Hearing the facts of a legal malpractice case inevitably causes every lawyer to feel somewhat sick to his or her stomach. We pride ourselves on performing high-quality work, but we recognize that every strategy call today could be viewed as a misstep tomorrow. More often than not, these cases lie in the gray area where reasonable, sophisticated attorneys could disagree about what the preferred course would have been.

Any legal malpractice case—even one that is entirely frivolous—has the potential to damage professional reputations. Such cases require immense resources to defend and strain relationships among colleagues.

It goes without saying that attorneys should strive to perform high-quality work. But there are also some lessons to minimize the risk of an unhappy client or an eventual dispute—or at least to maximize the likelihood that any dispute will ultimately be properly resolved on its merits.

Endeavor to Keep Your Client Well Informed

Most clients are reasonable people who understand that even the best lawyer cannot win every case. To the extent your client is regularly informed about the matter, and the strengths and weaknesses of your position, unfavorable rulings are less likely to come as a surprise. As a result, client contacts are less likely to find themselves in the uncomfortable position of explaining to their higher-ups why a matter they thought was under control has taken a turn in a different direction. Involving the client is not a magic bullet to avoid a malpractice claim, but a client is likely to be more reasonable when faced with a bad outcome that was a result of a decision it knows you carefully considered and vetted with it.

In addition to preventing a malpractice claim, these communications can also be important in defending against one, particularly if they reveal that you apprised your client of the weaknesses in your position and the reasons for your strategy calls. For example, in defending a legal malpractice charge, a law firm is often in the uncomfortable position of having to try to explain away positions it took on behalf of the client in formal proceedings. For example, in a patent infringement action, the patentee, through its law firm, will have filed briefs and contentions emphasizing that the patent was valid and infringed. When defending a charge of malpractice, however, the lawyer who filed these briefs may wish to argue that the client cannot prove that an alleged breach caused damages because the client would not have prevailed in the underlying litigation. Now the firm’s efforts to vigorously advocate for its client in the underlying litigation will be cited against it. But if the contemporaneous record shows that the lawyer apprised its client with a less bullish assessment of the likelihood of success at the time, a reasonable arbiter will have a better understanding of context and will properly discount the importance of arguments made in briefs against a third party.

Double Check Your Procedures for Tracking Deadlines

According to statistics published by the ABA, missed deadlines—whether because the deadline was never identified, miscalculated, or otherwise—accounted for 17 percent of legal malpractice claims in the United States.² One source estimated that 26 percent of the errors in patent prosecution are missed deadlines.³ This issue arises not just in connection with U.S. proceedings, but also in connection with foreign patent filings, including Patent Cooperation Treaty (PCT) applications.⁴

In short, it is worth taking the time to work with your team to review your process for identifying, calculating, and calendaring deadlines, so you will minimize these issues.

Consider Including an Arbitration Clause in Your Legal Retainer Agreements

Legal malpractice cases are not typically tried to courts that have experience with patent law. There is typically no federal jurisdiction over legal malpractice claims even when they involve U.S. patents. In 2013, the Supreme Court decided Gunn v. Minton, announcing: “we are comfortable concluding that state legal malpractice claims based on underlying patent matters will rarely, if ever, arise under federal patent law for purposes of § 1338(a).”⁵

Those who have appeared before reluctant judges addressing patent issues for the first time understand the practical challenges this ruling presents. It is already difficult to explain to someone unfamiliar with a particular case but steeped in the law and comfortable with technology why patent claims were drafted a particular way or why a particular claim construction argument was selected. Defending these decisions before judges and juries who have never before seen a patent case, are unfamiliar with practice before the U.S. Patent and Trademark Office (USPTO), and may be overwhelmed by the prospect of trying to understand technology, can be daunting.

One way to mitigate this risk could be by including provisions in legal retainer agreements providing that disputes will be resolved by confidential arbitration. This common feature can go a long way to protecting the attorney and ensuring a more fair proceeding.

