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Over the past several weeks, we have had the privilege of advising several colleagues who contacted us immediately after being shocked to learn that a mistake was on a client’s case. Those conversations usually begin with a discussion about how the mistake was made and end with a discussion about what steps should be taken next to meet their ethical obligations to their client and their contractual obligations with their lawyer professional liability insurance carrier. Up until the point where “it” hits the fan, many attorneys think very little about ethical and professional liability issues that may arise in their daily practice and invest little time in cost-effective risk prevention measures. Consequently, based on conversations with malpractice insurance professionals, it is estimated that approximately four percent of insured attorneys will face a potential malpractice claim each year.
Additionally, according to the American Bar Association’s Standing Committee on Attorneys’ Professional Liability Profile of Legal Malpractice Claims 2016-2019, slightly over 35 percent of all legal malpractice claims arise out of the preparation, filing, and transmittal of documents, just over 16 percent deal with the commencement of an action or proceeding, and just over 13 percent complain about the advice given or not given to the client. Over 32 percent of the malpractice claims are brought against sole practitioners, and 30 percent are brought against law firms of two to five attorneys. Personal injury attorneys still face the highest percentage of claims at just over 16 percent. Next, at 12.8 percent, are family law attorneys, with real estate attorneys following close behind at 12.4 percent of the claims and estate/trust/probate attorneys receiving 11.9 percent of all claims.
This is Part I of our IV part series which focuses on what to do and what not to do when faced with a claim of legal malpractice or a State Bar grievance. Let us first look at what you should do upon receiving a legal malpractice claim notice letter from your former client or her new malpractice counsel.
After receiving a legal malpractice claim notice “love” letter, the first emotion is a sinking feeling of panic. Rule Number 1: DO NOT PANIC! Again, DO NOT PANIC! Even very thoughtful and careful attorneys make mistakes, but sometimes those mistakes do not harm the client. Not all Bar grievances come with a malpractice claim, and not all malpractice claims come with a Bar grievance. However, a disgruntled client or former client may choose to pursue both avenues. In fact, your disgruntled client can use what is learned through discovery in a malpractice claim to support his allegation of an ethical violation in a Bar complaint. Similarly, in many states, the malpractice plaintiff can use a finding of a Bar Rule violation as evidence to support a deviation below the applicable standard of care in his malpractice case against you. (Note that this is not true in all states — multiple states do NOT allow evidence of bar violations as evidence of breach of standard care.) So, it is crucial to take very thoughtful steps to deal with each matter. While there is certainly some crossover from one to the other, malpractice claims and Bar grievances do carry mutually exclusive nuances that can impact on your life in very different ways.
Most legal malpractice cases begin with the receipt of a claim notice letter, a demand for money, or the threat of a lawsuit. Take proactive and protective steps even if you receive a request from your client for a copy of his entire file. If you receive such correspondence or request, immediately forward this claims notice letter to your carrier. In response, your carrier will ask for a great deal of additional information from you. Your carrier will likely request a copy of the client’s file, the basis for the claim, the communications, your responses, and what you did or did not do to create the basis for the claim. Depending on the circumstances, you will want to talk directly to your carrier and receive written acknowledgment of the claim and instructions on what you should do next. Once you have supplied sufficient information to your carrier, they may issue you an acknowledgment letter, a coverage letter, or a coverage position letter. In some cases, you may receive what is called a “reservation of rights” letter explaining any exceptions or exclusions to coverage and defense.
After receiving a claim notice letter and notifying your insurance carrier, seek objective legal counsel from an attorney familiar with defending legal malpractice claims. Once you retain counsel or counsel is appointed to you by your insurance carrier, counsel will contact the attorney representing the claimant. Your attorney will work with you to preserve evidence and ensure you begin your “to-do” punch list to defend the claim. Counsel will assess the viability of the claim and determine if it might be resolved short of litigation. Sometimes you can and sometimes you cannot resolve a claim pre-suit.
Next, do not immediately jump into action, contact the complainant, offer to refund legal fees, or try to resolve the matter on your own. You likely won’t succeed, and on most occasions, you may even compound the issues and even unknowingly commit an ethical breach. The absolute best thing is to remove yourself from the situation and retain counsel to step in and handle it. If you voluntarily make a payment or offer to pay to settle with the claimant without the consent of your carrier, they may deny the claim based on the voluntary payment provision in your policy. Thus, if you try to negotiate a resolution that inevitably goes south, your carrier could deny coverage if they discover you ever offered a payment to resolve the matter.
