When a lawyer’s assumption turned into an unforeseen expense

By FCT

Making assumptions is never a good idea. While most of the time the outcome is harmless, at other times it can be quite costly.

In late 2019, Ms. Jane Smith*, a lawyer practicing in Nova Scotia acting on behalf of her client, made an assumption that resulted in a taxation error on the statement of adjustments. Using the information of the previous rather than the current year, she paid an outstanding tax bill, assuming that the client’s account had already been debited for the same amount. This resulted in an overpayment by the client and insufficient credit on the statement of adjustments.

Taxation without verification

Jane assumed that her client had paid the deficit. It turns out that she was wrong.  She then proceeded to pay it out of her own pocket with the assumption that her client would duly reimburse her. The client had other ideas. Ms. Smith is left with out of pocket expenses of $1,066.16.

Lucky for Jane, she has an Error and Omissions Complete  (E&O) policy with FCT that came to her rescue. E&O Complete offers protection for claims under $10,000 where the policy covers the liability of the insured arising from an error or omission in providing legal services. It also provides reimbursement for losses resulting from claims against your mandatory E&O insurance for residential and commercial real estate transactions. This includes your standard deductible payment and any increase in premiums.

Mistakes will happen despite our best efforts. It’s reassuring to know that when they do, you can protect yourself with an E&O Complete policy.

If you would like to get the peace of mind that comes from being protected like Jane, please visit www.moreprotection.fct.ca.

For more information please contact us today at 1.866.804.3122 or by email moreprotection@fct.ca.

*The names of the parties have been changed to protect their privacy.

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