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Principals need to be proactive in supervising all employees, including experienced lawyers and clerks, to ensure the firm’s policies and procedures are followed and matters are progressed in a timely manner.

Supervision will vary depending on the area of practice and experience of the employee but should always involve regular face-to-face meetings and file reviews at appropriate intervals.

In one claim, a firm acted on the purchase of a commercial property in a compressed timeframe. An employee, who was an experienced property lawyer, had the conduct of the file.

While the vendor’s statement failed to disclose that the vendor had received a building order issued by the local council two years earlier, it did contain a letter from the council confirming two building approvals had been issued in the previous 10 years. No mention was made of final inspections or the building order.

There was no evidence on the firm’s file that advice was given to the purchaser about making its own enquiries with the council about possible planning and building issues.

Several years after settlement, the purchaser became aware of the outstanding building order when the council made a further order requiring the purchaser to undertake works. The purchaser again retained the firm, this time to advise on what action it could take against the council and the vendor.

A second employee lawyer had conduct of the matter and opened a new file. Due to the purchaser’s unrealistic expectations about its prospects of success this lawyer placed the file in the ‘too hard basket’ not advancing it in two years before leaving the firm and in that time, any claim against the council arguably became statute barred.

The purchaser sought a discount of the firm’s fees due to the lack of progress and queried whether the firm had a conflict of interest because it had acted on the purchase. The purchaser subsequently terminated the retainer and issued proceedings against the council and the firm.

The lawyer who acted on the conveyance said his usual practice was to advise purchaser clients to undertake investigations about planning and building matters but he could not recall giving any such advice in this instance. He did not send the firm’s pro-forma letter containing that advice. He had acted for the purchaser previously and it appeared he had a relatively relaxed attitude towards the conveyance and cut corners given the short timeframe.

This situation could have been avoided if the firm had a strict policy about sending standard letters of advice irrespective of who the client was and conducted periodic file reviews to check that the policy was adhered to.

The second lawyer failed to inform her principals of advice from counsel that the firm could be a potential target in litigation. By having regular meetings with the employee, the relevant principal would have realised the file had become ‘too hard’ and could then have taken a more active role in the matter, transferred it to another lawyer in the firm or advised the client to retain other lawyers.