Arbitration clauses can help prevent a legal malpractice plaintiff from achieving extraordinary leverage simply by threatening a public lawsuit. Any threat of a malpractice lawsuit is a serious matter. But when the first step involves a publicly available filing, drafted self-servingly to maximize damage to the attorney’s reputation, the threat is magnified regardless of the actual merits of the argument. This can have immediate and long-lasting damage to the attorney’s reputation, which is exactly why it can be so effective. By contrast, the filing of a confidential arbitration demand, while certainly unpleasant, does not have the same reputational impact. This allows the parties to engage the merits of the dispute and, hopefully, come to a reasonable resolution based on the actual merits, rather than allowing the plaintiff to extract an amount that greatly exceeds its actual damages in order to preserve the reputation of a lawyer and law firm.

It is certainly true that an arbitration clause cannot entirely prevent the risk of a public lawsuit. However, in the event that a plaintiff attempts to proceed with formal litigation despite an arbitration clause, a successful motion to compel arbitration can prevent further public filings, thereby shortening the duration and magnitude of the publicity.

Arbitration clauses also permit you to have some control over the arbiter of the dispute. Arbitration clauses typically call for one to three arbitrators, with the chair being jointly selected by both parties. This already provides some assurance that the decision maker will not be a judge or jury with no context for the dispute. It also helps reduce the likelihood of an extreme outcome. You may also want to consider writing into your arbitration clause that if the dispute involves matters of patent practice, one or more arbitrators must have substantial experience practicing in the patent field. Given that a significant issue for decision will be whether the attorney acted consistent with the knowledge, skill, and ability ordinarily possessed and exercised by patent practitioners, this will help ensure that your actions are being judged by someone knowledgeable. Similarly, you might specify that if the dispute involves technical matters, one of the arbitrators must have experience in that field. One aspect of the malpractice dispute will be addressing the merits of the underlying proceeding, and having an arbitrator with a general understanding of that area of technology could be helpful.

Alternatively, you can leave these particulars out of the provision to maintain maximum flexibility. If a dispute arises, you can decide at that time based on the nature of your dispute whether you think it would be beneficial to select an arbitrator with these qualifications.⁶

Finally, arbitrations are often more efficient than formal litigations, saving both parties significant costs and time. This is particularly the case when the arbitrators significantly restrict discovery.

It is worth noting certain potential disadvantages with agreeing to arbitration of any disputes at the outset of a representation. For one, before knowing the facts of the particular dispute, you will not know whether you might actually prefer to have a jury trial in your case. In addition, there may be certain cases where you would prefer the broad discovery available in litigation. Finally, arbitration comes with much more limited appeal rights. When you consider whether to incorporate an arbitration provision into your retainer agreements, it is important that you keep these points in mind.

Avoid Agreeing to the Application of Foreign Law in Your Legal Retainer Agreements

No one ever thinks that a new matter is going to result in a legal malpractice claim. At the time lawyers execute engagement agreements, this formality seems like a hassle. But attorneys should be careful not to be too nonchalant about engagement letters and, in particular, choice of law provisions.

Imagine that you are approached by a new foreign client seeking representation in connection with a U.S. patent litigation proceeding. That client typically insists upon the application of its country’s law to its contracts and edits your draft retainer to change your choice of law provision accordingly. You may think this is unlikely ever to matter so you accept the edit without giving it much thought, trying to keep to a minimum any sticking points in your client negotiation. Hopefully you are right—most of the time it will never matter. But if a dispute does materialize, suddenly you have a problem.

Most likely you are unaware of any nuances of how lawyers are expected to conduct themselves under the relevant foreign law, or what standards of proof would apply to a legal malpractice claim if a tribunal rules that the retainer agreement’s choice of law provision applies to your dispute. You probably could not conduct that research even if you wanted to, without hiring a foreign law firm to advise you. So you are at an immediate disadvantage because you do not know ex ante what standard will be used to assess your conduct and cannot endeavor to conform to it. You may well be judged according to standards that seem inconsistent with the typical practice of attorneys in the United States.

