Malpractice on Trial: Avoiding Claims and GrievancesAugust 2019 – Article
Every lawyer would like to retire without ever facing a legal malpractice claim. Unfortunately, that’s unlikely to happen for most lawyers today. In 1950, lawyers who entered the profession had an approximately 2% chance of being sued by a client; by 2000 that had risen to 65%. According to the Ames & Gough 2018 LPL Insurer Survey, actual or perceived conflict of interest is the number one cause of legal malpractice claims and one of the top for Grievances. The four practice areas experiencing the highest number of legal malpractice claims are business transactions, trusts and estates, corporate and securities, and real estate. Dismal as this sounds, there are things that you can do to reduce your chances of being the target of a claim.
1. Avoiding Claims
- Perform Conflict Checks in Every Case
Create a system to check for conflicts of interest prior to accepting any new representation. For the system to work, all lawyers in your firm must maintain records regarding contact with clients and potential clients so that all conflict issues can be identified and addressed. A complete, documented conflicts check should be part of the mandatory procedure for setting up a new matter file.
And conflicts should be a matter that you keep in mind through the life of a file. A conflict may arise at any point during the representation and especially when the parties to the matter change. So, be vigilant in both recognizing and addressing conflicts. Also recall, conflicts can arise once the representation is over. Sometimes, having represented a client in the past precludes representation of a different client in the future. See, e.g., Befekadu v. Addis Int'l Money Transfer, LLC, 339 Ga. App. 806 (2016).
Conflicts of interest claims are challenging for the lawyer because the argument to the jury is so easy: no one can serve two masters. Ga. St. Bar R. & Regs., Part IV, Rules 1.7, 1.8, 1.9. There are three basic attorney duties implicated in conflicts of interest claims: duty of candor, duty to exercise zeal/diligence, and duty of undivided loyalty. Ga. St. Bar R. & Regs. Part IV, Preamble, Rule 1.4. And, note, a finding of a conflict by the Bar can lead to disbarment. Rules 1.7, 1.8, 1.9.
- Properly Staff Matters
Assuming you have no conflict, make sure you have the expertise for the matter: trials should be managed by trial lawyers; transactions by transactional lawyers; patents by patent lawyers; and so on. Rules 1.1, 1.3. Do not take cases outside your area of expertise, even for a long time client. And don’t take a case and then hand it off to someone else to handle. Confirm docketing of deadlines and maintain some level of participation in and/or communication with the lawyers working on the file, as well as the client. No client wants to feel dumped.
Communicate clearly and often with your staff, which includes the other lawyers. The Rules hold the supervisory lawyer responsible for his/her subordinate’s violation of the Rules. Rule 5.1. And, negligent supervision is a viable count in a legal malpractice case. See, generally, Cont’l Cas. Co. v. Hsi Fin. Serv., 266 Ga. 260 (1996); United Wis. Life Ins. Co. v. Kreiner & Peters Co., L.P.A., 306 F. Supp. 2d 743 (D.C. Ohio 2004); OneWest Bank, FSB v. Joam LLC, 2011 U.S. Dist. LEXIS 150999, 2011 WL 6967635 (E.D. N.Y. 2011); Fang v. Bock, 2000 ML 1730 (2000). Lawyers should make sure they communicate clearly and frequently with the team so that the supervisor’s instructions are clear, the vision for the matter is plain, and the lawyers’ potential liability is diminished.
- Communicate with Your Clients
Each and every client you have is your most important client and every case you have for them is important. Uninformed clients don’t feel that is true and are unhappy clients. Return clients’ calls and e-mail inquiries promptly, and keep a record that you have done so. Send routine reports, even if you are not asked to and keep a copy in your file. See, Rule 1.4; Brito v. Gomez Law Group, LLC, 289 Ga. App. 625, 629 (2008).
Discuss all important decisions with your client and confirm the client’s decisions in writing, whether by letter or e-mail. See Rule 1.2. Any time you plan to take action which affects the client’s rights, give the client written notice, in sufficient time for the client to consider and comment. This includes settlement discussions, initiation and dismissals of actions, and execution of dispositive documents on behalf of the client. And make sure you spend equal time and attention on good news and bad. This helps set realistic expectations in matters going forward.
