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As reprinted from For The Defense, a publication of DRI, The Voice of the Defense Bar:
https://www.jacksonkelly.com/insights/you-do-not-deserve-to-be-their-lawyer-a-discussion-of-client-selection
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One of the latest things in the practice of law is the unbundling of services. It is merely an example of how the practice has changed in the delivery of services. A lawyer can provide just certain parts of a project, a la carte, and others can do different things at different prices in a competitive market. Of course, the key to any limited-scope arrangement or discrete task representation is the documentation of exactly what you will do. Model Rule 1.2(c) allows this limitation, but in the case cited in Thompson Hine LLP blog (Karen Rubin February 22, 2018) the documentation better be clear. In cases against lawyers, there will always be a tacit implication that the lawyers do this for a living, and if not clearly documented by them, the client’s perceptions will prevail over the lawyer’s testimony as a general proposition. More on point for practicing lawyers is the reminder that each case you take needs that documentation. Even if not required by your jurisdiction’s rules, you should always have an engagement letter. It is your take home exam and you should be able to get it right. Aside from clearly spelling out your charges, and conflicts, and routine obligations, you must absolutely protect yourself with a clear explanation of what you are doing, or not doing, for the client. Look at it in this simple way. The first paragraph of any engagement letter should thank the client for the representation. You should then say we have been engaged to do “ABC”, and sometimes even not what you are engaged to do. Scope of work can change later, but it can easily be noted in any clear communication that you have changed our engagement letter to include “DEF”. Likewise, in this first paragraph, you should clearly identify who the exact client is in the representation. Force yourself to be sure you know who you are representing. Is it the company (i.e., not the officers or Board) or whomever. This initial paragraph uses good manners and basic marketing, but clearly communicates your tasks and who exactly you represent. These key statements will protect you later when the client’s memory has faded and the case has slipped sideways. It is likewise important that lawyers not lose their way in the course of the representation and forgot who their client is in the representation. This standard practice at the beginning of every file will help you meet your duties and will protect you later when everyone claims something to the contrary. Exhibit “A” for you will likely be your engagement letter if done properly. A Loss Prevention Discussion for Lawyers In every respect, even the very notice of a baseless claim against you as a lawyer is upsetting. You immediately need a new mindset at that point. Put aside the disappointment, anger, and unhappiness and do the professional things that are required. Immediately secure the file and preserve it all; refer the client out if still an existing client; notify your carrier with the details; and get outside counsel to advise you. It is not a time to self-represent or try to handle privately or to avoid the issue. Baseless or not, deal with the issue raised right away. My personal theory from handling the defense of these for years is that good client relations and use of common sense prevent many claims. Mistakes are a given in any endeavor, but it is how well you respond that matters. Treating clients fairly in a timely and professional manner eliminates many of these in the first place. Likewise being a prudent professional and protecting yourself with a proper engagement letter and with full documentation of client discussions and decisions both go a long way in the faded memory category of a later claim against you. Good client selection plays a part in your claims avoidance. The markers are there for the many who will make claims and it is up to the lawyer to do proper due diligence before taking on any case that is within their legal skill set. My wife’s grandfather said: “People are no damn good.” She believes he meant “some people are no damn good.” He was right with regard to that group of “red flag” clients that are highly likely to sue you. You need to be alert to those flags. I am still amazed that errors and omissions coverage is not required for lawyers in some 48 states. Needless to say, if you own anything, it would be prudent to obtain and keep current this coverage if you intend to practice law. You can and will make mistakes. The “red flag” clients will be the type to make a claim, regardless of merit. So, in the Bad Day Category, claims against lawyers steadily come in, whether deserved or not. The problem is that the pure legal cost of defense, as well as the emotional toll, keep rising. Of these claims, the old error of having a conflict of interest lingers (and is still hard to defend before a jury). The new lawyer tools of technology are now giving rise to new types of claims in the cyber world. So, whether old or new issues, they will keep coming so plan to deal with them effectively. The very best defense to having a very bad claim day — is not to have a claim in the first place. This really requires a law firm’s commitment. Spend the preventative time to eliminate claims by good procedures and constant education. It takes time and repetition. Results show up only by not having claims. It is however worth the cost outlay to avoid having post-tax losses of income when you have claims. Emotionally you are better off knowing you and your other lawyers did all you could to avoid a claim. That process requires all in a firm to discuss and commit to a program of loss prevention with good quality control, as just good professional practice. Mobility in the modern law practice is a given and hires from other firms are called laterals. While the old law firm model was to hire out of law school and often keep them until retirement, that certainly has changed with the very common hiring of lawyers from other firms.
