Limiting Missed Limitation Claims

I’m wearing my risk management hat this week, while attending the American Bar Association’s conference on legal malpractice. Though one might argue if I did my job well, there’d be no need for it, the unfortunate reality is that legal malpractice claims continue to be filed across Canada. In keeping with the theme of my week, following is a repost of a recent article I wrote for the Canadian Lawyers Insurance Association Loss Prevention Bulletin on a consistent source of claims against lawyers – the missed limitation date.

Two years ago, just after Christmas, there was a small fire in my home, caused by a defective furnace. My home insurer quickly responded, covering the replacement and cleanup. I paid the deductible and that was the end of the matter from my perspective.

This past winter, a couple of weeks before Christmas, a lawyer acting for my insurer contacted me asking for details of the loss. He noted that nearly two years had passed since the fire and the limitation date was now approaching. He was preparing to file a statement of claim against the supplier and the manufacturer of the furnace. A few weeks later, I received a copy of the claim, filed one week before the limitation period expired.

This is how it is supposed to work. A plaintiff retains a lawyer to pursue a claim. The lawyer enters limitation dates into the firm’s system. Investigatory work takes place before the limitation date arrives. The lawyer files the claim in advance of the expiry of the limitation period. And the matter proceeds.

Limitation dates are critical in a litigation practice. Missing the limitation period means your client may be without recourse. For this reason, failing to file a claim on time often leads to a claim against the lawyer who missed the limitation period. Each year, claims based on a missed limitation period represent a significant proportion of all professional liability claims. Over the past 5-6 years, a missed limitation period was the basis for 10% of claims in Nova Scotia, 12% in Manitoba, 22% in New Brunswick, 25% in Saskatchewan, and 56% in Newfoundland.

While missing a limitation date often results from poor practice management, it may also result from a lack of knowledge of the applicable statute or rule. Application of limitation provisions will vary across jurisdictions. For example, Nova Scotia’s limitations statute sets out criteria for extension of the limitation period for up to 4 years. As well, court rules, such as Alberta’s “drop dead” rule, may further dictate the timing in which a matter must proceed.

Lawyers who take on cases in other jurisdictions must know the relevant limitation periods. The best limitation reminder systems can’t make up for a failure to know the applicable law.

The point is simply this: Never assume. In every case, make sure you have checked and diarized the correct limitation periods and deadlines. This is especially important when dealing with matters outside your home jurisdiction. Statutes are amended; rules change. Don’t assume otherwise.

Missing a limitation period may also be the result of a failure to adequately investigate the facts at issue. Your systems are only as good as the information you enter into them. If your client has a “fuzzy” recollection of the details, you should take further steps to confirm the facts before you file a claim.

Keeping track of limitation periods and deadlines is essential to good practice management. These habits are best learned in the early years of practice and maintained throughout a career. Though it’s sometimes too late to file a pleading, it’s never too late to pick up a new habit.

There’s nothing much new in the advice in this area, though the tools used may change from time to time. An “old school” paper- based calendaring system remains effective, but should have a backup. Such a system functions to track, bring forward, check and double-check for limitation dates.

Computer-based systems are equally effective whether used alone or with a paper- based backup. The key, regardless of the kind of system used, is to be consistent in using your system. You must enter relevant dates into the system on a timely basis, update as necessary, and review regularly. Your staff should be well-trained in the use of the system and must understand why it is critical to do so.

Furthermore, as already alluded to, you need a reliable backup plan. If your office server is down, do you have paper copies or an accessible electronic backup available? What if your office is inaccessible, as in the case of a natural or other disaster? Do you have offsite backup of your calendaring systems (not to mention your files) available? And, do you know that your backup plan is functioning based on regular testing?

The advice given above assumes that you’ll take appropriate action. The reminders set in your system are not effective if you don’t follow up. Human failure is as much a concern in this area as is systems failure. Tana Christianson, Director of the Law Society of Manitoba’s Professional Liability Claims Fund says:

“In our experience, most lawyers are aware of the correct limitation period, but they miss it anyway, usually because they have left dealing with it until the last moment and it falls through the cracks.”

Ultimately, it is up to you to allow enough time to get the job done, have a plan for handling contingencies due to illness or weather, and get over your bad case of procrastination. If you fail to do so, you may just find yourself named as a defendant.