Be circumspect in what you say in your notes to the file, including memos and inter-office e-mails. An e-mail you send within the office about what a terrible witness your client made will be seen by that client later if he requests the file--consider how statements will sound if read to others years later. Swift, Currie, McGhee & Hiers v. Henry, 276 Ga. 571(2003). Make realistic demands on opposing counsel. Every communication you have with opposing counsel can be used against you if your client later sues you.
Do not embellish what work you have done on a client’s file. It is not difficult to make one who is willing to embellish look like one who is willing to lie. Make sure everything in your report is absolutely correct. Even innocent errors can make it look like you are incompetent or untruthful.
And remember, all communication with a client is confidential, even if it is not privileged. Rule 1.6. Do not disclose anything you know about a client without the client’s permission.
- “Paper the File”
Having a good file makes it easier for you to remember everything that has happened in a matter, improving your effectiveness as a lawyer and assisting in your ability to explain conduct to a client, if necessary. Not to mention that plaintiffs’ legal malpractice lawyers relish the opportunity to point out the absence of documents in a file showing work performed, communications with clients, or confirmation of decisions made by clients. We have a saying that the jury tries the lawyer, then the file, then the case. If the file is three sheets of paper, the jury is going to be unimpressed.
Be thoughtful in what you say and how you say it as you develop the notes to the file, memos, e-mails, etc. Consider how statements will sound if read to others years later after your client has requested and received your entire file. The client is entitled to that file, even if he or she has not paid your bill. Mary A. Stearns, P.C. v. Williams-Murphy, 263 Ga. App. 239 (2003). But cf., Formal Advisory Opinion 87-5 for some exceptions.
- Memorialize the Relationship in Writing
One of the most important pieces of paper in your file is the one showing the terms of representation. The scope of representation and the fee for it should be set out in a document for each new matter even for the same client. Expectations should be established at the onset of representation regarding billing practices. And you should confirm with your client, in writing, any agreements regarding in terms for payment of fees and/or billing rates and any changes. If you cannot prepare a tailored agreement, be sure to fill in all blanks with all available information about the specific matter you have agreed to handle, including the names the clients you are representing. Often there is potential for related work. Consider this possibility at the outset and periodically throughout your representation. Discuss it with your client. Decide what you will and will not handle, and document that in writing. If co-counsel is involved, be certain that each lawyer's role is well defined in the agreement. See, Rule 1.5.
Clear engagement letters should define the beginning point of the representation, the objectives of the representation, scope of the representation (what you agree and do not agree to do for the client), payment terms, dispute provisions, and end point (either by external event (e.g., settlement) or act of the client (upon non-payment of fees). Some matters you may want to consider including in your agreement are: arbitration provisions, limitations on scope (e.g., you are investigating, but have not decided to file suit on behalf), consultation only, no tax advice, etc.
Once you’ve finished your work for a client, terminate the representation in writing. You should do this for each separate matter you have for a client. If you decline representation or terminate prior to resolution, you should notify the actual or would-be client in a writing that also sets out relevant deadlines which may affect the client's rights.
- Keep Detailed Time Records
The importance of invoices and time records cannot be emphasized enough. They are often the best evidence that conversations and meetings occurred (or did not occur), particularly when the client does not take issue with them after receipt of a bill. Even if you are paid a flat or contingency fee, keep detailed time-records reflecting the work you do. Log the tasks you perform and include enough detail to justify the time spent, the topics covered, and the decisions made. And keep in mind that fees are to be reasonable. Rule 1.5.
- Avoid Suing Clients for Payment of Fees
If you have established the relationship in writing and kept detailed records of your work, you will be in a much better position to prove the value of your work. You will need to do that if your client does not pay, because you need to be prepared to fend off a counterclaim for legal malpractice if you sue for fees. Non-paying clients are infuriating, but step back and consider whether the potential to collect that money is worth the stress and lost time associated with defending a lawsuit alleging malpractice, breach of fiduciary duty, or worse.