The reason “laterals” or “merged attorneys” get mentioned so often is because professional liability carriers have noted sharp upticks in claims arising from laterals’ conduct and also from the conflicts they can bring to a new firm, if not properly resolved in advance. My theory is that firms are so anxious to get new business that they do not do the kind of due diligence on new lateral hires that they would insist their clients do in a business deal. Firms should always require possible new lawyers to provide extensive personal, financial and bar related information under confidentiality agreements. This failure to examine all about a lateral carefully can get you someone else’s problem, as bad as a car flooded out by a hurricane. Likewise, their clients can be cross-checked under tight conflicts procedures to see what conflict issues might exist if they do join. Resolution of these should be a big factor in any hire or merge decision. Like most people, laterals will do things the way they did before and this could generate claims issues when not monitored. Firms should have a formal integration process for laterals that is better than the one they use for new hires. Particularly with lawyers now coming into a loss prevention conscious firm, old loose habits have to be changed and the new loss preventative procedures adopted, despite their complaints along the lines of “I just want to practice law”, rather than do the things you now require of me. In the Minnesota Lawyer recently, Charles Lundberg discussed this subject and listed an American Lawyers article on the subject. There have been spectacular issues with hiring a lawyer who either brings or creates bad mojo for the new firm. These articles are good to point out how serious the problem can be to you. However, the more regular lateral issue often comes about by promises made, but never met, and after years of paying them too much, it doesn’t work out. “We wish them well” is in the typical notice that Fred will be leaving the firm. This is not a new loss topic. Lots has been written about laterals and losses, but law firms keep doing this with, at best, a 50/50 financial success ratio, not to mention the greatly increased number of legal malpractice claims they generate. Think about that: 50/50 chance of success, but with a risk of conflicts and claims either way. In a single firm study, I have seen better than this 50/50 without any big claims issues and with long-term friends who have done well for the firm. My point is that you must (1) do due diligence; (2) resolve conflict issues; and (3) integrate them into the firm. I have seen many big successes by way of merger or lateral hires, including a successful Managing Member in the study firm. They did full due diligence and lots of advance conflict work, but they still had some failures like the national stats show for all. I really do have many good friends in the successful lateral hire category. See Model Rules 1.10 and 1.9 for screening and conflicts. I am told the country expression of hanging crepe refers to talking about really negative or pessimistic subjects. I then am a true crepe hanger whenever I speak with lawyers about claims made against them in their practice. I often advance the argument that the best way to defend such a claim is not to have any. The next best way to resolve the issue is to remove the basis of the allegation. The last best way is a right proper defense of any such claims against the lawyer. A study of trailing claims history is always illustrative to see what is trending. For years such studies took too long to receive and were not good preventive tools since they were dated by several years. Our friends at the McLean, Virginia insurance broker Ames & Gough have for the last seven years actively polled nine of the leading lawyer’s professional liability insurance companies to see what they were either reserving, or paying, for in such claims. Their methodology picks up about 80% of the Am Law 100 firms. While big firm centered, it is very instructive, particularly when compared with similar data of other large insurers like ALAS (mutually owned carrier for well over 50,000 lawyers). The modern (last few years) trend has been for the number of claims to level off. More carriers have stressed the ALAS approach of quality loss prevention trainers for their insured lawyers to get those numbers down. So level numbers are good, but the severity of the claims continues to rise. The number of claims and the severity are all still above the years before the 2007-2009 recession era however. Conflicts are at the top again in type of claims. There is no dead horse when you repeatedly preach to lawyers they must avoid conflicts. They lead the pack in claims because, in my opinion, they are so offensive and easy for any juror to understand. They do not see all the recognized legal exceptions we lawyers study and just see divided loyalty. About half of the surveyed respondents noted that conflicts arising from lateral hires are on the rise, as are such hires causing many other types of claims. Lateral transfers of lawyers can be a good thing, but if not done right you see more claims as reported here. My firm obtained very early cyber insurance from this broker and their 2017 study reports those types of cyber claims are also on the rise. It happens to all using electronics, but lawyers have confidential information, and when it unreasonably gets loose, it presents legal and ethical issues. So that part of the modern law practice is now a daily battle of the firm defenders against both hackers and human error. Coverage for these issues is often different from professional liability policies since most only apply to a liability claim arising out of their practice. Big cyber losses can occur to any firm without having a client claim, and therefore you need to look at cyber