Attorney s Liability Protection Society Presents Take Off Practices and Procedures for Preventing Claims and Ethics Complaints

Transcription

1 Attorney s Liability Protection Society Presents Take Off Practices and Procedures for Preventing Claims and Ethics Complaints How to Develop a Thriving Solo Practice ALPS and the VSB Lawyers Malpractice Insurance Committee October 15, 16, and 17, 2012

2 PRESENTER Wendy F. Inge is the Virginia Risk Manager for Attorney s Liability Protection Society, Inc. (ALPS), an attorney s professional liability insurance carrier. She has been in the lawyer s professional malpractice industry for over 20 years. Prior to coordinating risk management services, she handled lawyers legal malpractice claims for eight years. She regularly lectures and writes about ethics issues, malpractice prevention, and law office management for attorneys and their paralegal staff. Ms. Inge presents in numerous states and has been a frequent speaker for the American Bar Association s CLE programming. On behalf of ALPS, she also consults with individual lawyers on ethical issues and practice management concerns. She is a member of the Virginia State Bar and is on the Virginia State Bar s Standing Committee on Legal Ethics. Ms. Inge is also a member of the Board of Directors for Virginia Layers Helping Layer s, the ABA s Practice Management Division, the Center for Professional Responsibility and is on the Executive Committee for the Law Practice Management Division of The Virginia Bar Association. She received a law degree from the University of Richmond School of Law and an undergraduate degree from Virginia Tech. Contact Information: , winge@alpsnet.com THIS MATERIAL IS PRESENTED WITH THE UNDERSTANDING THAT THE PUBLISHER AND THE AUTHORS DO NOT RENDER ANY LEGAL, ACCOUNTING OR OTHER PROFESSIONAL SERVICE. IT IS INTENDED FOR USE BY ATTORNEYS LICENSED TO PRACTICE LAW IN MARYLAND. BECAUSE OF THE RAPIDLY CHANGING NATURE OF THE LAW, INFORMATION CONTAINED IN THIS PUBLICATION MAY BECOME OUTDATED. AS A RESULT, AN ATTORNEY USING THIS MATERIAL MUST ALWAYS RESEARCH ORIGINAL SOURCES OF AUTHORITY AND UPDATE INFORMATION TO ENSURE ACCURACY WHEN DEALING WITH A SPECIFIC CLIENT S LEGAL MATTERS. IN NO EVENT WILL THE AUTHORS, THE PRESENTERS, OR THE PUBLISHER BE LIABLE FOR ANY DIRECT, INDIRECT OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF THIS MATERIAL. THE VIEWS EXPRESSED HEREIN ARE NOT NECESSARILY THOSE OF ALPS. ALPS SM Attorneys Liability Protection Society, Inc. A Risk Retention Group 2012 Attorneys Liability Protection Society, Inc., A Risk Retention Group 1

3 Take Off Procedures for Successfully Managing Your Solo Practice I. What s in a Claim? The American Bar Association s Standing Committee on Lawyers Professional Liability publishes a quadrennial study highlighting the claims data it gathers every four years from professional liability insurers. The purpose of the study is to examining claim activities and determining what trends exist involving legal malpractice claims. The most recent claims trend data released as part of the ABA s malpractice study for 2004 to 2007 was released for publication in The ABA survey includes data from approximately 40,000 claims provided by eighteen commercial malpractice carriers in the United States and Canada. Key Findings from the 2008 ABA Malpractice Study Overall, claims rose by a third since the ABA s previous study in 2003 on malpractice claims. Plaintiff s personal injury practice has long been the riskiest practice area, and the most recent study showed there was no exception: personal injury lawyers reported 21.6% of all claims to insurance carriers (up 1.61% over the previous four-year study.) Claims involving real estate practice have surged to 20.1% --its highest ranking since 1985 and taking the number two spot in the list of riskiest practice areas. Real estate LPL claims have been trending upwardly since 1995, with its most significant leap of 3.6% occurring in the most recent study. Malpractice claims that result in no indemnity payment or are abandon dropped 10% from 61% to 51%. Claims with indemnity payments in excess of $2 million have risen 41% from the previous study and such claims now represent 1 in every 930 claims reported. Lawyers who practice in firms of 2 to 5 report a disproportionate amount of claims 2.2 claims annually for every lawyer in the firm, whereas solo attorneys.77 claims annually. Firms of 1 to 5 attorneys were responsible for 70.1% of all claims. New lawyers in practice for 2 years or less report the fewest malpractice claims per capita while lawyers in practice 11 to 20 years report the most. Claims involving intentional wrongs, such as fraud, abuse of process, libel, slander, have taken a disturbing increase to 13.8% from its previous high of 9.8%. Claims involving Personal Injury Defense have plunged by 7% to 2.9%. 2

