The Gazette 1971

The assumption in (b) is that a client who suffers

from his lawyer's negligence would not fail to com-

municate the details to his own circle of friends, who

in turn would pass them on to others.

In some of the reported cases on professional negli-

gence the mistake made was of an elementary nature,

the circumstances showing that it was not a mere slip

but arose from ignorance. If that sort of negligence

results in unrecompensed loss to a client, the reputation

of the profession is impaired through exposure of the

want of competence in one lawyer and the failure of his

fellows to have devised some means of avoiding its

sequel. There will, no doubt, be other views. The com-

petent, industrious practitioner should not have to bear

any responsibility for the incompetent or lazy member

who fails in his duty of care to a client. The negligence

of one lawyer is his own concern and the client's loss is

his own misfortune. This is mere sophistry. If the

opening statement of this Part IV is true, and it is

conceded that professional negligence is one of the

targets at which this aim is directed, the area of respon-

sibility might well extend to care for victims of the

negligence of lawyers in the practice of their profession,

to the extent that their losses are not met from insur-

ance and the negligent member's own resources. This

conclusion also makes professional negligence insurance

the immediate concern of professional bodies : to pro-

vide or secure for their members an effective insurance

cover on reasonable terms; to ensure that every practi-

tioner has that cover, as a condition of his right to

practice, if need be; and to consider what might be

done for the client whose loss is not made good.

PART V : CONCLUSION

Responsibility for the consequences of any person

accepting the views expressed in this paper is expressly

disclaimed by the Rapporteur. Enough has been written

in the foregoing pages to present the topic as being not

merely of lively interest, but of vital concern to the legal

profession; touching, as it does, the individual interests

of lawyers and the well being of their profession as a

whole.

APPENDIX A

QUESTIONS IN PROPOSAL FORM

1. Name and address of proponent.

2. Full names of partners, qualifications, when quali-

fied and how long practising.

3. Total numbers of partners and permanent staff.

(a) Partners.

(b) Staff, other than typists and office boys.

(d) Temporary staff.

4. (a) When was the firm established?

(b) If under five years please give details.

5. Has any application for insurance made on behalf

of the firm or any of the present partners or, to the

knowledge of the firm, on behalf of its predecessors

ever been declined, cancelled, or renewal refused?

6. Have any claims ever been made against the firm or

any of the present partners, or against its prade-

cessors in business or any past partner; or is the firm

aware of any circumstances which may result in any

claim being made against the firm, its predecessors

in business or any of the present or past partners?

7. Have you been previously insured? If so, please give

full details of policy, insurers and brokers.

8. Amount of indemnity required.

9. Do you require indemnity for any or all of the

following extensions, for which extra premium is

required :

(a) libel and slander;

(b) fraud and dishonesty;

APPENDIX B

Mr. J. N. Creer, Chairman of the Special Committee

mentioned below, has given a report on the group

scheme sponsored by the Law Society of New South

Wales, as follows :

In 1968, the Law Society of New South Wales spon-

sored a scheme of professional indemnity insurance

which is now established as the "Solicitors' Professional

Indemnity Insurance Scheme". The Society had no

intention of participating in a scheme of this kind, but

over a considerable period of investigation developed a

concept of establishing group insurance and the basic

feasibility research work was carried out by a Special

Committee of Sydney practitioners, appointed by the

Society, all of whom had specialised professional experi-

ence in various aspects of insurance law. The Special

Committee found that New South Wales solicitors had

been called upon to pay increasingly high premium

rates over the previous five years notwithstanding that

relatively few or large claims had been lodged. The

insurers, all of whom, of any consequence, were overseas

based companies, explained the increased rates by

claims experience in all the Australian states and, appar-

ently, the worsening world situation in regard to claims

for indemnity made by other professions. As a funda-

mental matter, the Committee, therefore, sought to

attract an Australian insurance company which would

be prepared to assess its risk solely on the solicitors of

the State of New South Wales and strike premium rates

accordingly. With the assistance of a consulting actuary,

the Committee, after some eighteen months work, suc-

cessfully negotiated the group scheme at reasonable

premium rates with a local underwriter which had very

satisfactory reinsurance arrangements.

The group scheme is available only to solicitors prac-

tising in New South Wales and relies upon a partici-

pation of a minimum of 100 members. The policies are

all subject to a compulsory self insurance of $A2,000

with cover available up to $A100,000.

Indemnity in excess of $A100,000 can be indepen-

dently negotiated with the underwriters.

As a financial inducement to the profession, the

scheme has a group discount incentive related to annual

premium. The scale of discounts applicable to the

number of members who jpin is as follows :

100 to 250 members

Group discount 10 per cent

251 to 500 members

Group discount 15 per cent

501 to 750 members

Group discount 20 per cent

751 and over

Group discount 25 per cent

In addition, the group scheme contains a profit shar-

ing formula. The nett profit after claims and expenses

have been taken into account will be ascertained at the

end of a three years period and 20 per cent thereof will

be credited to those members participating in the

scheme during the term, in proportion to the premiums

150