My Claim: Questions and Answers

This summary of LIF’s claims process for negligence claims and potential claims (Part A of the policy) is intended only to assist lawyers. The duties of both lawyers and the indemnitor are set out in Your Policy, and that wording governs.

To report a claim or potential claim, go to the Reporting Guidelines for Lawyers.

My responsibilities

You have two key duties. One is to promptly report claims and potential claims (see below). The second is to cooperate with us, and any counsel we retain, and assist us in investigating coverage, fixing mistakes, defending claims and making settlements. Other duties include obtaining our agreement before taking any steps in relation to a claim or potential claim, including making any admissions or attempting a repair. 

Policy:  Conditions 4.1, 5.1, 5.2 and 5.3 

Immediately. If you become aware of an actual or alleged mistake, or any circumstances that could reasonably be expected to be the basis of a claim, however unmeritorious, you must give written notice immediately along with the fullest information available. Report a claim or potential claim.   

You need to report any claim – a demand for money, an action, a claim or institution of proceedings against you – or potential claim. If your client suggests you were negligent, hints at suing you or seems unhappy with a result and asks you to send the file to a new lawyer, report even if you believe there is no merit to any claim that may be asserted. Alternatively, if you think you might have made a mistake, report to us – even if the client doesn’t know. The test for timely reporting has an objective as well as a subjective element. You can’t avoid a finding of a late report by saying that you did not believe that a claim would arise. We will look at what the reasonable person in your position would have anticipated. 

Early notice puts us in the best position to defend and resolve anticipated litigation. It may also allow us to fix a problem or take steps to minimize the financial consequences of a mistake, thereby avoiding losses and saving money. It may also prevent a loss to your client and the stress to you both that results from a malpractice claim. 

You do not pay more for the compulsory policy because you report. However, you risk paying the full cost of any claim entirely out of your own pocket if you do not report immediately and your indemnitor is prejudiced as a result. Although we will cover your partners who were unaware of the matter, you remain liable for any amounts that we pay on their behalf. If you are not sure whether or not to report, err on the side of caution, and for peace of mind, report or contact us; we are happy to help and are only a phone call away. 

Policy:  Conditions 4.1, 3.2 and 6.1 

Yes. The Law Society has a long-standing policy that claims information you provide cannot be disclosed to the Law Society’s regulatory departments unless you consent. The only exception to this policy is evidence of dishonest appropriation, fraud or criminal activity. So rest assured that when you report claims and potential claims your information – and your client’s – remains confidential with us. 

Reporting

If you have been sued, make sure you take any steps immediately needed to protect yourself and your firm from any default proceedings.

Otherwise, it is best to hold off on taking further steps until we connect with you. This way, you won’t risk coverage by admitting liability, indicating that the BC Lawyers Indemnity Association or LIF will 'take care of everything', trying to fix or settle the matter or doing anything else that might prejudice our ability to manage the claim. If your client or former client contacts you, either directly or through a new lawyer, wait to respond until you have spoken to us. We will guide you through what to say, ensuring you meet your ethical obligations without jeopardizing coverage. We will answer questions such as: “Can I tell my client I’ve reported to BCLIA or LIF?,” “Should I give my client my file?,” “Can I go ahead and try and fix this or settle it myself?” or “Can I say I’m sorry?”. If the matter is urgent, call us.

That will depend very much on the particular circumstances of your report. You may need to recommend independent legal advice, but you want to avoid admitting liability until you talk to us. An apology may be appropriate. As we will connect first (see above), we can help you work through what to say.

It depends. You may be in a conflict such that you are unable to do so, or it may be best for other reasons to refer your client to new counsel. We will help you work through these issues.

Probably because you want to serve your clients well and think you shouldn’t make mistakes. But no one can be perfect all the time, and that is one of the reasons you have indemnity coverage. And remember that you are not alone. Statistically, you will make a mistake – or someone will say you have – that requires you to report to us every seven years or so. We have been through this with many other lawyers and can help you put the matter into perspective.

Claims handling

One of our claims managers will review your report and, depending on the area of law, assign it to one of our experienced, knowledgeable claims counsel. Claims counsel are in-house lawyers who are on the front-line of managing claims and potential claims. They have all spent time in private practice and understand its rigours and challenges.

We first make sure coverage is in order (it usually is), and then work to determine the most appropriate strategy to manage the matter. The strategy will depend on a number of factors: Are you reporting an actual claim or your discovery of a mistake that might lead to a claim? Can steps be taken to fix the mistake or minimize the loss? Is a vigourous defence required or should we work towards a resolution? Is it best simply to 'let sleeping dogs lie' and wait for further developments or take immediate steps?

Generally you can expect a phone call from claims counsel after you report, and you will receive a letter. We may need more information and will want to discuss next steps with you. We can also answer any questions, including what to say to your client.

You are a vital part of the process. Your knowledge of the client and the circumstances surrounding the claim will be of great assistance. And by helping us and any defence counsel appointed, you are also meeting your duties as a Covered Party.

No. Unless there is evidence of fraud or theft, your report of a claim and any payments made by you or us are confidential and do not form part of your professional record.

Leave it to us and we will help make that happen. In fact, each year about 20 percent of the reports we receive are successfully repaired.You might think you can just go ahead and fix the mistake yourself. Please do not try. If you do, you run the very real risk of a coverage denial because of a late report.

We have ongoing relationships with various lawyers who have acted as repair counsel many times over, and will assist in choosing one with the appropriate expertise to act for the client on the repair. Once selected, the client usually agrees to the repair avenue outlined. In most cases in which the repair succeeds, the lawyer is able to continue acting for the client.

Repair costs, such as accounts from repair counsel, whether incurred by your client or by us while trying to fix your mistake, trigger the payment of your deductible. If the mistake can be fixed for less than your deductible, then you pay only the lesser amount. If repair costs exceed your deductible and we must contribute, then the usual financial consequences of a paid claim apply (see next question).

None, if a claim is defended successfully.  However, there are generally three consequences if we pay a settlement or judgment, or pay repair costs trying to fix a mistake:

  • You pay a deductible of $5,000, or $10,000 for mistakes reported within three years of each other. Your firm may agree to pay a deductible for you – that is a matter between you and your firm.  If we are unable to collect from you, partners at your firm when the mistake was made are also liable for the deductible;
  • You pay a surcharge of $1,000 on your indemnity fee for five years. The total surcharges will not exceed the amount we pay in indemnity;
  • You lose eligibility for the part-time discount for five years.

You usually won’t, as most of the matters reported to us do not involve litigation. But if you do, we will act as counsel ourselves or retain outside counsel. We defend many claims in-house, including most small claims matters. We also appoint external counsel, selecting from counsel who are experienced in defending lawyers professional liability claims. Selection is done on a case-by-case basis, taking into account factors such as the area of law and the complexity of the matter. As with most indemnitors or insurers, LIF controls the defence of the claim. However, if you have any questions about our choice of counsel, we are happy to explain.

We are committed to keeping you in the communication loop. If you have been sued, you can expect defence counsel to keep you informed, although we invite your calls at any time.

If we paid a settlement or judgment on your behalf, the usual financial consequences will follow. (See 'What are the financial consequences if a claim is made against me?')

Unless your claim was not covered, we will send you a Service Evaluation and Risk Management Form. We want to hear your thoughts on what we did right and where we can improve.

You may need to keep your file material relating to the underlying matter for a period of time. If you are not sure how long that should be, your claims counsel can give you some guidance.