4 A. What types of errors cause claims? The ABA study and most malpractice carriers break claims into four categories: Substantive Errors, Intentional Wrongs, Client Relations, and Administrative Errors. Types of Errors SUBSTANTIVE ERRORS 46.61% CLIENT RELATIONS 11.22% Failure to know the law 11.51% Failure to obtain client consent 5.31% Planning or procedure error 9.44% Failure to follow client instruction 3.22% Inadequate discovery 8.10% Improper withdrawal 2.70% Failure to know the deadline 6.38% Conflict of Interest 4.79% INTENTIONAL WRONGS 13.53% Error/Public Record Search 4.02% Malicious prosecution 3.88% Failure to Understand Tax 1.73% Fraud 5.82% Error/Math Calculation.64% Civil rights 1.87% Libel/Slander 1.96% ADMINISTRATIVE ERRORS 28.63% Failure to calendar/react to calendar 11.01% Procrastination 4.24% Failure to file document 10.73% Lost file/doc./evidence.6% Clerical Error 2.04% ABA Standing Committee on Lawyers Professional Liability 2007 Study B. ABA Claims Data by Practice Area IP 2% Labor Law 1% Int Law 2% Ins Defense 3% Corporate 10% Claims by Practice Area 2007 Taxation 1% Criminal 5% Bankruptcy 7% Estate Probate 10% Other 5% Personal Injury - Plaintiff 24% Family 10% Real Estate 20% 3

5 C. Firm Size: How does firm size affect claims exposure? In the ABA Study, firms of 1-5 represented approximately 70% of all claims activity. However, this should be kept in perspective because 63% of lawyers in the U.S. practice in firm sizes of 1-5. Breaking this down, claims against solo attorneys increased 4.49% to 37.24% while claims against firms of 2-5 attorneys remained virtually the same at 32.85%. Of concern is the disproportionate exposure faced by firm sized 2-5 who represent 15% of private firms but account for 33% of claims. D. Experience of Lawyer: How much does it impact claims exposure? Intuition might lead one to conclude that because of the benefit of experience, the longer a lawyer is in practice, the less likely he or she is to have a claim. However, when comparing the years in practice to claims reported, it appears that the longer a lawyer is in practice, the more his or her claims exposure goes up. Both the ALPS s and the ABA s data support this statement. (See chart on ABA data below.) Figure 1 Years of Experience E. What types of errors cause claims? 4

6 1. Substantive Errors: This category of errors remained steady in the 2007 ABA study accounting for 46.61% of all reported claims errors. 2. Intentional Wrongs: The ABA 2007 study reported that alleged errors from intentional wrongs, which include things like fraud, malicious prosecution/abuse of process, libel/slander, and violation of civil rights, increased significantly to an all time high of 13.53% in the 2007 study, up from 9.79% in the 2003 study. The poor economy may cause further increase in this area. 3. Client Relations: Client relations errors include things like: failure to obtain consent/inform client, failure to follow client s instructions, and improper withdrawal of representation. This category of errors was down from the prior years by 3.35% and made up 11.22% of claims errors. Malpractice claims and ethics complaints share very common ground when it comes to problems that arise from poor communication. Alleged errors in this category often result in the filing of an ethics complaint. a. Virginia Rule 1.4 Communication (a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information. (b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation. (c) A lawyer shall inform the client of facts pertinent to the matter and of communications from another party that may significantly affect settlement or resolution of the matter. 4. Administrative Errors: Administrative errors at 28.63% continue to represent about a third of all claims. The categories under this heading include: failure to calendar properly, procrastination in performance or follow-up, failure to react to calendar, clerical error, lost file documents or evidence, and failure to file documents (no deadline.) This is yet another category where malpractice claims and ethics complaints clearly overlap. Almost a third of your exposure to malpractice claims arises from administrative errors. The best way to reduce or eliminate this exposure is by implementing practice management systems and procedures that will help avoid these all too common mistakes. Docket Control and Calendaring: Consider case management software that will help provide a framework for consistency in calendaring, intake procedures, workflow, and conflicts checking. Conflicts Checking System: Manual conflicts checks in a firm with numerous practice areas and or more than one partner can be very challenging. Consider either a case management product or a searchable word document. Routine Client Intake Procedures that include intake forms filled out by client. 5

