In a law firm the proper culture is to embrace mistakes and encourage their recognition. The fact is that most can be fixed, or at least remediated, with the proper attention. The grade school “did not” denial does not work. Neither does the “So sue me, that is why I have insurance coverage” or the old depart by the back door to avoid discussing the issue with a waiting client. Just look at the ethics complaints in any state to see that those approaches are wrong. By addressing mistakes promptly and encouraging all to deal with them, the very essence of a quality control program exists.
You need to disclose mistakes to clients and deal with their seriousness. It makes no sense to blame staff when it is the lawyer who has failed in some area since it only diminishes respect for the lawyer. On the other side, lawyers are responsible for the mistakes of their staff. So it makes more sense to discuss with clients the options and solutions when disclosing a mistake. A judgment call must be made with the client whether independent counsel is needed, or whether the client is well informed and able to decide remedial steps with the lawyer. Caution is needed if you need to litigate your own mistake since true informed consent must exist to avoid a conflict of the firms’ interests and the clients’ interests.
Errors and omission (professional liability) coverage is generally not required to practice law. Arguments are made both ways on that, but most people will not leave a car dealership without an endorsement for coverage. So why I ask would you practice law without some degree of coverage? More and more states are requiring a full disclosure by lawyers whether they do, or do not, have coverage so the client can make a choice. Frankly, that disclosure does not mean much because you will be sued regardless if a mistake causing damage occurs and is not fixed. So, disclosure to the client and to your carrier would be in order. On a claims made basis with insurance, a lawyer should give notice of a circumstance that might lead to a claim.
Every firm, regardless of size, needs some form of workable loss prevention. It can be as simple as an effective double-check system on title searches to more elaborate docketing programs or a formal loss prevention program. Dating back to a French political economist and his theory, James Q. Wilson & George L. Kelling in Broken Windows, THE ATLANTIC MONTHLY, March 1982, posited that, “if a window in a building is broken and is left unrepaired, all the rest of the windows will soon be broken.” They used this concept in terms of police work for the effects of such unfixed issues upon an area of a community. The same theory has been applied in law firms with the idea that a mistake or a bad practice by a lawyer that is left broken will only result in more mistakes and problems. So, the very process of addressing mistakes and fixing non-complying behavior will result in fewer mistakes and better quality of work. This mistake addressing system is good for law firm business in the long term.