The area of residential conveyancing has so far given rise to the highest number of negligence claims amongst 2-10 partner law firms in 2005, according to Aon Ltd, the UK arm of one of the world's largest insurance broking and risk consulting firms.
Almost half (43 per cent) of all claim notifications among such firms have been related to conveyancing, with approximately a quarter of these arising from residential and almost a fifth linked to commercial conveyancing cases.
Most residential conveyancing negligence claims, by both number and value, stem from mistakes made in carrying out procedural issues related to the work - particularly failure to undertake sufficient property searches - or failure to correctly advise the client on points of law.
Failure to recognise recent amendments made to the Landlord & Tenancy Act, which specifically affect the renewal of business tenancies, are a major cause of commercial conveyancing claims.
In addition to conveyancing, 16 per cent of negligence claims among 2-10 partner firms relate to trust and probate practice; 14 per cent to personal injury; and 11 per cent to litigation.
Martin Thomas, managing director of Aon's Claims Solutions Division, said: "Based on our experience, the majority of claims causes flow from three core areas: timing issues, drafting errors, or advice which is not properly thought out, misleading or simply factually and, or, in some cases, legally incorrect."
This year many 2-10 partner firms will have to buy more professional indemnity cover than they did in previous years as the Law Society has increased the minimum indemnity limit from £1 million to £2 million. However the more claims that an individual firm experiences, the less attractive they are to insurers, and the greater amount of premium they will need to pay for their cover.
Angus Cameron, executive director, Aon Professional Risks, added: "No firm wants to be paying over the odds for insurance cover and so it is in their best interest to reduce their claims frequency. In order to protect themselves, firms need to assess their potential level of exposure and embed robust risk management systems. For example, areas of focus might include time recording systems, supervision levels and knowledge bases.
"The ultimate risk management initiative is the implementation of Lexcel 2004, the Law Society's industry standard, but not all practices are willing to dedicate the financial resources required to do this." n The construction industry is again coming under the Inland Revenue spotlight, according to a Coventry firm of chartered certified accountants.
This time, the crackdown is to ensure that contractors are not avoiding tax and National Insurance by wrongly classifying their subcontractors as being self-employed.
Laurence Moore, a partner at Pilley & Florsham, said the onus was on contractors to establish whether subcontractors should be paid as self- employed or as employees.
"If the subcontractor has been wrongly classified, then any due NI and tax will become the liability of the employer," he said.
"Thousands of workers are currently in the Construction Industry Scheme and outside the PAYE payroll system, which is subject to higher tax rates and NI contributions. But, if a subcontractor has been paid regularly, the Inland Revenue may consider them to have been employed and therefore expect a larger amount of tax."