Lawyers’ Risk Appetite May Unwittingly Influence Their Clients’ Desired Exposure

Lawyers’ Risk Appetite May Unwittingly Influence Their Clients’ Desired Exposure

It is a well-established fact that litigation has risk.  The risk forms the basis of the “no win, no fee’ contingency fee agreements that are used by the majority of lawyers in retaining their personal injury clients.

LAWYERS INFLUENCE THEIR CLIENTS’ RISK ASSESSMENTS

A client’s appetite for risk is influenced not only by their lawyer’s professional assessment of their claim, but also by their lawyer’s personal risk appetite.   Clients will almost certainly ask their lawyer, “How good is my case?”, “What do you think it is worth?” and “How long will it take to get the case settled?”  In answering these questions, regardless of how vague the answers may be, the lawyer shapes the client’s expectation and assessment of risk.

Ian Hu, an attorney with Toronto-based LawPro, says:

“the biggest risk of malpractice claims surrounding settlements is when lawyers fail to fully discuss with their clients all the potential outcomes of a case, the risks involved with each scenario and the potential costs.”

A lawyer should ask themselves, from their client’s perspective:

  • Is this client exposed to risk that the client should be made aware of?
  • Have I advised the client of all the consequences of litigation?
  • Am I shaping the client’s view of litigation risk by not fully explaining the possible outcome of a case or by downplaying litigation cost consequences?
  • Have I conveyed my personal risk profile onto the client?
  • Have I avoided discussing costs and risks because I don’t like to discuss these items or because I am afraid that, if I do, I may scare the client away?

LITIGATION IS RISKY

If your client’s claim for compensation is unsuccessful, an After the Event Insurance policy will protect them from paying their own costs and disbursements and those of their opponent as well as adverse cost awards.

The client’s risk profile may be considerably different than their lawyer’s.  Understanding their risk appetite and placing their best interests ahead of all else will  always serve you well.

Only when your clients have an ATE policy in place when pursuing a compensation claim, can they feel assured that their claim is risk free.

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