Emotional Distress in Malpractice Claims

Emotional distress is not uncommon in malpractice cases. Some jurisdictions have expressly permitted the recovery of such damages, while other jurisdictions don’t have any law addressing this potential healing area. A few states have addressed this issue in the past year, and the decisions are worth noting.

Last year, the Washington Supreme Court issued a decision that opened the door for potential damages in a legal malpractice action. In Schmidt v. Coogan, the malpractice claim was triggered by the alleged negligent representation in a personal injury suit that was filed after the statute of limitations. During the trial of the malpractice case, the plaintiff sought to amend her complaint to add damages for emotional distress. She alleged that her attorney harassed, intimidated, and belittled her when she raised the issue with the statute of limitations.

On appeal to the state Supreme Court, one of the issues addressed was whether emotional damages are recoverable in a legal malpractice case.   The Court held “that emotional distress damages are available for attorney negligence when distress is foreseeable due to the particularly egregious (or intentional) conduct of an attorney or the sensitive or personal nature of the representation.”   The Court noted that egregious conduct is not necessarily the only way to establish the right to recover damages for emotional distress, but is not “required” if the plaintiff can prove that the attorney’s conduct subjected him to significant emotional distress. In this particular instance, however, the plaintiff was unable to recover from emotional distress because the subject matter of the litigation was not particularly sensitive, she did not lose any freedoms, and her attorney’s actions were not egregious.

In contrast, two other courts recently held that distress damages in malpractice claims are not recoverable. In Rodriguez v. Nam Min Cho, the California Court of Appeals addressed the issue of what damages were recoverable in a default judgment. In its analysis, the Court relied on other state court opinions and noted that “a plaintiff generally could not recover emotional distress damages for legal malpractice.”  Similarly, in Desposito v. New Jersey, the U.S. District Court in New Jersey indicated that emotional distress damages are generally unavailable in a legal malpractice action. Quoting from prior state court decisions, the Court noted that “emotional distress damages should not be awarded in legal malpractice cases at least in the absence of egregious and extraordinary circumstances.”

Attorneys need to be mindful of the laws in their jurisdiction regarding the recovery of damages. While an attorney’s actions should never rise to the level of “egregious conduct,” knowing whether the law permits recovery for such damages and the type of conduct that would trigger such a claim is essential. Likewise, attorneys involved in a malpractice suit need to know the available defenses and when a claim for can be raised.

Engagement Letter Defense

An engagement letter is typically the first line of defense. It clarifies obligations, the scope of duties, the client’s identity, billing terms, and other vital clauses that are generally a must for most engagements. They may also include exculpatory language such as limitation of liability provisions, damages caps, or different contractual language, which may aid in defending a lawsuit. Yet, according to a recent decision, the clause was not enforceable because it was not explicit and clear.

In Warren Averett, LLC v. Landcastle Acquisition Corp., 349 Ga. App. 479 (2019), an accounting firm – “Accountant” – argued on appeal that the underlying court erred by finding unenforceable a contract provision that limited the number of recoverable damages. Accountant conducted year-end audits for its client, a law firm. When the law firm discovered that its managing partner had allegedly embezzled more than $15 million, it sued Accountant for breach of contract, professional negligence, and gross negligence.

The Accountant filed a motion for partial summary judgment contending that a provision within the parties’ contract limited any recoverable damages to the number of professional fees paid to the Accountant, which amounted to about $87,000. The clause within the parties’ engagement states:

Should you become dissatisfied with our services at any time, we ask that you promptly bring your dissatisfaction to our attention. If you remain dissatisfied, it is agreed that you will participate in non-binding mediation under the commercial mediation rules of the American Arbitration Association before you assert any claim. In any event, no claim shall be asserted which is more than the lesser of actual damages incurred or professional fees paid to us for the engagement.

In response, the plaintiff filed a cross-motion arguing that the clause was unenforceable as a matter of law because it was not sufficiently prominent to provide notice, and it was ambiguous and insufficiently explicit as to whether it applied to the claims for professional negligence and gross negligence. The court agreed and concluded that the clause was unenforceable due to its “lack of prominence among the surrounding terms, the ambiguous scope of the provision, and its invalidity as to the … claim for gross negligence.”