For example, if you sign an engagement agreement that is to be construed under German law, the German client might argue that German law should apply to any malpractice dispute, and that under German law your obligation was to recommend to the client the “safest and least dangerous course,” which some have argued is a German standard of care principle that has no equivalent in U.S. law. Setting aside the question of whether that is a proper interpretation of German law, or what exactly that would mean in any particular situation, if the German client indeed expects that its lawyers will always advise it to take the safest course, it would obviously be preferable for you to understand the client’s expectation at the beginning of the representation. Particularly when it comes to the appropriateness of conduct before a tribunal, it is awkward, to say the least, to assess the conduct of U.S.-barred attorneys, practicing before a U.S. tribunal, relative to what a foreign attorney would have done practicing before a foreign tribunal.

In addition, if foreign law applies to your dispute, you may have given up legal protections offered by many U.S. jurisdictions. Some U.S. courts have developed principles designed to ensure that attorneys have appropriate discretion in their decision making and that a legal malpractice plaintiff properly proves that an alleged error actually caused the claimed damages.

For example, it has been recognized by many U.S. states that an attorney is not liable for mistakes made in the honest exercise of professional judgment.⁷ Many U.S. courts have recognized this “judgmental immunity,” holding that “informed professional judgment made with reasonable care and skill cannot be the basis of a legal malpractice claim.”⁸ In addition, “no claim of legal malpractice will be actionable for an attorney’s reasoned exercise of informed judgment on an unsettled proposition of law.”⁹

As to causation, U.S. law generally requires that the plaintiff prove “that he or she would have succeeded in the underlying action” but for the attorney’s malpractice.¹⁰ In considering this question, U.S. jurisdictions will typically assess whether the client was a contributing cause of the damages.¹¹ This can result in a reduction of the amount of damages recoverable. Some jurisdictions, such as the District of Columbia, use a contributory negligence framework to bar recovery completely by a negligent plaintiff, even if the plaintiff did not have a “substantial degree” of responsibility for the injury.¹²

The wiser course is to insist on application of U.S. law in retainer agreements—at least with respect to potential malpractice disputes. If for some reason you have no choice but to agree to foreign choice of law provision in a retainer agreement, then take steps to try to prevent a future problem. Consider specifying that any arbitrator(s) must be familiar with U.S. patent law and practice, and separately undertake to gain a basic understanding of that country’s expectations from attorneys at the outset of the representation, so that you and your team are better able to comply with them.

Conclusion

An assertion of malpractice against you or your firm is by no means pleasant, but it is something that you can work through. It is worth being proactive about adopting practices that will reduce the risk of a dispute ensuing and provide for an appropriate, fair proceeding if one nonetheless materializes.

Endnotes

1. ABA, Profile of Legal Malpractice Claims: 2008–2011 (2012); see also 4 Ronald E. Mallen with Allison Martin Rhodes, Legal Malpractice § 31:2 (2015).

2. Dan Pinnington, The Most Common Legal Malpractice Claims by Type of Alleged Error, 36 Law Practice, no. 4, July/Aug. 2010.

3. Mallen & Rhodes, supra note 1, § 31:2.

4. See, e.g., Carter v. Clements Walker PLLC, No. 08 CVS 4333, 2014 WL 201571 (N.C. Super. Ct. Jan. 10, 2014) (alleging failure to file a PCT application until after publication of a U.S. application).

5. 133 S. Ct. 1059, 1065 (2013).

6. For more on arbitration provisions in retainer agreements, see generally Joseph P. McMonigle & Thomas Weathers, New Way to Go: Arbitration of Legal Malpractice Claims, 64 Def. Couns. J. 409 (1997). In addition, some jurisdictions have legal ethics opinions on how arbitration clauses can be drafted. See, e.g., D.C. Ethics Op. 218 (June 1991).

7. See Nat’l Sav. Bank of D.C. v. Ward, 100 U.S. 195, 198 (1879).

8. Biomet Inc. v. Finnegan Henderson LLP, 967 A.2d 662, 665–66 (D.C. 2009) (citing cases around the country).

9. Id. at 667–68; see also 7 Am. Jur. 2d Attorneys at Law § 208.

10. See 7 Am. Jur. 2d Attorneys at Law § 201.

11. Mallen & Rhodes, supra note 1, § 22:2.

12. See Wingfield v. Peoples Drug Store, Inc., 379 A.2d 685, 687 (D.C. 1977).