Isn’t it incredible how busy you are these days? While your laundry list of legal and nonlegal obligations varies, it likely includes a massive helping of co-workers, clients, spouses, children, coaches, adversaries, potential clients, mediators, judges and friends making various demands on your time while you scurry to keep everyone satisfied. Factor in the hundreds of emails and text messages that you mine through on a daily basis just to keep your head afloat, and it’s obvious that the demands have greatly increased.
So let’s take a brief moment to talk about something that isn’t always the first topic of conversation: legal malpractice claims.
Now removed from private practice, I currently serve as a professional liability claims manager for an insurer. I’m grateful to continually learn from the numerous legal malpractice claims filed against law firms of varying size spanning from New York to California and everywhere in between. In addition, I get to speak with many lawyers about their various approaches to the profession. Every claim is unique, and each one is different in size and scope. In an effort to learn from the actual (and alleged) mistakes made by attorneys, I wanted to first ask this question: When was the last time that your firm openly discussed ways to minimize malpractice claims and establish firm protocols to address issues when they arise?
Unfortunately, it’s not a stretch to say that legal malpractice claims are a “when,” not an “if,” proposition these days, with demands and expectations of clients constantly increasing in an ultra-competitive profession. To illustrate, I’ve heard the phrase, “I’ve never had a malpractice claim in my 25 years” quite a few times lately. Even the phrase “legal malpractice” has a negative connotation and, as such, it appears to be a topic that some firms avoid discussing openly.
If your initial response to my question was “Who cares, that’s why I have insurance,” I encourage you to continue reading, because your name and your firm’s reputation are squarely on the line if a claim is made against you. Sometimes when you win, you can still lose.
Those who defend clients in litigation know that the process is primarily a very reactive one, as you typically don’t make a move until your client gets sued. Yet you constantly market and provide value to your existing and potential client base by giving seminars, discussing risk transfer issues, reviewing contracts and preparing your clients for battle. So why not apply that same logic to your firm’s risk management?
Below are two areas that commonly result in legal malpractice claims.
Missed Statutes of Limitations
It may come as no surprise that missed statutes of limitation are a common claims driver. Missed statutes affect law firms of all sizes, so it is not isolated to one type of firm. While there can be numerous reasons for a missed statute, here are a few causes that I’ve seen:
lack of a strong diary system to monitor the filing of timely lawsuits;
failing to recognize that a state, federal or other specific statute is in play (e.g., the Tort Claims Act);
failing to recognize that multiple statutes can apply at the same time based on the harm alleged;
being unaware that statutes in other states might also apply; and
being unaware that an applicable contract may dictate choice of law, timing and venue.
While firms that handle plaintiff work are usually the ones that deal with statute claims, don’t discount the potential for a defense firm that decides to take that plaintiff’s case that it thinks it can handle (which is a topic for a different day), or if your firm is responsible for filing a cross-claim, third-party complaint or contribution action. Statute issues aren’t always the creature found on the left side of the “v.”
Conflicts of Interest
Conflicts of interest are another common area where claims arise. While the concept of an actual conflict is more clear-cut, potential conflicts are a different ball game. A review of some recent trial decisions across the country demonstrates that conflicts are an issue for firms of all sizes.
In my experience, I’ve seen a number of reasons why conflicts issues arise, including:
the lack of a strong, automated conflicts process;
reliance on the fact that you would be aware of any possible conflict in your office (a concept seen more in small- to medium-sized firms);
not wanting to part ways with a file if the existence of a conflict is a close call (a realistic occurrence in a competitive marketplace);
not having an executed conflicts waiver in place; and
representing two parties to a transaction or agreement.
Like all businesses, law firms have finite resources; some have the luxury of a risk manager, while others do not. That being said, what is the cost for you to meet in a conference room, set up a call or prepare a bulletin to start the discussion about how you can take steps to tighten up your risk management?
No one likes to admit that they’ve made a mistake. It causes embarrassment, stress, panic and a host of other responses. Thus, being more open about the reality of legal malpractice claims and their possible effect on your firm may assist you in avoiding potential pitfalls and being better equipped to handle issues when they arise.
Elvis Costello wrote, “Accidents will happen.” However, some might be minimized with a little bit of planning and honest conversation. •
Zayle is the professional liability claims manager at ProSight Specialty Insurance in Morristown, and he is a licensed New Jersey attorney. Before ProSight, his practice centered on defending professional liability, products liability, construction defect and premises liability claims.