Proactive communication as a risk management tool

September 1st, 2021

Effective communication in the legal services industry – like any other professional service – goes to the heart of the maintenance of the relationship between the legal practice as the service provider, on the one hand, and the client as the consumer of such services, on the other. A breakdown in effective communication between the legal practice and its clients can include –

  • the breakdown of the relationship between the parties;
  • a complaint being lodged against the legal practice with the Legal Practice Council (the LPC); or
  • the client bringing a professional indemnity (PI) claim against the legal practice.

A written record of the communication between the parties will go a long way towards mitigating the risks flowing from a breakdown in the relationship. This article will cover (in broad strokes) the journey from inception of the relationship with the client until the conclusion of the mandate. By so doing, I  hope that the areas where a breakdown in communication, which can have negative consequences, will be highlighted.

Setting the terms of the mandate

When accepting a new mandate from a client, it is imperative that the legal practice set out in writing what the terms of the mandate are. This assists both parties to the relationship (the legal practice and the client) in understanding what the terms of the mandate are, including the respective obligations of each party.

Explaining the terms of the mandate will assist in avoiding disputes in future. Rule 35 (of the Rules made under the authority of ss 95(1), 95(3) and 109(2) of the Legal Practice Act 28 of 2014 (the LPA)) is instructive in this regard and provides as follows:

35. Instructions of attorneys

(section 95(1) (zC) read with section 34(4))

35.1 For purposes of this Rule 35 “client” means the user or intended user of legal services to be provided by an attorney.

35.2 Instructions by a client to an attorney may be in writing or may be verbal.

35.3 When written instructions are given by a client to an attorney the attorney must ensure that they set out the intended scope of the engagement with sufficient clarity to enable the attorney to understand the full extent of the mandate. If the attorney is uncertain as to the scope of the mandate the attorney must seek written clarification of the intended scope of the instruction.

35.4 Where the client instructs the attorney verbally, the attorney must as soon as practically possible confirm the instructions in writing and in particular must set out the attorney’s understanding of the scope of the engagement.’

Rules 35.5 and 35.6 are not relevant for present purposes and have thus been omitted from the extract above.

In many instances the genesis of the dispute between the legal practice and the client is one regarding the scope of the mandate. The benefits of the parties discussing the full scope of the mandate, in order to ensure that they are ad idem therein, cannot be overemphasised. The potential uncertainty on the scope of the instruction referred to in r 35.3 will be avoided if there is a discussion ensuring that there is a meeting of the minds and a common understanding of the scope, which is then reduced to writing and confirmed by both parties. Where applicable, it would also be prudent to record any part of a particular transaction that legal practitioner will not carry out as part of the mandate.

There have been several PI claims where the client (plaintiff) has alleged that the legal practitioner has not carried out a certain part of an alleged mandate, resulting in a loss being suffered by the party concerned. The legal practitioner may dispute this, and it is then left to the respective memories of the parties many years after the fact to determine what had been agreed in respect of the scope of the mandate, in the absence of a written record.

The defence to a complaint lodged with the LPC may also turn on the contents of the written mandate. In submitting a complaint to the LPC, one of the questions posed to the complainant is whether there was a written letter of engagement. If there was, the complainant is required to provide a copy thereof (see s 3 of the complaint form issued in terms of sch 5 (r 45.2)).

It will also be appreciated that disputes regarding fees could be mitigated by documentation of the agreement regarding fees and billing in the written mandate. The terms relating to fees and billing should also be verbally explained to the client as part of the general discussion regarding the terms of the mandate.

Regular reporting to a client

When regard is had to the particulars of the disciplinary hearings published on the LPC’s website in terms of s 38(3) of the LPA, it will be noted that many of the complaints arise from failures by the legal practitioners concerned to communicate with clients or other third parties and to account (in the financial sense or account in the sense of reporting). Regular and effective communication with the parties concerned would have avoided the disciplinary sanctions and the negative publicity associated with the publication of the names on the legal practitioners on the list. It will be remembered that para 16 of the Code of Conduct for all Legal Practitioners, Candidate Legal Practitioners and Juristic Entities provides that:

16. Replying to communication

An attorney –

16.1 shall within a reasonable time reply to all communications which require an answer unless there is good cause for refusing to answer;

16.2 shall respond timeously and fully to requests from the Council for information and/or documentation which he or she is able to provide;

16.3 shall comply timeously with directions from the Council [LPC].’