insurance. It is a rising claim area where you could be uninsured. Finally, it just costs more internally and for outside defense costs when you have any professional claim of any type, so this goes into the increased severity costs. So all these things cause me to preach the loss prevention gospel and for me to take you down the country path of “Hanging Crepe”. The concept seems odd, but would you advise any business your size to operate with self-advised guidance? In the business world have you ever known a business equivalent to yours to go without proper legal advice? Being around lawyers all these years, I know this is a tough sell to some, but you absolutely need to designate a firm lawyer to be your legal representative. My firm went to a General Counsel concept in 1994, well before the trend to do so started in larger firms. Regardless of your size, you need to consider designating one of you to act in that role. The key to doing so would be treating firm matters just like you do client matters, thereby establishing an attorney-client relationship and privilege so you can discuss problems, fixes, and client protection matters. I routinely opened firm legal files and did all like any other client work, except for billing. At a start-up level, your newly-designated firm lawyer can review conflicts, consult on ethics issues, handle your errors and omissions coverage, and provide confidential advice to your lawyers on the daily issues that arise in the practice. That role will expand as the firm adopts the culture of legal consultation before acting. It becomes a way of life in a law firm and gives the firm a set of eyes and ears intended to prevent claims. The firm lawyer concept has greatly evolved in bigger firms. Some firms split the work among several people and others have actually created the Office of the General Counsel or a Chief Legal Officer. Of course, the utilization of a senior lawyer there is a cost, rather than a revenue, position. Many resist it because of that. I always explained as “negative revenue”. My job was to keep post-tax firm income from sliding off the table and down the proverbial drain by preventing claims and issues. The loss of the policy deductible and the loss of the productive time of lawyers and staff cost way more than the income I would have otherwise generated with those hours. It is a reverse concept, but a sound one. You need to have a claim to understand how much you actually lose out of your earned income. In the not measurable world of loss prevention, having no claims was tantamount to having a good revenue year. Analyze an ethics charge or a legal malpractice claim in your office and you will see what I mean. Much like the businesses of our clients, law firms are forced to manage their professional services in a business-like manner. The firm lawyer needs to assist in managing the client intake for quality control and for conflicts avoidance. The lawyer for the firm has to address business wide risks to help the “client” law firm avoid them. Tasks include conflicts, client guidelines, fees and billing, staff regulations, ethics, data breaches, and the myriad issues arising daily in the business of law. Anthony Davis of Hinshaw & Culbertson, LLP pointed out in a May 2017 article that the role of a General Counsel in a big firm has expanded into areas not thought of just a few years ago. See my 2012 article at https://goo.gl/DVREX.m for other thoughts on this firm need. Give the concept some discussion time in your office. Even though a professional services firm, think like a business and protect yourself. Designate a lawyer. You would tell every one of your clients they needed one. I am behind my self-imposed publishing schedule due to a pesky trial. Some of you remember those things where you work 19 straight days getting ready for trial and it gets continued over your objection. You then get to re-do all of that 4 months later when it is rescheduled – you know, a trial. So, to refocus, my general aim in these posts is to help lawyers better manage their practices and avoid having claims made against them. Loss prevention is better than claims defense. I present this staff related post not because it is Administrative Assistant Month and Day. By the way, if I ever were to offer free legal advice, do not forget that day for your staff. At least, say thank you. Unhappy clients often show their displeasure with ethics charges or legal malpractice claims. Attorney at Work, in a Daily Dispatch by Roy Ginsburg, recently highlighted these basics of “customer”/client service: • Listen to what the client wants. • Do not delay in doing what the client wants. • Communicate with the client about the progress. All of these are just good common sense approaches, but so many in the business and legal worlds do not meet these. Some variation creeps into claims made when you start digging in a deposition. While in no way covering for any lawyer without these basic skills, I do observe that most lawyers have overflowing plates with their time controlled in part by others. Here you go with my spring pitch – our staff is the key to keeping the greasy side down and the shiny side up. As a lawyer, you must get to the above service components to be successful as a lawyer. You need people in a law practice that understand these basic service tenets and then you need to let them help manage you and your time. Let go of a little of that ego and get your staff helping you more. The front of your office is fundamental in the happy client world. An intelligent and prompt telephone answer and a professional appearance at the front desk mean a lot for the critical and only first impression. You need to train for these skills and monitor for their quality. Then good docketing and assistance by staff to recognize deadlines and assist in meeting them allows that busy lawyer to