Serving as “lawyers’ lawyers” in a wide range of professional liability matters has provided us a prime vantage point for identifying issues and situations that can lead to problems for lawyers. While we have seen cases of blatant wrongdoing, more often we see cases in which it is quite easy to envision ourselves as the defendant (i.e., there but for the grace of God go I). In this article, we focus on the latter category of cases. The following are the top eight lessons we’ve learned as lawyers’ lawyers.
1. Firm Counsel Is Your Friend—Maybe Your Best Friend
One of the most glaring commonalities among the malpractice cases we see is a failure to consult with firm counsel until it is too late. Too often, firm counsel is not consulted until after the client files a lawsuit, after opposing counsel files a motion for sanctions, or after a serious problem otherwise manifests itself.
Lawyers should not hesitate to contact firm counsel when first considering a difficult ethical issue that could implicate the law firm. At the very least, lawyers should go see—not email—their firm counsel at the first hint of a problem. The ethical and legal issues lawyers confront on a daily basis are complex; talking them through with firm counsel can help protect the lawyer and the firm and sometimes prevent a small issue from spiraling. Unfortunately, lawyers often are reluctant to ask for help because they feel they should know all the answers or do not want to “look stupid.” Trust us, nothing looks stupider than telling your firm’s managing partner about a lawsuit against you and the firm when the allegations have been percolating for months.
Remember to consider privilege issues when contacting firm counsel, especially if you are still representing the “unhappy” client at the time of the communication. While the law of several states will protect communications and emails between a lawyer and firm counsel under the law firm’s internal attorney-client privilege, this area of the law is still evolving in some states. Thus, the safest course of action is to meet with your firm’s general counsel face-to-face. If you must send the general counsel an email, clearly mark the email with “Firm Counsel Privilege” and keep it separate from the client file. Of course, do not bill the client for your time spent consulting with firm counsel.
2. Screen for Unworthy Clients
Unworthy clients are a frequent source of claims against the lawyer and law firm clients we represent. When we say “unworthy,” we are not referring to clients who are in trouble or who have been accused of wrongdoing—even clients who have made serious mistakes deserve representation. By “unworthy,” we are referring to clients who do not act with integrity toward their counsel.
Considerations that might weigh against taking on an engagement include situations in which
- the client is changing counsel in the middle of a matter;
- the client has sued an attorney in the past;
- the client has gone through multiple bankruptcies;
- the client or its principals have been convicted or found civilly liable for fraud;
- the client experiences frequent professional turnover, especially lawyer or auditor turnover, particularly where the client refuses to let the firm speak to its previous lawyers;
- the client seeks to impose significant limitations on the firm’s ability to perform functions that the firm normally would expect to perform;
- the client wants the firm to issue an opinion to be relied on by third parties, particularly if the client was turned down by another firm;
- the client has not engaged appropriate professionals required for a transaction, such as underwriters and issuers in a securities transaction; or
- the client is engaging in regulatory avoidance strategies, such as through using offshore entities.
In addition, if you cannot understand the client’s business or the deal the client is trying to close, do not assume you are stupid and stop asking for explanations. Keep asking the client to explain until you get a clear explanation that makes sense, lest it turn out the client is involved in something with which you do not want to be associated.
Lawyers (partners, in particular) feel constant pressure to bring in clients and can sometimes be tempted to overlook these warning signs and take the engagement anyway. Resist this temptation. If the prospective engagement involves one of the issues above or something just “feels off,” slow down, talk to your general counsel, and carefully consider whether it is in the firm’s interest to take on the matter. Any initial benefit you might enjoy from bringing in the business would, in all likelihood, be far outweighed by the consequences of a malpractice suit against the firm.
3. Communicate, Communicate, Communicate
We believe the best and safest rule is to send nearly everything along to the client (e.g., routine court orders, correspondence from opposing counsel) unless the client instructs otherwise. Certainly, a lawyer should send everything of importance and, without exception, any and all settlement offers.
We have handled legal malpractice matters that were precipitated by a client being “surprised” by an adverse ruling and then reacting negatively. Clients hate surprises, whether it is a bad ruling, a brief they need to review quickly, an onerous discovery demand, or a large bill. Constant communication not only prepares the client for adverse events, it is better client service, and it also is consistent with our professional obligations as lawyers.
Communication with the client is governed by ABA Model Rule 1.4, which provides that “(a) A lawyer shall . . . (3) keep the client reasonably informed about the status of the matter.” The comments to the model rule explain that “[t]he client should have sufficient information to participate intelligently in decisions concerning the objectives of the representation and the means by which they are to be pursued.” Instead of trying to guess what is “sufficient information,” send it all until the client tells you to stop. To date, we have never had a client tell us we kept him or her too informed on a matter.
4. Keep Communicating, Even When You Make a Mistake
It is imperative that lawyers keep their clients advised of the status of their matters, even when that means delivering uncomfortable news. We have been involved with several matters where lawyers made a mistake and, instead of advising the client of the issue, seeking assistance from their firm counsel, and addressing the problem, the attorneys ignored the issue and avoided the client. This always makes matters worse because it lets a problem remain unaddressed and allows the issue to grow. As they say in politics, the coverup is always worse than the crime. The same is true in legal malpractice. The vast majority of mistakes (we all make them) can be fixed. However, avoiding or lying to a client not only is misconduct under the ethics rules but also is more likely to fracture the relationship and lead to a lawsuit for malpractice (or worse). This type of intentional conduct also can complicate the defense of a claim and open the door to punitive damages at trial.
5. Put It in Writing!
You might call this the cardinal rule. At the very least, it deserves special emphasis because it goes hand in hand with several of the other rules. This rule is critical because when cases go wrong, clients often prove to have very short memories.
