“We all make mistakes – it’s just how many”

When it comes to professional indemnity claims, residential conveyancing holds the number one spot for volume, which is why we always remind ourselves that our role is like doing an exam in which you have to get 100% right. 

The problem is that it’s neither possible nor commercially practicable for us to be 100% right and in this increasingly litigious world, we must face the reality that our approach to risk must change.

Which could be the most important area for our new best friend, Artificial Intelligence (AI) to step in.

The reality of insurance

I recently shocked my colleagues by telling them how a competitor declared “who cares if we make a mistake, that’s what insurance is for”.  They were adamant this approach would lead to the firm not being able to obtain professional indemnity insurance.

Only they have and are still trading.

While those firms with less than impeccable claims records may pay a little more, it’s the population of law firms that meets the overall cost of their negligence.  Which explains why it tends to be the smaller firms that close due to insurance affordability.

Pareto - the 80:20 rule

We must accept that the approach of trying to control all the risks using current technology and processes is not suitable for the challenges raised by today’s conveyancing clients.

The problem is that exceptions are the rule and irrespective of outcome, the client may take action, as whether its fighting claims or lengthy discussions with the Ombudsman, they know that firms will be encouraged to settle, leading some to pursue the most frivolous cases.

We must look at how much time, money and inconvenience we cause not only our clients, but ourselves, when it comes to risk management, especially given that the Pareto principle applies and 20% of our cases will account for 80% of our costs.

For example, whenever we have a near-miss or potential claim, we update our Report on Title to take these into account and hopefully defend against a future issue.  It’s a good idea in principle, but it only protects against future claims and of course, nothing stops these new clauses being inadvertently removed.

There’s no such thing as overkill

A common misconception is there’s no such thing as overkill when it comes to risk, but this is not correct and we must make smart decisions.  Here are some examples where we have made process changes without affecting risk.

1.      Multiple exchange authorities

When a client claimed they had not given authority to exchange, we could not prove this, so we changed our process to insist as well as telephoning, clients had to send a message on our portal.  When an agent asked why we did this, as we record all our calls, and it could add days to the process, we scrapped the requirement to message and eliminated the delay with no additional risk.

2.      Duplicating work - checklists and tasks

When we first created a completions team to reduce post-exchange issues, we automatically set seven new tasks on exchange.  We did this for years and our colleagues spent most of their time dealing with tasks that were actually just duplicating our checklists.  We reduced the seven to just “Process Completion” reducing time wasted processing tasks, which improved morale, with no additional risk.

3.      Confirming the title plan

Finally, and just to show that things aren’t always clear, when we act for a client buying a property, we currently ask them to confirm the title matches the extend of the property.  Unfortunately, we had a case with a rogue piece of land belonging to the property across the river that neither of us knew of and another where the seller falsely marked the extent of the property. Both cost money to be settled, so we are assessing the benefits of confirming the plan, versus the risk it reduces.

Does AI have a role to play?

Given that a person checking their own work has a minimal impact on risk reduction, we believe this is where AI will be critical, for example;

Someone forgets to update client data and paperwork is sent inadvertently to their old address, resulting in a data breach.  AI could check the documents, see if a mortgage had been redeemed, and flag up the potential data error.

At end of a long day, a tired lawyer forgets to check some email attachments, and sends them another client’s mortgage offer.  AI could check the contents of the mortgage offer and flag the mistake the lawyer is about to make.

Finally, a lawyer is reporting to a client on a leasehold purchase and misses a S20 notice in the management pack.  AI could check the wording of the report against the contents of the pack, and flag up a potential issue.

Can we compromise on risk management

Some will argue that we must apply the same level of due diligence against all cases, irrespective of content.  However, despite meeting regulatory requirements to carry out risk assessments on all cases, mistakes still occur.

We must weigh this generic risk management against the potential claims of clients, which takes compromise and instead of 95% correct we may be forced to accept a 75% correct figure.

Whilst we may consider this unacceptable, with increasing case complexity and litigation, we have no choice unless we accept the price of increased claims or actively seek out technology to address this.

Peter Ambrose is the CEO of The Partnership and Legalito – specialists in the delivery of transparent and ultra-efficient conveyancing software and services.

Peter Ambrose: pambrose@thepartnershiplimited.com, 01483 579978

Press enquiries: Tracy Holland, tholland@thepartnershiplimited.com 01483 579978