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DID YOU MAKE A RECORD IN YOUR OWN OFFICE?

4/2/2015

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                    My handwriting was so bad that my mother always asked me to call from college, not write.  We all had to develop some way of keeping readable to us notes once we got to college, and certainly in Law School.  In the pre-computer days, we even had fancy leather-bound law notebooks with room to annotate the notes and attach the case briefs to match.

                    Reading California lawyer Megan Zavich’s article on taking better notes in our offices made me think of the need to re-assert this as a loss prevention item in all law firms.  Most of us have a strong background in taking some form of notes, but I have observed they are often lacking in the routine claims against lawyers I examine.  Perhaps it is the classic “Cobbler’s Children Have No Shoes” Syndrome.  Many files just lack documentation of the legal mission or advice given.

                    As a trial lawyer, I got to the point where mock jury responses no longer surprised me.  I had the opportunity to view a number of live, and also taped, jury deliberations in legal malpractice cases.  The theme there that surprised the non-litigators was that jurors believed it did not happen unless the lawyer wrote it down.  “They are lawyers, aren’t they?” was a frequent comment by jurors.  The failure of the defendant lawyer to document events or advice to the client often decided the case, and always against him or her. 

                    Trial lawyers learn to make a record, and to vouch the record to avoid the void of what would have been offered if allowed.  Business lawyers document for their clients by due diligence, but many lawyers do not have notes in their files of what they did, decided not to do, or advised a client not to do.  We probably did a little better in the days when we routinely dictated letters on so many issues. 

                    Megan Zavich pointed out there are many ways to do it now.  We just need to get lawyers to re-start the discipline of making notes and in reality, making their own record for their files in their own office. 

                    We all know lawyers tend to be an independent lot and they often resist the idea of anyone telling them what to do (despite the fact we all operate under extreme sets of laws and regulations in our occupation).  After the claim has been filed training is not a great way to learn.

                    In firms, for many reasons, I advocate a peer review of files on a periodic basis.  If you have, or are developing, a culture of preventing claims and losses, this is just good quality control.  If such spot reviews show a lack of documentation of key decisions, actions or inactions, you have a good teaching moment and the opportunity to repair.  The best example is to question the attorney how he/she would defend themselves if the client made a claim that was contrary to the work shown in the file.

                    Unfortunately, defensive law is needed in the modern world.  When you do not take a case, a communication to that effect is the great exhibit.  I have advised you to do X, but have made the decision to do A, B and C instead sure will help when that train goes off the track and they blame you.  Why the inaction?  A note to the file might just convince the Disciplinary Committee there was an external reason at play.  In other words, lawyers do a better job to defend yourselves.  Keep a good file that you could show before a jury.  Remember the lay jurors comment: “If they did not write it down, it did not happen.  They are lawyers.”

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Lawyers Get Old Also

9/2/2014

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     I had a very talented law partner who retired at age 64 to take an appointment by the Governor for a six-year term on the Public Service Commission.  He works just as hard as always, but for less money in government service.  When I discussed it with him, he said he wanted to do something different and to go out on top — and that he did.

     The days of the magic retirement age of “X” and a gold watch are over.  (See August 2013 Post.)  For each it is a personal decision and for the poor planners, a necessary delayed requirement.  As the very large group of post-World War II children age up, it becomes a legal issue worth revisiting.  I officially “retired” at 65, but daily actively practice law and intend to do so.  It is just a bit more fun doing it on your own terms, as opposed to that strong fiduciary duty to your other partners to provide full hours, manage a business, feed work to others, and be part of your professional and local communities.  As I said before, no lawyer ever went to the Pearly Gates and said:  “Damn, I wish I had billed some more hours.” 

     We are talking valuable experienced legal resources here.  Firms should have every interest in using their talents productively as long as their lawyers wish to do so.  However, on the other side, you do not want to be the older person the younger partners always complain being gone or not engaged.  They do not take kindly to the “I earned it” approach.  It is more like “what have you been doing lately” approach.  So, do like my friend did — go out on top is my thought.  Work out your own deal with your firm and be happy.  The Earl of Elkview, a local colorful lawyer, advocates “Festive Living” with livable rather than billable hours.  There are many variables to be considered.  See, Jim Cotterman (Cotterman on Compensation) May 14, 2014.

     There is a legal point where the retirement and aging issue transcends what is right, or what you want to do with your legal career.  Do not get to the point where your train of thought leaves the station without you.

     Having served on a statewide Alzheimer’s Board, I feel somewhat better attuned to the aging process issues which will statistically hit the Boomers in a big way.  Absent a cure, aging issues will most definitely affect boomer lawyers and their law firms.  So as your law partners’ keeper, you must watch for all the many things induced by the stressful life of a lawyer, and now add cognitive degeneration to that watch list.  Before 401K plans, lawyers never retired and others did pay attention to this, but not so much in the last thirty (30) years.  Now I see an early ethics opinion on this very subject.