succeed. In the type, send and move on world, more eyes on the subject for more quality assurance help the product. An effective staff team is part of that solution. Each of the basic service tenants can be enhanced or better delivered with good staff. Never underestimate the value of the time you spend in hiring and training people who can make you look fabulous. That good client result and the timely delivery of what the client wanted may not have happened just based upon your good looks. Develop and celebrate a good staff and you will be a more successful lawyer. Lawyers will remember their basic tort law about motor vehicle statutes requiring a driver to look before doing certain things. The case law then required the driver to “look effectively”, and in so doing, exercise the required ordinary care with regard to the normal and obvious risks attendant. Some of you grew up in safer times where homes did not need to be locked and children could play in neighborhoods after dark. As always, things change and the common security mantra now is: “See Something — Say Something.” Where once you might have blithely walked into a dark parking garage, you now need to be alert and safety conscious everywhere. Security people refer to it as having “situational awareness”. Look about you, and look effectively as you go about your daily business. I do not believe it is a leap for me to encourage lawyers to use the same type of awareness acts in your own offices as you move about there daily. In the world of loss prevention, it is never good to hear that they never knew of an issue. Because in discovery you usually find that someone knew, “or should have known”. All lawyers, and importantly all staff, need to be told to be alert and not to cover or conceal a lawyer’s issues. There is a loyalty trait to do that, but they are not helping the lawyer or the firm. I bet every reader recalls someone with a problem, and someone knew, not telling others about it. This exists in every office and in any size office. There are always some indicators. It must now become a standard way of doing business to list all deadlines on a master calendar so if someone fails to show for work, others know what is scheduled. Financial and file controls must be strong and redundant so no one can work off the books in your office, or perhaps use personal accounting magic with either client or firm funds. Required receipts and routine inquiries on expenses shall be the norm in your office for all so that no one thinks their personal integrity is at issue. It is a fact that people have issues, and perhaps lawyers under stress may even have more than normal issues (like an estimated 2 to 3 times more). Add to the normal issues of mental or psychological issues, financial woes, and substance abuse, a new fact of life — aging lawyers. As an example, Virginia noted that about a third of its lawyers were over 54 and 11.5 percent were over 65 (https://goo.gl/dtKKSo). It and other bars have ethics opinions that offer advice to law firms and impose a duty to evaluate its lawyers to prevent having a colleague being impaired. (December 15, 2016 Virginia LEO 1886). The State Bar of Arizona says every 66 seconds someone in the United States develops Alzheimer’s disease. More than 15 million family and friends are caring for those with Alzheimer’s and other dementias. The Bar there has started offering courses to help lawyers identify these issues. West Virginia is now offering lawyer CLE courses that include competency issues in the legal profession. Progressive Law Practice published an article advocating that Law Schools should monitor students for addiction and mental health issues before graduation. Law.com just started a column “Let’s Address the Elephant in the Law Firm” (https://goo.gl/f8mgwr). By nature lawyers are an independent lot and resist lots of things, especially when it applies to them. Again, the fact of life is that one lawyer’s actions can bring down a firm. It is in everyone’s interest to be situationally aware of who is doing what, and who might be showing signs of issues which could be of consequence to both the clients and the firm. Until his death at 102, I shot skeet with a doctor who retired in 1985. I enjoyed his company, but always stood right behind him when he was shooting his new in 1952 shotgun. My wife’s uncle at 101 is active despite retiring in 1965. Nothing prevents a lawyer from practicing as long as he or she wants, but common sense says everyone watches for tells, just like they do with a young bright associate who starts missing work and deadlines. “See Something — Say Something” applies to more than Homeland Security. I recall the Saturday Night Live character, Debbie Downer. Everything she said was dark and dismal. In this common sense column, I do not seek that title. However, as a young lawyer I recall an exceptionally bright and well-respected older lawyer taking his pants off in the office at 10:00 a.m. to take a nap. It made the distinct impression upon me that perhaps we should have seen some issue with him before that day. In the modern mobile electronic device world, reviews of restaurants and businesses are posted even during a bad service event. Bad reviews that are floated out to the world are hard to get rid of in this electronic environment. Yet professionals, and not just lawyers, seem stuck in an old world approach when it comes to such things as their “customer” relations. Professional services of various types come after many years of specialized training. In itself that may affect the professional view of the value of their services. Many, by my observations, seem above the approach of relating to good service as a way of developing more professional business. I am reminded of the 18th Century Honoré Daumier satirical print of the losing client walking alongside the lawyer who arrogantly says: “But you had the opportunity to hear me argue your case.” Every reader has many examples of businesses you will not re-visit, or your own bad reviews passed on to friends based upon just bad service. Yet I have trouble convincing some lawyers that their best client development tool can be the simple and easy good client service model. Training new lawyers I often use the example of: “How would you want your grandmother treated if you referred her to a lawyer?” Alternatively, think of the things that irritate you when dealing with service providers and stop doing them to your clients, who are in fact your best referral network. Good manners and good sense will be worth way more in results than an entertainment or marketing budget. Many lawyers think the latter constitutes “marketing” of their legal services. You will really need to start good client relations at the staff level to make sure clients are not being placed on hold, or screened constantly, or called “honey”, or cut off. Would you hang up if you were a potential client trying to reach your office? That should be your constant quality control check. You the lawyer then need to think more like a service professional and return calls and messages promptly, or with an explanation that you will contact them as soon as you are out of court, etc. Communicate regularly and bill fairly and openly so the client has reasonable expectations of costs and results. You will be eliminating a lot of complaints in the process. If you took the time to look at routine ethics complaints, you would see this in reverse — lawyer did not perform; did not communicate, overcharged, etc. So an easy fix for lawyers is to start thinking good “customer” service. Even car dealers have caught on to customers rating their work; rewarding their good service representatives; then developing more business from a customer who believes they care. Luxury resorts hire consultants to come in and teach their employees good service. At the Greenbrier Resort in White Sulphur Springs, it is “Ladies and Gentlemen serving Ladies and Gentlemen” as a staff motto. The maintenance men get downgraded if they do not look up and say “Good afternoon” to you upon passing them at the Broadmoor in Colorado Springs. So, how hard is it for you and your staff to be polite, considerate, and responsive? Lawyers should tell their clients what they are doing and what it will cost. Seek to understand your client’s business and problems. Thank them for their business and celebrate their good deeds. Common sense indeed, but it is not being done by many professionals. This kind of enterprise change at your law firm will reduce claims, get you more business, and decrease your marketing costs. Could it really be that simple? Look around your town at the businesses who do well and those that close their doors. It simply cannot hurt, and likely will help, if you seek to improve your “customer” relations as a lawyer. After this was written, I saw an April 29, 2016 article for Jaffe Legal Marketing Consultants by Joi Scardo. I refer you to this article for “Seven Ways for Law Firms to Improve Client Service”. In the world of losses and claims you think of this as the very reason to buy coverage in a law office. We all make mistakes. It is not new. But what is breaking news would be the rise of mistakes in volume and in the serious nature of the claims presented. One carrier noted that 79% of its reserves for losses in 2015 were as a result of mistakes. You might say that is an epidemic. I visited the general subject of claims last issue and mentioned mistakes. (http://goo.gl/MdIxHb). I recently attended a carrier’s training session on the subject and was struck by how the modern practice of law had dramatically increased a lawyer’s exposure, with the old-fashioned mistake now being a leading cause of claims. In that carrier’s study, the last five years proved that they were the biggest losses. I gave a talk last year on change in the law practice and pointed out that lawyers had to adapt or be left behind. Easy examples were the death of photo film, Radio Shack and malls. That same rapid change has probably led to the rise in mistakes in a law practice. Think about today’s pace in the practice of really being reachable all day and every day, no matter where you are. Cost issues imposed by clients may reduce second eyes’ review or intra-office discussion or more research. A rapid fire response back to a client while you are catching a plane may well lead to a mistake, and the consequences can be great. So, perhaps some discipline for busy lawyers may be in order. Slow down and perhaps respond to the client: “I’ll get back to you soon after I have time to consider your inquiry.” Perhaps eat the internal cost of research or a second review to be sure of the answer. Do the old-fashioned proofreading. Utilize what pilots are required to do — checklist items to see that all was done. If nothing else, do yourself a favor and do not work up against a deadline. Your dog will kick the bucket, or the electronic filing system will not work. Just do it all the day before and take away one more possible mistake. Watch out for technology. Sometimes it is not your friend. Of all the areas for claims, mistakes should be a preventable one. By the way, I was rushing to attend the carrier’s loss prevention presentation on mistakes. While I thought I was sending something to my secretary to make envelopes for twelve friends, I sent it to all twelve of them instead. Harmless here, but a lesson for me. To avoid mistakes, learn from your own mistakes as well. |
AuthorSteve Crislip was the General Counsel and Loss Prevention Member to a 11 office and 7 jurisdiction law firm for 10 years and has been defending lawyers and firms for more than 25 years and litigating for 40 years. Archives
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