What trouble are other lawyers getting into?

March 23rd, 2016
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Do you know what your own colleagues and employees are doing?

By Ann Bertelsmann

There may well be some sense of schadenfreude – that is, if you yield to the temptation to take a form of pleasure in the troubles of others – when you read about practitioners’ mishaps in the case studies that follow:

Misleading clients

In the article by John Hyde ‘Partner struck off for “web of deception” about case progress’ The Law Society Gazette (www.lawgazette.co.uk, accessed 22-2-2016), he discusses the sad tale of a solicitor having been struck off for misleading his client about the progress of a land dispute with a neighbour.

In mitigation, Adrian Harling, the managing partner of the law firm, argued that he had genuinely believed he was serving his client’s best interests, having advised as far back as February 2008 that land dispute cases were difficult to win.

Closer to home, the Attorneys Insurance Indemnity Fund (AIIF) is regularly notified of claims where practitioners or support staff have attempted to mislead clients about the status of their matters – even going so far as to cut and paste court documents to create the impression that litigation has commenced or has been successful.

In one such case, several claims arose out of a partner in a two-person practice having misled a substantial number of clients over a period of time. For a fuller discussion, see the article by Ann Bertelsmann ‘Let the Partner Beware! An important case study’ Risk Alert Bulletin (www.aiif.co.za, accessed 22-2-2016).

Case notes

Misleading colleagues

The AIIF was notified by A Attorneys of a number of potential claims against them, arising out of the prescription and/or under-settlement of some of their clients’ Road Accident Fund (RAF) claims.

These matters had all been allocated to S, a senior candidate attorney, who had been employed by the practice for several years, while he obtained his LLB degree and did his articles. S was allocated his own secretary and a portfolio of RAF and other personal injury matters.

Apparently during this time S reported to the directors on a regular basis. He built up a vast experience in running personal injury claims and had successfully concluded a large number of these matters.

A year or two later, one of the directors became aware that S had omitted to timeously lodge the RAF 4 serious injury report in one of his matters. S was instructed to consult with the senior director about the matter the following day. At this consultation, he was asked to have all his files ready for a discussion with the directors the following week. Thereafter, S failed to return to work and never furnished an explanation for his desertion. He did not return messages left for him and could not be contacted.

When S’s other files were subsequently checked by the directors, it became apparent that many of them had not been dealt with competently and some claims had in fact become prescribed.

Ignorance of the law

  • In another claim against a firm of attorneys arising out of the prescription of a client’s RAF claim, the attorney had misunderstood the law. The client was injured in a motor vehicle accident in which the insured vehicle was unidentified – a so-called ‘hit and run’ claim. Such claims must be lodged within two years from the date of accident. The claim was lodged three months late and, therefore, became prescribed. The insured attorney explains that he was under the impression that a claimant in a hit-and-run case had two years and three months within which to lodge the claim. This was his (incorrect) understanding in terms of the amendments to the RAF legislation.
  • In a conveyancing matter, B Attorneys had drafted a rental agreement between Ms X (the lessee) and Mr V (the lessor), which included an option to purchase the properties specified in the agreement from the lessor for R 3 million.

When the lessee attempted to exercise the option, the lessor refused on the basis that the agreement was in conflict with art 3 of the Subdivision of Agricultural Land Act 70 of 1970 (the Act).

B Attorneys then represented the lessee in an action against the lessor to force him to comply with the agreement.

The court found that the relevant clause was indeed in conflict with art 3 of the Act. A subsequent appeal was also unsuccessful. The lessee brought a professional indemnity claim against Attorney B, on the basis that he had drafted the agreement in contravention of the Act.

Lack of attention to detail and administrative errors

During March 2009, a couple consulted with C Attorneys regarding the drafting and registration of their prenuptial agreement. Their wedding was to take place on 21 March 2009. C Attorneys provided the couple with a letter to be given to the marriage officer as confirmation of the marriage regime to be entered on their marriage certificate. He drafted the contract, had it properly notarised on 19 March 2009 and lodged it with the deeds registries office on 23 March 2009.

However, the Registrar rejected the application because C Attorneys had reflected the incorrect identity number of one of the parties on the agreement. Although the error was subsequently rectified and the documents were re-lodged, they were once more rejected on the basis that more than three months had elapsed since the contract had been notarised and the provisions of the Deeds Registries Act 47 of 1937 were therefore not met.

To exacerbate the problem, as a result of a bona fide administrative error on C Attorneys’ part, an application for condonation for the late registration of the agreement was never made. It was only when the couple sought to purchase an immovable property a few years later that they discovered that the agreement had never been registered in the deeds registries office.

An application for condonation was successfully brought and the agreement was finally registered in February 2014, by which stage the purchase of the immovable property had fallen through.

Poor trial advocacy

E Attorneys were sued by a client whose action against the state was unsuccessful. The transcript of the trial revealed that the professional assistant employed by E Attorneys had failed to place key evidence before the court to support the allegations in the particulars of claim.

Oversights

  • During April 2006 F Attorneys received an instruction from S Bank to register a first mortgage bond in their favour over a property. The mortgagor was Mr P.

The bank also instructed F Attorneys to have a limited surety signed by Mr P’s daughter. Registration of the mortgage bond was duly effected in the Cape Town Deeds Office. Unfortunately the signed surety documents were not obtained. F Attorneys only realised that the surety had not been obtained, when the bank’s compliance department contacted them in this regard.

Thereafter, F Attorneys were unable to persuade Mr P’s daughter to sign the surety documents.

The bank demanded that F Attorneys provide them with an undertaking to cover any loss incurred as a result of their error. The mortgagor, Mr P was in arrear with his bond instalment.

  • The sellers sold a property to the purchasers, subject to a water servitude for household consumption being registered in favour of their remaining property. F Attorneys drafted the papers to register the servitude but failed to register it. A paralegal had dealt with the file under the supervision of a director of F Attorneys.

Since the cases discussed are merely a small sample of things that have gone and do go wrong in practice, it might be prudent to ensure that mistakes made in your own practice do not also end up being material for future case studies – and the schadenfreude of others.

How would you go about ensuring that procedures, checks and balances are put in place in your practice to prevent such claims-prone situations? For some ideas read the article ‘Effective supervision in your legal practice’ 2015 (Dec) DR 26. You might also wish to consult the Risk Management section on the AIIF’s website at www.aiif.co.za.

Ann Bertelsmann BA (FA) HED (Unisa) LLB (Wits) is the legal risk manager for the Attorneys Insurance Indemnity Fund in Centurion.

This article was first published in De Rebus in 2016 (April) DR 12.

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