The most widely read magazine for Canadian lawyers
Issue link: https://digital.canadianlawyermag.com/i/1408991
www.canadianlawyermag.com 29 Running a successful law practice comes with its own set of challenges. There's a lot of competition when it comes to pricing and turnaround time, and even when lawyers add to their team to help handle the files, they then have to manage those employees and ensure that all internal processes are properly adhered to. "Even in the best of times, it's not uncom- mon for experienced lawyers to accidentally overlook something or forget to communi- cate something to a client," says Brendan Fagan, Chief Underwriter and Senior Legal Counsel at FCT. "Increasing their business 20-30% just adds to those risks." FCT, who provides a suite of E&O prod- ucts that are complementary to a lawyer's mandatory E&O insurance, hasn't seen a change in the common types of claims that they see, but with practices getting busier, Brought to you by "more things are slipping through the cracks and we've seen a slight increase in claims tied to that high volume lawyers are facing." The most common types of claims against FCT's E&O products are small calculation errors — for example, errors on closing adjustments where a lawyer might think the vendor is entitled to receive X amount and sent too much or too little, or misun- derstandings with hold-back requirements leading to shortfalls. Other common prac- tice errors include misspelling the name of the lender when registering a mortgage, or being off on the closing or refinance date. With skyrocketing sale prices and prop- erty values, the same error a lawyer might commit in 2021 could be significantly more costly than if that error were committed in 2006. And while a mistake costing $5,000 or $8,000 won't ruin a practice, "the lawyer may have to close a fair number of transac- tions to make up for that loss," Fagan notes, adding that there could be a reputational risk as well. It's important to note that these are not errors caused by negligence, he says, but mistakes anyone can make — which only underscores the importance of extra cov- erage. Along with that slight increase in claims, FCT is also seeing more interest from the lawyer community in its supple- mentary products. Offered free of charge, E&O Extra® covers the expense a lawyer might incur by making a claim with their main E&O insurance company. For example, if there's a deductible or any increase to insurance premiums, the E&O Extra policy will cover those costs, up to $30,000 per claim. "All a lawyer has to do is sign up with us and they have that policy each year," Fagan notes. "It doesn't cover the actual error, but covers the loss relating to the deduct- ible and increase in premiums because of a claim made to the lawyer's professional lia- bility insurer, so they're not out of pocket for the cost of making that claim," Fagan says. For a small premium, E&O Complete™ goes beyond the protection of E&O Extra and offers direct coverage for claims that are $10,000 or less. For example, if a cli- ent owed $6,000 because the lawyer mis- read a status certificate and the previous owner owed common expense condo fees at the time of sale, the E&O Complete pol- icy would pay that amount and the lawyer wouldn't have to make a claim to their lia- bility insurer, which would potentially cause those premiums to rise. Small problems can escalate quickly. As they are often the client's last point of con- tact, lawyers can bear the blame for issues — even ones that aren't actually errors on