This article appeared in the January 10, 2022 New York Law Journal Special Section on Litigation.
A legal malpractice claim can be disconcerting, time consuming, expensive, and disruptive to a litigation attorney’s practice, but there are many simple risk management techniques that can be taken by any litigation practitioner that can significantly help prevent common legal malpractice claims.
Every few years, the American Bar Association’s Standing Committee on Lawyers’ Professional Liability conducts a survey of legal malpractice claims. According to the most recent survey conducted in 2019, issues related to client relations, which include the failure to follow client’s instruction, failure to obtain consent and/or inform the client, and improper withdrawal from representation, account for 16.70% of all legal malpractice claims. As such, the simple act of improving client relations can significantly reduce an attorney’s chances of having a legal malpractice claim brought against her.
One of the most effective ways to improve client relations is through the strategic use of engagement letters or retainer agreements. Engagement letters and retainer agreements are useful tools that can significantly help prevent legal malpractice claims. Engagement letters should not be boiler-plate agreements that simply and broadly state the nature of the representation and the fee that will be charged. The most effective engagement letters for the purposes of risk management, client relations, and the reduction of exposure to legal malpractice claims are detailed agreements that define the scope of the representation, define anything specifically known to be outside the scope of the representation, advise the client of the specific costs and fees to be charged, provide the client with a budget and a timeline for the matter, among other issues important to the particular matter. Such detailed engagement letters can significantly help eliminate misunderstandings over these issues, which can otherwise lead to malpractice claims.
Not only is it good practice to make use of engagement letters and retainer agreements, but they are mandated under 22 NYCRR 1215 for most retentions, which requires, among other things: an explanation of scope of the legal services to be provided; an explanation of attorney fees to be charged, expenses and billing practices; and that the client be notified of his right to arbitrate fee disputes under Part 137, if applicable.
There are innumerable examples of legal malpractice cases brought against attorneys that perhaps could have been prevented by a well written, detailed engagement letter and there are even examples of legal malpractice cases that have been dismissed because the attorney had prepared a sufficiently detailed engagement letter.
In Douglas v. Dashevsky, 62 A.D.3d 937 (2d Dept. 2009), a client brought a legal malpractice action against her former attorney alleging that the attorney advised her not to file a claim with her employer’s disability carrier and as a result she was denied disability benefits for not filing a timely claim. The attorney’s motion to dismiss was denied because the retainer agreement submitted in support of the motion did not establish that the attorney’s obligation was to advise the plaintiff solely with respect to her wrongful termination action against her employer. In that case, had the retainer agreement detailed both what was within the scope of the representation and what was outside the scope of the representation, the attorney may have been able to prevail on the motion to dismiss.
To the contrary, in Keld v. Giddins Claman, 170 A.D.3d 589 (1st Dept. 2019), a client brought a legal malpractice action against her former attorneys alleging that they were required to manage all aspects of her condominium purchase including advising on inspections for safety, quality of renovation, and environmental issues. In affirming dismissal of the action, the Appellate Division held that the scope of services the former attorneys were to provide plaintiff in connection with her purchase of a condominium unit was clearly limited by the retainer agreement which specifically enumerated the legal services defendants would provide including the review, preparation, and/or negotiation of specific documents related to the closing and the investigation and analysis of issues relating to title.
Not only can the risk of legal malpractice claims be diminished by the employment of effective client relations through the use of detailed engagement letters, but the chance of a malpractice claim can also be diminished when attorneys limit the cases they accept into their practice to those within their specific areas of practice. According to the 2019 American Bar Association survey, 15.90% of all legal malpractice claims arise from an attorney’s failure to know or properly apply the law. These errors most commonly occur when an attorney dabbles in an unfamiliar area of law.
Attorneys generally concentrate their practices in particular areas of the law. Since they regularly handle matters in their areas of practice, they are proficient in such matters and less likely to have a malpractice claim arise in an area of the law in which they regularly practice. However, time and time again, attorneys choose to take cases that are outside their areas of regular practice and it is the dabbling in these less familiar areas of the law that often results in malpractice claims against attorneys. Not only is it a good risk management technique for attorneys to only handle cases in their particular practice area, but it is also required by Rule 1.1 of the Rules of Professional Conduct that attorneys be competent in the matters that they are handling for their clients.
Another important risk management technique to employ in an effort to prevent legal malpractice claims is the necessary and appropriate investigation into each case. According to the 2019 American Bar Association study, 8.22% of all legal malpractice claims arise from inadequate discovery and/or investigation.
While failure to properly investigate issues in a case can occur at any time over the course of a representation, it often occurs at the very outset of the case. Potential clients often consult an attorney at a time when a looming deadline is imminent (i.e., statute of limitations). In an effort to assist the time-strapped potential client, attorneys may hastily accept the retention in order to immediately begin work on the matter. However, when a deadline is close, an attorney may not have time to properly investigate the matter and appropriately determine a proper course of action before the deadline is reached. In the case of personal injury matters, for example, a late retention on the eve of a statute of limitations deadline can result in the improper parties being sued or all necessary parties not being sued. If the client cannot make a full recovery on his claim because the attorney failed to name the proper parties, a legal malpractice claim will inevitably result.
Published cases are replete with examples of legal malpractice claims against attorneys for alleged failure to properly investigate. In Utica Cutlery Co. v. Hiscock & Barclay, 109 A.D.3d 1161 (4th Dept. 2013) a client brought a legal malpractice action against its former attorney alleging that the attorney failed to investigate and notify the client of available insurance that covered it in an underlying trade dress lawsuit. Similarly, in Shaya B. Pacific v. Wilson, Elser, Moskowitz, Edelman & Dicker, 38 A.D.3d 34 (2d Dept. 2006), plaintiff alleged that the attorneys failed to investigate the existence of excess insurance coverage. In Thompson v. Seligman, 53 A.D.3d 1019 (3d Dept. 2008), plaintiff raised a question of fact as to whether his former attorneys exercised the appropriate degree of care in performing their duty to investigate the availability of a third-party claim by plaintiff. In Brady v. Bisogno & Meyerson, 32 A.D.3d 410, 819 N.Y.S.2d 558 (2d Dept. 2006), plaintiff accused her former attorneys of failing to conduct a proper investigation in order to determine which party controlled or maintained the parking lot where she fell. In Perks v. Lauto & Garabedian, 306 A.D.2d 261, 760 N.Y.S.2d 231 (2d Dept. 2003), a client brought a legal malpractice action against his former attorneys claiming that they failed to adequately investigate the assets and insurance coverage of the driver whose vehicle was involved in a collision with him.
Better client relations through detailed engagement letters, avoiding cases outside the practice areas of concentration, and ensuring proper investigation throughout the course of every representation are three simple ways litigation attorneys can help prevent malpractice claims from disrupting their practices. “An ounce of prevention is worth a pound of cure.” Those famous words are as true today as they were in 1736 when Benjamin Franklin first spoke them and they are true for all professions, including litigation attorneys.
William McCaffery practices legal malpractice defense at L’Abbate, Balkan, Colavita & Contini in Melville, New York.