To avoid fee disputes, you must maintain ownership and engagement in the legal matter so that you know early on when there is a problem. If you’ve established clearly and early on the expectations about billing, you can follow up more easily and early, reminding the client of what he or she agreed to at the outset of the representation. Review invoices for errors prior to sending them to your clients and promptly communicate with clients who fall behind in payment of fees. If a client presents a complaint regarding representation, respond as quickly as possible, in writing, attempting to address the concerns. Do not threaten to withdraw or take other action related to the representation unless no other alternative exists, but do not permit the client into getting you to do more and more work for free. When a client is not paying a bill, that is a clear indication that there is some dissatisfaction. That dissatisfaction will not go away on its own. You must address it and resolve it. If you don’t, you may end up with such a large AR that you have no choice to sue and you get the inevitable malpractice counterclaim in return.
- Establish a Workable Docketing System
A clear system should be established for entering dates into the applicable calendaring system to ensure that all responsible persons are aware of all relevant dates. Case deadlines should be tracked by multiple people within your team to ensure that no dates are missed. And everyone on the team should know who is responsible for meeting what deadlines.
Calendaring systems need to have docketing and tickler functions. The lawyer needs to be reminded several days ahead of when a task needs to be completed to ensure that adequate time is allocated for completing the task. And the docketing or calendaring system needs to work with the particular lawyer’s style and the law firm’s practice. There are many products out there that can help. For example, LawBase is a web based database that stores cases. It integrates with Calendar Rules for deadlines. Calendar Rules (http://www.calendarrules.com/) is subscription based, based upon number and types of courts in the subscription. Another system is SmokeBall (https://www.smokeball.com/features/legal-calendaring-software/). It is an all-in-one application which tracks time and deadlines and stores e-mails. MyCase (https://learn.mycase.com/) is a web based management software that also does calendaring and notes deadlines, tracks billing, and stores documents in one place. PracticePanther (https://www.practicepanther.com/legal-calendaring-software-law-firms/) also has everything in one place for lawyers. It consolidates legal calendars and e-mails into one software. The author is not recommending or suggesting any of these particular products. My purpose is to suggest to you that there are many products available with different features and capabilities. You should find and use one that works for you.
Whatever system that is selected, share the deadlines and due dates with the client as part of the regular communications with the client. This helps clients prepare–psychologically and actually–for whatever comes next in the legal matter. It makes the client a part of the process, which reduces the chances of the lawyer taking action that is at odds with the client’s wishes and reduces the chances of an outcome that displeases the client.
- Comply with Applicable Continuing Legal Education Requirements
Ensure that you are up to date on all applicable CLE requirements, preferably in areas relevant to your practice. In-house seminars are encouraged to educate new lawyers regarding procedures for conflict checks, establishing representation, and maintaining communication with clients.
You must know the law. If it is well-settled, you must follow it. Jones Day v. Am. Envirecycle, Inc., 217 Ga. App. 80 (1995).
- Maintain Adequate Malpractice Insurance
The nature of your practice typically dictates the amounts and kind of coverage needed, but consider carefully the various terms offered. Many carriers offer coverage for “claims repair” (fixing a problem before it becomes a claim), Bar Grievance defense, and subpoena assistance. All of these coverages are designed to help avoid claims. Consider also who the insurer usually hires as defense counsel (many carriers give you at least a voice in this choice—ask!), along with the limit (needs to be sufficient for “worst case scenario” for your most significant case), named insureds (needs to be all lawyers doing work for your firm), and time limitations (ensure no gaps).
Know what your coverage is. You need to know the limits, of course, but you also need to understand what your insurance is and what your obligations, as well as your insurer’s obligations, are. It most likely is a “claims made and reported”, not occurrence policy. You may have a prior acts policy and/or tail coverage. Your defense costs may be outside the limits of coverage or they made erode coverage. You may have a policy with an admitted or non-admitted carrier.
