Lockton’s dabbling lowdown

In the era of management information and data-driven decision-making, the modern solicitor must be many things. It isn’t enough to simply give clear advice; we are told that the industrious solicitor is supposed to have a can-do attitude, adding value wherever possible. This can lead to a temptation to take on work outside your area of expertise. Not so fast! In our latest risk management article in conjunction with Lockton insurance brokers, Alan Eadie and Stuart Craig of DAC Beachcroft take a look at the potential risks you and your firm face when dabbling in unfamiliar territory.

The first step in avoiding dabbling? Being able to recognise it. Some areas of practice come with obvious red flags: crofting law, tax, international sanctions, etc. Beyond those, it is a matter of professional judgement; you tend to have a gut sense of when you're straying beyond your comfort zone. Don’t ignore this instinct. Unfortunately, there is no one-size-fits-all rule that can be applied to avoid the perils of dabbling. It might look painfully clear when starkly laid out in a Scottish Legal Complaints Commission (SLCC) investigation report, but the distinction between acting at the limits of your expertise and overreaching is often more opaque in practice. Consider these examples:

• A solicitor acting in a different area of expertise but within the same specialism. For example, a solicitor who specialises in fatal accident claims assists a client to defend an industrial disease claim. The applicable legislation may differ, but there is likely to be significant crossover in terms of the litigation process and strategy, including assessing liability, causation and quantum.
• A solicitor acting in a different specialism but within the same discipline. For example, a personal injury solicitor provides advice to a client regarding a complex property recovery matter. Both are civil litigation matters but there will be divergence in lifecycles and applicable time limits. Some overarching principles may be applicable to both, but more technical and procedural nuances creep in. Proceed with caution.
• A solicitor acting in entirely different disciplines. For example, a commercial litigation solicitor advises a private limited company on how to transition into a public limited company via an Initial Public Offering (IPO). In this instance, the solicitor is acting in two distinct areas of law. The applicable legislation, accepted practice, instruction lifecycle and client expectations could be vastly different. Proceed with extreme caution. Better yet – refer elsewhere!

Any of these examples could be dabbling, or they might not be. Each client engagement turns on its own circumstances, which will include the capabilities and experience of the particular solicitor acting. For instance, it is not uncommon for a sole practitioner or smaller high street firm to cover a number of different disciplines including conveyancing, wills and executries but also commercial work. Conversely, the highly specialised personal injury solicitor in our first example may be at risk of dabbling if they have no prior experience of dealing with industrial disease claims.

To help identify where to draw the line, solicitors should conduct their own transaction-specific risk assessment on top of the usual financial checks and client-vetting processes. The first step should be to consider whether you or your firm usually carries out work of that nature. As a general rule, be extremely wary of taking on work in an area in which you have limited experience. That is not to say that a solicitor cannot develop the breadth of their expertise, but this should be done by pushing the boundaries of their existing comfort zone, not by launching into a completely different area of practice.

The level of risk and seriousness of any potential consequences must come into play: the average DIYer might be willing to have a go at putting up a shelf or wallpapering a room but should be rightly wary of tackling a plumbing or electrical job! Applying this analogy to solicitors, potential exposure should be considered in line with your firm’s risk appetite. If the scope or value of the transaction falls outside your firm’s usual parameters, this may expose your firm to new risks not anticipated in the current risk management plan. Consider that an instruction may become much more complicated as it progresses. If you are out of your depth at the outset, you could very quickly find yourself drowning.

What certainly should not be a determining factor is the potential level of reward – and that works both ways. The risk is no less just because there is little or no fee taken (for example, a favour for a friend). On the other hand, reaching beyond your comfort zone to grasp at a potentially hefty fee could backfire spectacularly if things go wrong.

It may be that a solicitor can take on work that is a bit of a departure for them if they are adequately supervised. This might be by a colleague in their own firm, another firm, counsel or an independent expert. Supervision should be more than superficial, involving case reviews and readily available guidance. If the support is external, the person providing it should have a level of accountability. Everything should be documented as a means of demonstrating the exercise of reasonable skill and care.

Dabbling can lead to all manner of mistakes, from incorrectly interpreting legislation to missing a deadline; the unwitting solicitor can easily find themselves facing a professional negligence claim.

Claims by clients against solicitors are normally based on the express and implied terms of the contract between the client and the solicitor, with negligence as an alternative basis. In both instances, the solicitor is assessed as to whether they applied the standard of care to be expected of a reasonably competent and careful practitioner versed in the particular area of law.

Before taking on any instructions, you must consider whether you (alone or with input from others) have the legal knowledge, skill and experience to meet that threshold.

In the event of a claim, your firm will likely be on the hook to pay the self-insured amount (and deal with the likely increase in the following years’ premium loadings). In addition, it is important to ensure that your level of PI insurance is sufficient to cover the value of any potential claim and kept in place for as long as the risk of a claim subsists. Even if a claim is ultimately unsuccessful, time spent defending it will eat away at valuable fee-earning time.

There are also the reputational and client retention implications. It is unsurprising that most clients turned claimants choose to take their future business elsewhere. Faced with all of this, any fee (however hefty) for the original instruction will quickly pale into insignificance.

In addition to professional negligence actions, there are instances where dabbling could constitute a breach of a solicitor's professional obligations and form the basis of a complaint to the SLCC or LSS.

As per Section 5 of the Scottish Code of Conduct for Solicitors, solicitors are under an obligation to provide adequate professional services to their clients. As part of this, a solicitor must “only act in those matters where the solicitor is competent to do so”. It follows that it would be improper for a solicitor to agree to act where they consider the service to the client could be inadequate owing to lack of knowledge or experience.

A client is entitled to make a service complaint, conduct complaint or both against a solicitor or firm of solicitors. The service elements of any complaint will be investigated by the SLCC and an upheld complaint can lead to:

• a reduction or refund of fees;
• compensation for loss or inconvenience; or
• a requirement to carry out additional work to correct what has gone wrong.

The conduct elements are investigated by the LSS and lead to sanctions affecting the solicitor personally, such as a requirement to pay a fine or compensation, or being censured, thus restricting their ability to practice.

There are a number of laudable reasons why solicitors might consider pushing themselves to build their experience and add more strings to their bow. When that is done in a controlled way, with suitable safeguards in place, it is something to be encouraged.  However, regardless of good intentions and an eagerness to provide a comprehensive legal service, solicitors must always exercise professional judgement and consider if they have the knowledge and experience needed to provide a competent legal service. If in any doubt, it is better to be cautious. Given the option, most clients would prefer to receive a letter from their solicitor politely declining certain instructions than one withdrawing from acting after the damage has been done.

Article submitted by Lockton. Written by Alan Eadie and Stuart Craig at DAC Beachcroft Scotland.

Alan is partner and Stuart a solicitor in the Professional and Commercial Risks team at DAC Beachcroft Scotland. Both specialise in defending professional indemnity claims across a broad range of professions but with a particular focus on dealing with claims under the Law Society of Scotland Master Policy Scheme.