7 Education and Training for Associates and Staff that clearly and consistently communicates procedures for handling client and client matters. Such education should be reviewed and refreshed annually. Documentation: Documentation is critical to having a well run practice. F. Building Success Relationships with Clients Satisfied clients are the key to a successful legal practice. It doesn t matter how well you can run the administrative aspects of your practice if you can t retain clients you are doomed for failure. On the positive side, happy clients refer you to others who then become happy clients that refer you to others. Here is a checklist to ensure you have good client relationships and to avoid ethics complaints (Rule 1.4) and malpractice claims. Client Relations Screen clients carefully. If you have a bad feeling about a client, don t accept the project from the client. Be careful about accepting cases outside your area of expertise. Set realistic expectations with your client. Don t over promise. Don t ever tell your client they have a slam dunk case if they really do not. Don t tell your client you will send something to them tomorrow and not deliver on that promise. Make sure your fees are clearly outlined. Be certain that your client understands the basis of your fees. Communicate regularly with your client. Call your client. Make sure that your clients are informed as to the status of their case. Make sure you promptly return phone calls. Make time for your clients. Treat your clients as you would like to be treated. Don t make them wait at their meeting, don t interrupt your meeting with your client unless it is urgent, and explain things so that your client understands. Never give your clients the impression that you are too busy to meet or talk to them. Maintain an accurate file with as much detail as possible. Maintain a 6

8 Don t Lie about a Mistake. If you make a mistake, tell your client the truth. Most clients are willing to forgive a mistake but are not willing to forgive trying to cover up a mistake. Also to preserve coverage call you malpractice carrier and discuss it. Bill with detail. The more detail that you include with your bill, the more likely the client will understand the level of effort involved. Clients have a difficult time paying $1,000 for Research without further explanation. Say thank you. G. Successful Client Intake 1. Manage Expectations from the Outset: A critical part of your client intake process is to screen your clients. Always determine what the client wants to achieve from the representation. Specifically ask them the question and listen to the answer. Educate the client regarding whether these goals are realistic or not and what the costs of achieving them will be.if their goals are unrealistic and not likely to change, even with education from the lawyer regarding what would be a realistic outcome, then decline the case. If you and the client are able to agree on the goals of the case, then write it down because you may need it later as documentation of what the expected outcome was and as a reminder for the client who has lost focus. While unrealistic expectations can take many forms, they generally fall into the following categories: Expectations about service Expectations about time Expectations about costs Expectations about results Red Flag Clients Unrealistic or Unreasonable Client Expectations- could be outcome, services, or fees about which client is unreasonable. Clients Attitude- could be very rude or aggressive or untrusting. Clients Demands- client wants access to lawyer 24/7, everything is always urgent, won t respect boundaries established by lawyer or staff. Client had Other Counsel assess why fist lawyer is no longer involved. Get client s permission to talk to prior counsel. Review file carefully. Client Engaging in Dishonesty or Fraud- if questions about the client s integrity are apparent serious ethical implications such as Rule 3.3 Candor Toward the Tribunal must be considered and addressed. Often best to decline representation. 7

9 Discuss Fees and Use a Written Engagement Agreement: At your first meeting with the client, explain the basis on which your fee will be determined and what expenses will likely be incurred. Don t gloss over it, it is better to answer questions and explain what will be required on the front end than not get paid after your time has been invested. Use a written engagement agreement that explains the fees, expenses, and the client s obligations to pay both promptly. You are far more likely to be paid if, from the beginning, the client has a good understanding of the fees and expenses the case will generate. See Appendix I. Engagement Letter. Engagement Letter Do s and Don ts. Use and Engagement Letter in Every Representation, even if it is not a new client. Many attorneys object to sending engagement letters to on-going long-standing clients. They argue that it is too formal and will detract from a good attorney/client relationship. This rationale might be true if long standing clients never sued their attorneys. In fact, long standing clients, life-long friends and family members do sue their attorneys, at least as often as other categories of clients do. Engagement letters need not be lengthy, legally formatted or stiff. They should identify the following: who is and is not the client; what legal services will and will not be provided, fees and costs, duties and responsibilities of the client, duties and responsibilities of the lawyer, and provisions for termination. Transactional Work: Short is no excuse. Particularly with transactional work, attorneys sometimes argue that more time than is warranted would be spent drafting and sending an engagement letter when the work itself is usually completed within a month. In response, it is uncanny to note the number of times that a planned one-month transaction ends up taking far longer. Unforeseen complications abound. Also it is appropriate to include a conflicts disclosure, often an issue in transactional work, if appropriate at the same time as the engagement letter. Court Appointed Work or Pro Bono Work: Still Using it. If you take a lot of cases while at the court house or out of your office, create a standard form fill in the blank engagement letter that you can use for these representations where the client may never come to your office. Worst Excuse Ever: It will take too long to draft. All of this speaks to the need to play it safe when it comes to the use of engagement letters. As the relationship between the attorney and the client becomes more detailed and complex, particularly regarding fees, the need to define and specify the details in the engagement letter also becomes greater. With today s technology, it is easy to add simple letters to the macros or templates of all word processing systems. This allows the lawyer or staff (with very little effort on the part of the attorney) to easily send an engagement letter out shortly after the client has come to the office. 2. Other Important Letters that Help Prevent Claims: Non-engagement letters are as important as engagement letters for the opposite reason. Engagement letters document representation and define its scope. Non-engagement letters 8

