pandemic but also in relation to Lease extensions, continue to be troublesome. However, we are seeing less buyer-funded development claims, as firms are now more aware of the risks involved.
The poor management of litigation, leading to missed limitation deadlines and the under settlement of personal injury claims, remains a problem. It can be hard to identify the root cause of these errors, but we have seen examples of solicitors struggling with their workloads. The rise in remote work, particularly during lockdowns, and lack of supervision, still affect the number of claims.
A recent decision in favour of a claimant who alleged that, due to the negligence of her lawyers, she received a less favourable settlement in the context of ancillary relief proceedings following divorce, may mean that these claims continue to increase. For years, there have been claims about solicitors failing to secure Pension Sharing Orders, particularly where the pension is the main matrimonial asset.
Claims involving private clients have become more common in recent times. These claims take a number of forms. More complex family arrangements and rising house prices have contributed to this trend, meaning that claims can be significant and hard to resolve.
Across the profession, cyberattacks and data breaches remain problematic. SRA statistics show a modest reduction in cyberattacks, possibly because the profession has become more educated as to those risks. But law firms remain a target for threat actors. We still see firms failing to properly verify bank details, allowing an attacker to gain access to files, change bank details and divert monies. The changes in the Banking Code, which require matching account details and names, haven’t completely solved this issue.
Defending claims has also become more difficult to deal with because of an increase in claims being brought by Litigants in Person. This rise might be due to the cost-of-living crisis, limiting access to legal services.
What’s next?
It is important to stress that the consequences arising from the pandemic have not been as severe as many feared. Many of the risks which were predicted to cause huge volumes of claims have not materialised.
The new challenge is the economic climate. There’s a concern about lenders making claims against conveyancing solicitors, a pattern that was prominent after the 2008 financial crisis. Government data shows that repossession claims have increased by 40% since 2022. However, the increase in repossession orders is only 11%, and they remain significantly lower—about 95% less than in 2009. A number of the major, mainstream lenders have, however, agreed a moratorium on repossessions until 2024. If interest rates continue to increase, we predict a new wave of these claims, but with lower volumes than in the last recession.
The key message for firms is to remain vigilant. Support colleagues by managing workloads, providing supervision and put risk management at the centre of your firm’s culture.
Image: Tom Bedford
Josie Geistfeld
Josie Geistfeld is Editor of Yorkshire Legal News. She welcomes comments and questions.