By Ann Bertelsmann

Why do so many claims become prescribed?

It might surprise many readers to know that professional indemnity (PI) claims against legal practitioners in South Africa hardly ever result from the practitioner’s lack of legal knowledge.

Did you know that currently 40% of all claims notified to the Attorneys Insurance Indemnity Fund (AIIF) result from claims becoming prescribed in the hands of practitioners?

Even more surprising, is the fact that most of these prescribed matters are claims against the Road Accident Fund (RAF) where there are no grey areas in the calculation of prescription dates. It is as easy as ABC … three years for lodging the claim and five years for the service of summons (except in the case of minors/people with incapacities or ‘hit and run’ accidents). It could not be simpler. This is one of the reasons why such claims attract a higher deductible/excess than the rest of the claim types, other than conveyancing.

However, prescription periods in general matters can sometimes be difficult to calculate as there can be uncertainty as to when exactly prescription begins to run.

Then why do 82,5% of all prescription claims arise from RAF matters and only 17,5% from more complicated general matters?

RAF prescriptions: What goes wrong?

Oversights (the main culprit):

• Diary problems:

The firm has an unreliable diary system and the matter simply does not come to the practitioner’s attention timeously.

Suggested remedy: Make the necessary changes to your diary system (preferably use an electronic system). Use (and adhere to) your own back-up system or Prescription Alert (free of charge through the AIIF – see www.aiif.co.za).

• System problems:

The firm does not have secure and well-managed filing systems and follow-up procedures. This can lead to lost or misplaced files. The file does not come out of diary or if it does, it then gets buried under ‘more important’ files on someone’s desk, floor or even the window sill.

Suggested remedy: Ensure that the person responsible for the filing and retrieving of files is well trained and supervised. The removal of files should be carefully monitored. Keep records of who removes which files and when. Maintain a central register of all open and closed files, which records to whom they are/were allocated.

• Diarising ahead for long periods:

This can result in the matter being forgotten, the client not being contactable at a crucial time or too little time left before prescription, for the necessary preparations for lodgment or summons.

Suggested remedy: Diarise for a maximum of two weeks and be proactive in the management of the file. Follow up if you have not received reports that are awaited. If necessary send a staff member to the police station or hospital. Get your assistant to telephone the client to give an update – and to make sure the client can still be contacted.

• Incorrect prescription dates used:

Suggested remedy: Check and get a second person to verify that the accident date on the police report, hospital records, client’s affidavit and your file match. Check that your calculation of the prescription date is correct. Is it a ‘hit and run’? If there is any doubt about the identity of the owner or driver, rather use the two-year period. Make sure the prescription date is marked prominently on the file so that you do not take your eye off the ball.

• Non-adherence to prescription alert reminders or own diary reminders:

Suggested remedy: Ensure that all support staff are aware of the importance of these reminders and that the file is brought to you – and to your attention immediately.

• Mistakes in perusal and preparation of documents:

Suggested remedy: Check, re-check and get someone else to check important documents. Do not notice too late that the registration number that your client gave you differs from the one on the police report – or that the accident dates or nature of injuries differ.

• Last-minute lodgment of claim/service of summons:

This may be the result of a misconception that RAF claims are straightforward and not enough time remaining for proper attention to the matter. Anything can go wrong at the last minute. The sheriff can serve summons late; a messenger can be unreliable and deliver the claim late; or counsel can take too long in settling the particulars.

Suggested remedy: Rather aim to lodge the claim or serve summons well before the prescription date. Give yourself enough time to give the necessary attention to your client’s matter. The prescription dates may be straightforward but the claims seldom are. Remember that only the service (and not the issue) of summons interrupts prescription.

• Absence of checklists:

This can lead to an important step being forgotten/omitted and a last-minute rush.

Suggested remedy: In every area of practice, but especially with RAF claims, the experienced practitioner should compile a checklist, which all staff must follow.

• Staff turnover and transferred files:

This is a common cause of prescription. The file is handled by a succession of (usually junior) practitioners, so that there is no continuity. Someone leaves the practice and takes the file with him or hides it behind a cabinet. He might put a misleading note on the file stating that the summons has been issued – and the person who takes the matter over assumes that it has also been served. Files transferred to you from other firms can also prescribe for similar reasons.

Suggested remedy: Make sure that you have proper, documented procedures for file handovers, and that strict rules are followed regarding file order and the making of comprehensive file notes. In the case of transferred files, the full engagement management procedures of engagement letter, client interviews etcetera, should be done.