     Kansas Bar Association Legal Ethics Opinion No. 14-01 “Duty to report attorney memory lapses” tells its lawyers to refer memory lapses, cognitive deteriorations, or other potentially disabling conditions to the Kansas Lawyers Assistance Program, or other suitable service.  If this problem resulted in acts or omissions constituting actual violations, then another lawyer would have the duty to report it.  I see this as an early recognition that this coming impairment is a larger issue to be regarded in the legal community due to its potential volume.  Well, there you have it.  Have we discussed this before?

     As a good friend of mine always closes:  “Remember, life is too short for boring briefs.”


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THE V-8 MOMENT WITH REGARD TO INSURANCE

8/5/2014

 



 



 

 

     Wow, I should have had professional liability coverage.  I remain amazed at how many lawyers forego such coverage.  I do not understand that rationale since they would never risk their assets with an uninsured car or house.  Yet, they think this cost of doing business is too high or it somehow is not needed.

     Even a totally bogus claim costs real money to defend.  It takes time and work to get these dismissed, with no return of the costs.  Lawyers always seem surprised at the legal costs for such work when they send out similar bills each day.  Then if there is a meritorious claim or even a colorable claim, coverage is very much needed.

     When I last looked, only one state required legal malpractice coverage as a condition of licensing.  Many states annually require you to disclose whether or not you have such coverage for consumer knowledge.  I wonder how many clients ever really check that, or if they even care.  If you err in their case, they will sue you regardless.  Do not think they will not, just because you have no insurance.  You certainly do not want to explain to family members that they now need to take the bus, since your cars were attached to pay a malpractice judgment.  Just treat this like a business expense and get coverage, and get the right coverage.

     You should shop for coverage with brokers and agents as well as Bar groups.  Be totally forthcoming in any applications so there is no reason for any carrier to later deny coverage.  Price varies with the amount of risk you are willing to take by way of the deductible.  Sometimes that is just cost pricing with lower annual premiums for higher retention levels by you.  Sometimes in order to get big policy limits for some specialty work, you are required to have a big deductible.  Bigger firms are used to that, but smaller firms must always be mindful of the amount of risk they can absorb and how much they can promptly pay for a defense.  Usually the deductibles are for both losses and for the defense of the claim.

     At one time, professional liability policies were like your auto policy — occurrence based.  Were you insured when you had the wreck or act of malpractice, or not?  By the 1970’s, that type of coverage disappeared and all are usually claims-made, eliminating the open-ended coverage concerns.  So, now a lawyer needs to be covered when a claim is made and must therefore avoid any gaps in coverage.

     Since claims can arise well after the act or occurrence, prior acts coverage was needed to cover such matters forward when changing carriers or policies.  A tail (extended reporting endorsement) or an endorsement for prior acts must be considered carefully when charging firms.  Someone either closing a firm or making a lateral move needs to consider this carefully.  See, “A Primer on Prior Acts Coverage”, Mark Bassingthwrighte, ALPS 411, May 27, 2014.

     For example, working in a mid-size regional firm, it made no sense to take in a lateral lawyer and provide them with prior acts coverage under the firm’s policy.  There had been no quality control by the firm and there were totally unknown risks involved with the lateral’s prior work.  With a large deductible, it was just bad business to assume that liability.  Accordingly, all laterals were told to look to their prior carriers or firms for coverage up to the day that they just started at our new firm.  Going forward they were covered, even when they left, as long as our firm was viable and still covered.  A tail may be needed by them from their prior work, but if they were likewise leaving a viable ongoing firm with good coverage, maybe nothing was needed.

     Complicated to some degree, but it is just a part of doing business as a lawyer.  You need certain things to practice and this certainly is one of them.  Just like paying the rent on the office, paying for the coverage in a timely manner, and getting the right coverage is kind of important.  Don’t be the person who thinks they will not be sued by their clients.

     Be advised that most are loss and claim deductibles for any expended fees and costs, as well as claims payouts.  Also, it is customary for you to have to pay your full deductible before any carrier pays anything.  So pick a deductible you can afford and then escrow the funds for it as soon as a claim surfaces.  By the way, give notice of claims promptly, again to avoid coverage issues.  See ALPS 411, Claims-Made Reporting Requirement, February 15, 2012.

 

 

 

 

THE SENSORY PRACTICE OF LAW~

6/10/2014

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     When you do a whiskey or wine tasting, all your senses are used to evaluate the product.  The sense of smell is one of the biggest factors in whether you will ultimately like the taste of the product.   If you have not learned it yet, some prospective clients smell bad also, in the figurative sense.  Learn to trust all your instincts and do the full evaluation before you jump in and take a new client.  Everyone wants new business, but the pain of a bad choice will change your approach to new client intake.