10 document that there is no representation. Send these letters any time a case is not taken and the identity and address of the individual are known. One or two standard non-engagement letters placed on the computer for use by all members of the firm can significantly ease the word processing burden the major reason firms cite for not using this type of letter. These letters should never discuss the merits of the case or state the exact date of any applicable time limitations. Why take on added liability when there is no compensation? See Appendix II. Sample Non-Engagement Letter. New Client Phone Only: In those situations where only a name is given, keep a written record of the phone call and non-engagement discussion in a non-engagement file. These records can be as simple as writing a note on the phone message slip and placing it in a miscellaneous advice or non-engagement file. After a client fails to get an action filed prior to the statute of limitations running and the resulting a claim boils down to the client s word against the attorney s word, having a phone record or a copy of a non-engagement letter that documents the discussion becomes invaluable. Closing Letter: It is always a good idea to document that the representation has ended and inform the client that the file is about to be closed, or that the file relative to a particular matter for an on-going client will be closed. A letter of closure sent at the conclusion of representation can meet this need quite effectively. This letter can serve several purposes beyond documenting that the attorney and client understand and agree that representation has ended. The letter provides the opportunity to inform the client, in writing, about the continuing responsibilities that flow from the matter. For example, if you form a new corporation for a client, you should use the disengagement letter to clarify who will be responsible for maintaining the corporate records and accomplishing the annual filings necessary to maintain corporate existence. Similarly, you should remind estate-planning clients that they should review their plans with you, or another attorney, every three to five years to make sure no significant change has occurred in their personal circumstances and/or the applicable estate tax laws. This is particularly important for the one-time client with whom you may lose contact. See Appendix III. Sample Closing Letter. The letter of closure may also help sort out potential future conflict of interest problems. The documentation of the termination of the attorney/client relationship for a former client may allow you to move forward with representing another client in opposition to the former client in an unrelated matter. Permanently retain copies of all closure letters in a closure letter file for this very reason. The letter of closure also provides the opportunity to inform the client of the firm s file retention/destruction policy and can serve as a cover letter for the return of original documents to the client. It also assists in marketing by giving the firm a chance to say to the client thank you for bringing the business to the firm. Use of a closure letter need not be burdensome. Design and place several templates in the word processing program for use by the entire office. For on-going clients these letters can be as simple as a thank you note card. The time spent handwriting a brief thank you note that documents the conclusion of the current matter will be marketing time well spent. Preventing Ethics Complaints and Malpractice Complaints: The regular and consistent use of these letters can and will reduce your exposure to a malpractice claim. Whether the letter defines scope of representation up front, documents the absence of an attorney/client representation, or documents that representation has ended, together these forms help to clarify and define the 9

11 professional relationship and the attorney s responsibilities and this is where their value lies. Clients are far less able to run with assumptions like alleging that their understanding of scope of representation was far broader than your understanding. In the end, these letters begin to place some boundaries or limitations upon your ultimate exposure should a malpractice claim ever arise. For this reason alone, the time spent drafting a well-written engagement letter and letter of closure is worth it. If you have a claim, the claims attorneys will be looking for these types of documents. They are that important. 3. Documentation: Be Thorough in Your Documentation. Document everything you possibly can, including phone calls, voic messages and messages. Confirm the client s instructions to you in writing, and confirm your instructions to the client in writing. Include the possible consequences of various courses of action the client may be contemplating. Save messages and instructions in your usual way as part of the permanent record of the file. This should be done for every representation. The file should be organized, complete and well documented. Documentation Document with adequate detail to assist you in a future disagreement regarding who said what to whom and when. Record at least the following for all exchanges relating to the matter: The client s name. The file name. Who the contact was with. The date of the contact The nature of the contact (phone call, meeting, voice mail, or the like.) How long the contact took. The details of who said what, including what the lawyer said. Any instructions given during the contact. 4. Conflict Searches According to statistics compiled on a nationwide basis by the ABA, just over 4% of all malpractice claims are asserted because of substantive errors in the identification of conflicts. The problems surrounding identification of conflicts of interest are complicated by the fact that conflicts of interest are subtle. There are no hard-and-fast rules to avoid many conflict of interest problems. The rules 10

