Professional indemnity

I noticed with interest that in the Risk Alert Bulletin (No.4/2017) (RAB) (see also www.aiif.co.za, accessed 14-9-2017), there is mention of professional indemnity claims and the legitimacy of some.

I have had the experience of more than 50 years that when an attorney is struck from the roll, former clients (some) are apt to submit claims, which are at times proven to be false, or the attorney had already accounted to that client. The client (at times) claims the full amount paid by the Road Accident Fund but the client fails to disclose the payments made by the attorney and, if these claims are proven to be false, no provision is made for the taxation of an attorney and client bill of costs.

In many instances the ‘removed’ attorney is unaware of these claims and the Attorneys Fidelity Fund (the Fund) expends money, which are not in truth owing to the client, or a greatly reduced amount only remains due.

In many instances, the attorney never received any prior notice of such claims and I would suggest that it be made obligatory that the ‘removed’ attorney be advised immediately when any claim is received so that he or she can assist the curator in determining if such a claim is genuine or not and that the attorney be given at least 30 days to respond to any such claim.

This can bring about an immense saving to the Fund and will ensure that the claim is correctly dealt with and not merely on the unilateral version of the claimant.

 KM Röntgen Snr, attorney, Pretoria

Response to letter from Mr Röntgen

The letter sent in response to the Risk Alert Bulletin (No.4/2017) refers.

A distinction must be drawn between claims dealt with by the Attorneys Insurance Indemnity Fund NPC (the AIIF) and those dealt with by the Attorneys Fidelity Fund (the AFF). This distinction is important as the claims dealt with by each of these organisations are different and as will be the party submitting the application for indemnity to the respective organisation. The AIIF provides professional indemnity (PI) insurance cover to practicing attorneys, while the AFF refunds claimants who have suffered losses as a result of the misappropriation of trust funds by attorneys or their staff.

The AIIF deals with PI claims notified to the company by insured attorneys. The third party (usually a former client) will have brought the claim against the attorney who, as insured, will then have notified the AIIF (as insurer) thereof and applied for indemnity. The AIIF policy does not give any rights to a third party to claim directly from the company (clause 39). The insured attorney is obliged to cooperate with and assist the AIIF in all aspects of the claim. Even where the claim is brought against an attorney who has been struck from the roll, left practice or is deceased, the AIIF will, subject to its policy conditions, indemnify the attorney if the cause of action arose when the practitioner was still on the practicing roll and thus either in possession of a valid Fidelity Fund Certificate or obliged to apply for such a certificate. All aspects of the claim (merits and quantum) are thoroughly investigated by the AIIF team, including the liability (if any) and the extent thereof (the quantum), by the attorney to the third party. Any funds previously received by the client will be deducted from any settlement/payment made to the claimant. A plaintiff would not have suffered damages for funds previously received. The AIIF team will be in constant communication with the insured attorney throughout the lifecycle of the claim (unless the attorney is deceased, in which case the communication will be with the executor). All the insured attorney’s records in respect of the matter will also be taken into account in the investigation of the claim. Attorneys (whether practicing or not), the curators of their practices and their executors (in the event of death) should thus report all actual or potential claims to the AIIF as soon as they become aware thereof and also provide the AIIF with a full background report and their full file of papers.

The AFF, on the other hand, deals with claims arising out of the misappropriation of trust funds (see ss 26 and 47 of the Attorneys Act 53 of 1979). The AFF is a fund of last resort and the claimant will have to exhaust all their legal remedies against the practitioner before instituting a claim against the AFF. Thus, any funds previously received by the claimant, and accounted for by the attorney, will also be subtracted before any damages are paid to the claimant (in the event that the AFF is liable).

We thus wish to assure the writer of the letter that processes are in place to ensure that claimants do not receive ‘double compensation’.

Thomas Harban, General Manager of the Attorneys Insurance Indemnity Fund NPC, Centurion

Beware of pitfalls in our own cyberwars

There are different types of hackers/crackers:

• Script kiddies, these are hackers that have limited or no training and do not really understand what they are doing.
• White hat hackers, also known as ethical hackers.
• Gray-hat hackers, also known as hackers who are between good and bad.
• Black hats, the bad guys.
• Suicide hackers, they are hackers proving a point.
• Hacktivist, a hacker promoting or pushing a political agenda.

Just recently the Department of Basic Education’s website was hacked by an infamous group called Team System DZ. I spoke to a ‘white hat’ regarding this hack and he said he was not surprised when this happened, as South Africa (SA) is one of the most vulnerable countries to cybercrime in the world.

Hackers are uploading their encryption ransomware on companies’ systems on a daily basis and by taking control of their systems they take them hostage, you might be familiar with the Petya or WannaCry attacks. Unfortunately the current laws of SA, which include common law, the Protection of Personal Information Act 4 of 2013 and the Electronic Communications and Transactions Act 25 of 2002 do not give us the necessary tools to effectively act against cybercrimes at the moment.

We are currently awaiting the Cybercrimes and Cyber Security Bill B6 of 2017 (the Cyber Bill) to be passed, which will certainly bring some welcome changes in the country, and enable SA law enforcement to utilise the special procedures necessary to fight our own cyberwars. The Cyber Bill will create new offences and have many consequences enabling better policed cybercrimes.

With cybercrimes forever on the rise worldwide, we, as legal practitioners and our client’s need to – in the meantime and after the Cyber Bill has been passed – make sure that our intellectual property is properly protected. Luckily there are white hats to hire who can verify the integrity of our computer systems.

When contracting with a white hat to check that systems are properly protected against hackers, your clients need to protect their intellectual property even from the white hats, and you need to keep the following in mind when drafting a white hat agreement, namely –

• reporting security vulnerabilities, which include timelines;
• proper non-disclosure clauses are important;
• permission to the ethical hacker to penetrate the system should be given; and
• confidentiality and privacy is key.

There are also a few things that legal practitioners should understand, namely, what ‘penetration’ or ‘intrusion’ testing is. This is ethical hacking, where a system is tested by an ethical hacker with the permission of the system owner.

In the world where accessing company software through ransomware is as easy as one of your employees clicking on a ‘phishing e-mail’, it is, therefore, important to make sure that you and your clients protect your intellectual property by means of contracting a white hat.

If you, as a legal practitioner, are acting for a client or even a white hat you should always make sure that they have a proper agreement in hand to protect themselves.

Jana Doussy, attorney, Pretoria

• See p 17. – Editor

This article was first published in De Rebus in 2017 (Nov) DR 4.