According to the court, the clause at issue was not prominent enough because:

  • The clause was “the same font size as that used throughout the entirety of the [contracts].”
  • The clause “is not capitalized, italicized, or set in bold type for emphasis.”
  • The clause is “not set off in a separate section that specifically addressed liability or recoverable damages, with a bold, underlined, capitalized, or italicized specific heading, such as “Limitation on Liability” or “DAMAGES.”
  • The clause is not “a prominent place within the contracts to emphasize the importance of the provision’s limitation on recoverable damages, such as being adjacent to another similarly significant provision or being next to the parties’ signature lines.”

Perhaps the silver lining in this decision that did not go the way of the professional is that it could provide us with a road map of how best to avoid a similar result in engagement letters moving forward.

Most Common Malpractice Claims for Attorneys

Understanding where and why malpractice claims happen can help you proactively take steps to reduce the likelihood that a claim will be made against you.

So, what is the most common of all the malpractice errors that lawyers can commit? You are correct if your answer is a failure to know or apply substantive law. No single error accounts for the majority of claims. However, as a general category, the substantive-related kind is your best bet for falling on the wrong side of the malpractice line.

The following guide includes the five most common malpractice claims attorneys face, along with preventative steps to avoid them within your firm.

An accurate picture of malpractice errors. Getting good across-the-profession data on legal malpractice errors in the United States is virtually impossible for two reasons: Multiple legal professional liability insurance carriers operate in all but one state, and many U.S. lawyers don’t have malpractice insurance.

Substantive errors. When grouped, substantive errors account for more than 46 percent of reported claims. The most obvious error in this category is a failure to know or adequately apply substantive law. Another rather obvious error is the failure to understand or ascertain a deadline. Claims further indicate that “dabblers,” or lawyers acting outside their usual practice area, are far more likely to fail to know or apply the law.

Administrative errors. Taken together, administrative errors—including tickler system errors, clerical and delegation errors, lost file or document errors, and procrastination—account for 28.5 percent of reported claims. A failure to file documents is the top administrative error in the studies (at 8.6 percent). A failure of the calendar is the fifth-most common error. A related but less standard error is the failure to react to a calendar system. Clerical and delegation errors include simple clerical errors, errors in mathematical calculations, and work delegated to an employee that is not checked. Delegating tasks to knowledgeable support staff is an essential part of the operation of every practice. However, the lawyer is ultimately responsible for the delegated work and has to take steps to ensure that delegated work is reviewed appropriately.

Intentional wrongs. Intentional wrongs constitute 12.3 percent of claims. Intentional wrongs include fraudulent acts by the lawyer, malicious prosecution or abuse of process, libel or slander, and violations of civil rights. As a category, these types of claims may be the most shocking.

Regardless of firm size, every firm must implement appropriate internal controls to ensure that funds in trust accounts are handled correctly and that all transactions involving client monies are adequately documented.

Client-relations errors.  Client-relations errors constitute 12.3 percent of claims. There are several types of these claims, which all tend to arise from lawyer-client communication problems.

The first type is failure to follow the client’s instructions. Often these claims arise because the client says one thing about what was said or done, or not said or done, and the lawyer says another. These claims tend to come down to credibility and can be challenging to defend if the lawyer has not documented the instructions in the file successfully.

The second type is failure to obtain the client’s consent or inform the client. These claims involve the lawyer’s allegedly doing work or taking steps on a matter without the client’s consent. Such claims also involve the lawyer’s failure to advise the client of all the implications of possible outcomes when decisions are made to follow a particular course of action.

The third type is poor communication with the client, which involves a failure to explain to the client information about administrative procedures, such as the timing of steps on the matter or fees and disbursements. This error also arises when there is confusion over whether the lawyer or client is responsible for taking a specific action during or after the matter—for example, sending a lease renewal notice to a landlord or renewing a registration or filing.

You can significantly reduce exposure to client-relations errors simply by controlling client expectations from the very start of the matter, actively communicating with the client at all stages of the matter, creating a paper trail that carefully documents instructions and advice, and confirming what work was done on a matter at each step along the way.

Conflicts of interest. There are two types of conflict malpractice claims. The first arises when conflicts occur between multiple current or past clients represented by the same lawyer or firm. The second type occurs when a lawyer has a personal interest in the matter. Because real estate and corporate commercial lawyers regularly act for multiple clients or entities, these lawyers experience more conflict claims than those in other areas of law. Litigators, however, seem better able to recognize conflicts and have a relatively lower rate of conflict claims.