Turning to the underlying cause of PI claims, it will be noted that the dissonance between the client and the erstwhile legal practitioner arises, in many instances, from a lack of communication by the latter and a failure to report on the progress in a matter being undertaken. The lack of regular and substantial communication from a legal practitioner on the status of a matter may be the reason a client terminates the former’s mandate. A lack of communication may lead the client (justifiably in some instances) to believe that either the matter is not being attended to or that the practice does not value the client’s business.

In litigious matters, where offers of settlement are made or received, this must be put to the client. The client’s instructions and the recommendations by the legal practitioner in respect of such offers must similarly be confirmed in writing. This will go a long way to avoiding claims based on ‘under’ or ‘over’ settlement of matters and other allegations that the practitioner has breached the terms of the mandate or acted without a mandate.

In some instances, the legal practitioner may realise that an error has been made in a matter. In this regard, it is best to have an open and frank discussion with the affected parties and to record the discussion in writing. Caution must be applied in such instances not to make admissions of liability, offers of settlement or some other action that will be perceived by the PI insurer as compromising its position in respect of a potential claim. Legal practitioners would be well advised to simultaneously communicate the circumstances leading to a potential claim (or intimation of a claim) to their PI insurer and to seek guidance from their insurer before communicating the error to the client or a third party. The recent judgment by the Supreme Court of Appeal (SCA) in McMillan v Bate Chubb & Dickson Incorporated (SCA) (case no 299/2020, 15-4-2021) (Zondi JA (Mocumie and Schippers JJA and Gorven and Eksteen AJJA concurring)) is apposite in this regard. In the matter, the SCA was called on to determine whether the appellant’s claim against his erstwhile attorneys had prescribed. The court had to decide when the plaintiff acquired knowledge of the facts required to institute action and thus when prescription began to run. The attorneys (the respondents in the matter) had consulted with the plaintiff on 9 May 2014 when the appellant was informed that the antenuptial contract entered into between himself and his former spouse contained ‘an error and mistake which may be attributable to the drafter’. The respondent sent a letter to the appellant on 12 May 2014 confirming the discussion that had been held on 9 May 2014 (see para 37 of the judgment). The SCA upheld the respondent’s special plea of prescription. In my view, the open and frank communication by the respondent, in the discussion with the appellant on 9 May 2014 (a Friday) and confirming the discussion in writing on 12 May 2014 (the following Monday) went a long way to ensuring that the defence to the claim could be upheld.

Closing the instruction

It is also good practice to communicate with the client at the end of the mandate. The communication at this stage of the engagement should go beyond a discussion of the financial, billing, and other accounting aspects (which are also important). The communication and conversation should also be used to get feedback from the client on their experience with the legal practice and to obtain their feedback on how the matter was handled. Beyond being a good client satisfaction exercise, the opportunity can also be used to glean whether there are any areas of unhappiness on the part that of the client that could potentially lead to a PI claim (some clients may consult with another legal practitioner for a second opinion on the outcome of the matter) or even a complaint to the LPC at a later stage. If there are any further steps the client may need to take after the scope of the mandate has been completed, these can also be highlighted.

Finally, a letter to the client expressing appreciation for the instruction, recording that the mandate has been carried out in full and the closing discussion will go a long way to retaining the relationship and mitigating the risk of regulatory action or a PI claim against the practice.

Thomas Harban BA LLB (Wits) is the General Manager of the Legal Practitioners’ Indemnity Insurance Fund NPC in Centurion.

This article was first published in De Rebus in 2021 (Sept) DR 5.

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