Claim Reporting
When and How to Report
You are required to report a claim to your insurer as soon as practicable after learning of a claim or becoming aware of circumstances which might give rise to a claim, however unmeritorious.
Furthermore, you should report to your insurer when:
- You discover a mistake which has or may have caused the client damage. This is true even if the client has no intention of advancing a claim against you at the time; the client may advance a claim in the future. Early claim reporting allows investigation and possible mitigation of the problem before it becomes worse or more costly.
- You receive any threat or communication of intention to sue from a client or his or her lawyer. You should not second-guess the client’s intentions and wait for a clearer indication that the client is serious.
- Your handling of a matter is criticized by a member of the judiciary or in a public document.
- Another lawyer, on behalf of your former client, requests your file on a particular matter. This action should cause you to be cautious, especially if the former client’s lawyer does not give an explanation or expresses concerns about your handling of the matter.
- A client expresses dissatisfaction with your handling of a particular matter and there is some indication the client believes he or she has suffered a loss or incurred damages
This list is not exhaustive. There is no downside to reporting. When in doubt, report out of caution. The Nova Scotia Court of Appeal decision in Moore v. Canadian Lawyers Insurance Association, establishes an objective test for determining when a reasonably prudent lawyer should report, and confirms that you are required to report when you hear of circumstances which would likely give rise to a claim.
Steps you should take in preparation for reporting:
- Notify a LIANS claims counsel or the director at the earliest stage, even if you feel that a claim is contingent and may never materialize. Reporting late could mean that there is less time to repair the damage or investigate properly. Significant delays in reporting may cause a member to be denied coverage.
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Consider clause 4.4(d) of the Policy, which prohibits an Insured from making any admission of liability unless the Association gives prior consent:
"4.4(d) - Defence of claims - Admission of liability. The Insured shall not make any admission nor take any other action that might reasonably be expected to prejudice conduct of the defence unless the insurer is aware of and consents to the admission or action in advance." - Maintain all personal notes, memos or drafts relevant to the case, including jotted ideas on scraps of paper, and old telephone and electronic communications. Have all parties involved (client, your staff, etc.) make a record which describes the events surrounding the error.
- Make all records, details and file material available as requested by LIANS claims counsel. For a property claim, your certificate of title, title abstract, search notes, survey plans, and objection letter are generally always relevant.
- Do nothing more in the matter without the concurrence of claims counsel and the client, and ensure full disclosure of all impending deadlines and statutes of limitation dates.
- Always maintain a complete copy of your original file.
Also consider Commentaries 4.14 through 4.17 of the Legal Ethics and Professional Conduct Handbook on your obligation to advise your client when a claim or potential claim arises without admitting liability:
Errors and omissions
4.14
Upon discovering that a lawyer has made an error or omission in a matter in which the lawyer was engaged that is or may be damaging to the client and cannot readily be rectified, the lawyer has a duty to inform the client promptly of the situation but without admitting liability. When so informing the client, the lawyer must be careful not to prejudice any right of indemnity that either the client or the lawyer may have under any insurance, client protection or indemnity plan or otherwise.
4.15
At the same time the lawyer has a duty to recommend to the client that the client obtain legal advice elsewhere about any rights the client may have which arise from such error or omission and also whether it is proper for the lawyer who made the error or omission to continue to act in the matter for the client.
4.16
he lawyer also has a duty to give prompt notice of any potential claim to the lawyer’s insurer and any other indemnitor so that any protection from that source will not be prejudiced and, unless the client objects, has a duty to assist and cooperate with the insurer or other indemnitor to the extent necessary to enable any claim that is made to be dealt with promptly.
4.17
If the lawyer is not so indemnified, or to the extent that the indemnity may not fully cover the claim, the lawyer has a duty to expeditiously deal with any claim that may be made and must not, under any circumstances, take unfair advantage that might defeat or impair the client’s claim. In cases where liability is clear and the insurer or other indemnitor is prepared to pay its portion of the claim the lawyer has a duty to arrange for payment of the balance.