12 that do exist are not absolute, and contain conditions, exceptions and discretionary factors. A conflict of interest can adversely affect a lawyer s judgment, loyalty, and ability to safeguard the interest of a client or prospective client. Loyalty and independence of judgment are essential to the effective representation of a client. In fact, they are fundamental to the health of the lawyer/client relationship. A conflict of interest may make it impossible to exercise the essentials of loyalty and judgment. Although evidence sufficient to establish a violation of the Rules does not necessarily establish a cause of action for legal malpractice, courts look to the Rules of Professional Conduct with increasing frequency for guidance in considering issues of conflict of interest in disqualification and legal malpractice cases. Virginia Rules 1.7, 1.8, 1.9, and 1.10 should be reviewed regarding the ethical analysis and handling of a conflict. The perception of whether a conflict exists is from the point of view of the client or potential client, and it is often made from the vantage point of hindsight after something has gone wrong. As a result, the process of conflicts identification and resolution should always err on the side of caution. To avoid conflicts, be sure that you do not discuss confidential information with a prospective new client before conducting a conflict of interest search (See Virginia Rule 1.18 Duties to Prospective Clients.) You must develop and maintain a database that is used to identify potential conflicts of interests. Be sure that the conflicts system is used by everyone in the firm, have a designated staff person responsible for maintaining the database and make certain that everyone is properly trained on using the conflicts system. See Appendix IV. Conflict of Interest Search Terms and Appendix V. Conflict Disclosure Letter. What should the conflicts system address? It should address not only former, current and multiple party conflicts; but also lawyer and staff interests, including newly hired staff, of counsel, and ancillary business of the firm if any. (See Appendix IV. Conflict-of- Interest Search Terms.) Your data base should address not only current and adverse parties but also interested parties and related entities, the broader the data base the better. Prior to conducting any informational interview the conflicts information should be obtained and a conflicts check should be run. The firm should have a gate keeper and/or committee that reviews and analyzes all potential conflicts. The firm should have procedures for disclosing, discussing, resolving and waiving the conflict in writing where appropriate. Getting an opinion from your Bars ethics committee or Board may be appropriate. When to Run the Conflict Search: More often than not, law firms do a good job with checking conflicts at the outset of the representation, but the procedures tend to fall down as the representation proceeds. A law firm practice of performing a conflicts check only at the intake does not comply with an attorney s ethical obligations. Conflict checks should be performed before initial consultations, before a new file is opened, whenever a new party, attorney, witness or expert enters the representation and whenever the firm decides to interview a candidate for possible hire. 11

13 Intake: All existing clients must be kept in the conflicts data base. Intake of all potential new (even if rejected) clients should be entered on standardized intake sheets and entered into the firms system. Everyone must be required to follow the same intake procedure. A reasoned conflicts analysis can only be performed if this practice is rigorously and scrupulously maintained. At a minimum, the intake sheet, which should be modified to suit your practice areas, should contain the following information: the name, address and contact number of the client and any entities related to the client; the date of the intake; the nature of the representation; if the client is a new client without established terms of compensation, the terms and conditions of the engagement; if the client is a new client, the identity of the person authorizing the engagement; the name, address and contact numbers of all parties involved in the representation; the terms/names which should be included in a conflict search. Identification of the terms that must be searched should not be left to the discretion of a clerical employee. Remember that accuracy is important. A name misspelled will not be properly recorded in the law firm s conflict system and may form the basis for a missed conflict. Consistency is also important. Those individuals tasked with entering information into the conflict system must be taught to enter names and other information in the same manner every time it is done. Conflict Analysis: Once a conflict has been identified then an analysis of the conflict should be conducted to determine whether the lawyer s representation would be materially limited (or has confidential information) by the lawyer s responsibility to another client, a former client, a third person, or a personal interest of the lawyer. If so the lawyer should decline the representation. If however, it is a potential conflict and the lawyer believes he/she can adequately represent the interests of the client without interference of the duty to provide competent and diligent representation to each affected client, then the lawyer can seek a waiver of the conflict. Any waiver of a conflict should include a full disclosure to the clients of what the conflict is and how it could potentially impact the representation. The disclosure should be made in writing and the client s decision should be documented in writing. See Appendix V. Conflict Disclosure Letter. Risks Associated with Conflicts: Withdrawal of the lawyer at a critical juncture may prejudice the client and result in a malpractice claim, an ethics complaint and a request for disgorgement of fees. Regarding disgorgement of fees, you cannot profit from a matter that you should never have been involved in from the start. Legal malpractice insurance policies do not cover disgorgement of fees and the fees in question can be substantial. (See Rule 1.16 Declining or Terminating Representation.) Case Management System: A case management system is an excellent tool for managing conflicts if it is regularly and properly used. Case management systems can keep track of and organize an incredible amount of information electronically, allowing for easy retrieval and accessibility for the entire firm, lawyers and staff, no matter what their location (provided the 12

