This article appeared in the November 13, 2018 New York Law Journal Special Section on Litigation.
English philosopher and jurist, Jeremy Bentham, is credited as having said, “Lawyers are the only persons in whom ignorance of the law is not punished.” Sorry, Mr. Bentham, lawyers are, indeed, punished for their ignorance of the law and for every other conceivable error or oversight. Such “punishment” is administered in the form of legal malpractice actions and those most at risk for such actions are litigation attorneys.
According to the most recent survey of the American Bar Association’s Standing Committee on Professional Liability, personal injury litigation, alone, accounts for more than 20 percent of all legal malpractice claims brought in the United States. Being most at risk to malpractice claims, it is imperative for litigation attorneys to incorporate certain essential risk management techniques into their practices.
Risk management for litigation attorneys begins right at the outset of any potential representation, in the careful selection of the clients and cases that are accepted into their practices. There is a perception that it is the client that selects his attorney, but it is just as important for an attorney to carefully select her clients. Time and time again, the case that results in the malpractice claim is the case that seemed like a problem right from the beginning. These problem cases can often be filtered out of a practice by recognizing certain “red flags.”
Is the case too big? If a potential case is too big for an attorney’s practice, other cases handled by that attorney may be neglected because of the amount of time and resources required to handle the big case.
Is the case too small? Attorneys often take small cases hoping that the client will return with a bigger case or will refer someone with a bigger case, but it is often the small case that gets neglected and results in a legal malpractice action. It is human nature to work on the cases that are going to result in the greater fees, but an attorney owes no less of a duty to the client with the small case than to the client with the big case.
Do you have time to properly investigate the case? When a client seeks to retain an attorney on the eve of the expiration of a statute of limitations, proper investigation is often impossible, which can result in the wrong parties being named in the action.
Beware of family and friends. Cases handled for family and friends are often handled as a favor or at a discount. As a result, an attorney will often put these cases on the “back-burner.” By doing so, these cases are most susceptible to error and simply because the client is a friend or a family member does not mean he will not sue when things go wrong.
According to the most recent ABA survey, 4.15 percent of all legal malpractice claims arise from conflicts of interest. Accordingly, implementing strict conflict procedures can significantly diminish the possibility of a legal malpractice claim.
Be sure to clearly identify your client. Conflicts can arise when an attorney does not specifically identify her client at the outset of a representation. This often arises in litigation involving businesses. If a business is being represented, it is important that the individual partners or officers or shareholders clearly understand that they are not being represented individually.
A conflict check must be performed at the outset of any potential representation. This is not only good risk management practice, but it is also required by RPC 1.10(e). However, it is not only important to conduct a conflict check at the outset of a representation; it is just as important to conduct ongoing conflict checks when there is any change to any of the parties involved in the case (party added to a case, party substituted, witness, expert, etc.). A conflict check must also be performed when a lateral attorney is hired into a firm. Any new attorney to the firm comes with her own existing conflicts.
The best practice is for an attorney not to accept conflicted clients; this will avoid the conflict in totality. However, if an attorney accepts a potentially conflicted client, it is imperative that the attorney obtain signed and detailed conflict waivers from both clients.
6.79 percent of all legal malpractice claims arise from problems with client relations. Educating a client about what should be expected over the course of the litigation and keeping the client informed during the litigation is an effective tool in avoiding legal malpractice claims.
If a client thinks he has a million-dollar case, but he does not, it is imperative that the client be educated about the actual value of the case. An attorney can achieve a spectacular result, but if that result does not meet the client’s expectations, the client will believe that his attorney must have done something wrong.
While a client may agree to pay a certain hourly rate at the outset of litigation, he may not realize the total costs that may ultimately be associated with the representation. Accordingly, in order to prevent conflicts with the client over billing issues, an attorney should provide her client with an anticipated budget at the outset of the representation.
Similarly, litigation can be lengthy, but the client may not know how long it can take to resolve a case in litigation. In order to better manage a client’s expectations and avoid conflict, an attorney should provide her client with a timeline of what is to be expected over the course of the litigation.
An uninformed client is a dissatisfied client and dissatisfied clients lead to malpractice claims. Accordingly, the simplest technique to prevent a malpractice claim is to keep your client informed throughout the course of the litigation.
Direct, open, and regular communication with a client can go a long way in preventing problems. Not only is regular communication imperative, but it is also important to provide the client with all significant documents throughout the course of the litigation. This helps keep the client informed, helps demonstrate to the client the efforts that are being taken on his behalf, and helps the client understand that for which he is paying.
It is also important to communicate to the client, in writing, all important events and decisions over the course of the litigation. Not only does this keep the client informed and avoid misunderstanding, but it also documents that the client agreed with the course of action taken in the case.
Of significant importance to the litigation practitioner is making use of engagement letters, non-engagement letters, and disengagement letters. A well written engagement letter can help reduce the scope of potential liability and help educate the client on what is to be expected over the course of the litigation. If a client’s case is not accepted, use of a non-engagement letter is important to eliminate any confusion as to whether the case was accepted or not. A disengagement letter at the termination of a representation can also be helpful in establishing when the statute of limitations for a legal malpractice action begins to run.
Disputes over legal fees often result in legal malpractice claims. To avoid billing disputes, attorneys should submit their bills on a monthly basis. Regular, timely billing keeps each bill limited and bills submitted closer in time to the tasks performed allows the client to better understand that for which he is being billed.
Invoices should also be detailed and complete. The billing entries should clearly reflect the services provided and should be written in such a way that the client understands that there was value to the task performed.
Rather than seeking payment from the client after services are rendered, litigation attorneys should require a retainer deposit against which fees can be charged. As the retainer diminishes, the attorney should require that the deposit be replenished. Attorneys are sometimes reluctant to require an upfront retainer, fearing that the client will not have sufficient funds and will seek counsel elsewhere. However, if the potential client does not have the funds to pay an initial retainer, it is unlikely that he will have the funds to pay the bills later.
An attorney that does not get paid by a client may consider commencing a fee suit. However, it is almost inevitable that a client who is sued by an attorney for a fee will respond with a legal malpractice counterclaim in an effort to demonstrate that no fee is warranted due to the alleged malpractice. Accordingly, avoiding fee claims is an essential key to preventing malpractice claims.
Jeremy Bentham said, “Create all the happiness you are able to create: remove all the misery you are able to remove.” By implementing these risk management techniques into their practices, litigation attorneys can help prevent avoidable legal malpractice claims and in so doing, remove some unnecessary misery from their law practices.
William T. McCaffery practices legal malpractice defense at L’Abbate, Balkan, Colavita & Contini in Garden City, N.Y.