To Notify or Not to Notify



30 November 2020

We are often contacted by firms, uncertain whether a particular matter should be notified. In our experience, if you are contemplating the question, then it is likely to be a matter that should be notified.

We will always suggest that you err on the side of caution. We offer the following guidance, looking more specifically at the position with reference to a claim, circumstance, complaint, and file request.

A Claim

In the MTCs a Claim is defined as:

“a demand for, or an assertion of a right to, civil compensation or civil damages or an intimation of an intention to seek such compensation or damages. For these purposes, an obligation on an insured firm and/or any insured to remedy a breach of the SRA Accounts Rules…shall be treated
as a claim...”

The guidance for claims is straight forward. If you receive a communication (whether written or oral) from a client or someone acting on their behalf, that demands, or asserts a right to civil
compensation or civil damages or intimates an intention to seek the same, then you should notify the matter straight away. Policy wordings will differ, but all require prompt notification and
use words such as “as soon as possible” or “as soon as reasonably practicable”. You should refer to your current policy for the precise wording of the notification clause, but the golden rule
is not to delay in making the notification.

The merits or otherwise of the matter are immaterial. Even if you consider the claim is misconceived, wholly without merit, or unlikely to be progressed further, you must still notify
it. This is an obligation under your policy and the Insurance Act 2015 requires disclosure and fair presentation. Remember, unmeritorious claims are sometimes pursued – and they need to
be defended.

If you are uncertain whether a matter amounts to a claim or intimation of a claim, it will almost certainly be a circumstance, which should likewise be notified, as outlined below.

A Circumstance

In the MTCs a circumstance is defined as:

“an incident, occurrence, fact, matter, act or omission which may give rise to a Claim in respect of civil liability.”

It is important to focus attention on the word “may”. It means that it is at least possible that a claim will result – although the risk must be real as opposed to “fanciful”.
Again, the precise wording will differ from policy to policy, but the requirement for notification of claims and circumstances will usually be the same and you should notify

There are various ways you could be alerted to a potential circumstance. It could arise in the context of a complaint by a client, a file request from a new solicitor, a position that
is taken by the solicitor on the other side of a transaction or litigation, or the result of an internal file audit. Alternatively it might be that light bulb moment when you realise you
have made a mistake. Whether a matter amounts to a circumstance is not always clear cut and if you are in any doubt, always pick up the phone and discuss the matter with our
claims team. They are here to help and are experienced at dealing with this issue.

If you become aware of a circumstance do not adopt a “wait and see” position in the hope the issue will go away. Sometimes it will be possible for a matter to be rectified
and your insurer will be able to assist you with this.

If you do not notify a circumstance and it develops into a claim at some later point, your insurer will be concerned about the late notification – particularly if you have changed insurers since the circumstance first arose. If this is the case and the matter should have been notified to an earlier insurer, you might find yourself in an uncomfortable position, with your current insurer looking at the “reimbursement” provision in the policy.

A Complaint

Whether or not a complaint should be notified to a PII insurer will depend upon the nature of the complaint. At one end of the spectrum the client might be complaining that a fee
earner has not been returning calls or keeping them updated. A bare service complaint of this nature does not need to be notified to insurers. At the other end of the spectrum the
client might be alleging delay that has caused them financial loss. Where loss is alleged the matter should be notified. There will be a “grey area” in between and we urge you to
contact our claims team for discussion if you find yourself in that situation.

It is also important to keep complaints carefully under review. While a matter can start out as a benign service complaint, it can escalate over time. It is important to be alert to this
and notify the matter if this happens.

A File Request

There can be a number of reasons why another solicitor writes to you to request a file, and often no reason will be given. In our view it is always wise to review a file prior to its
release. If you have any concerns about the advice that has been given, then consider whether the matter should be notified as a circumstance and ensure that you take a copy
of the file before release. If your review suggests that there are no issues with the file then there is no need for any notification to insurers.

Remember, the Howden claims team is here to assist you. If in doubt, call us.

Jenny Screech

Consultant, Solicitors 

Jenny Screech