     In the initial interview with lawyers I am defending, the most repetitive comment is:  “I never should have taken that client.”  So, stop doing that.  Stinky clients, aggressive and unreasonably demanding clients, irrational clients, shady clients, and clients who just don’t pay their bills lead to no good for the lawyers representing them.

     Every firm should develop a rigidly followed and routine conflicts check that is done every time and always documented in the file.  In a very small office, it could be a sign-off by each lawyer; as you get larger, you need computer-assisted checks.  Requiring each lawyer to immediately open a file for conflicts recordation purposes is critical.  Working off the books without opening a file in your conflicts system will certainly cause you problems and will definitely cause you conflicts.  But by this point, you need to be smelling using your instincts.

     The worldwide web can be a good thing and a bad thing.  Use it to search the names of potential clients and companies to help weed out those who have public information that would make you not take them as a client.  When things go sour with either a crooked or just bankrupt client, the solvent lawyer becomes the target and the claim will be that you “aided and abetted” the wrongdoer, who no doubt has fled the scene or has no assets, or both.  A simple internet run by you or a staff person may tip you to a recognized bad actor and prevent you from being their alleged partner in the bad venture.

     Clients that decline to pay you a reasonable retainer might well alert you that they would also decline to pay your reasonable bill at the end.  Overly aggressive and demanding clients, unreasonably so, can be problems.  Lawyers who get in trouble with that type of client typically do not stand up to them or tell them that they are the professional and will abide by the rules regardless of what the client wants.  Instead, they knuckle under for fear of losing the money.  I submit that is shortsighted and dangerous.

     How many times have you heard the saying that your first instinct is often right.  Even if that is not the case, look at the prospective client and evaluate all you have and note the “smell” of something not quite right.  Occasionally you will be wrong, but at many other times you can say:  “We do not deserve to be your lawyers” and be better off for it.

 

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Who is your Client?

5/5/2014

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Pretty basic legal stuff you might say.  If so, why do so many legal malpractice claims involve lawyers who lost sight of their clients.  The wandering off of true client north leads to conflict of interest claims.  Those can cause you some distress since juries just do not see your point when you say there was no conflict.  They think bible verses about having only one master.  You will make it a little rough on your defense counsel if you get mission creep from your initial engagement by the loss of the identity of your real client.

Believe me, this happens to good lawyers.  They have represented Fred and his company for years, but in a business deal or in litigation they forget they represent only the company — and not good old Fred’s interests.  What about a partnership or a 50/50 stock ownership and you focus only upon one of them for guidance?  Take a joint representation and fail to disclose the same information to both and see where you end.

A solid way to deal with the issue is to take the pain at the file opening stage.  Define your client and your terms of engagement without fail.  Do it in writing.  To do that, prevent any files from being opened until that engagement letter is prepared.  Sure the clients can then change and the engagement mission changes.  It is real easy to just send an e-mail to document that you have also asked us to also represent the treasurer of the company and we have explained to you any risk of conflict and both of you consent, etc.  You can do the same simple approach for your new tasks: In addition to our engagement letter of January 1, 2014, you have asked to also do X and represent Y in the same litigation.  Believe me, when a claim is made, you need to be able to hand over a writing that says who you were to represent and what you were to do.  It also forces the lawyer to remember who his client is at all stages.

Of course, when you get one of these course corrections after the engagement letter, you better also think of it like opening a new file and do a conflicts check on any new client or new adverse party.  What was clear of conflicts yesterday may not be so today.

These are simple things.  They should be a matter of routine.  Yet lawyers lose their way on who their real client is at times.  Make it a simple process of a full stop until an engagement letter is done specifically stating (1) who the client is; and (2) what is to be done.  Then require, insist and harass until another writing to the client(s) is done when there are changes.  Exhibits “A” and “B” of these will be your friends later when the client’s memory fades, or it is more convenient to remember it differently.  Some lawyers do not make very good defendants or witnesses because of non-lawyer’s perceptions on conflicts.  Clear writings and identity of client and engagement sure help them look good.

 

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SITUATIONAL AWARENESS

4/9/2014

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                   In a recent car commercial, the driver accelerates some new style engine in the car in order to bring the three passengers’ heads up from their devices to make them discuss where to go to lunch.  Everywhere you go, you see people preoccupied with something and not paying attention.  We all go about our pattern behavior without really looking around and seeing our situation.  Lots of trips and slips of all types can be avoided by effectively looking, a concept long recognized in negligence case law.