We have seen numerous examples of lawyers providing aggressive or creative advice with respect to a client’s difficult matter (e.g., a losing case). Aggressive advice is sometimes necessary, and it is acceptable as long as the client is fully informed of all the options and the risks and chooses to proceed. The problem arises when that advice is not memorialized in writing because—several years later—when the advice does not work, the client may get a selective memory and not recall you telling him or her that the course of conduct was “a long shot.” At that point, it is an issue of he said/she said, which is not easy to resolve on a motion to dismiss.
We know what you are thinking—“My clients will not appreciate my sending them a ‘CYA’ letter.” However, when done properly, the letter can be viewed as client service because it is outlining the agreed-upon course of action and the possible risks. This is especially true in the day of multiparty conference calls hashing out complex issues. Clients often appreciate a relatively short email in bullet-point format outlining the agreed-upon course of conduct. This step is not necessary for every decision; it is most important for significant strategic decisions, aggressive decisions with potential downside, or decisions in which the client did not accept your advice. Failing to spend 15 minutes to document a major decision in a matter has been a complicating factor in numerous lawsuits we have handled on behalf of lawyers.
6. Put It in Writing, Part II: Document the Engagement—Both Ends of It
The opening and closing of an engagement are such significant events that we thought it appropriate to have a separate “lesson learned” pertaining to their documentation. When documenting the opening of an engagement, be sure to (1) identify the client; (2) clearly explain the method of charging fees and expenses; (3) specify the scope of the engagement, including any limitations on the engagement; and (4) document any waivers of actual or potential conflicts of interest.
The identity of the client can be a more complex issue than you might imagine. Pay attention to whom you represent—the corporation, the director, the officer, the employee—and document when the representation changes. In more complicated arrangements, make sure the applicable contractual agreements clearly state which parties are included and not included in the representation, which parties are entitled to information about the progression of the case, and which parties have a say in strategic decisions. For entities that are somehow involved in the litigation but not party to the representation, include clear language stating that the law firm does not owe them a duty.
In opening a new matter, the best practice is to send an engagement letter outlining the scope of the representation. Otherwise, you can open yourself up to surprises. Say you file a lawsuit for a client, litigate for years, negotiate a great settlement, and then get sued for malpractice because you allegedly did not advise your client properly on the tax implications of the settlement. You are not a tax lawyer and the client never asked you about tax advice, but because you do not have an engagement letter that limits the scope of representation, the client asserts that you were responsible for providing tax advice.
It is equally important to be diligent in documenting the closure of the file when the matter is completed. This is an even easier email to send: “It was a pleasure representing you. Because the matter is concluded, we are closing our file.” Not doing this can possibly lead to a malpractice claim because the client could argue that you are still his or her lawyer and have a continuing obligation to advise him or her on new developments in this subject matter. This risk is increased if you do not have an engagement letter addressing the scope of representation. Comment 4 to ABA Model Rule 1.3, “Diligence,” echoes this principle: “Doubt about whether a client-lawyer relationship still exists should be clarified by the lawyer, preferably in writing, so that the client will not mistakenly suppose the lawyer is looking after the client’s affairs when the lawyer has ceased to do so.” Also, from a business development perspective, not clearly closing the client file can create a conflict of interest in the future if your “former” client argues that it is really a “current” client because you never documented the closing of your file.
7. Vet Opinion Letters Through the Appropriate Firm Committee
An opinion letter is a formal statement of an opinion that presents unique issues and can have implications for a firm. If not handled properly, an opinion letter can be treated by an unhappy client like a guaranty of a particular outcome, with the law firm’s malpractice insurer as the guarantor.
All opinion letters or memos should go through the appropriate firm committee before being issued to the client. Among other questions, the committee should address the following:
- Is the topic fit for an opinion?
- Is the client a longtime client with a legitimate need, or is the client shopping for an opinion?
- Does the letter have provisions regarding (a) limitations on advising as to future changes in the law, (b) caveats about how courts may rule, and (c) limitations on who may rely on the opinion?
In a related vein, litigators often face pressure over how to express the likelihood of success on a particular litigation issue. Clients often push for percentages. Lawyers should resist providing percentages, even at the risk of making a client unhappy.
Whether in memos, conversations, or opinion letters, consider using—instead of quantitative, numerical descriptions—qualitative adjectives such as “weak,” “non-frivolous,” “plausible,” “good,” or “substantial” to describe the relative strength of arguments.
8. Pay Continuous Attention to Conflict Issues
You cannot have an article about being a “lawyer’s lawyer” without addressing conflicts of interest. Conflicts are a huge issue. There is a growing body of case law about them, and they have been known to spur juries to ramp up verdicts exponentially against law firms in malpractice cases. Obviously, to avoid a conflict of interest, your firm should have a thorough, mandatory conflicts check process. However, in our experience, some firms run the conflict check at the beginning of the representation but fail to revisit conflict issues as the case progresses. We recommend that conflicts checks be run at the following stages:
- before representation begins;
- when new clients are added to the representation;
- when the scope of the representation changes;
- when parties are added to the case or are to be subpoenaed;
- when cases are consolidated;
- when new matters for an existing client begin; and
- when lateral partners and associates are hired.
Afterward, discuss the results with firm counsel. The conflicts department or firm counsel or both should then document the results and the decision made, and take any necessary actions, such as obtaining written conflict waivers or erecting ethical walls.
While lawyers are human and perfection is unattainable (especially given the complex issues we confront on a daily basis), following these tips should help you avoid some of the more common situations that we have seen in our years of practice being lawyers’ lawyers.
Copyright © 2018, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).