To avoid conflicts of interest, ensure your firm has procedures for checking disputes at the earliest possible time. This should, ideally, involve an electronic system that includes not only client names but also individuals and entities related to the client, including corporations and affiliates, officers and directors, partners, trade names, and the like.

Another hot-button issue is a rise in conflicts relating to the lateral hirings of partners and associates. Unfortunately, such conflicts are often addressed very late in the process, when the transfer is all but done. At this late stage, all parties have a strong desire to complete the transfer, that potential conflicts are often ignored or overlooked.

Frivolous Lawsuit Leads to Serious Damages

Many attorneys will encounter a lawsuit they believe to be potentially frivolous at one point or another. These claims often lead to frustration for the defense attorney and Client, who may face two complex alternatives: (a) settle the case to avoid defense costs or (b) expend time and money in defending a meritless claim. A recent case out of Pennsylvania may give some hope to those forced to defend weak claims and might give pause to anyone considering such a suit in the future.

A jury in Philadelphia County recently awarded approximately $2.3 million in damages in a frivolous litigation matter. Plaintiff alleged that the defendant’s attorney and law firm commenced and pursued a frivolous claim designed to extort money. Defendant Attorney represented Client in a bitter amongst Client’s family over nearly $1 million in stocks. Client, through Defendant Attorney, alleged that Client’s aunt was mentally incompetent and that Client’s brother-in-law (“Plaintiff”) was unduly influencing the aunt to take advantage of the stock windfall. That suit was dismissed with prejudice in 2013.

Subsequently, the brother-in-law (an attorney) filed a claim against the defendant’s attorney, alleging that the undue influence suit was commenced to pressure the family into a financial settlement by threatening his reputation within the legal community. The jury agreed with Plaintiff’s allegations and awarded approximately $2.3 million in damages, roughly $1.9 million attributed to Defendant Firm.

Though the threat or implication of a potential lawsuit is a widespread and predictable settlement and negotiation tactic, following through with such a lawsuit where the claim itself is not solvent creates the instant potential for retribution by way of a counter-suit based upon frivolity or vexatious litigation. Instances such as this serve as yet another reminder that those in the legal profession need to take care and exercise only the best and most prudent judgment when accepting and pursuing cases on behalf of clients, lest the potential for recovery becomes a potential for loss.


Premises medical liability coverage protects law firms.

Premises Medical Liability Insurance Coverage

Should your law firm have a physical location, you may be at risk for customers sustaining injuries on your property. Premises liability insurance coverage is designed to address such injuries. Typically, customers who may bring lawsuits against you and your firm for injuries on your premises may accuse you of having unreasonably dangerous conditions on your property.

Scenarios that may result in such lawsuits include spilled liquids on floors, an unmarked step or curb, a crack or hole in a floor or sidewalk, or inadequate lighting. These conditions may cause customers to slip or trip and fall. Premises liability insurance provides financial protection for these types of scenarios.

Generally, premises liability insurance provides coverage for hospital and physician visits, surgeries, other medical bills, physical disfigurement, inability to work, and pain and suffering of an individual who sustained injuries on your business property. It does not cover damage to your equipment or building, which would fall under your business property insurance policy. You may want to talk with your agent to get a clear understanding of how premises liability insurance works so that you may determine how much you need for your law firm.

Workstation ergonomics help prevent workplace injuries.

Basic Workstation Ergonomics

Overuse injuries are one of the most significant risks law firms face regarding worker’s compensation injuries. The following is a list of basic ergonomic tips to avoid overuse injuries:


Place the keyboard in a position that allows the forearms to be close to the horizontal and the wrists straight. That is, with the hand in line with the forearm. If this causes the elbows to be held far out from the side of the body, then re-check the work surface height.

Some people prefer to have their wrists supported on a wrist rest or the desk. Be careful not to extend or bend the wrist in an up position.


Adjust the seat tilt to be comfortable when you are working on the keyboard. Usually, this will be close to horizontal, but some prefer the seat tilted slightly forward.

Your knees should be bent at a comfortable angle and greater than 90º flexion. If this places an uncomfortable strain on the leg muscles, or if the feet do not reach the floor, then a footrest should be used. The footrest height must allow your knees to be bent at 90º; the footrest height may need to be adjustable.