2. If a Claim is Made
If, despite all your good intentions and hard work, a claim is made, call your carrier. Do not try to hide your mistakes. The adage that “the cover up is worse than the crime” is nowhere more true than in the legal malpractice arena. Report every single incident or potential claim, even if you are unsure. Often there is coverage for claims repair, document requests, deposition subpoena and more. The last thing you want when you have a claim is for your carrier to decline to defend you in it.
Seek professional advice. Even though you no doubt know the file better than anyone, you need defense counsel who will be more objective about the relative strengths and weaknesses of your case and can focus on the most important and relevant aspects of the case. On the other hand, if you can be involved in the repair of the claim, you should do so, with the guidance of your insurer and defense counsel.
Immediately assemble and organize your file. Do not remove or add to, but make sure you have it all. This includes drafts, paper, and electronic materials, and it includes e-mails and text messages to or about the client or the legal matter.
Work with your carrier and your lawyer. You are all on the same team and the same side now and the goal should be resolution of the claim. Claims rarely just “go away” and it will take time and attention to get yours resolved. Be reasonable about the outcome. Agee to suggested resolution of liability cases if it is possible to do so early on for a fair amount, but be prepared to take cases of no liability to verdict.
Some of the most common defenses you can expect to encounter are:
Statute of Limitations: Generally four years, but can be two or six. O.C.G.A. §§ 9-3-24, 9-3-25, 53-12-307; Wells Fargo Bank, N.A. v. Cook, 332 Ga. App. 834 (2015) (fiduciary); Newell Recycling of Atlanta, Inc. v. Jordon Jones & Goulding, Inc., 288 Ga. 236 (2010) (engineer; written contract distinction); Loftin v. Brown, 179 Ga. App. 337, 338 (1986); Riddle v. Driebe, 153 Ga. App. 276, 279 (1980). The statute begins to run on the date of the contended error. Jankowski v. Taylor, Bishop & Lee, 246 Ga. 804, 805 (1980); Long v. Wallace, 214 Ga. App. 466, 467 (1994) (no “continued representation tolling); Consol. Mgmt. Servs. Inc. v. Halligan, 186 Ga. App. 621, 622 (1988) (accountants and lawyers; discovery rule inapplicable).
Proximate Cause: But for attorney’s alleged error, the outcome in the underlying litigation would have been different (the proverbial case within the case). Lalonde v. Taylor English Duma, LLP, 2019 Ga. App. LEXIS 215, 2019 WL 1512599 (03/11/19); Jim Tidwell Ford, Inc. v. Bashuk, 335 Ga. App. 668,(2016).Szurovy v. Olderman, 243 Ga. App. 449 (2000); Freeman v. Eichholz, 308 Ga. App. 18 (2011); Perry v. Ossick, 220 Ga. App. 26, 467 S.E.2d 604 (1996).
No or Deficient Affidavit: The plaintiff is required to file with the complaint an affidavit which sets forth specifically at least one negligent act or omission of the lawyer. O.C.G.A. § 9-11-9.1; Centrust Mortgage, Corp. v. Smith & Jenkins, P.C., 220 Ga. App. 394 (1996).
Duplication: Where a plaintiff’s claims, such as breach of fiduciary duty, “merely duplicate her malpractice claim” courts limit the claims to one for malpractice. Griffin v. Fowler, 260 Ga. App. 443, 446 (2003); McMann v. Mockler, 233 Ga. App. 279, 282 (1998).
Judgmental Immunity: An honest exercise of professional judgment, even if it turns out wrong, is not malpractice. See, Hudson v. Windholz, 202 Ga. App. 882, 886 (1992); Mosera v. Davis, 306 Ga. App. 226 (2010); Botes v. Steel, 2010 U.S. Dist. LEXIS 25676 * 1 (N.D. Ga. March 17, 2010).
3. Bar Grievances
In addition to or instead of a malpractice claim, a disgruntled client may file a Bar Grievance against you. Steps you can take to avoid legal malpractice claims are the same you can take to avoid, and later succeed on, a Bar Grievance. Indeed, there is often cross-over since violation of a Bar Rule is a factor the malpractice jury can consider in determining if you complied with the standard of care. Allen v. Lefkoff, Duncan, Grimes & Dermer P.C, 265 Ga. 374 (1995). Concomitantly, violation of a Bar Rule alone, is insufficient to prove malpractice. Tucker v. Rogers, 334 Ga. App. 58 (2015).
