Claims against professionals are on the increase; lawyers, accountants, surveyors, and even financial advisors are not immune. These days you can be subject to a claim by someone who is not a client if you have failed to carry out due diligence on your client. For example, you could have been acting for a fraudster, and the other party has relied on the belief that you were acting for that client, and the transaction has resulted in another party suffering a loss.

Acting for elderly clients is even more prone to claims; do your clients’ have capacity, are they being put under pressure by their family, is this what they really want to do? It is very easy to fall into the trap of going through the motions with a client, meeting with them, completing the appropriate forms, carrying out the ID and due diligence, without noticing the warning signs. Often the situation has some urgency and before you know it the transaction has been completed, and months or even years later you are faced with a claim. It is only then, when reviewing the file, and with hindsight, can you see the warning signs.

So what are the warning signs? Urgency is usually up there towards the top of the list, a sad story, an overbearing relative or spouse who you are authorised to deal with, a transaction that doesn’t quite add up, makes you feel uneasy , or just doesn’t smell right.

What can you do to avoid a claim?

  • Always meet / speak to the client direct (where meeting ensure that you are able to have time to speak to them alone and without family members)
  • Do not just accept authorities without speaking with the client as to why it is necessary and to check that they are in fact authorising it and you have their informed consent
  • Look carefully at the reason why they want to enter into the transaction
  • Make sure that the transaction makes sense for them
  • Ensure bank details are provided by post and not email or by telephone
  • Ensure that the client is actually living at the address that has been provided (mail can get intercepted by a relative / carer whilst the client is in a residential home)
  • If the transaction affects family members (such as in an equity release transaction) then you should encourage the client to let family members know what they are doing
  • Check signatures (no one is expecting you to be a handwriting specialist but sometimes it is obvious that it is not the client’s signature)
  • Where you have solicitors involved in the transaction in acting for the client, if you have potential concerns alert them and ask them to meet with the client too

To sum up, if the transaction doesn’t feel right then it probably isn’t. Carry out additional checks and don’t get bulldozered into proceeding until you are 100% happy that you are doing what the client wants.