By Ann Bertelsmann

By now it is surely common knowledge among South African practitioners that the majority of professional indemnity (PI) claims arise out of two areas of practice – Road Accident Fund claims and conveyancing matters. What is it about these two areas of law that lends itself to such claims?

When we scratch beneath the surface and examine what the majority of these matters have in common, the single most frequent answer is that they are dealt with by staff who have no formal legal qualification – or if they are legally qualified, then they have little experience in practice.

Coupled with this inexperience or absence of legal qualifications, the absence of effective supervision is the most significant factor that leads to these PI claims.

The failure to effectively supervise staff is, in our experience, the single most important reason why claims arise in all areas of law.

According to Frank Maher in his book Risk Management and the Legal Profession 3ed (UK: Ark Group) at 9: ‘Supervision is one of the most significant people risk issues in law firms, and in the author’s experience, it is the area where most variation in standards is found – even in the same firm.’

Remember, you have a fiduciary duty to your client and your practice, to ensure that your client’s work is properly carried out.

There are of course, substantial risks in a legal practice when work is delegated by senior professionals to junior staff. There are also significant risks in not delegating work. The answer lies in ensuring that delegation is effectively used in combination with proper supervision.

Micro-manager, macro-manager or empowering delegator – which are you – or which do you have?

Micro-managers find it difficult to delegate work. Instead of giving general instructions for smaller, routine tasks and supervising larger issues, they direct, monitor and assess every step of the way. These managers disempower employees, stifling innovation and learning opportunities. Rather than enhancing performance and stimulating a strong independent employee work ethic, they tend to ensure poor performance and unhappy staff. This style of management is inefficient and counterproductive – much of the manager’s valuable time is spent unprofitably. Micro-management is mismanagement and it is as bad for business as it is for employees.

Macro-managers (or laissez-faire managers) fall at the other end of the spectrum. Employees are not given guidelines, direction, feedback or support and are left to deal with the work on their own, as best they can. But at least they do not feel ‘picked on’.

Micro-management can make people less productive – and cause them to resign. Macro-management can also make people less productive – and they often stay on. Either way everyone loses.

Effective managers and empowering delegators ensure that the work gets done as effectively and efficiently as possible by ensuring the following.

The delegated task is clearly defined. The nature of the task is matched to the qualifications and experience of the delegate. The delegate is given a measure of authority and the means to handle the task, as well as responsibility for the outcome – even though the delegator carries ultimate responsibility.

Effective delegation is always coupled with effective supervision and communication. It empowers the delegate while providing broad guidelines, appropriate training, support, review and constructive feedback.

Some of the most important ‘softer’ traits displayed by effective supervisors are flexibility, inspiration, respect, openness, two-way communication and leading by example.

By delegating basic and routine work to junior staff, senior professionals can free themselves up to do the more complicated and financially rewarding work, while at the same time clients should benefit financially from having lower fee-earners involved in carrying out their mandates.

However, if senior professionals make the mistake of delegating only the most basic routine tasks – so that the delegate is not empowered by participating meaningfully in any matter – there is reduced opportunity for increasing the profitability of the practice, together with a failure to develop, motivate and retain potential fee-generating junior staff.

The flip-side of delegating only routine tasks is giving the delegate a number of files (often ones that the other professionals do not want and that have been handed on through successive juniors, who have come and gone over the months). The unlucky recipient must sink or swim. The dangers inherent in this type of macro-management are obvious – yet this practice persists.

The ideal lies somewhere between these two extremes.

In the interests of productivity, in addition to fee-targets being set for all fee-earning staff, workloads and time-management need to be monitored. Time spent on training and mentoring in time-management is time well spent in the long term. It goes without saying that quality should never be sacrificed on the altar of productivity.

What are the benefits of being an effective supervisor and delegator?

You will make a valuable contribution to ensuring that your practice –

• has confidence in client satisfaction levels;
• employs skilled, confident, motivated and efficient staff – staff retention;
• has teams that work together successfully;
• has a minimised risk of errors and resultant PI claims;
• reduces the risk of misappropriation of business and trust money; and
• is efficient, profitable and successful.

What are the negatives of being an ineffective supervisor and delegator?

Ineffective supervision can lead to –

• claims being made against your practice for professional negligence/breach of mandate, misappropriation of trust money or fraud;
• misappropriation of business money and property;
• disciplinary action by your professional body;
• orders against you for costs de bonis propriis (which are excluded from cover in your Attorneys Insurance Indemnity Fund (AIIF) PI policy);
• unhappy, unmotivated disloyal staff and high staff turnover;
• lack of teamwork and a stressful working environment;
• loss of dissatisfied clients;
• damage to your practice’s reputation; and
• decreased efficiency and profitability.

How do I implement effective supervision in my practice?

The practice’s Minimum Operating Standards (MOS) (see ‘Risk management and Minimum Operating Standards’ 5/2015 Risk Alert Bulletin 3) need to put in place its own comprehensive and well-coordinated supervision policy and plan. There needs to be a framework of procedures and systems that all employees and principals must comply with. This should be re-assessed and refined from time-to-time and compliance should be monitored regularly.

Supervision skills do not come naturally to most people. Ideally, professional training should be provided to supervisors.

How can a supervisor identify and manage risks brought about by delegates and colleagues?

Some routine procedures that can be put in place for the supervision of both co-principals and employees are –

• correspondence checking: Incoming and outgoing e-mails, faxes and mail;
• file audits/reviews; (see 2/2015 Risk Alert Bulletin 3, which can be found on the website www.aiif.co.za.)
• use of checklists;
• workload and time management;
• integration of legal processes into information technology workflow management programs;
• diary and appointment management;
• regular formal and informal meetings and brainstorming;
• a non-judgmental and solution-focussed approach in providing feedback;
• identification and tracking of the completion of all corrective actions;
• client complaint procedures: To alert you at an early stage where there is any client dissatisfaction;
• checking activity on matters in the practice’s financial records and diary system;
• regular accounting for the whereabouts of all client files;
• proper induction, training and development of staff; and
• effective knowledge management.

The above procedures can be incorporated into your practice’s MOS and most can be wholly or partly conducted by support and junior staff.

What are the risk indicators that might set the alarm bells ringing?

• negative client feedback;
• matters where the work is not billed for or the bills remain unpaid;
• long periods of file inactivity;
• missing files;
• changes in a colleague’s behaviour or demeanour; and
• failure to ask for advice or feedback.

Supervision of co-principals and yourself

This article focused largely on effective supervision of salaried and junior staff. It is no less essential that all other partners and directors undergo some form of supervision. Even single practitioners need to establish methods for self-supervision and self-assessment.

Clearly, the level and methods of supervision will be tailored to the supervisee’s level of experience, ability and proven track record.

As some practices have learnt from bitter experience, even your most trusted senior colleagues can let you down. Lately, there has been a marked increase in claims arising out of a lack of mutual supervision among co-principals. Remember that principals are jointly and severally liable for the actions of their co-principals.

Maher (op cit 11) expresses the view that effective team work is at the heart of a successful risk management environment and that the key to this is communication at all levels. He aptly sums up the true situation when he writes: ‘How many sole practitioners are there in your firm? Most firms have one!’

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 2015 (Dec) DR 26.