Adjust the backrest to support the lower back when you are sitting upright. A range of chairs is available.


Avoid cradling the phone between your head and shoulder when answering calls. If you need to use your computer simultaneously, use a headset or the phone’s hands-free/speaker-phone capabilities if the environment is suitable.


Set the eye-to-screen distance at the distance that permits you to focus most efficiently on the screen. Usually, this will be within arm’s length.

Set the monitor’s height so that the top of the screen is below eye level and the bottom of the screen can be read without a marked inclination of the head. Usually, this means that the center of the screen will need to be near shoulder height. Your eyes should be level with the toolbar.

People who wear bifocal or multi-focal lenses will need to get a balance between where they see out of their lenses and avoid too much neck flexing. The height of the monitor can be adjusted using a monitor riser.

Document holder

Place the document holder close to the monitor screen in the position that causes the least twisting or inclination of the head.


Adjust the height of the work surface and the chair’s height so that the work surface allows your elbows to be bent at 90º, forearms parallel with the floor, wrist straight, and shoulders relaxed.

Place all controls and task materials within the comfortable reach of both hands so that there is no unnecessary twisting of any part of the body. Most people prefer the document holder between the keyboard and the monitor, and there are many different types of document holders available.

Cyber Security Best Practices

Law firms are the same as any other company in countering cyber attacks and protecting their confidential and proprietary data. The only difference is that law firms have ethical rules that require confidentiality of attorney-client and work product data. That does not make them unique, however, because accounting firms, engineers, and medical providers also have privileged data.

Some essential activities must be undertaken to establish a security program, no matter which best practice a firm decides to follow. Technical staff will manage most of these activities, but firm partners and staff must provide critical input. Firm management must define security roles and responsibilities, develop top-level policies and exercise oversight. This means reviewing findings from necessary activities, receiving regular reports on intrusions, system usage, compliance with policies and procedures, and reviewing the security plans and budget.

  • Set the “tone from the top” and issue high-level policies regarding the privacy and security of firm data. This includes encryption, remote access, mobile devices, thumb drives, laptops, Wi-Fi “hotspots,” clouds, Web email accounts, and social networking sites.
  • Inventory the firm’s software systems and data, assigning ownership and risk categorizing. Client data may need to be organized; not all clients are equal. Extremely sensitive matters have the highest risk and could cause the most significant magnitude of harm if breached. Firms may want to keep this data on a separate server with stronger security protections and access controls.
  • Conduct third-party vulnerability scans, penetration tests, and malware scans. Antivirus software is essential, but it detects only a small percentage of new malware. Specialized services that see sophisticated attacks may be required.
  • Deploy needed security technologies for encryption, intrusion prevention, detection, monitoring, security event management, etc.
  • Identify and document security controls.
  • Develop security policies and procedures to support the security plan and technologies.
  • Develop contractual security requirements for outsourcing vendors, cloud providers, or other entities that connect to the firm’s network, including notification in the event of a breach.
  • Conduct regular reviews of the security program and update as necessary.

Like any other business, law firms are subject to breach notification laws, and many have pre-breach security program requirements. A firm will be in a far superior position with its clients, its state bar, and any regulators that may become involved if it can show that (1) its security program is aligned with best practices, (2) its management is engaged, (3) it is complying with its policies and procedures, and (4) tools are deployed to detect malware and criminal behavior.


Having a well-rehearsed incident response plan is critical. It must specify who will be notified, within what time frame, what documentation must be kept, who is designated to speak about the incident, and who has the authority to make certain decisions about the investigation. Serious incidents require specialized assistance from cyber forensic experts and careful documentation to preserve evidence. Even if the event did not trigger a breach of law, a law firm’s decision to cover up an incident could be a dangerous strategy.


New commentary to Rule 1.1 of the Model Rules of Professional Conduct requires attorneys to “keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.” Model Rule 1.6(c), on the confidentiality of client communications, acknowledges that disclosures can happen by providing: (c) A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.

Commentary on the Rule notes that [18] Paragraph (c) requires a lawyer to act competently to safeguard information relating to the representation of a client against unauthorized access by third parties and inadvertent or unauthorized disclosure.

Thus, