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Episode 53 Buy Episode

Mistaken Expectations: Managing and Owning Mistakes in the Workplace

Law as stated: 11 February 2022 What is this? This episode was published and is accurate as at this date.
In this episode, Jennifer McMillan from Lawcover discusses what to do when you’ve made a mistake. She provides useful advice on what to say to the client and some useful ways to rectify some common issues.
Ethics and Professional Responsibility Ethics and Professional Responsibility
11 February 2022
Jennifer McMillan
Lawcover
1 hour = 1 CPD point
How does it work?
What area(s) of law does this episode consider?How to manage and appropriately respond to mistakes in the workplace.
Why is this topic relevant?Everyone makes mistakes. However, it’s not necessarily the act of making a mistake which determines the outcome, but rather how we deal with the situation once we realise a mistake has been made.

Dishonesty as to a mistake exacerbates the consequences. Appropriately managing mistakes and understanding the correct way to respond to them is a key skill for lawyers.

What legislation is considered in this episode?Legal Profession Uniform Law Application Act 2014 (NSW)
What cases are considered in this episode?Pitcher Partners Consulting Pty Ltd v Neville’s Bus Service Pty Ltd [2019] FCAFC 119

  • Neville’s Bus Service (NBS) engaged Pitcher Partners to assist in the preparation of a tender. A director of Pitcher Partners noticed an error in their work on the tender, but dishonestly indicated to NBS that the tender was accurate. This error led to the contract being $660,000 a year less profitable. At trial, the director admitted deliberately not telling NBS the full story.

Council of the Law Society of New South Wales v Renfrew [2019] NSWCATOD 63

  • A lawyer prepared a will for a client in which the lawyer’s assistant signed as the second witness after the testator had died. The lawyer then witnessed an affidavit of the executor that named the two witnesses. On application by the NSW Law Society to have the lawyer removed from the roll, the tribunal instead recommended that the lawyer be publicly reprimanded, have her practising certificate restricted, and that she undertake further legal education.

Victorian Legal Services Commissioner v Olayemi (Legal Practice) [2019] VCAT 1283

  • A newly admitted lawyer made a fatal mistake on a visa application and doctored the visa refusal letter, changing the reason for refusal. The client informed the practice that the document was doctored. While the lawyer was  eventually sanctioned by VCAT, his supervisor acknowledged in evidence the failures of the practice to provide appropriate supervision and monitoring of the young lawyer’s well-being.
What are the main points?
  • The most common complaint reported to the OLSC was lawyer negligence. Followed by issues with communication. The third most common complaint was cost disputes for overcharging.
  • Lawyers have a responsibility to let clients know of a mistake or issue as soon as reasonably practicable. However, it is important not to admit liability to a client where Lawcover has not recommended to do so.
What are the practical takeaways?
  • When you make a mistake, own up to the mistake and notify your supervisor or a trusted colleague as soon as possible to try and rectify the issue before significant harm has been done to the client. It is likely that they will direct you to call Lawcover. You can talk to a Lawcover claims solicitor about what’s happened and they will provide advice on the next steps you should take.
  • Dishonesty exacerbates mistakes. Do not act dishonestly and try to hide a mistake you have made. This can potentially have significant negative impacts on your client. Be honest and try to rectify the mistake as quickly as possible.
  • Supervisors and principals should endeavour to create a working environment that encourages lawyers to admit when they have made a mistake and seek advice on how to rectify this issue.
Show notesThe Office of the Legal Services Commissioner Annual Report 2020-2021
David Turner:

 

 

 

 

1:00

Hello and welcome to Hearsay, a podcast about Australian laws and lawyers for the Australian legal profession, my name is David Turner. As always, this podcast is proudly supported by Assured Legal Solutions, a boutique commercial law firm making complex simple.

Well, it’s trite, but true, we all make mistakes. And as much as type A, perfectionist lawyers like you and I hate to admit it, that includes all of you listening. It certainly includes me, I have to admit, but the true quality and character of a professional can be shown in how they handle their mistakes and that’s what we’re talking about today. Joining us again today in the Hearsay studio, I’m so glad to welcome her back, to talk about what to do when we discover that we have made a mistake is Jennifer McMillan from Lawcover. Jennifer, thank you so much for joining me again on Hearsay.

