Assisting Lawyers

Have a query? Call the Helpdesk
PII & RM: +603-2050 2001
BCM General Line: +603-2050 2050
Marsh Insurance Broker: 
     +603-2723 3241 /3388
Font size
  • small text
  • medium text
  • large text

Prevention is Better Than Cure

Legal risk is unavoidable as lawyers do make mistakes from time to time.  Therefore, taking pre-emptive measures will help to prevent any potential claims or legal disputes from errors or omissions made by the legal practice.  Proactive practices will go a long way to safeguard reputation, financial bottom line and unnecessary stress from allegations of potential lawsuits.
Below are several actual cases which also highlights various learning points that are simple, but often overlooked:

Confirm your scope of work in writing

Case 1 – Investors sued a company and its lawyer when an investment scheme failed.
Case 2 – Purchaser sued vendor for a failed promise of investment returns.  Vendor brings in their lawyer as co-defendant for failing to advise the terms.  The lawyer merely drafted the agreement.
Case 3 – A person claiming to be the principal shareholder/beneficiary to a stockholder, sued the shareholders and their lawyer for unlawfully releasing a substantial fee to the broker.
Case 4 – A borrower sued a lender and their lawyer alleging harassment when demanding repayment of a loan which the borrower now denies its existence.
It is very important to list down a complete scope of work in detail and confirm it in writing with a client.  Any subsequent changes or additional work should also be promptly put in writing.  This will help if there is a dispute or even ambiguity in the future with the client.
At the same time, it is prudent to always confirm in writing (eg by letter/email) on any key points discussed, whether with the client or any other parties involved in the matter.
Verifying such instructions may be challenging while working remotely during the current pandemic lockdown, therefore, confirmations via email should be carefully scrutinized for possible cyber security issues, eg in case the email is hacked.  It is better to speak to the client directly on the mobile phone or in a virtual online meeting, and then confirm it in writing. 

Confirm conditions for managing stakeholder sums

Case 1 – Upon termination of an investment agreement, purchaser sued vendor and their lawyer for refund of the deposit which the lawyer released to the vendor, as it had no specific conditions on the same.
Case 2 – In a consultancy services agreement between a consultant (the client) and a company, the lawyer had immediately released the fees to the consultant, after receiving money from the company when the consultant failed to deliver the services.  The company sued the consultant and lawyer for refund of the fees paid under the consultancy services agreement.
Case 3 – As instructed in a supply contract, the lawyer released the purchase price to a 3rd party manufacturer for the goods.  Due to non-delivery, the purchaser sued the supplier and the lawyer for damages and the purchase price paid.
Case 4 – Lawyer acted as stakeholder for an international transaction.  Monies transferred in USD exchanged into MYR.  The Client’s transaction did not materialize, and the lawyer proceeded to refund but exchanged from MYR to USD.  The amount was materially short due to the Forex loss.  Client demanded the lawyer to make good of the shortfall.
When drafting agreements, details such as how to manage stakeholder sum should be clearly stated and to be strictly adhered to.  If there are any changes, even if the instructions came from the client, it must be agreed to in writing by the relevant parties.

Know Your Client

Case 1 – A lawyer acted for purchaser Mr X in a property SPA with vendor Ms B.  The lawyer never met Mr X, and received instructions only from Ms B (supposedly Mr X and Ms B know each other very well) including the disbursement of purchase price.  Mr X sued Ms B and the lawyer for the loss of the monies.
As lawyers, strict compliance with the statutory anti-money laundering and countering terrorism obligation is required.  Do not proceed any further until sufficient verifications to identify details of the client have been made.  This applies to individuals, corporate clients, and includes verifying the appropriate mandate or authority for any intermediary or representatives of the client.  This is a basic and essential way to avoid being unknowingly related to any sort of potential fraud or crime. 

Confirm your legal fees with the client in writing

Case 1 – The lawyer acted as stakeholder.  The lawyer was subsequently discharged over dispute on legal fees, but the lawyer retained stakeholder sum as fees.  Client sued lawyer for the return of the full stakeholder sum.
Disputes over legal fees and expenses are not covered by the Professional Indemnity Insurance Policy.   Therefore, it is crucial to communicate and confirm legal fees with the client in writing, before or in the early stages of providing service.  Any additional or revised fees should also be promptly confirmed in writing.  This issue may seem less important to some and hence overlooked on many occasions – until a dispute arises over legal fees, which can literally end any client relationship as a provider of legal services in the future.  
Finally, continue to keep your clients engaged and informed regularly, especially during this difficult time.  Update them regularly with the developments in the legal work you are doing for them, finding out their wellbeing and if you are able to offer any help.   Extend the extra mile for them and the effort can go a long way!
Marsh is one of the Marsh & McLennan Companies, together with Guy Carpenter, Mercer and Oliver Wyman.  This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such.  The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy.  Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein.  Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as actuarial, tax, accounting or legal advice, for which you should consult your own professional advisors.  Any modeling, analytics, or projections are subject to inherent uncertainty, and the Marsh Analysis could be materially affected if any underlying assumptions, conditions, information, or factors are inaccurate or incomplete or should change.  Marsh makes no representation or warranty concerning the application of policy wording or the financial condition or solvency of insurers or re-insurers.  Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage.  Although Marsh may provide advice and recommendations, all decisions regarding the amount, type or terms of coverage are the sole responsibility of the insurance purchaser, who must decide on the specific coverage that is appropriate to its particular circumstances and financial position.  Insurance coverage is subject to the terms, conditions, and exclusions of the applicable individual policies.  Policy terms, conditions, limits, and exclusions (if any) are subject to individual underwriting review and are subject to change.