As a veteran insurance professional specializing in lawyers’ professional liability, I’m often asked – what are the most frequent causes of malpractice claims against lawyers?
In reviewing countless claims throughout my career, several clear patterns emerge. I’ve identified the top 5 risk areas that consistently lead to malpractice suits – and simple ways diligent attorneys can work to avoid them.
Master the Engagement Letter
An ironclad engagement letter is quite possibly the #1 most vital malpractice prevention tool for any law firm. This document clearly delineates the scope and terms of the legal representation. When done right, an engagement letter can preempt a whole host of issues down the road.
Without a signed engagement letter, clients may wrongly assume the attorney is handling other matters outside the scope discussed. I’ve seen cases where clients presumed additional matters were covered and sued when expected legal work wasn’t performed.
A well-crafted engagement letter also lays out payment expectations, billing practices, and attorney fees upfront. This heads off potential fee and billing disputes on the back end. I can’t tell you how many malpractice cases originate from soured fee collection actions.
The engagement letter should spell out key details such as:
- Identity of the client
- Precise scope of representation
- Service fees and billing practices
- Expenses and what’s covered
- Document retention and destruction policy
Refer to sample engagement letter templates, but craft policies tailored to your firm and jurisdiction. Review and update templates annually to incorporate evolving best practices. Have clients sign the agreement at the very start of an engagement – before any work begins. Doing this simple step well can save you months of headache defending a malpractice suit down the road. A new engagement letter should be signed for each new matter being handled by the firm.
Specialize Don’t Generalize
Here’s one last risk management tip that pays major dividends – avoid dabbling in too many practice areas. CNA’s claims data reveals that generalized lawyers have significantly more malpractice claims than legal specialists.
Taking on matters outside your well-honed expertise boosts the chances of mistakes – and allegations of incompetent representation. Instead, contain your practice to closely related fields where you have sufficient experience.
Rather than dabbling, refer specialized cases to trusted practitioners in those areas. Establish reciprocal relationships by exchanging referrals within your niche. Also consider forming associations with experienced co-counsel to jointly handle crossover matters.
New attorneys should apprentice under veteran lawyers to systematically build competencies in new practice areas. There are no real shortcuts – intentionally limiting your practice scope takes dedication but lifts quality and lowers liability profiles.
Detect and Manage Conflicts of Interest
Conflicts of interest are another leading source of malpractice liability for lawyers. Understanding your jurisdiction’s ethics rules is mandatory – conflicts can quickly spiral into disqualification and disciplinary action.
Run exhaustive conflict checks at the very beginning of an engagement, before accepting representation. Then continue periodically throughout the case upon new developments like adding parties to litigation.
If waivable conflicts arise, promptly inform the client in writing and secure advanced signed consent. Withdraw right away when nonwaivable conflicts occur.
Document due diligence in detecting conflicts and compliance in addressing them. Never let a conflict slide by rationalizing it’s small or indirect. Even minor conflicts often fuel disgruntled clients’ malpractice claims down the road.
Avoid Suing Clients for Unpaid Fees
Here’s an alarming statistic – up to 47% of fee collection suits spur legal malpractice countersuits. This cycle accounts for a large portion of professional liability claims.
Of course, firms need to collect on services rendered. Yet suing clients should be an absolute last resort. Start prevention early by clearly explaining payment expectations and reviewing bills meticulously for errors before mailing.
Discuss past due balances immediately and set deadlines for payment. Withdraw from the representation if invoices remain unpaid by the deadline. Impose late fees to discourage delinquency.
If you eventually need to pursue collection, first weigh if the fees genuinely exceed the costs of defending a potential malpractice countersuit. Also consider waiting until after expiration of the malpractice statute of limitations.
Rather than routinely suing clients, tighten intake procedures, enforce contracts, bill promptly, and withdraw for nonpayment. This reduces collection actions and liability exposure. Prevention on the front end is far easier than defending avoidable malpractice claims down the road.
Thoroughly Vet Clients Before Accepting Representation
Another prime source of malpractice claims are problematic client relationships. That’s why robust client and case intake procedures are so critical for liability prevention.
When evaluating potential clients, look out for red flags including:
- Unreasonable expectations about legal outcomes
- Reputation for frequently suing past lawyers
- Poor finances or inability to pay fees
- Company culture that dismisses lawyers’ advice
- Demands for unethical conduct
Do comprehensive conflicts checks on both potential clients and related parties. Carefully assess whether the client and case align with your firm’s expertise. Decline representations where you lack specialized knowledge or have ethical conflicts.
Problematic clients are malpractice claims waiting to happen. Stand your ground on intake standards, even when finances are tight. The short-term gains of questionable clients do not outweigh the long-term risks.
The Bottom Line
Malpractice claims against attorneys will likely always exist in some capacity. But they absolutely don’t need to be an inevitable part of practicing law. By reinforcing client communication, honing intake procedures, avoiding risky fee suits, detecting conflicts, and focusing your practice, you can substantially reduce malpractice exposure.
With the right malpractice coverage and prevention plan, you can practice law with greater confidence and peace of mind. Don’t wait for a claim to make prevention a priority.
For more information on Liberty’s Lawyers Professional Liability Solutions, please reach out to DJ Mckenna, Division Manager (Lawyers Professional Liability), The Liberty Company Insurance Brokers.