In addition, you, the attorney, need to realize that a conflict of interest exists between you and the client the moment the client threatens or follows through with a malpractice claim. In that case, you should not offer your adversarial client any advice about what they should and should not do other than go find another attorney. If you step beyond the limited advice to find another attorney, you then begin to set yourself up for failure. If you start talking to the claimant and trying to negotiate with them or their attorney directly, you are laying the groundwork for not only a malpractice claim but also a potential breach of fiduciary duty claim and a Bar grievance, further opening the door for the client to make your law practice and your personal life challenging.
Generally speaking, succeeding in a legal malpractice claim will be an uphill battle for the claimant. For a former client to prove a malpractice claim, they have to establish four integral elements:
For the attorney facing a malpractice claim, you will find comfort in knowing that successfully prosecuting a legal malpractice claim is difficult, and depending upon the issues, can be very expensive to develop.
Should a complainant prove a duty, a breach, causation, and damages, you and your carrier would find yourselves trying to resolve the matter. However, if you do not, then it is likely the case would forge ahead to ultimately end up in a trial in front of a jury. Once a lawsuit is filed, it will likely take upward of two years to resolve the matter in front of a jury or judge. That is, at least in part, why it is so important to maintain correspondence and communications between you and your former client. Indeed, it is very unlikely you will remember all the details of the disagreement two or more years after they occurred. Without maintaining the correspondence and communications between you and your former client, your defense will become a very risky swearing contest between you and the claimant.
During the litigation, if circumstances are right, your attorney likely will file a motion for summary judgment, alleging that there was either no attorney-client relationship to begin with or no proximate causation. Even if the case survives a motion for summary judgment, you still likely have a number of available defenses. For starters, you can often argue that the client would not have been any better off, despite the attorney’s actions. This principle of no harm, no foul is often a strong defense to a malpractice allegation. Additionally, you might allege that the claimant failed to prove a breach; namely that the attorney did not do anything that could be construed as a deviation below the applicable standard of care of similar attorneys on a day-to-day basis. You might also find that the acts complained of were judgment calls by you in which case judgmental immunity may apply. Moreover, oftentimes many other events break the causal chain between breach and damages, which might include a withdrawal as counsel of record or a substitution of another attorney. These actions are unlikely to support a malpractice claim since an intervening party likely played a role in causing the alleged harm. You might also allege contributory negligence on the part of your client or some third party, which might preclude any recovery or offset the recovery.
When it comes to malpractice litigation, clearly a lot is on the line. So, it is imperative that you take these claims seriously and prepare like it is the most important case of your life. Possibly, far more will be at stake than just your outstanding policy limits. Please know that if the plaintiff demands in excess of your policy limits, you would be well-served to hire your own personal attorney, often referred to as personal or excess counsel, who will advise you at your own expense about such an excess situation. Do not be pound wise and penny foolish by not hiring excess counsel in these sorts of situations.
Whether the legal malpractice has merit or not, for your overall success in defending the claim and your sanity, you must take each and every one of the allegations seriously. If not taken seriously, they can lead to total financial ruin in the worst of cases and extreme stress and time loss in a best-case scenario. With the help of malpractice defense counsel and your malpractice insurance carrier, you can begin to implement best practices and respond to the claims helping mitigate the immediate and lasting impact on your life and practice.
Stay tuned for Part II of IV in the coming weeks where we explore why clients file Bar grievances and what to do should you receive a grievance.
Douglas Chandler grew up in the Northwest corner of Georgia in LaFayette, Walker County. Upon graduation from Auburn University he was commissioned as a reserve officer in the United States Navy. As a Lieutenant and Naval Flight Officer, Douglas was assigned to the Grumman E-2C “Hawkeye” Aircraft. While on reserve status, Douglas attended Samford University’s Cumberland School of Law where he served on the Board of Directors of the Cordell Hull Speakers Forum. Before entering private practice, he was the law clerk to the Honorable D. Al Crowson, State Court of Alabama, and a Law Clerk at Ferguson & Saunders, LLP of Atlanta. Douglas is a Board Certified Legal Malpractice Attorney, Co-Founder and Executive Committee Member of the State Bar of Georgia Professional Liability Section, and an active lecturer and panelist on the topics of Law Firm Risk Management, Legal Professional Ethics, and Malpractice Prevention. He has been recognized multiple times by his peers and Atlanta Magazine as a Super Lawyer and Legal Elite by Georgia Trend Magazine. Highly active in the Atlanta community, Douglas has served or currently serves in leadership roles at his church, with his children’s school, and with local organizations such as the Fernbank Natural History Museum’s Lost Oasis fundraising event. When not practicing law, Douglas enjoys spending time with his family outdoors, fishing, hunting, and playing tennis.
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