A Grievance is initiated when someone (a client, opponent, colleague, etc.) files a Grievance against a lawyer. Ga. St. Bar R. & Regs., Part IV, Ch. 2. There is a screening lawyer at the State Bar Office of the General Counsel (“OGC”) that reviews all Grievances. Sometimes, Grievances are so patently unsupported they are dismissed at this stage. More often, they are sent to the lawyer about whom the complaint is made and the lawyer is asked to comment or respond. It is strongly recommended that you contact counsel at this point as the response can make the difference in whether the process ends there or continues.
Once you respond, OGC then screens the Grievance and the Response (and Reply from the Grievant, which is typically permitted) to see if the Grievance is unjustified, frivolous, patently unfounded or fails to state facts sufficient to invoke the disciplinary jurisdiction of the State Bar of Georgia. OGC can collect evidence and information concerning any Grievance which is added to the investigation file. Rule 4-202.
OCG decides whether and how the matter moves forward at that point. It can dismiss the Grievance altogether; issue letters of instruction with a dismissal; proceed to investigation; issue formal Letters of Admonition or Confidential Reprimands; issue Notice of Discipline; or refer a lawyer for evaluation of impairment. Rule 4-203.
If OGC determines that the Grievance states facts that may support a finding that an ethical violation has occurred, it will forward the Grievance to the Investigative Panel of the State Disciplinary Board of the State Bar of Georgia, and a Notice of Investigation will be issued. Rule 4-204. The Investigative Panel can then decide whether to issue a formal Letter of Admonition, Confidential Reprimand, Notice of Discipline, refer a case to the Supreme Court for a hearing before a Special Master and file a formal complaint with the Supreme Court of Georgia, or refer a lawyer for evaluation of impairment. Rule 4-204. If anything other than confidential discipline is selected, the process becomes public at this point. Rule 4-221.1.
If probable cause to believe a violation of an ethical rule has occurred, a formal Complaint is filed. The Respondent Answers. The parties can then conduct discovery and finally a formal hearing is held. Rules 4-210, 4-212. The hearing is a trial, with all of the evidentiary rules applying. Rules 4-213, 4-221. The State Bar has the burden of proving violation by clear and convincing evidence. Rules 4-221.2. At the end of the hearing, the Special Master makes a written recommendation to the Supreme Court. Rule 4-214.
This Report can be reviewed, upon party request, by the State Disciplinary Review Board. Ultimately, the Supreme Court receives the entire record, the Report of the Special Master, and the Report of the Review Board, if any. The Supreme Court then imposes discipline. Rule 4-218.
At any time during this process, the attorney can request voluntary discipline. The State Bar can support or oppose a Request and the Supreme Court can accept or reject it. Rule 4-227.
Discipline can range from confidential letters of instruction to disbarment. Rules 4-204.5-4-207, 4-220. A subsequent infraction will automatically make the attorney subject to harsher punishment. See Rules 4-208
Lawyers facing disciplinary proceedings are entitled to have lawyers of their own. Hiring counsel is not guaranteed that the result will change, but it does give you, the lawyer, (1) expertise of an attorney who specializes in handling ethical complaints and is familiar with the process, (2) an objective advocate who can see things uncolored by the emotions that inevitably arise given unreasonable former clients and belligerent adversaries, (3) the ability to offload some of the stress of responding so that you can focus on practicing law, and (4) distance between yourself and the pleadings (not all of which must be verified).
Finally, know your coverage. You may have insurance that will help defray the costs of hiring a defense attorney.
There is much you can do to avoid claims, either of malpractice or ethical violation. Keep them in mind. If you heard nothing else today, I hope you heard communicate with your clients, document that communication, and seek legal assistance at the first hint of trouble. That is key to avoiding and defending malpractice claims and Grievances because, as my late partner used to say, “They are deadly serious, until they are not.”