In determining whether a firm has implemented an effective risk management program, the Insurer must be satisfied that the solicitor has exercised a reasonable degree of care and skill in his/her conveyancing work. This includes:

• whether a conveyancing checklist is used;

• whether identity and background searches are conducted;

• whether land searches are conducted;

• whether instructions received and advise given are recorded in writing; and

• whether important dates are recorded.

Between 2015 to 2020, the Insurer received a total of 41 applications from firms who applied for their Base Excess reinstatement. Only 15 were able to show that they had practiced effective risk management in their conveyancing work. That equates to successfulrate of 37%, who had acceptable risk management.

In the 63% of firms who had been unsuccessful, the Insurer observed that:

• no identity and background checks were conducted. These includes failure to conduct bankruptcy or insolvency checks on the vendor which would unnecessarily expose the purchaser to the risk that the vendor is a bankrupt or insolvent;
• land searches were not made at crucial stages of the transaction, namely, prior to execution of the sale and purchase agreement and/or prior to presentation of the transfer instrument which may prevent the transaction from being completed if the land was encumbered or has a caveat in place;
• land searches were made but for the sole purpose of the loan transaction relating to the
• property and not for the sale and purchase agreement;
• solicitors who had chosen to rely on land searches provided by their client or opposing party which may expose the solicitor to the risk of an outdated or even forged document;
• documents were attested but not witnessed by the solicitor personally; and
• conveyancing checklists were not used.

The end result of good risk management is a successful conveyancing practice. Without an effective risk management system, firms are exposed to risks from external sources such as land fraud and scams or internal sources such as mistakes made by staff and lawyers, poor matter management, ineffective controls, and even technology.

It is reckless therefore to ignore common sources of risks that arise from conveyancing practice. Risk management is important for legal practitioners and practices and it is more than just avoiding legal claims or lowering the costs of professional liability insurance.