Jennifer McMillan:Pleasure.
DT:And I should say to our listeners before we start, if you haven’t listened to Jennifer’s first episode, it’s a fantastic listen from our first season, great one for an ethics point Episode ‘Risky Business.’ So listen to that one after this one if you haven’t already. Now, Jen, as I said in the intro, mistakes are very common in professional services as much as we might not like to admit it, do you have any information on how likely it is that a lawyer will have to make a claim on their professional indemnity insurance or will have to deal with an ethical complaint at some point in their career?
JM:

2:00

 

 

 

 

 

 

3:00

 

 

 

 

 

 

 

 

 

 

4:00

Our stats actually show that as a whole the legal profession in New South Wales does pretty well. For every thousand lawyers that we insure, we can expect to get about 20 actual claims per year. And those are claims where some money is paid because someone, usually a client, has suffered a loss. We get about twice that much in terms of notifications because we really encourage our insureds to notify as soon as they think they may have a claim. But in about 50% of notifications it never actually turns into a claim and doesn’t really lead anywhere. In terms of complaints, we don’t actually handle complaints against solicitors, but the Legal Services Commissioner publishes each year the number of complaints that they’ve received against solicitors, and from that you can see that there are about 130 complaints for every thousand solicitors each year. So you’ve got a six times greater likelihood of having a complaint made against you than having an actual claim against you.

TIP: As you might already know, the Office of the Legal Services Commissioner is an independent statutory body operating under the Legal Profession Uniform Law Application Act 2014 (NSW).

It receives and manages complaints against solicitors and barristers in NSW and it can make findings of unsatisfactory professional conduct or professional misconduct against legal practitioners in the state and similar independent bodies exist in other Australian jurisdictions, of course.

Now, as Jen mentioned, each year the OLSC publishes an annual report with the number of complaints made against legal practitioners in the past year. For 2020-2021, the OLSC received a total of 2,714 written complaints, noting that COVID-19 related lockdowns in March 2020 and June 2021 caused a spike in complaints against legal practitioners. The most common complaint was negligence, followed by poor communication, we all know that’s a common cause of complaints, and overcharging.

If you’re interested in the OLSC’s statistics, we’ll leave a link to that report in the show notes for this episode.

By the way, we’ve had a guest from the OLSC on the show before, Roger Gimblett. So, if you’d like to hear more from the OLSC, listen to that episode after this one.

DT:And I suppose those numbers are small, which is pleasing, and it’s good to know that there’s plenty more notifications than there are paid out claims. We spoke on your earlier episode of Hearsay about how the Lawcover policy works as a claims notified policy, but over a 20 or 30 year career in the law, those kind of yearly figures, I imagine quite a few people face a complaint at some point in their career.
JM:And I think many people will have had at least one complaint against them throughout their career. Certainly in terms of claims, I have notified claims when I’ve been a principal of a firm, I haven’t had any turn into actual claims, but I think that that’s a really common experience. And anybody who says they’ve never made a mistake, frankly you’ve got to wonder whether they’re telling the truth.
DT: 5:00That’s right, perhaps they’re just not capable of recognising or being aware of the mistake, really.
JM:And that in itself can be a real problem.
DT:Absolutely. And it’s so important that we acknowledge that mistakes happen because as we come on to talk about it a little later in this episode, having a culture in your firm for principals and employees to be able to acknowledge that is so important to managing them.
JM:Absolutely.
DT:Before we get there though, we’re talking about mistakes in this episode, and when we use that term mistake, what are we really talking about? What do we mean?
JM:

 

6:00

Well, it’s perhaps best explained by way of example. So, when we talk about a mistake that leads to a claim, it really means that someone must have suffered a loss because of this mistake. So, a really basic example, if you’re a solicitor acting for a vendor on a sale of land and you don’t put the correct prescribed documents, you don’t have them attached to the contract, then that could give a purchaser the right to rescind a contract. And if the vendor/client can’t then find anyone who’s prepared to pay the same price that their first purchaser was prepared to pay, then the solicitor may well be liable to make good the shortfall on a resale. So, we’re talking about mistakes that have real life consequences for someone where they end up with less money in their pocket than they otherwise would have had.
DT:Absolutely, we’re talking about mistakes with consequences, and I suppose we should distinguish those from the kind of errors which might happen in practice, but which are trivial or which don’t really give rise to a loss for someone. Can you think of a sort of example of an error or a mistake that we’re not talking about in this episode?
JM:

7:00

 

 

 

Yeah, and of course mistakes happen all of the time in law firms, and the things that I think law firms have got much much better at is having checks and reviews in place so that the mistakes are discovered before they become costly to a client. So, in the example I just gave about not getting the right documents attached to a contract, if the vendor’s solicitors check the contract and discover the problem before the auction date or before exchange in the case of the sale by private treaty, then the problem can be fixed up before the client is exposed to any loss. I mean, it can be embarrassing and difficult to tell the client about a stuff up that might lead to some delay, but you’ve got a real risk of a significant loss if you don’t confront the problem head on and deal with it. So, I think there would be so many examples of mistakes that are picked up before they leave the office or picked up before they cause a real problem and it’s really only when it’s not picked up until it’s too late that it starts to lead to the likelihood of a claim.
DT: 8:00

 

Absolutely. I suppose that’s really what supervising the practice of supervised lawyers is all about is ensuring that…mistakes always happen as a learning experience and they just need to get picked up before they reach a client, or anyone who’s going to rely on the document.
JM:Exactly right, having two sets of eyes cast over important documents is one of the fabulous risk management measures that people can take. And it’s very difficult, to be fair, to someone who’s a sole practitioner who doesn’t have a second set of eyes they can call on to check things for them. It’s certainly not just new solicitors who make mistakes, we very often see mistakes from solicitors with plenty of experience.
DT:

 

9:00

Now, as you said, it’s important to confront mistakes head on when you identify them but I think everyone who’s made a trivial mistake and maybe doesn’t want to own up to it right away feels that momentary temptation to think, ‘well, no one will know, I’ll just sweep it under the rug. No one will find out. I’m sure it won’t be a problem. What’s the likelihood it’s actually going to turn into anything?’ But the consequences of attempting to conceal a mistake, especially from your client who might ultimately rely on something that contains amistake can be devastating. Can you tell me a little bit about that?
JM:

 

 

 

10:00

 

 

 

 

11:00

 

 

 

 

 

 

 

12:00

Yeah, look there’s actually a fantastic recent example of this involving an accounting firm rather than a legal firm. This was a case where the accounting firm was engaged to prepare modelling for a tender for some bus services. And the tender was successful, but it turned out that there had been a pretty simple error in the modelling that the accounting firm did, and that error resulted in the contract being about $660,000 a year less profitable for the client than it should have been. And the evidence in the case indicated that the accounting firm discovered the mistake at a fairly early stage but misrepresented the position to their client to try and indicate that they hadn’t actually made the mistake and to deflect blame on the client for the reduced profitability. And the original mistake was one that, yes, might have led to a claim, yes, would have been embarrassing to admit all the rest of it. But what happened when they tried to conceal the mistake and were really dishonest in their dealings with the client was just so much worse. So instead of being frank with the client, the partner of that accounting firm became more and more entrenched in his refusal to accept responsibility. I kind of get the impression that he started to believe his own lies and eventually there was a 13-day hearing with silks in the Federal Court. And there was a massive amount of loss suffered once the contract was locked in. Came to about $5.4 million and on top of that they ended up having to pay costs on an indemnity basis of more than $3 million so you know, there were really, really significant consequences of concealing the mistake and then digging their heels in about concealing that mistake. It’s definitely a lesson for lawyers that that’s not the way to approach things when you discover that there’s been a mistake made.

TIP: The full name of the case Jen’s referring to here is Pitcher Partners Consulting Pty Ltd v Neville’s Bus Service Pty Ltd [2019] FCAFC 119.

Neville’s engaged Pitcher Partners to assist in preparing a tender for the right to operate buses in a part of the Sydney metropolitan area.

Mr Stewart, an executive director and partner of Pitcher Partners, noticed the error in Pitcher’s work on the tender, in that the tender price did not include certain anticipated costs related to the transfer of buses from the existing incumbent operator. As Jen said, this ultimately led to the contract being $660,000 a year less profitable for Neville’s.

Mr Stewart not only failed to alert Neville’s of the error but in oral evidence further admitted to deliberately not telling Neville’s the full story of the mistake and that’s really where he went wrong.

DT:

 

I mean two things struck me when I read that case after you sent it to me. The first was how small the mistake was in terms of conduct, although it was enormous in terms of effect. It really was a formula in an Excel spreadsheet pointing at the wrong cell. It was pointing it at the…
JM:Exactly right.
DT:

13:00

…at the, I think, the depreciated cost of the bus instead of the original cost of it and that had this massive effect on the amortisation of the cost of them over the life of the contract, although a massive cost, just a tiny little thing to miss. I think a lot of people probably think about mistakes like this as fundamental misconceptions about the law for example, in our context about really getting the theory or the advice wrong, being misconceived in some way, but so many mistakes are inadvertences. They’re typos, they’re simple things to do.
JM:

 

 

 

14:00

Yes it’s leaving out the word ‘not’ in an important clause of a contract. It’s something really tiny like that that can have big consequences. And the really awful thing in this situation was that by concealing the mistake from the client they ended up, for example, not being able to rely on their membership of the professional standard scheme to limit their liability. It meant that they were up for all of the consequential loss where it would otherwise have been limited to a much smaller damages award. And really, from the client’s perspective, if they’d been told at the time that it was discovered that there was a mistake in the calculation of the amortisation, they weren’t locked into the contract yet at that point.
DT:Yeah.
JM:They could have gone back and re-negotiated, they could have said, ‘sorry we can’t proceed on this basis.’ But the more entrenched the accountant got in trying to give the impression that there was nothing to see here, the greater the loss that was suffered by the client.
DT:

 

 

 

I mean that’s the other thing that was so extraordinary about this case that did strike me is pride really plays such a role in aggravating the damage that this sort of issue causes, because it was discovered before the client was committed to the leases, I think it was discovered in kind of another financial due diligence exercise where they were testing the cash flows on another Excel spreadsheet and the partner then deliberately manipulated that report…
JM:Yeah.
DT:in order to make it match the first one in error.
JM: 15:00That’s right. And it was always going to be hard to dig himself out of that hole once he had emailed to the client some numbers deliberately misleading the client into thinking that those were the numbers that were relied on when the tender was put in, when in fact they’ve been doctored by that stage.
DT:

 

 

 

 

16:00

There’s really sort of two categories here. You could imagine that that sort of error, because it is so small in terms of its conduct, it is so inadvertent that it might well happen, and it might well be the sort of thing that you need to own up to quickly in terms of a professional indemnity insurance notification once you discover it’s occurred after it’s too late to fix. I was involved in some litigation a number of years ago where a business sale contract was prepared by another firm of solicitors and it contained a formula that was the subject of extensive advice from not only the law firm preparing the documents, but also a major tax accounting firm. And there was such detailed consideration of these higher order issues that no one looked at what the formula actually said and what it said was that if the formula was A times B, A was the amount of revenue received by the company when its shares are sold and a company doesn’t receive anything when its own shares are sold – its shareholders do.
JM:It’s the shareholders.
DT:And so it was obviously prepared by very experienced and knowledgeable lawyers and accountants, but just missed that surface level issue; identified all of the complex tax and structuring issues, but not that surface level issue. But here in Pitcher Partners it’s just such a shame that there was an opportunity to fix it and it wasn’t taken.
JM:Yeah.
DT:If you have that former scenario where you identify this sort of innocent error after you’ve lost the opportunity to fix it, it’s too late. What should a Lawcover insured or a solicitor do?
JM: 17:00

 

 

 

 

 

18:00

 

 

 

 

19:00

The first thing to do would be to contact Lawcover, talk to a claims solicitor at Lawcover. I really don’t think there’s been a mistake made by a lawyer that hasn’t already been dealt with at some point in a Lawcover claim. So the claims solicitors have got access to all of this experience. And the first thing that you do really is think about, well is there something that can be done to mitigate the loss that the client might suffer? So you might talk about what strategies might be available to mitigate loss. It may be that there are no strategies available. It may be that this is a claim that ought to be settled quickly and then everybody can just move on. Or it might be a situation where the client is asserting a mistake, but it doesn’t really look like the solicitor actually made a mistake, in which case it might be something where we would consider defending a claim. But it’s really important to have that conversation early with the Lawcover solicitors. One of the difficult things for a solicitor who discovers a mistake that might end up having a bad effect for a client, is that the policy itself has a clause that says that you must not, without Lawcover’s consent, admit liability. And so having a discussion with the claims solicitor at Lawcover, really gives you an opportunity to workshop how you are going to tell the client what has happened because it is never the right answer to not tell the client what has happened. You always have to be up front. You always have to be frank with the client. You may not necessarily go so far as admitting liability, but in some circumstances the position of Lawcover might be that there’s no point not admitting liability. And in that case you’re doing it with Lawcover’s consent and so that’s absolutely within the terms of the policy. But it’s possible to tell a client what has happened. You can always tell a client the truth of what has happened on a file, that doesn’t necessarily mean that you also go on to admit liability, but what you might end up doing after you’ve explained about a mistake that you’ve uncovered on a file is that you might end up saying to the client, ‘you really should seek independent legal advice.’ And that of course is likely to lead to a claim being made in the right circumstances, but that’s how it should be because the client deserves to be protected.
DT:

 

 

20:00

Absolutely. I suppose there is that tension there, isn’t there? Not an unresolvable tension, but there is a tension there between not admitting liability and giving an explanation because I can imagine for some issues it’s hard to give the explanation without suggesting in some way that a mistake has been made or that you’re responsible for that mistake. I suppose the best way to resolve that tension is to make a notification early, and it’s just as well, because that’s obviously in the practitioner’s interests too. But how would one of our listeners manage that conversation if they had to describe a mistake without making an admission of liability before they had permission to do so? What does that conversation look like?
JM:

 

 

 

21:00

 

 

 

 

 

22:00

 

 

 

 

 