                    For fun, I took a handgun safety class once.  During all nine hours of the class, the former Marine captain made us do every maneuver only after first looking around us to develop “situational awareness”.  I had never made myself regularly do that as a habit.  I now look around parking areas and walkways, as a habit, because his comments made real sense.  Be aware of where you are and what is around you.  You will see things quite literally and avoid many issues by having your head up and looking around.

                    This same concept really applies in law offices where you want to avoid personnel or client problems.  When there is a big issue of these types, you usually find after the fact that someone had knowledge, or was generally aware that something was not right.  They just did nothing about it.  They did not pay enough attention.  So, I am now preaching situational awareness to you in the loss prevention business for lawyers.  (See November 2013 Post for examples to look for and consider.)

                    A lawyer from Ames & Gough, an insurance broker specializing in law firm coverage, recently shared with me their article on Enterprise Risk Management (ERM), a recognized method of evaluating and eliminating risk in an organization.  They argue that its use in the law firm setting starts with the education of senior leadership and management acceptance and then moves out in the firm.  A group within the firm organizes the effort to list their known risks and keeps track of them and how they deal with them.  They suggest a formal approach to accomplish this and to evaluate the risks, manage, and measure them. 

                    In many modern larger law firms this is done through the General Counsel function.  If you are not to that point in your firm, you may want to consider forming a small group to do this on a formal basis.  I submit it is worth your time and will then allow you to use basic situational awareness to avoid problems.  Paying attention to developing problems will save you later grief, as well as money.

 

See Ames & Gough Winter 2014 Information Alert,

citing Fraser and Simpkins Enterprise Risk Management: Today’s Leading Research and Best Practices for Tomorrow’s Executives

Wiley & Sons, Inc. 2010

 

 

 

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CLOUDS

3/8/2014

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      What does weather have to do with the practice of law? It is the term now used to identify web-based storage of a lawyer’s files and records instead of the usual paper files and firm server, backed up on local electronics.  It is called Software as a Service (SaaS), or on-demand software.  Technology as it has evolved is universally viewed as a requirement for modern lawyers. Clients expect it, but do not expect to pay for it.  So, to avoid the high costs of servers, back-ups, installation, maintenance and support, some are turning to subscription services for a fixed fee (example, Dropbox and many others).  Of course, the advantage is the management of a cost and then the accessibility of data at any time over a range of devices.


      Wonderful:  What could go wrong with that?  If it can, it will and there have been a number of breaches individually of the lawyer, and the firms as well as the service providers.  What then is a prudent lawyer or firm to do? 



      Like so many things in the law, this area is evolving and starting to gain traction.  The
ABA 2013 Legal Technology Survey Report looked at this in depth and noted a big jump in use (50% increase from 2012 to 2013) now amounting to about 30% of the respondents reporting its use.  Individuals and small firms, along with the West Coast (used to tech businesses) and southern (result of Katrina) lawyers, were the biggest users.  A Lexis Nexis study says 2014 is poised to be the year of the cloud in “small law”.


      Recognizing our duties to clients to protect their data and confidential communications, “big law” is slower to come over to this so-called cloud storage.  As a group, lawyers are slow to accept changes anyway.  Bar groups have started to examine the ethics of cloud storage and at last count, 17 jurisdictions have all agreed that cloud computing is ethical. (See, e.g., New York City Bar Report December 2013).  A trend is developing toward acceptance, it seems.  I suspect we shall see more use there, and more gradual acceptance, particularly where clients want it for their use.


      Bear in mind that the professional rules still apply. The holdings stress all the same duties as before and therefore put the lawyer in a real due diligence situation before using.  Lawyers’ actions with regard to safekeeping fall into the reasonable conduct standard, and not strict liability or as a guarantor of confidentiality.


      The lawyer or firm needs to be able to document each step they took to select a provider and to produce it all later to show they acted reasonably.  The vendor’s reputation will matter, their track record, their service agreement, their coverage (cyber insurance) and yours.  You will really need to review their written terms and make sure they have the same duties you have.  Cyber insurance issues, if you have acquired such coverage, need to be reviewed and compared so there are no gaps.


      Sure there will be risks to balance against any convenience, affordability, or increased production.  While most lawyers do not want to be out on the “bleeding edge” of new things, this may quickly evolve into an accepted method for law firms to store data.  There was always an old school risk of server damage and physical loss to your files, so any cloud based use will be a balancing of that new risk as more Bars approve the process.  At one point we were told not to use cell technology for client issues.  Like that example, technology evolves and lawyers have to adapt to meet needs of clients and their expectations.


     See, Amicus Attorney, Answers to the Top Five Questions Law Firms Have About Cloud Practice Management Systems by Seth Rowland posted February 19, 2014.


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    Author

    Steve 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.
    These articles reflect lessons learned for Law Firms.

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