The changing face of law firm wellbeing and professional indemnity insurance
01 December 2021
Having spent 30 years in the Professional Indemnity Insurance (PII) broking sector it is fair to say that whilst many things have changed, a lot has remained the same.
When I started at specialist PII broker, Nelson Hurst & Marsh in 1991, there were no emails, faxes were new, we still had a Telex machine and I had a car phone but it was far from mobile! We relied heavily on Royal Mail, outside/overnight typists and an army of people processing paper; proposal forms, quotations and policies. It was the same across all the professions (although some of my wealthier clients may have possessed a new “brick” sized mobile phone!). Although the pace of life and business may have seemed fast back then, it was much slower than we face today.
In that same 30 year period the legal profession has changed almost beyond all recognition. Whilst new working practices, use of technology and even Regulation (by the SRA) have introduced many benefits, they have also resulted in some considerable challenges. The sheer volume of emails exchanged every day is a major issue. Clients now demand instantaneous responses and are often asking law firms to bear far greater liability for any loss sustained. Supervision has also been made more difficult as flexible and/or remote working becomes more prevalent (or even mandatory).
The Legal Profession and wellbeing
Of course there are many reasons why the legal sector remains one of the most interesting and exciting places to work. Great career opportunities, financial reward and earning potential, varied work and the ability to make a genuine difference to people’s lives are just a few. But it’s a sector that often demands long working hours and excessive workloads, often resulting in stress and work/life balance issues.
A recent survey conducted across the profession by Lawcare noted:
- 69% of the participants reported they had experienced mental ill-health in the last 12 months
- 22% felt unable to cope
- 48% had low mood
- 29% had depression
- 6% had suicidal thoughts
- 80% said their work was fast-paced with tight deadlines
- 65% regularly check emails outside “office” hours
- 28% said they were required to be available to clients 24/7
- 35% said they slept six-seven hours, 25% estimated five-six hours and 12% got less than five hours sleep
Nick Bloy, a former lawyer and HR Business Partner with Wellbeing Republic, has worked with many of the larger law firms and is quoted on the Lawcare website as saying
There is evidence to suggest that our IQ takes a substantial hit when we’re under the influence of fight or flight (due to long term stress), with several studies finding IQ can drop as much as 10-15 points, the equivalent of going a night without any sleep or being drunk.
Robbie Weston of Howden’s Employee Benefits and Wellbeing services for law firms says
We are aware of how important sleep is to performance and have heard of a company that is looking to introduce a bonus payment to their employees if they can prove they consistently get eight hours of sleep a night. This totally shifts the wellbeing agenda.
The survey went on to say that although 87% said they were individually responsible for their own wellbeing, 84% of participants felt their employer was also responsible.
Working with a wide range of clients, Howden’s Employee Benefits and Wellbeing team know the top concerns and priorities for law firms currently include:
- Improving and supporting mental health at work
- Ensuring that benefits strategies meet the needs of a post-pandemic workforce
- Creating a great culture and one that actively supports workplace wellbeing
- Retaining & recruiting top talent
- Maximising firms’ investment into employee benefits
- Improving diversity within the sector
- Better communication of benefits to boost employee engagement & understanding of what’s offered
- Helping people better prepare for their financial future
Professional Indemnity Insurance
In the past 30 years little has changed in the way PII underwriters have assessed the risk presented by a professional service firm; be they a law firm, a property consultant, accountant, insurance brokers et al. That is until Covid-19 hit us in early 2020.
Those that have the responsibility for completing a law firm PII proposal form will know the “pleasures” of collating information on their firm’s business details, for example their gross fee income, work split, number of offices, largest deals and claims records, etc. During the last two years, however, the information required by insurers has inflated following their need to understand how firms have managed remote working (with all the risks that brings), their financial stability following lockdown, and the way they are managing their employee’s welfare and performance.
Martin Ellis of Howden’s Legal Services Practice Group says
With all the surveys and coverage about wellbeing in the media, is it any wonder that this now appears on a Professional Indemnity Insurer’s radar? This, combined with the continuing hard insurance market and Covid-19 has understandably resulted in a shift of underwriters’ focus. In addition to the more traditional risk management metrics, we now see a greater desire to understand the culture of a firm and the initiatives used to support their employees’ wellbeing.