23:00

Look, I think it comes down to explaining what should have happened and explaining what did happen. So, you can actually say to somebody, going back to that really simple example of the contract that didn’t have the right documents, you can say, ‘there should have been attached to this contract, a sewer service sewage service diagram. I didn’t have a storage service diagram, it didn’t get attached to the contract and that means that the purchaser may be able to get out of the contract.’ So you’re saying all of those things that explain what has happened to the client and then you go on to say, ‘you might need to get some independent legal advice from someone other than me.’ And you haven’t actually said the words, ‘I admit, liability,’ although you may by that point have agreement from Lawcover that it’s OK to say that but referring the client off for independent legal advice is always a good idea. One of the things that we find comes up from time to time, and we’ll take different approaches depending on the circumstances is that if you’ve got a long-standing client and you’ve discovered a mistake that you’ve made and there is a way of resolving that mistake, the solicitor might want to continue to act for the client in trying to resolve that mistake. So, for example, it might involve making submissions to Revenue NSW as to why a certain duty that’s been applied shouldn’t be applied to somebody. The solicitor might say I want to continue acting for the client to see if I can resolve this issue. And in some circumstances that might be OK because there might not be a conflict between the duty that you owe to the client and your own interests in that if you’re able to achieve the outcome that you’re trying to get for your client, you will do it and you won’t charge for it and so it may be that the interests are aligned. As soon as Revenue NSW knock you back, though, on your submission and say ‘no, we’re still going to charge that,’ you have to recognise that in that moment your interests aren’t the same as your client’s. Your client has a cause of action against you and you shouldn’t stand in the way of them being able to make a claim against you, so it can be a very fine line to tread. I think we’re very lucky at Lawcover that we’ve got a really experienced team of claims solicitors who are really all over those issues that can arise and they will help advise you about when to cease to act, when it’s OK to act, what you need to tell your client to make sure that you’re not misleading them in any way.
DT:I think most clients who aren’t themselves lawyers would probably think, ‘well if someone makes a mistake, I expect them to fix it’ and even for myself, or most lawyers, I imagine would also feel a strong compulsion to try and fix a mistake if they’ve made one. So it’s good to know that that’s a possibility. You were talking earlier about mitigation strategies to mitigate loss, if a mistake has caused it, is that an example of one? And are there others?
JM:

 

 

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27:00

Yeah, look that there’s another case, the case of Renfrew, where I think it would have been so much better if this solicitor had consulted Lawcover or an experienced colleague, before going down the path that she did. This was a case where she’d been instructed to make a will for a client. The will was prepared, the client signed the will, she signed the will as one of the witnesses, but for some reason there was not a second witness signature on the will. And I think that the solicitor was not very familiar with the ability to have a will that hasn’t been properly witnessed admitted to probate under the dispensing power. I think she thought that the fact it only had one signature for a witness on it meant that it was fatal to the will and the will would be held to be invalid. And so she ended up going down a path that really caused many more problems. The person who was intended to be the second witness signed the will, as witness, even though she didn’t see the testator sign and of course with wills it’s not just the witnesses who need to see the testator sign, the testator needs to see the witnesses sign as well. So it was actually signed after the testator had died, so there was no way that that was a proper witness signature on the will. And the solicitor, rather than disclose to the court that when the will was signed there was only one witness signature and request that the court dispense with the requirements for a second signature, rather than going down that path, she just filled in an ordinary application for probate. She witnessed an affidavit of executor that said who the two witnesses were to the will and really ended up misleading the court into thinking that it was a will that was properly executed. And that was a really, really unfortunate thing because it ended up leading to a finding of professional misconduct on her part. So if she’d spoken to a trusted colleague, or if she’d spoken to one of the Lawcover claims solicitors she would have been directed to section 8 of the Succession Act, which allows you to make an application to the court where you don’t have a will that’s been properly witnessed and unfortunately she just didn’t realise that that was something she could do. She thought that she’d be letting the client down if she didn’t probate this will and ended up falling into the trap of really misleading the court. So, it was a very unfortunate set of circumstances and one where the action in mitigation was actually there, and it would have been, I’m sure, quite easy to get that will admitted to probate without misleading the court. She just ended up having a professional misconduct finding against her, which was really, really unfortunate.

TIP: Now those facts that Jen just mentioned, relate to the case named Council of the Law Society of New South Wales v Renfrew [2019] NSWCATOD 63.

Now, in the Tribunal, the NSW Law Society sought to have Ms Renfrew’s name struck from the roll. Being struck off, as most of us will know, is a very serious punishment which can only be applied to solicitors guilty of professional misconduct, not merely unsatisfactory professional conduct.

Now in this case, it wasn’t actually an issue whether Ms Renfrew had failed in her professional duties – she admitted to that, but she argued that she shouldn’t be struck from the roll because the Tribunal couldn’t be satisfied of her probable permanent unfitness to practise law

Ultimately, the Tribunal agreed that removing Ms Renfrew from the roll was too severe a sanction in the circumstances. Instead, the Tribunal ordered a public reprimand, placed restrictions on her practising certificate and ordered that she undertake further education on wills, probate and legal ethics.

DT:

28:00

Unfortunate and so similar to the Pitcher Partners case in that, again, an inadvertent error where there was an opportunity to fix it before the person who committed that error really committed to a course of deception and dishonesty to try and conceal it and with devastating results.
JM:I think sometimes, and I don’t know whether this was the case in Renfrew but I suspect it might have been, I think that people just end up in a brain snap. Where they are in such a panic about having not done everything that they should have done, that they lose sight of the big picture and lose sight of what’s important and what’s not important.
DT:

 

 

