All professional services firms suffer claims made against them, not least solicitor firms. The fact remains…there will always be disgruntled clients. However, many firms are needlessly exposing themselves to potential claims by failing to adequately discuss all considerations under “Information about costs” as directed under the SRA Code of Conduct.
Obtaining After the Event insurance and the possibility of third party funding should not be ignored but instead be appropriately highlighted and explained to clients regardless as to how strong a case may appear.
Whilst OFR replaced the Code of Conduct in 2011 the same provisions apply under section 2, paragraph 2.03 “Information about the costs” in particular item (g).
“You must give your client the best information possible about the likely overall cost of a matter, both at the outset and, when appropriate, as the matter progresses. In particular you must:
(g. discuss with the client whether their liability for another party’s costs may be covered by existing insurance or whether specially purchased insurance may be obtained.”
Even those claims with high prospects of success should not deny the client in receiving “the best information possible” so the client can be empowered to make an informed decision when considering the financial risks associated with litigation, critically in their protection against adverse costs with after the event insurance.
The implications for not discussing the risk of adverse costs with a client should their case fail are clear. For instance, if a client lost their case but was not made aware of the possibility of obtaining After The Event cover then potentially the client may have a case against the firm. Equally, if a client had not been informed of the possibility of obtaining an After the event policy and had decided not to proceed with their claim for fear adverse cost exposure then here too lies a potential claim against the firm.
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