It is really only in recent years that the legal profession has started to pay attention to mental health and wellbeing within their own workplace. Whilst there is now definitely a greater level of awareness, there still appears to be a long way to go. Those engaged in any management or supervisory roles need to be alert to the warning signs, which can include a decline in performance, physical symptoms of distress, and uncharacteristic behaviour. Firms must also ensure they are able to respond appropriately, for example by providing support, access to external counselling services and allowing time away from the office or adjusting workloads and responsibilities.
Mental health and wellbeing as a catalyst for PII claims
When you ask insurers for the 10 common causes of claims, they will confirm that it is usually process or judgment issues that lead to the majority of claims. A top 10 list will generally look something like this:
- Failure to record advice given
- Failure to properly record scope of retainer
- Identifying the client
- Missed time limits
- Lack of supervision/Failure to seek assistance
- Failure to distinguish role from other professionals
- Advising outside area of expertise
- Time pressure
- Inadvertently assuming duties to third parties
- Conflicts of interest
Interestingly, while neither stress nor mental health and wellbeing are on the list, they will often be the catalyst for many of the above issues. When fee earners are tired, stressed or anxious, it can be a challenge to simply get through the day. Shortcuts happen, diaries don’t get checked, and it can be difficult for them to tell their clients’ something they don’t want to hear. A struggling colleague may worry that asking for help will reflect badly on them.
PII defence lawyers are now starting to cite stress or mental health challenges as an increasing “root cause” of claims against solicitors. Even if it is not raised in the context of the initial notification, it often becomes apparent when interviewing fee earners in relation to the claim.
When reviewing the causes of claims, firms will often look for themes in order to identify the risk management initiatives they need to deploy, but many do not take a step back to consider whether there is a broader and underlying issue relating to the mental health and wellbeing of their fee earners. We strongly encourage all firms to do this.
The impact of PII claims on mental health and wellbeing
When a claim or complaint is made against a fee earner, this can cause them a great deal of stress and anxiety in itself. We always advocate that the notification to insurers and subsequent management of the claim should, wherever possible, be dealt with by someone else in the firm. This is a time when it’s important to offer support and reassurance to the fee earner.
Insurers are always interested to know what a firm has done to avoid a similar claim happening in the future. Fraud and dishonesty aside, responding that the firm has “managed the fee earner out of the practice” is not the answer they are looking for and regrettably it is unfortunate how often they hear this. Insurers will always be concerned about the message that such a response sends to others in the firm.
Culture - Open door policy?
Most firms will tell their insurer that have an “open door policy” and that their employees are always able to raise issues or concerns, both in relation to files they are handling and their personal health and wellbeing. However, we encourage firms to reflect carefully on this. Is this the perception of your fee earners and other employees? Does this culture exist across the entire practice?
You know that an open door and supportive culture is alive and well if your fee earners are engaging regularly with management, supervisors and your risk and compliance teams to raise queries and discuss concerns. This will also be reflected in the pattern of notifications to insurers. If a firm makes precautionary notifications in a timely way throughout the year, then that is a good sign that the culture within the firm is open and supportive. In contrast, when a firm only notifies following an annual trawl or after a matter has escalated into a claim, then that can indicate that colleagues are reluctant to ask for help at an early stage.
The subject of wellbeing is rightly everywhere and our team are involved in many wellbeing audits to review opportunities for improvement. It is clear that having a comprehensive Employee Benefits and Wellbeing package can help in the following areas:
Business Tenders – clients are looking for their law firms to mirror their own wellbeing and environmental agendas when submitting RFPs
Protect the reputation of the firm - social media is rife with comments employees make about their employer
Increase the firm’s return on investment - wellbeing can increase the firm’s return on investment with lower absenteeism and greater performance
Reduce employee turnover - a comprehensive Employee Benefits and Wellbeing programme can reduce employee turnover by improving retention and recruitment of quality people
Fewer PII claims - helping those of us in the PII broking world by having fewer PII claims, ensuring we can present a professional and comprehensive wellbeing strategy to insurers when they assess your next renewal.
When you look at all the benefits of an active and comprehensive benefits and Wellbeing package the costs of reviewing and/or implementing improvements can be minimal.
It will be interesting to see how things change over the next 30 years!