14 firm is networked). They can be used to create a searchable conflicts database for performing routine conflicts checks. They can serve as the firm s perpetual and integrated calendar system, date calculator, and task tickler for planning workflow. And they can also integrate to the firm s time and billing and accounting software. An excellent resource for evaluating many of the popular case management software systems, including specific functions, cost, and integration with other software (i.e., billing programs and documents assembly programs) is provided by the ABA at: 5. Docket Control System It is essential that you implement and use practice management or docket control system software. Docket control system software is often included within practice management software. Do not begin practice without having a docket control system in place and knowing how to use the system. It is standard practice to have a dual calendaring system. Two calendars are used in most law offices: a master calendar and a personal calendar. Each member of the legal team has a personal calendar. A paralegal s personal calendar is a duplicate of the attorney s personal calendar. Events are docketed as soon as possible after the date is received. Regular meetings, at least once or twice a week, should be set with the attorney, paralegal, and legal secretary to review calendars. The best calendaring systems have redundancy and the calendar should be backed up every day. All lawyers and staff in the firm must participate in the calendaring system. There can be no exceptions. Common deadlines that must be recorded are: The statute of limitations for all claims of the client Any deadline listed in a court scheduling order Appointments or scheduled meeting dates Court hearing or trial dates Time limits imposed by court rule, such as when the client must respond to a request for documents Deposition Dates Witness Subpoenas Time limits for performing any act under a contract Time limits set forth in any statute requiring the client to do something or after which the client is allowed to do something Reminder Dates There are two types of computerized docketing systems used by law firms: static calendar programs, or automated docketing programs. A static calendar program allows the user to enter dates into the program, and the event will be noted on a specific date of the calendar. Static calendar programs are very similar to manual, handwritten systems. Tickler dates are calculated manually, so it is possible for an entry to be scheduled for a holiday or weekend, resulting in lost information. Automated docketing programs are designed specifically for law firms. Experts agree that an automated docketing program should contain key features that make it an effective program. The information in an automated system is displayed in a calendar that resembles a personal calendar. Software with preprogramed court rules is called court rulesbased calendaring software. There are many advantages to a court rules-based calendaring program. 13

15 Docket Control System The following procedures shall be utilized for docket control purposes and to avoid missing deadlines: When cases are set for trial or for hearing and when cases have discovery deadlines, answer dates or other critical dates, the deadlines and 7 and 14 day advance warning notice dates shall be posted on at least two separate computer calendars on the specific dates under the events and to do sections, and the attorney s status list shall be updated with the deadlines indicated. The separate calendars shall be the calendars of the attorney and the legal assistant assigned to the case. The calendars shall be checked for deadlines and response dates daily for the events of each particular day and also for one week in advance. Items shall be placed on the calendars as the critical dates are received. Each legal assistant shall maintain a case status list of the files assigned to that legal assistant, reflecting the current status of each file and the outstanding matters needing to be addressed in relation to each file. The legal assistants shall have a minimum of two conferences per month with the attorneys, with calendars in hand, as well as their to do list, to discuss work to be done and deadlines to be met. Following each meeting, the legal assistant is to update the status list and print a copy of same for each attorney. Maintain a File Status Checklist of critical dates relative to your practice area within the file. These Docket Control Procedures were Provided Denton Texas Attorney Mike Gregory. H. Top Five Practice Areas: What concerns exist regarding individual practice areas? 1. Professional Responsibility Consideration: Virginia Rule 1.1 Competence A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. 2. Specific Areas of Practice: Personal Injury Personal injury cases can be lucrative, which makes it a very attractive practice area for many 14

16 lawyers to take a case in, even if the lawyer does not routinely practice in that area. Therein lies the problem; while everybody would like to have a little of the action, this area of the law has grown more complicated, and specialization is becoming more necessary. There are endless pitfalls for the unsuspecting lawyer, and the resulting damages, should a mistake be made, can be quite high. From a legal malpractice perspective, it has often the leading practice area out of which claims arise both in dollars of damages and also in frequency. It is also an area of practice where damages in the underlying cases are regularly high, thus lending itself to severity. Dabbling: Attorneys should not dabble in personal injury work. This area of the law continues to grow more specialized and for good reason. If you do not practice in this area but want to start, either go to work for a firm that already has an established personal injury practice, or with the client s consent, associate an experienced personal injury attorney to work with you. Docket Control: The most common malpractice error in personal injury cases continues to be missed statutes of limitations. Make sure you have a thorough calendar and docket control system, good case management software, and good procedures to prevent errors. File Early: Due to the complexity of identifying all the defendants, file early and conduct discovery before the statute of limitations runs. Crossing State Lines: Seriously consider whether to take a case from outside of your state. If you decide to accept it and hire local counsel, make sure you have checked counsel s credentials. Also be certain to implement reliable communication and clearly document responsibilities in the case. Miscommunication can be costly to both you and the client. Medical Liens and Tax Consequences: One of the most recurrent issues that must be addressed when clients are considering settlement options is the impact of tax implications and paying off medical liens. All clients should be advised that the recovery of damages may result in tax consequences and what the tax implications will be. However, unless you are versed in and keep up with the tax code, do not assume a new risk by answering these questions. If you are not knowledgeable in this area, make sure to involve a third party, whether an accountant or other lawyer, to advise them. The issue of tax implications and how it will be handled should be addressed both orally and in writing by the lawyer. The same is true regarding medical liens; before any settlement is accepted, the client should be advised of their existence, how the liens will be handled, and how they will impact the settlement. This information should be communicated both orally and in writing. 3. Specific Areas of Practice: Personal Injury Defense This area of practice has experienced a significant decline of over 7% in the number of claims reported, bringing it down to about 3% over the last 9 years. While this should make defense lawyers very happy, it may unfortunately increase over the next several years. Typically, when there is an economic downturn in the business world, insurance companies that might otherwise overlook a complaint against their long-standing defense counsel will not overlook a mistake or error when financial conditions become more strained. 15

