"Avoid A Claim" Blog

The issues that arise when dealing with clients in hard times have come up in a few of my recent discussions with lawyers and in some of the claims LAWPRO is now seeing. This prompted me to think about an article that recently appeared in LAWPRO’s new Webzine.)

I posted a link to the article on SLAW two months ago, but thought the points in it are worth repeating for readers of AvoidAClaim. Not just to highlight the risks, but also to remind lawyers of the steps they can take to reduce their exposure to a malpractice claim and to encourage them to use the resources on the practicePRO.ca website to accomplish this – see a list of these resources at the end of this article.

When times are good, bumps in the road won’t always cause problems. Clients are upbeat and they want the deal to close, their problem resolved or the litigation matter to proceed. Happy clients are far less likely to sue their lawyers for malpractice.

However, in tough times, clients squeezed by money problem scan become unhappy and they will be more likely to look for ways to allege that their lawyers made a mistake. In a similar fashion, lawyers squeezed by financial problems can also find themselves more likely to engage in risky behaviour. Unhappy clients and risky lawyer behaviour translate into more LAWPRO claims.

In good times and bad, avoiding a legal malpractice claim requires that you understand where the risks are so that you can respond to them by proactively taking steps to reduce your exposure to a claim. As you will see, the risk management strategies you should employ in good times and bad are essentially the same. And, as clients are likely to hold you to a higher standard when money is tight, being proactive with risk management becomes even more important in tough times.
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For my first real post to AvoidAClaim, I want to focus on the biggest cause of malpractice claims: lawyer/client communication-related errors. Over the last eleven years, by cost and count, more than one-third of LAWPRO claims involved this type of error – almost $25 million or close to 8,200 claims.

The adjacent pie chart shows the amount and proportion of communications related errors relative to the other most common errors we see.

More detail on the different types of errors appears in this article The Biggest Malpractice Claims Risks from the Summer 2008 (Vol. 7 no. 2) issue of LAWPRO Magazine, “practicePRO: Helping Lawyers for 10 Years.”

It is interesting to note that for sole, small, medium and large firms alike, roughly one-third of claims are communications-related. This is a profession-wide issue. More on this in a future post.

There are three types of communication-related errors. The most common is a failure to follow the client’s instructions. Often these claims arise because the lawyer and client disagree on what was said or done –or not said or done. These claims tend to come down to credibility, and in handling claims LAWPRO finds these matters are difficult to successfully defend if the lawyer has not documented the instructions with sufficient notes or other documentation in the file.

The second most common communications error is a failure to obtain the client’s consent or to inform the client. These claims involve the lawyer doing work or taking steps on a matter without client consent (e.g. seeking or agreeing to adjournment; making or accepting a settlement offer); or failing to advise the client of all implications or possible outcomes when decisions are made to follow a certain course of action (e.g. pleading guilty on DWI; exercising a shotgun clause).

Poor communications with a client is the third most common communications error. These claims often involve a failure to explain to the client information about administrative things such as the timing of steps on the matter, or fees and disbursements. This type of error also arises when there is confusion over whether the lawyer or client is responsible for do something during or after the matter (e.g. sending lease renewal notice to landlord, renewal of a registration or filing).

On top of being the most common malpractice errors, communications-related claims are also among the easiest to prevent. You can significantly reduce your exposure to this type of claim by doing the following things:

• Controlling client expectations from the very start of the matter: make sure your clients have realistic expectations about the timing, process, outcome and costs.
• Actively communicating with the client at all stages of the matter: make sure your client understands how the matter is moving along and that any delays that occur are explained.
• Creating a paper trail: In time entries, memos to file, and/or emails or reporting letters to your clients carefully document information provided by the client, instructions and advice, and confirm what work was done on a matter at each step along the way.

I will post more information on lawyer/client communication-related errors in future posts, including information on the specific types of communications errors LAWPRO sees in different areas of the law.