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Lawyers Get Old Also

9/2/2014

     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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Those Pesky Clients- Part Deux

7/7/2014

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     You may have heard me say how much fun the practice of law would be without dealing with clients. (See June 2013 Post). They always seem to need something from you right now and, by the way, don’t always want to pay full price for on-demand services. Well, perhaps clients as the consumers of legal services have a point. Currently there are plenty of good lawyers around, even more than there is of good legal work to do. Perhaps there are now more lawyers than there is demand and the clients have experienced a shift in this balance.

     More companies use inside General Counsel who act as the new trusted advisors to the companies, but with a business budget line to control. So, many trends and changes are afoot in the delivery of legal services and firms need to adapt. Things that can be done cheaper than using lawyers are simply outsourced. Young lawyers cannot be billed in some cases until they have some experience. More and more technology is required by clients to meet their needs, and the costs of that are not recoverable by the law firms. As they say, “it is what it is” and lawyers who want to be successful in the future must adapt and improve the delivery of their services to be competitive.

     Routinely advocating change and the ability to adapt, I still push back at the commodity procurement driven approach of many companies — buying legal services like buying pipes. Cost cutting driven by the Finance and HR portions of companies sometimes result in “guidelines” that seem written by non-lawyers and have more restrictions than the professional rules. Caution is urged at this point, regardless of the market.

     One speaker at the 40th ABA National Conference on Professional Responsibility referred to these company-imposed guidelines as a source of private regulation. He pointed out two main areas of concern: (1) client identity and (2) conflicts of interest. Some corporate guidelines say you will represent all of our affiliates and a conflict would exist as to each. Often we lawyers do not know and cannot determine who these hundreds of related parties may be. The guidelines views of what they say is a conflict may exceed both the case law and the professional rules.

     Watch also these corporate guidelines for other hefty duties such as:

          • Data security audits and other type random audits.

          • Different file destruction requirements.

          • Disaster recovery plans for firms.

          • Breach notifications procedures and damages.

          • Personnel background checks on all employees.

          • Indemnity clauses that can cause coverage issues.

     There is no cookie cutter response to these. I very much advocate a measured discussion and written exceptions to the guidelines when needed and possible. Some will throw their weight around and put the firm in a take-or-no take situation. Generally however, reasonable discussions can produce workable exceptions. Since the firm’s engagement letter is intended to meet its professional responsibility where it practices, a procedure that states the General Counsel and the firm’s designated lawyer agree to resolve any differences between the guidelines and the engagement letter seems fair. Placing the various affiliates in the firm conflict base for information and discussion purposes, but only representing the defined client in this matter may be a good compromise on the one-equals-all problem with regard to conflicts.

     Despite being an advocate of law firms changing to adapt, there have been times when the guidelines were just so bad or unreasonable that I have said: “We do not deserve to be your lawyers.” Most however are workable. Just be very aware of what you are agreeing to by way of guidelines since a court may well conclude they were contract terms, despite being more than required in the law or rules.

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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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Check

2/4/2014

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     You take comfort when you walk on to a plane that the flight crew always runs a printed checklist on every aspect of the flight and that most systems on the aircraft are duplicated. If you were awake, you might have heard the scrub or circulating nurse doing a sponge and instrument count before and after your surgery. These are routine and fundamental procedures in these professions.

      With the number of claims and their severity on the rise against legal professionals, you might just wonder why we do so little check-listing. I often remind younger lawyers that spell-checking is not proofreading. Double-checking legal documents by proofreading seems to be a dying art.

      A successful major insurer of law firms (Attorneys Liability Assurance Society, or ALAS) recently put on a training program featuring an engineer who was a pilot, and later became a medical doctor who then became an astronaut. Having retired from NASA, he does quality control for a large metropolitan hospital. His point was that we lawyers can control mistakes to a greater degree than other professional errors, and should utilize basic safety type checklists
with the fundamental communication read back. Every new pilot learns quickly to read back the controller’s direction to take heading 240° at 10,000 feet to avoid that simple little avoidable mistake of running into another aircraft at the wrong altitude and heading. The same basics apply to an itemized list of procedures, which as the surgeon Atul Gawande wrote, can “hold the odds of doing harm low enough for the odds of doing good to prevail.”

      In a recent WSJ column, Jason Zweig argued that intelligent investors should consider doing the same standardization for basic investment decisions, and thereby reduce the risk of costly errors you have learned by past mistakes. He argues the biggest investment flaw comes from inconsistency which can be smoothed out to avoid making the same mistake again.

      So, think with me here as to our profession. Would not real estate title research and opinions, business closings, legal research and litigation filings, estate planning and many other aspects of the practice make logical checklist items? My argument is that we can take control of the mill run mistake and narrow its occurrence by a simple read back of all essential and required steps on a checklist to get repeat legal tasks done.
Roger that.

See, Joseph T. Halliman, Why We Make Mistakes; and The Checklist Manifesto by Atul Gawande.

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MOMMA SAID THERE WOULD BE DAYS LIKE THIS

12/5/2013

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     You know the legal rules and you follow them. You use common sense and have good social skills with clients. You still get named in a legal malpractice action. It can and does happen to good lawyers. The ABA recently put the average number of claims at three per career and at a risk of 4% to 17% of a claim in any year. ABA Profile of Legal Malpractice Claims: 2008-2011.

     Like other professions, you cannot guarantee a result (and remember that half of each case loses as a rule) and sometimes an adverse result ends up as a claim despite no errors or issues – just a loss. I again encourage you to use all the methods available to you to control and reduce those possibilities. Bring your own stats down by all means available.

     Various groups look at trailing years and report the highest risk area of practice. It just makes you want to stay in bed some mornings. The latest areas to stub toes are real estate (20%); personal injury (15%); family law (12%); estate, trust and probate (10%); and collection and bankruptcy (9%). Oddly, solos have the highest percent of the claims and the percents drop sharply as the firm size goes up. The level of experience fools you also because the new and the old are not the leaders of the pack in claims. Instead the biggest tranche of claims (35%) falls with those having 11 to 20 years of experience.

     The number of claims and the severity (read cost) are on the rise. While loss prevention is not a positive cash flow in a firm, it certainly prevents already made and taxed income from going out the door. It is truly worth the time of a firm to devote resources to a solid loss prevention program.

     Ames & Gough, a risk and insurance advisor to the law firms, does its own analysis and studies trends. They polled seven of the leading professional liability insurers (80% of the market for Am Law 250 firms). They confirm that the number of claims is increasing along with their frequency. The bad news is that their study confirms the big claims and costs are growing, no doubt due to added complexity and the cost of defense of these claims. Out of the seven carriers, six reported payouts on claims of more than $50 million. That makes a law firm stop to look at their purchased limits, compared with the type of work they do.

     The Butcher’s Bill lists new risks that never even existed in the past (attorney/client relationships from e-mails; inadvertent disclosures via e-mail; cyber risks and confidential information breaches). Lateral hires are driving up the claims, but the old standby of conflict of interest still ranks as the first or second on all lists of the most frequent cause of malpractice claims – by a large margin.

     I would like to offer end-of-the-year cheerful thoughts. But the old Dragnet TV show detectives said: “Just the facts, ma’am.” It is what it is, so you better do all you can to keep down the claims against you.

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Lawyers Get Old Also

Those Pesky Clients- Part Deux

THE SENSORY PRACTICE OF LAW~

Who is your Client?

SITUATIONAL AWARENESS

Check

MOMMA SAID THERE WOULD BE DAYS LIKE THIS

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