Mitigating Legal Risk: Experts Analyze Professional Liability and the Key Role of Technology  

Professional liability, its practical aspects, how to mitigate it with the use of tech, insurance coverage, and the training of lawyers.

Toronto, Canada - A distinguished session of the International Bar Association (IBA) brought together international experts to address the challenges of professional liability in the legal sector, focusing on how risk management, technology, and professional insurance are vital for the sustainability of law firms.

The panel, titled "Professional liability, its practical aspects, how to mitigate it with the use of tech, insurance coverage, and the training of lawyers," was aimed at management and professionals who handle claims against law firms and lawyers.

The session was jointly organized by the Law Firm Management Committee, the Litigation Committee, the Professional Ethics Committee, and the IBA Legal Policy & Research Unit of the International Bar Association.

Alexia Aurelio, panelist and lawyer from Aresco Abogados in Argentina, noted that it was "challenging" to observe the degree of evolution in legal risk and technology aspects in countries such as the UK, USA, and European nations. This is because these topics are "just beginning to develop in LATAM."

The panelist highlighted that, in the case of Argentina and its neighboring countries, the implementation of institutional Compliance policies, Codes of Ethics, and KYC (Know Your Client) procedures is still limited to a reduced number of large law firms, estimating that only between three and five firms have adopted these measures.

Furthermore, Alexia Aurelio indicated that the use of Artificial Intelligence (AI) both in law offices and for client onboarding processes is still very limited in these countries. Consequently, she found the exchange of information and the insight into developments in these areas in other jurisdictions to be "very enriching."

Analysis of Liability Sources

The panellists examined the sources of liability for legal professionals, which include negligence, breach of fiduciary duty, and confidentiality breaches.

They highlighted the common causes of professional negligence claims, such as:

- Missing deadlines (e.g., limitation periods).
- Poor communication or advice.
- Errors in drafting.
- Failure to follow client instructions.
- Conflicts of interest and failure to clearly identify who the firm is acting for.

The experts also discussed the impact of liability on the firm, covering reputational, financial, and regulatory consequences.

Technology and Risk Mitigation

A central focus of the discussion was the use of technology for risk mitigation. The panel explored how Practice Management Systems are crucial for:

- Key date tracking.
- Time recording.
- File audits and workflows.
- Client identification and conflict checks.

The role of Artificial Intelligence (AI) in tasks such as due diligence, contract review, and client onboarding (KYC/AML) was analyzed, with mention of tools like Cascade. However, a caution was raised regarding the risk of over-reliance on technology and the necessity of human oversight.

Additionally, the importance of cyber-security and data protection tools was stressed to address the liability issue posed by data breaches. The discussion also covered the appointment of compliance officer / AML reporting officer / general counsel regarding reporting suspicious activity.

Insurance and Organizational Culture

The session dedicated time to insurance coverage, providing an overview of professional indemnity insurance. Key aspects covered included what it covers, its limits/exclusions, the importance of accurate proposal submissions, and the claims process. It was emphasized that cyber-liability insurance is a growing necessity.

Finally, the importance of training and culture within firms was addressed. This involves:

- Building a risk-aware culture.
- Ensuring regular CPD (Continuing Professional Development) and legal updates for all staff.
- Establishing supervision structures.
- Encouraging early reporting of potential issues and near-misses.
- Utilizing knowledge management to reduce avoidable errors.

Participating Panelists

The experts who led the discussion were:

Fabio Trevisan (BSP, Luxembourg)
Alexia Aurelio (Aresco Abogados, Argentina)
Mike Fendel (Miller Nash, USA)
Anura Bana (Senior Project Lawyer, Legal Policy & Research Unit, IBA HQ)
Paul Marmor (Sherrards, UK)
Rachel Cropper (Mawer Risk Specialist, Ogier, Jersey)

ibanet.org