Protecting Your Professional Indemnity Insurance: Questions a law firm should ask during the recruitment process

Due diligence is important when a law firm is recruiting a new fee earner – whether that is at trainee, paralegal, solicitor or even partner level. Some firms are highly organised and have a pre-hire question set. Other firms are more reticent and feel awkward about asking questions relating to issues such as complaints or claims history. In our experience firms can cause themselves great difficulty if they do not undertake sufficient due diligence prior to recruitment – difficulties that can impact adversely on their Professional Indemnity Insurance (PII).

We set out below some of the basics we consider you should be covering:

A candidate’s CV – Follow up references and request confirmation of academic qualifications.

Practising certification and history – This can be checked with the SRA and it is useful to check that their career history matches the CV. The SRA will confirm by phone if a candidate has a current practising certificate, but if you want their career history you will need to request this in writing, advising why you require it. Beware if the candidate is currently practising as a sole practitioner or even as a partner in a small firm that could close if the candidate were to leave. These are scenarios where your firm could become a successor practice and you will need to proceed carefully and take advice. It is important to ensure your PII providers are notified if there is a succession issue and there might be implications with regard to cost and terms of cover. Some firms have been badly caught out on this issue.

Disciplinary history – This can be checked on the SRA website. If a candidate does have a disciplinary record it is important that you obtain full details. If you proceed with the recruitment, your insurer will certainly want chapter and verse. Ensure that you have all relevant documentation and it is often useful to obtain additional references that you can also submit to insurers.

Criminal record – Seek confirmation that the candidate has no criminal convictions.

Complaints, claims and allegations of negligence involving the candidate – While there is no means to independently verify this information, it can be useful to have the candidate sign a document confirming the accuracy of the information provided. Complaints and claims do happen and often serve to increase an individual’s awareness of risk, so an affirmative answer need not be fatal to the application. If there are issues, get as full an understanding of the background as you can, so that you can properly assess the position and make a considered decision on the recruitment. Again, your PII provider will consider this to be material information.

Questions asked by insurers – Consider adopting a question set that matches the questions relating to practising certificate and regulatory issues that are set out in insurer proposal forms. Insurers often ask for quite detailed information regarding fee earners going back for a period of up to 10 years. Some of the questions include reference to practising certificate and disciplinary issues that we have referred to above. However other questions can include whether a fee earner has practised in a firm that has been the subject of an investigation or intervention by the Law Society and some insurers also ask about civil judgments and bankruptcy or IVAs in relation to fee earners. You will not be able to properly complete your proposal form unless you have asked these questions of fee earners and the recruitment stage is an ideal opportunity to obtain the information for future use.

Reasons for seeking a new opportunity – It is useful to understand the reasons why the candidate is considering leaving their current firmor if they are not currently working, the reasons why they left their last firm.

Level of billing – Again it is difficult to verify this, but your own experience should tell you whether the figure given is realistic and at an appropriate level.

Competency – When recruiting at a more senior levelyou, or someone in the firm, may have had professional dealings with the candidate and will have a view on their competency and professionalism. This is rarely the case with more junior recruits and it can be useful to ask some questions related to their area of practice. One option is to present a fact scenario and ask them to explain the advice they would give. Alternatively, you could ask them to summarise and give their view on a recent decision of significance in their practice area.

Due diligence does not end at the point that the recruitment is completed and the candidate arrives for their first day. The induction process is also key, particularly with reference to the firm’s policies, procedures and risk management requirements. Ensure that the new solicitor knows and understands exactly what is expected and do not assume that they will have the same awareness of the importance of risk management as other fee earners in your firm.

Supervision of new fee earners, no matter how senior, is likewise critical for their integration into the firm. To protect the firm from risk, you need to be certain that the induction process has been effective and that they are practising as the firm expects.

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