Lawyers required to report a claim to LIANS as soon as practicable after learning of a claim or becoming aware of circumstances which might give rise to a claim, however unmeritorious.
Furthermore, you should report to LIANS when:
- You discover a mistake which has or may have caused the client damage. This is true even if the client has no intention of advancing a claim against you at the time; the client may advance a claim in the future. Early claim reporting allows investigation and possible mitigation of the problem before it becomes worse or more costly.
- You receive any threat or communication of intention to sue from a client or his or her lawyer. You should not second-guess the client’s intentions and wait for a clearer indication that the client is serious.
- Your handling of a matter is criticized by a member of the judiciary or in a public document.
- Another lawyer, on behalf of your former client, requests your file on a particular matter. This action should cause you to be cautious, especially if the former client’s lawyer does not give an explanation or expresses concerns about your handling of the matter.
- A client expresses dissatisfaction with your handling of a particular matter and there is some indication the client believes he or she has suffered a loss or incurred damages
This list is not exhaustive. There is no downside to reporting. When in doubt, report out of caution. The Nova Scotia Court of Appeal decision in Moore v. Canadian Lawyers Insurance Association, establishes an objective test for determining when a reasonably prudent lawyer should report, and confirms that you are required to report when you hear of circumstances which would likely give rise to a claim.
Steps you should take in preparation for reporting:
- Notify a LIANS claims counsel or the director at the earliest stage, even if you feel that a claim is contingent and may never materialize. Reporting late could mean that there is less time to repair the damage or investigate properly. Significant delays in reporting may cause a member to be denied coverage.
- Consider clause 4.4(d) of the Policy, which prohibits an Insured from making any admission of liability unless the Association gives prior consent:
“4.4(d) – Defence of claims – Admission of liability. The Insured shall not make any admission nor take any other action that might reasonably be expected to prejudice conduct of the defence unless the insurer is aware of and consents to the admission or action in advance.”
- Maintain all personal notes, memos or drafts relevant to the case, including jotted ideas on scraps of paper, and old telephone and electronic communications. Have all parties involved (client, your staff, etc.) make a record which describes the events surrounding the error.
- Make all records, details and file material available as requested by LIANS claims counsel. For a property claim, your certificate of title, title abstract, search notes, survey plans, and objection letter are generally always relevant.
- Do nothing more in the matter without the concurrence of claims counsel and the client, and ensure full disclosure of all impending deadlines and statutes of limitation dates.
- Always maintain a complete copy of your original file.
Also consider section 7.8 of the NSBS Code of Professional Conduct on your obligation to advise your client when a claim or potential claim arises without admitting liability:
7.8 Errors and Omissions
Informing Client of Errors or Omissions
7.8-1 When, in connection with a matter for which a lawyer is responsible, a lawyer discovers an error or omission that is or may be damaging to the client and that cannot be rectified readily, the lawyer must:
- promptly inform the client of the error or omission without admitting legal liability;
- recommend that the client obtain independent legal advice concerning the matter, including any rights the client may have arising from the error or omission; and
- advise the client of the possibility that, in the circumstances, the lawyer may no longer be able to act for the client.
- In addition to the obligations imposed by Rule 7.8-1, the lawyer has the contractual obligation to report to the lawyer’s insurer. Rule 7.8-2 also imposes an ethical duty to report to the insurer(s). Rule 7.8-1 does not relieve a lawyer from the duty to report to the insurer or other indemnitor even if the lawyer attempts to rectify.
Amended February 26, 2016
Notice of Claim
7.8-2 A lawyer must give prompt notice of any circumstance that may give rise to a claim to an insurer or other indemnitor so that the client’s protection from that source will not be prejudiced.
- Under the lawyer’s compulsory professional liability insurance policy, a lawyer is contractually required to give written notice to the insurer immediately after the lawyer becomes aware of any actual or alleged error or any circumstances that could give rise to a claim. The duty to report is also an ethical duty which is imposed on the lawyer to protect clients. The duty to report arises whether or not the lawyer considers the claim to have merit.
- The introduction of compulsory insurance has imposed additional obligations upon a lawyer, but these obligations must not impair the relationship and duties of the lawyer to the client. A lawyer has an obligation to comply with the provisions of the policy of insurance. The insurer’s rights must be preserved, and the lawyer, in informing the client of an error or omission, should be careful not to prejudice any rights of indemnity that either of them may have under an insurance, client’s protection or indemnity plan, or otherwise. There may well be occasions when a lawyer believes that certain actions or a failure to take action have made the lawyer liable for damages to the client when, in reality, no liability exists. Further, in every case, a careful assessment will have to be made of the client’s damages arising from a lawyer’s negligence.
Amended February 26, 2016
7.8-3 When a claim of professional negligence is made against a lawyer, he or she must assist and co-operate with the insurer or other indemnitor to the extent necessary to enable the claim to be dealt with promptly.
Responding to Client’s Claim
7.8-4 If a lawyer is not indemnified for a client’s errors and omissions claim or to the extent that the indemnity may not fully cover the claim, the lawyer must expeditiously deal with the claim and must not take unfair advantage that would defeat or impair the client’s claim.
7.8-5 If liability is clear and the insurer or other indemnitor is prepared to pay its portion of the claim, a lawyer has a duty to pay the balance. [See also rule 7.1-2]