• Absence of file reviews/audits:

Suggested remedy: Ensure that you have a system of regular file reviews/audits. This will increase the chances of discovering oversights and problems timeously.

• Missing the date for service of summons when negotiations are in progress:

This is another favourite. The RAF’s claims handler strings you along by promising imminent settlement. ‘We need to obtain one more expert report and then we can settle this last issue’ they say. You focus on getting your client to attend another consultation. You take your eye off the prescription ball. The file is on your desk and will not come out of diary to remind you. Wham! A day after prescription you get that letter from the RAF.

Suggested remedies: Call in the troops. Have a central list/calendar of all prescription, court appearance and other deadline dates. Make someone responsible for following up with the people concerned, well ahead of time and again closer to the time. Get your assistant to regularly check the prescription dates that are prominently displayed on the files in your office. Serve summons on the RAF during negotiations as a precaution and then agree to stay further pleadings.

Inappropriate delegation and lack of supervision:

Unfortunately, in this area, there are many firms that employ unqualified and/or junior staff to do this work, which they seem to regard as straightforward and not necessarily requiring experience and formal legal training. These employees are also inadequately supervised. Most of the claims that cross our desks at the AIIF are prescribed because they were handled by inexperienced, junior staff without sufficient guidance and supervision. In Mlenzana v Goodrick and Franklin Inc 2012 (2) SA 433 (FB) one can see the sort of problems that can arise when this happens.

Suggested remedy: Matters should be delegated in accordance with the training, experience and ability of the delegate. Checklists and guidelines should be in place and the delegate must be properly supervised and assisted. File audits/reviews and discussions of matters are essential.

Engagement management failures:

1 Instructions taken by third parties:

Many claims arise out of firms’ receiving instructions via a third party or sending people out to take instructions from accident survivors in rural areas or hospitals (and even churches). We make no comment on possible ethical difficulties in doing this. There are numerous problems that arise. For example, the firm’s mandate gets signed by the ‘client’ who has never been interviewed by the practitioner himself. Sometimes the instruction never comes to his attention or even gets to him at all. Perhaps the instruction does reach the practitioner, but the ‘client’ is uncontactable. The file might simply be overlooked. Perhaps the ‘client’ gives the incorrect date of accident or vehicle details. The ‘client’ has proof of the mandate when he sues this practitioner for allowing his claim to prescribe.

Suggested remedy: Do not do this, or if you must, do so with extreme caution, bear in mind the hazards.

2 Bulk instructions:

Many practitioners (in other jurisdictions as well) take on such instructions en masse, for example, from another firm or an organisation offering its members a form of legal assistance. This kind of sausage-factory claims-handling comes with many dangers, some similar to those in point 1 above.

Suggested remedy: Make sure that these files are dealt with immediately and are screened initially for looming prescription dates. Do not take on a matter where prescription is imminent. Do not allocate the whole lot to one practitioner or paralegal. Ensure that each file is dealt with individually, that client is contacted immediately and full instructions are taken in a face-to-face consultation.

3 Instructions taken too close to prescription:

Inevitably you are unable to lodge or serve summons timeously.

Suggested remedy: Do not do this – or if you must, first properly explain the problem of impending the prescription and get the client to sign a carefully worded disclaimer (which must be properly explained to the client). This disclaimer should also be included in your signed letter of engagement.

4 Communication failures:

The client cannot be contacted when prescription is imminent so the claim is not lodged or summons is not served, either because the claim form must be signed, payment is required or instructions are needed.

There is a miscommunication about any issue that might affect the conduct of the claim.

Suggested remedy: Ensure that all possible contact details (including those of friends, employers and relatives) are obtained at the initial consultation. Get a power of attorney (and deposit if required) at the first consultation. Failing these measures, send someone to find client/instruct a tracing agent, serve summons without instructions or deposit and bear those costs, rather than running the risk of a claim against you.

In appropriate cases use the services of an interpreter (preferably not a member of the client’s family).

5 Non-engagement problems:

You do not agree to take on the matter, but do not put this in writing (non-engagement letter). The claimant alleges that you did take it on.

Or you do not take on the matter or withdraw and you fail to explain to the claimant that prescription is imminent and the claim should be attended to timeously. In this situation, the practitioner will generally be found to be liable.

Suggested remedy: Ensure that you get the non-client to sign a letter of non-engagement (including a reference to prescription, even if this is not imminent) and keep a record of this. If prescription is imminent give the necessary information and warning. Do not withdraw close to the prescription date.

Stick to all these simple suggestions and beat the ticking clock.

•      See 2014 (May) DR 26 and 2014 (July) DR 20.

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 (June) DR 19.