In the legal profession, recruitment can be an exhausting and unpredictable process. At times you can spend months finding an individual only to be let down at the eleventh hour, losing out on valuable fee earning hours in the process. Whilst frustrating, it is important that this does not lead rush decisions or settling for second best. We've put together some points to consider to help make recruiting as productive as possible in the long run.
The Perfect Candidate
When identifying the need to recruit, the chances are you will have an idea of what makes the perfect candidate for your firm's growth and strategy. Are you looking to add further expertise in areas of law you already practice in or looking to expand into other disciplines? Either way, from a Professional Indemnity perspective, it is imperative that you get it right.
The first thing to look at is the history of any solicitor and there are many ways to tackle this, both with the individual and behind the scenes.
The candidate's CV will provide you with an employment history and identify their skill set but it may not cover any Professional Indemnity or regulatory issues involving the solicitor.
Speak with your broker. We may be able to advise on a potential new hire, particularly if you are wary of their past. We provide insight and suggest how your insurers would view the appointment before you proceed.
Professional Indemnity Insurance and Succession
Whilst Professional Indemnity insurance (PII) provides cover for the entity, any previous claims involving an individual solicitor that they are aware of, should be declared to a potential new employer. Equally if the candidate has been involved in any regulatory investigations in the past, regardless of the outcome, they should also make you aware of this as this forms part of your ongoing disclosure.
Our New Solicitor Questionnaire is created for this very purpose - this can be downloaded by clicking the file on the right hand side of the page. It asks for information around a solicitor's past conduct, regulatory history and financial standing. We request that our clients arrange for any new solicitor to complete and return this form along with their CV.
By not conducting appropriate due diligence on a new hire, you risk suffering a negligence claim against your PII policy or bringing reputational harm to your business. The initial impact could be that your excess becoming payable. Depending on the size and nature of a claim, the long-tail nature of PII means that it could have an impact on your renewal premium for years to come, even after they have left the firm. Naturally reputational harm is more difficult to measure but could prove to be even more damaging than a claim.
You need to ensure that you will not be deemed to have liability for any work previously undertaken. This is mainly relevant when recruiting a solicitor who has been trading as a sole practitioner. We recommend obtaining confirmation that run-off cover is being placed with the firm's incumbent PII insurers to capture any potential claims arising from past activities effectively drawing a line in the sand for you.
Should you be deemed Successor Practice to a firm you take on all of their historic liability and could open yourself up, and insurers, to far greater exposure than was previously the case. There may also be some ambiguity regarding whether your insurers were correctly advised of the situation at the time. This could lead to unnecessary litigation, time you could spend focussed on fee earning work.
If the candidate is working in a firm and they intend to bring working files with them, a review of the files is essential before you assume this liability.
Avoiding the Cuckoo
It is important to remember why you are recruiting and what skillset you require from the applicant. There can be some ramifications in 'settling' just to get someone, as a short-term gain could easily result in a long-term loss. Settling for 'second best' could have an immediate financial impact on your business.
Expanding into other areas of law can be prudent for your business and your Professional Indemnity insurance should not deter you from doing so. However, it is important to evaluate any potential issues and establish a plan to mitigate the risks associated, ensuring that new business schemes or new work disciplines are advantageous in not only in the short, but also in the long term.
Cuckoos are infamous for laying eggs in the nests of others, moving on before they hatch, and this analogy is not lost on the legal profession. The liabilities of a solicitor can live far longer than their employment within a firm, indeed your candidate could be looking for a way out of their current firm before their eggs hatch.
File reviews form part of the core practice management standards set out by the Law Society and are a key part of risk management within law firms. However, what if your recruitment was based on branching into new areas of law? Is there anyone within the firm with the relevant experience to successfully assess this work, or will you need to outsource this, incurring further cost?
Due to the potential impact on your PII, it is vitally important that you invest the right amount of time and effort into the recruitment process...
Equally, cultural fit is a key consideration too; ask yourself if the candidate will work well with the existing team? Perhaps, establishing early in the process why the candidate looking for a move could also help save wasted time. It could bring any issues to the fore so that you make the right decision for the benefit of your practice.
Invariably, your broker will be able to assist and guide you through the process so any decisions made do not have negative implications in future insurance renewals. Should you have any questions on this, please do not hesitate to contact your Lockton representative or myself directly and either of us will be very happy to assist you.