17 4. Specific Areas of Practice: Real Estate The years from saw a significant increase in real estate claims. Real estate claims now are the leading practice area of claims. This trend reflected the increased volume of real estate transactions experienced during the boom in the market. Increased volume in any practice area over a sustained period can lead to more claims. In certain practice areas, in order to specialize and still be profitable, the lawyer must generate significant volume. This can result in increased mistakes and an inability to properly supervise and review all the work. The real estate market experienced a period of several years where the number of closings and refinances were up significantly, and that, coupled with the rising fair market value of property, resulted in an increased number of real estate claims and increased damages associated with those claims. While the volume of claims in this area appears to have leveled off it has not diminished significantly. Real Estate LPL Claims y = x x R² = ABA Standing Committee on Lawyers Professional Liability Common Mistakes: Mistakes include closing and contract drafting errors; mistakes regarding title searches, title reports and title insurance; recordation problems; lien priority issues; escrow issues; zoning issues; failure to communicate information from third party reports, like survey and termite; and conflicts of interest. In many jurisdictions there is still confusion regarding whom the lawyer is representing and to whom the lawyer has duties; engagement letters and non- engagement letters should be used to clarify this. Volume Mistakes: Claims data indicates that while specialization in a particular area of practice is a good thing, uncontrolled volume increases the number of errors made. Good systems and procedures can help control the potential for errors; however, the lawyer must still have adequate time to address the client s legal needs and communicate with the client. 16

18 Supervision, the Buck Stops Here: Non-lawyer staff plays an essential role in making the everyday practice of law manageable; however, the proper use and supervision of staff is a critical responsibility of the lawyer. Taken together, Virginia Rule 1.1 on competency and Rule 5.3 on supervision make the lawyer responsible for work done by non-legal staff. In order to prevent errors, the lawyer should have an opportunity to review the work done by non-lawyer staff. Malpractice Concern: Many underwriters for mal-practice carriers, including ALPS, inquire about the staff-to-lawyer ratio. Liability insurers are concerned about a workload that is carried mostly by the staff with only minimal supervision by the lawyer. As the staff number increases, the risk that the lawyer will miss an issue increases as well. Areas of practice such as real estate, collections work, and bankruptcy lend themselves to a high staff-to-lawyer ratio and frequently can become a law firm mill where legal work is churned out at such high speed and volume that the chance of making a mistake on the lawyer s part increases exponentially. Burn Out: Controlling the volume and pace of your practice is critical to your health and wellbeing. Take control of your practice, rather than being controlled by your practice. Know your limits and control the workload; realize that while additional staff and delegation can help your practice run more efficiently, you still need adequate time to supervise the work and stay up to date with managing your practice. 5. Specific Areas of Practice: Family Law Typically coming in third or fourth, family law claims tend to occur with some frequency but are often defensible, so the dollars paid out in indemnity are low. For lawyers practicing in this area, the biggest challenges arise because There is never enough time or money. Lawyers struggle to find the time and appropriate means to adequately communicate with clients who are often confused by the process, upset and angry. Additionally, it is often challenging to provide representation within the financial constraints of the client while still adequately developing the issues that are most important to the client. Identification and Evaluation of All Marital Assets: Lawyers need to be complete in identifying and documenting all the assets of the parties. And they need to document why and how that asset will be evaluated for purposes of property settlement. Second Lawyer Syndrome: Reliance on the first lawyer s work without an independent assessment by the new lawyer can be hazardous. The second lawyer needs to make an independent and thorough assessment of the issues and information previously developed in the case. Communication Problems and Neglect: Time constraints in a busy practice can make it very challenging to meet the client s communication needs, especially when the client is often confused about the process, upset, and angry. While many of the malpractice claims arising in the family law context will not survive because they often lack any actual damages, such claims often also become ethics complaints that requires the lawyer s time and attention. One area of concern is when the client raises failure on the part of the lawyer to explain the terms of 17

