Reducing Solicitor Claims with Document Automation

The Impact of Claims on Solicitors

Solicitors face a range of claims that can significantly affect their reputation and financial position. According to Willis Towers Watson in their 2024 Solicitors Claims Analysis Report, the most frequent claims against solicitors are related to advisory activities and professional services, followed closely by process errors. These claims not only lead to substantial financial losses but also damage client relationships and trust.

Understanding the types of claims and their root causes is essential for risk management. By analysing claims data, solicitors can identify patterns and implement strategies to mitigate these risks.

Document automation is one important tool in this regard, offering a cost-effective and reliable way to reduce errors and enhance the quality of professional services.

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Common Advisory and Professional Service Claims

Advisory and professional service claims form the largest category of claims against solicitors. These claims arise from allegations of negligence, misrepresentation, breach of duty of care, and failure to meet client requirements. For instance, providing incorrect legal advice or failing to conduct thorough due diligence can lead to significant financial losses and legal disputes.

The report gives an example of an advisory and professional services claim:

"The insured was retained by their client to deal with negotiations for a loan and to advise in relation to a construction project. The insured’s client had problems with their general contractor in relation to payment for work to be carried out. The insured proposed to their client that a term sheet be signed which dealt with the distribution of funds and timescales for work to be carried out. This was signed by the general contractor, the insured’s client and the lending bank. Several months later, the general contractor walked off the project after collecting a large amount of funds from the insured’s client. The insured’s client then received multiple mechanic’s liens from the subcontractors and suppliers that had not been paid."

The cost associated with advisory and professional service claims can be substantial, encompassing both settlement and defence costs. Solicitors must, therefore, prioritise accuracy and thoroughness in their advisory roles.

Understanding Process Errors in Legal Practices

Process errors are a common source of claims against solicitors. These errors typically involve execution or procedural mistakes, such as missed deadlines, drafting errors, or incorrect filings. For example, failing to register security interests or file court papers on time can lead to significant legal and financial repercussions for both the solicitor and their client.

The report gives an example of a process error claim as follows:

"The insured had been instructed to renew a lease on behalf of their client. The lease was intended to be for a 10-year period with an option to extend for 5 years at the discretion of the client. The insured drafted the lease but the discretionary power to extend the lease had been given to the landlord. Towards the end of the 10-year period, the client had intended to vacate the building as they had constructed their own premises, however, the landlord used the extension option to increase the term of the lease."

The root causes of process errors often include manual data entry mistakes, miscommunication, and inadequate oversight. These errors can be particularly costly as they may lead to delayed legal proceedings, lost cases, and financial penalties.

How Document Automation Can Help Reduce Risks

Document automation involves the use of technology to create legal documents efficiently and to high standards of quality and consistency. Document automation can play a valuable role in reducing the risk of claims related to advisory/professional services and process errors. By automating routine tasks and standardising document creation, solicitors can improve accuracy, efficiency, and compliance. Here are some ways document automation can help:

• Consistent advice: Document automation can help ensure that the advice provided is consistent and based on the latest precedents and practices.
• Comprehensive documentation: Automated systems can generate comprehensive documentation that meets client requirements and reduces the risk of misrepresentation or negligence. Each person creating the document can be guided through a checklist, ensuring they turn their mind to each important point and choose the most appropriate option for their circumstances.
• Efficient client communication: Automation can streamline client communication, ensuring that clients receive timely and accurate information. As an example of how Pawson Law benefit from document automation in criminal law – particularly in improving the timeliness and quality of client reporting - see this case study: https://www.lawhawk.nz/case-study/pawson-law.

By automating document-related tasks, solicitors can also minimise the risk of process errors and ensure timely and accurate execution of legal processes:

• Automated reminders: Document automation systems can generate important data, such as key dates, that can be used to send reminders for important deadlines, ensuring that conditions are satisfied or waived, and court papers are filed on time.
• Template-based drafting: Using standardised templates for legal documents can minimise drafting errors and ensure consistency.
• Error-checking: Automated systems can perform checks for common errors, such as missing information or incorrect formatting, before documents are finalised.

LawHawk has automated a number of highly complex document templates. As well as maximising time savings, we are always looking for ways to pre-empt errors. As one example, consider a will where the Will Maker wants to gift $200,000 equally to Mary and Sam. That's easy – each gets $100,000. However, the Will Maker changes their mind and decides to give the $200,000 equally to Mary and "my Children", where there are three children. Now what is intended? It could be:

• Mary gets $100,000 and the children get $100,000 (to share between them); or
• Mary and each child gets $50,000.

This type of change, and its significant implications could be easily overlooked in manual drafting. With our automated will, when a gift is divided between one or more family classes in this way, an additional mandatory question immediately displays asking if the gift is to be on a "per capita" basis, with guidance explaining what this means. This should prevent this issue – and any subsequent claim – from arising.

Conclusion

In conclusion, document automation offers an important component for solicitors facing the challenges of process errors and advisory claims. By leveraging technology to streamline document-related tasks, solicitors can enhance accuracy, ensure compliance, and ultimately reduce the risk of costly claims. Implementing best practices and learning from successful case studies can further help solicitors maximise the benefits of document automation and safeguard their professional integrity.

If you would like to explore how document automation could enable better overall business outcomes for your firm, please get in touch.

If you would like to understand what technology options may be available to your firm more generally on an affordable basis, check out our eBook: A Guide to Tech for Small Law Firms: Practical Solutions on a Budget.

If you'd like to know more about WTW and how they help solicitors (and businesses such as LawHawk), contact:

James Earwaker, Manager Wellington & Central or Jackson Wilson-Yalden, Account Executive