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October/November 2007 Issue | Volume 33 Number 7 | Page 64

Rip It!

Seven Simple Rules for Avoiding Malpractice Liability

Advice for staying on track and out of the hot seat.

Lawsuits accusing top firms of malpractice—or worse—are no longer a rarity. Burdens placed on the partners charged with putting out fires and handling claims continue to grow—especially when it comes to helping colleagues navigate increasingly difficult legal issues and ethical quandaries. Busy lawyers barely have enough time to keep up with developments in their own areas of expertise, much less the law of lawyering and the practices that constitute true loss prevention. Learning and following seven simple rules, however, can substantially decrease the likelihood of a major problem.

1.  Avoid conflicts of interest. A violation of the ethics rules is a surefire way to convert a “garden variety” mistake into a claim for fraud, conspiracy or other sinister conduct. Every firm needs at least one lawyer with expertise in identifying all varieties of ethical issues, or ready access to a skilled outside lawyer for consultation. Give firm members training that focuses on identifying conflicts, with special emphasis on those that are most common, and on requiring consultation with the firm’s conflicts resources whenever a possible problem arises.

2.  Avoid bad clients. Frequently the root cause of trouble is a client that the firm should never have agreed to represent. In most situations, the likelihood of a problem could have been predicted at the outset. Every firm should have intake procedures—including a checklist of warning signs—designed to identify potential problems. By using common sense, readily available databases and other resources, it is easy to find reliable indicators of danger, such as the reasons for a change in lawyers in the middle of a case and whether the client has a history that portends future problems.

3.  Identify the client. The objectives of a representation often are not always clear at the outset. Often multiple persons being involved in the initial consultation, each of whom may have differing interests. The situation can become even more complex when the matter involves entities, some of which have not yet been structured or formed. Before the representation begins, lawyers must assess each situation carefully to identify the client or clients that properly may be represented and the disclosures that need to be made. It is equally important to identify and advise in writing all of those whom the lawyer does not represent.

4.  Use engagement letters wisely. The engagement letter is the lawyer’s best opportunity to establish the ground rules of the representation. Clients rarely object to fair provisions, even those designed to protect the law firm. Do not squander the opportunity by using a form engagement letter. Every new matter should be initiated with a carefully crafted letter that is tailored to fit the requirements of that matter and is countersigned by the client.

5.  Avoid suing for fees. A law firm that sues to recover unpaid fees almost inevitably faces a malpractice counterclaim, even if the firm’s work was flawless and good results were achieved. If you must sue, make sure that someone objective vets the file for possible problems beforehand. Also be sure to perform a cost-benefit analysis to make sure that the amount at stake justifies the risk, aggravation and costs.

6.  Remember that honesty is the best policy. Clients rightfully expect their lawyers to deal with them fairly and honestly. Any lawyer who fails to meet this expectation will predictably be caught and face serious problems—not the least of which is a former client who will need little motivation to sue and file a disciplinary complaint.

7.  Don’t be bashful about seeking help. Lawyers who try to fix their own mistakes are likely to make the errors worse. Every firm should require its lawyers to seek help from inside or outside counsel at the first hint of a problem, even if they think a client’s complaint is baseless or will “go away.” Those who opt to ignore or cover up a mistake or threatened problem (even one that turns out to be a false alarm) should be penalized. A critical component of successful loss prevention is solving little problems before they become big ones—which they almost always do absent prompt attention by an experienced lawyer with the right skills.

About the Author

Alan S. Rutkoff is a partner of McDermott Will & Emery LLP and the firm’s General Counsel. He represents, counsels and speaks to lawyers about professional liability, loss prevention and ethics issues.