19 the settlement fully, claiming such issues as tax implications, or when various assets that will be transferred were never explained to them. Withholding the File and Suing for Fees: This is never a wise idea in any practice area; it seems to come up with some frequency in family law representations. Pursuant to Virginia Rule 1.16(e), a lawyer cannot assert a retaining lien on the file pending payment of the fees. The best way to prevent this situation all together is to be proactive from the beginning of the representation about collecting your fees. Use an engagement letter that clearly sets out the fees and costs, and get an advance from the client that is billed against and replenished throughout the representation. Regarding suing for fees, the risk is a counter claim alleging legal malpractice. Such counterclaims are very common and can be costly to the lawyer and the malpractice carrier. It is best to avoid if possible by working from an advance and also consider including a fee mediation or arbitration provision in your engagement agreement. 6. Specific Areas of Practice: General Business The ABA s data has two separate categories that capture business claims. They are business organization and business transactional work. ALPS s data combines those two business categories. Downturns in the economy resulting in deals that go bad often cause an increase of claims in this area. Commercial claims are expensive to defend and often have a severity component. Who Is the Client? Two of the most common errors encountered while representing businesses are conflicts that arise during the entity set-up and conflicts that arise when the shareholders have an intra-corporate dispute or falling out. Lawyers who do this sort of work need to be very careful to identify who is the client and to determine whether they have a conflict of interest that prevents representation. Potential for Claim Exacerbated by the Deal Going Bad: In general, if the business deal goes bad or the entity implodes, the potential for a malpractice claim increases as those involved scrutinize both the work done and the relationships that might have been part of a conflict of interest. Add to this a recession that is continuing to impact commercial markets, and malpractice claims in commercial transactional work will likely increase. Representing an Entity: Attorneys who practice in the corporate environment need to be very sensitive to identifying and analyzing conflicts of interest. Many of the claims resulting from conflicts involve complex relationships which develop over an extended period, coupled with a lack of focus by the attorney on whom the attorney represents and the scope of the attorney s responsibilities. In some cases, a conflict appears to be unrelated to any damage suffered by the client, but the alleged conflict can, nonetheless, become an issue for a jury. In a prior study on this issue, ABA-NABRICO has recommended firms focus their loss prevention efforts in this area due to the great difficulty of defending such claims. Owning an Interest in the Entity: Lawyers should avoid owning an interest in any entity they represent. It creates a conflict of interest that will receive heightened scrutiny regarding the lawyer s conduct as to both his legal work and his personal interest as it affects the entity and others involved in it. Consider Virginia Rule 1.8 Conflict of Interest: Prohibited Transactions, which while not an absolute prohibition against a lawyer owning an interest, 18

20 specifically addresses the problems and ethical dilemmas encountered in such a relationship and specifies what is required of the lawyer regarding disclosure and protection to the client. (Reasonable terms and full disclosure, reasonable opportunity to consult with other counsel, and client consent in writing.) 7. Specific Areas of Practice: Trusts and Estate Work According to ABA data, the claims in this practice area have grown slightly for each study period. It has been suggested that with the relative wealth of our society and the mass of baby boomers approaching sixty-plus years old, there will continue to be an increase in claims simply due to the increased demand for estate planning by this generation (unless the recession continues long enough to make that unnecessary). Drafting Errors, Competency and Tax Implications: The three most common types of malpractice mistakes in the area of wills and trusts are drafting errors, issues related to testator competence, and tax errors. Document Management: Lawyers practicing in this area need to design a very reliable system for naming and identifying drafts. Both the staff and the lawyer need to know and understand the system and use it to help prevent the possibility of errors. Numerous claims arising from drafting errors can be traced to poor document management where the wrong draft or version of a document is mistakenly finalized. Additionally, the lawyer needs a reliable system for reviewing all final documents for errors. Competency of Client: Lawyers working in this area need to be sensitive to issues of competency and situations of undue influence by interested parties. Any safeguards to help manage and avoid these problems are well worth the effort and time. Consider Virginia Rule 1.14 Client with Impairment. Tax Implications: In addition to being knowledgeable in the substantive area of estate taxes, it is important to thoroughly collect information on the estate assets and to spend adequate time with the client to fully appreciate what they want to achieve. The file should be well documented to reflect the gathering of information regarding the client s assets and discussions regarding the client s intent, particularly if it goes against traditional estate planning strategies. 8. Specific Areas of Practice: Criminal Law While many lawyers practice in this area and there are a high number of complaints, the relative claims exposure is low. Many criminal clients seek relief from alleged ineffective assistance of counsel claims through habeas proceedings, rather than through a civil suit for legal malpractice. Furthermore, the law in the majority of state jurisdictions continues to require the claimant in a civil suit for legal malpractice, arising from a criminal matter, to prove not only that legal malpractice occurred but also that the client was innocent of the alleged crime. 19