29:00

Absolutely. And that frame of mind or that mindset about mistakes is something I want to come back to in just a moment, but just reflecting on your tip there about asking a colleague that’s so important for a couple of reasons. One, because it would have revealed the solution, the mitigation strategy, but also because in the context of, this was less an ethical issue than it was just a straight up mistake, or it became an ethical issue when it was concealed I suppose. But when dealing with a difficult ethical situation where you’re not sure if you’re about to make a mistake or not, depending on what you do, the tribunal routinely takes into consideration the extent to which you’ve consulted with a colleague, consulted with counsel or senior counsel about what you intend to do and takes into account your thoughtfulness in that process in deciding what ultimately will happen to you. So important not just to identify these mitigation strategies, but even to demonstrate in the context of an ethical issue that might later give rise to a complaint that you’re really paying attention to and giving due consideration to your ethical responsibilities.
JM:

 

30:00

That’s right, and turning your mind to what you will do next and why you will do it is really important. The other thing that we see time and again in the disciplinary decisions against solicitors is that those solicitors who recognise when they’ve made a mistake and understand the gravity of what they’ve done will very often be treated much more lightly than those solicitors who dig their heels in and refuse to accept that what they did was not the right thing.
DT:Yeah, absolutely. I mean it’s a little bit like a sentencing consideration, isn’t it? That remorse and contrition is very important.
JM:Absolutely. And the extent to which you’ve been cooperative with the people who are investigating as well can make a big difference. If you’ve just refused to respond to letters from the Legal Services Commissioner, you’re not setting yourself up very well.
DT:

 

 

31:00

And that not only applies with the Legal Services Commissioner and proceeding in the Tribunal, but also with the Law Society of New South Wales’ own disciplinary processes and professional conduct committee. So in any context, cooperation and forthrightness is going to be an asset for you. A consistent theme in both Renfrew and the Pitcher Partnerscase is really, there’s an opportunity to fix these mistakes, maybe in Renfrew that opportunity wasn’t identified, but it was in Pitcher Partners, but the parties end up on this downward spiral where they have to conceal the mistake and end up doing so through fraud, or at least dishonesty – in one case, out of pride and in another out of I suppose…
JM:Panic.
DT:Panic and perceived necessity. It seems like it’s really important that lawyers, and although the cases we just talked about were about principals, especially employed lawyers I think feel that they can admit to mistakes and admit to the mistakes that they make early before they’re released to the world and released to the client so they don’t end up on an unsustainable path of defending what was ultimately an innocent and fixable error. Does Lawcover have any tips for our listeners on how to create the kind of culture in a law firm where people feel safe admitting to mistakes?
JM:

32:00

 

 

 

 

33:00

I think it’s good that you use that word ‘safe’. It seems to me that in many ways this is an issue of leadership, and if you’re the supervising principal in a firm, somebody who is a really strong leader in that role won’t be expecting that mistakes don’t happen. They’ll be encouraging discussion of mistakes, how they happen, how they can be avoided, how they might be fixed in different circumstances, and the importance of being frank in your discussion with clients. It’s really key to accept and discuss the fact that no one is infallible and make sure that people in your team understand what’s expected of them when they make a mistake. The worst thing for a principal is to have underlings who are concealing the mistakes that they’ve made – that’s disastrous. And it comes down to managerial style I guess, but blaming and shouting is probably not going to have the desired effect. It’s probably going to have the opposite effect of what you want, which is to have a culture where your team looks at mistakes as opportunities to learn and improve. And ultimately, if you’re a law firm, you’ve got compulsory professional indemnity insurance, so it’s not really the end of the world when a mistake comes to light, even if it has caused loss. Your client is going to have recourse to insurance, yes, there will be an excess to pay, yes, it’s gonna be a pain in the butt, yes, it’s always better if a mistake is caught before it leaves the office. But if you create a culture where people are so scared that they will lose their jobs if they ever come concede that they might have done something that wasn’t perfect, you’re really making a rod for your own back.
DT:

34:00

Yeah, and almost raising other ethical issues, or at least business sustainability issues. I suppose. If you have a junior lawyer who is so terrified of getting feedback from you about a mistake that they spend 8 hours on a 2-hour task, and then you bill for that time. Well…
JM:That’s not clever either.
DT:Yeah, exactly, that’s going to come back to bite you. I’m sure there’s some people who think, ‘oh well, that sounds like a win-win situation.’
JM:But I did mention that you’re much more likely to get a complaint…
DT:That’s right.
JM:…than a claim and a lot of those complaints will be about overcharging.
DT:We’ve spoken on this show about how to give feedback in a number of episodes, and we’ll give our listeners some references to those episodes and some of those tools. But being able to give feedback in a positive way in a way that highlights that mistakes are a learning experience, I think, is part of that culture, isn’t it?
JM:

35:00

I think that’s exactly right, and I mean everybody is different in their managerial style. But I think if you’ve got some difficult negative feedback to give to somebody in your team, it’s good to do that in private if you’ve got praise to give, it’s good to do that in public. But when a mistake has been uncovered, I think you need to have the private word with the person who is involved and then you need to turn it around and say, ‘look I think this is a mistake that could have been made by somebody else as well, let’s have a talk about it as a team so that we can really discuss how we will make sure this doesn’t happen in other matters.’
DT:Yeah, absolutely. I mean a bit like what we were discussing in terms of the Pitcher Partnerscase you want to identify that issue as early as possible, but for a firm that’s large and operating nationally like that one, and you want to make sure that your people are aware of the issue and that as an organisation you learn and grow from it, quite apart from the individual professional.
JM:Yeah, absolutely.
DT:

36:00

And now that’s a bit of a tip on how to make sure employed solicitors feel that they can admit to mistakes and learn from mistakes. But Mr Stewart in the Pitcher Partners case and Ms Renfrew in the Renfrew case, they were both principals of their practices, Ms Renfrew I think was a sole practitioner. How do we make principals feel comfortable admitting to mistakes because we don’t have that kind of opportunity to create a culture in which they work to do that, do we?
JM:

 

 

 

37:00

Yeah, and it requires real self-awareness. When the firm is you, you need to be aware of who you are and how you react in difficult situations. And I think it can be very difficult for some personality types. In Mr Stewart’s case, I think he just became so entrenched in his position of denial that he may even have come to the point where he believed his own lies. To my mind having the ability to admit a mistake is actually a strength and should be recognised as such and of course the consequences of concealing mistakes are so much worse than the consequences of being frank about them. I think Ms Renfrew was a very much a different personality type but she obviously is somebody who probably needed a bit more mentoring from somebody who would be able to point out to her that there are other ways of fixing things up than concealing the error.
DT:And I do remember reading in the background to that decision she commenced practice as sole practitioner 2 years after commencing practice as a supervised lawyer, so not a huge amount of time in practise before.
JM:And I think people in that situation are quite vulnerable and really need to be encouraged to develop a network of mentors and other people around them so that they don’t feel completely isolated. I think isolation really contributed to the problem in that particular case.
DT:

38:00

Can you tell us, just going back to a situation of employed solicitors ’cause I think a lot of our listeners will be really concerned to make sure that they have this sort of culture in place in their own firms, can you tell us a story about an error committed by an employed solicitor that could have been avoided if there was that culture in the firm where they felt comfortable admitting to a mistake?
JM:

 

 

 

39:00

 

 

 

 

 

40:00

 

 

 

 

 

41:00

Yeah. Look, there’s a really striking case that came out of VCAT a couple of years ago of Victorian Legal Services Commissioner v Olayemi and this was a newly admitted practitioner and I felt really sad for him. He was working in a very, very busy immigration practice and he was pretty much drowning under the file load that he had. And he was asked to submit a visa application and he ended up getting a refusal letter back from the department and when he read the refusal letter, he realised that he’d made a mistake in the application that he made and that that mistake had really been fatal to the visa application. But he obviously did not have a good enough relationship with his supervising principal to go to him and say, ‘look, I’ve done this terrible thing, what can we do about it?’ And instead of doing that, what he did was he took the refusal letter from the department and he doctored it. He added a new fictitious reason that covered up the fact that he’d made the mistake that led to the visa application being refused. And the client twigged to the fact that the documents had been fabricated and confronted the principal who then confronted this poor young practitioner. And he fessed up that he had made the original mistake, and then he had doctored the refusal letter. Oh, just awful, he ended up getting dismissed from his position. By the time it came up before VCAT he hadn’t been in the law for three years, he hadn’t been practising for three years, so it absolutely spelt the end of his career. VCAT made a determination that it was professional misconduct and they put a time around how long he then should wait before he applied for a further practising certificate, and that he would need to undergo professional development in the area of ethics and professional responsibility, have to have a further two years supervised practise, and he was also up for costs in the case. But you could imagine something like that for a newly admitted solicitor, you’re probably never going to get back up on your feet. Where with the right culture in the firm, with a culture where it was understood that OK mistakes sometimes happen but what you have to do is tell your supervising principal straight away when you discover that something’s gone awry, that could have made a big difference. And I think one of the interesting things about that decision is that the supervising principal actually came along to the VCAT proceedings and gave evidence on behalf of this young practitioner sort of saying, ‘look, he was under immense pressure at work. We could have done a better job of supervising him.’ He really ended up kind of trying to help this guy out and in hindsight I think that the principal actually saw that there were a number of things that he could have done differently to avoid the situation.
DT:I mean that’s a mistake of an entirely different category, isn’t it? To realise that you’ve not creating an environment where the professionals you supervise can do their best work.
JM:Yeah, I do think it was absolutely to the credit of that supervising practitioner that he was really prepared to shoulder part of the blame for that, even though the disciplinary proceedings were against the young guy.
DT:

42:00

Oh, of course. I think it would be enormously courageous when the opportunity is there to just throw someone under the bus who’s already in the firing line to mix a few analogies there. But It would take a huge amount of courage to admit to having a part in that, at a disciplinary hearing no less.

TIP: Now, although the absence of a workplace culture that encouraged lawyers to admit to their mistakes was a big problem in Olayemi, encouraging such a culture is only one part of being an effective supervisor to young lawyers.

When the Olayemi case reached the Victorian Civil and Administrative Tribunal, the young lawyer’s supervisor did take some responsibility for the situation of the young practitioner. and senior VCAT Member Wentworth found that the supervisor’s evidence was thoughtful and candid about the failures of the environment. The Member noted that she was impressed by the supervisor’s recognition that supervision of young lawyers was not just about supervising their work, but also about checking in on their well-being.

DT:

43:00

I mean the thing that strikes me about Olayemi is, and I don’t have any data to support this, but it’s a strong anecdotal belief that I have is that I think a lot of costly mistakes happen at 2 or 3 AM when quality is perhaps the last thing in anyone’s mind. Everyone is desperate for sleep, everyone is overworked and possibly has been for weeks. What role does an appropriate amount of capacity and appropriate workload and appropriate working hours play in the quality of legal services and guarding against mistakes?
JM:

 

44:00

 

Yeah, I think we’ve actually seen a real shift in the last five years or so from this kind of bravado about being able to work silly hours and this myth that you can turn out quality work when you’ve already been sitting in your office chair for 16 hours. And I think that in some ways the Royal Commission into the Financial Services and the consequent exposure of unsafe work practises in some large law firms has really helped people to recognise that there is responsibility on an employer to ensure that the workplace is safe and that doesn’t just mean not having cords you can trip over. It also means having an environment where people aren’t running themselves into the ground, and of course that plays into mistakes. We all know that when we’re feeling particularly stressed or feeling like we’re not on top of our workload that’s the very time when things slip through the cracks or things that should have been checked don’t get checked.
DT:I often think large law firms usually have a policy somewhere that says you shouldn’t be doing client work whilst intoxicated, and we also know that being sleep deprived is in large part very similar.
JM: 45:00Yeah, fatigue is…exactly. Fatigue is very, very much a factor in terms of quality of output. And I’m not putting all of the responsibility of this onto the principals and the management of a firm, I do think that individuals also need to know themselves and know when they’ve been at the office too long and they’re not performing at their best.
DT:Well, I think I know what the tip’s going to be, but if you had to leave one tip with our listeners to draw from the stories we’ve talked about today in terms of managing mistakes, what do you think that tip would be?
JM:

 

46:00

I think be aware of your own tendencies, whether they’re tendencies to panic or get entrenched in a position of denial. Stop and think and just remember that you owe a duty to your client. You really do need to make sure that you’re not misleading the client, and talk to somebody. Talk to somebody before you do anything whether that’s a trusted colleague or not. Many experienced trusted colleagues will tell you to ring Lawcover and notify of what’s happened so that you can talk to a claims solicitor about what’s happened as well. There is no adverse consequence from notifying Lawcover when a mistake is discovered. You’ll only have to pay your excess if there’s an actual claim where money is paid. It won’t have any impact on your premiums if it doesn’t turn into a claim, but it will be a great weight off your mind having a chance to talk it through with somebody who will have seen it before.
DT:Absolutely there is really no downside to notifying and plenty of upside especially if you’re one of those practitioners we were describing who maybe doesn’t have the advantage of another set of eyes to look at their work especially when something like this is discovered.
JM:Absolutely.
DT:Jen, thanks so much for joining me again on Hearsay. Thanks very much.
JM:Thank you, David.
DT: 47:00

 

 

 

 

 

 

 

48:00

You’ve been listening to Hearsay the Legal Podcast. I’d like to thank my guest today, Jennifer McMillan from Lawcover, for joining us again on the show. Now, just because the CPD rules say you only need one ethics point, there’s no need to stop there. If you liked listening to Jen as much as I enjoyed interviewing her, you could listen to her previous episode, episode 4 of Hearsay, right now, or if the facts of the Pitcher Partners case have you suddenly interested in analysing the profitability of your own business, check out accounting for lawyers with Nik Ahkin, episode 24, for a practise management and business skills point. Now, as you know, if you’re an Australian legal practitioner, you can claim one Continuing Professional Development point for listening to this episode. Whether an activity entitles you to claim a CPD unit is self-assessed, but we suggest this episode entitles you to claim an ethics point. More information on claiming and tracking your points on Hearsay can be found on our website. The end of the CPD year is fast approaching, and if you know anyone who needs more points before 31 March, tell them to sign up to Hearsay with the coupon code referee2022, that’s referee2022, for 25% off their subscription price. Hearsay the Legal Podcast is proudly supported by Assured Legal Solutions, a boutique commercial law firm that makes complex simple. You can find all of our episodes, as well as summary papers, transcripts, quizzes and more e-learning materials on our website and, if you’re a subscriber, we’ll let you know by email whenever we release a new episode. Thanks for listening and I’ll see you next time.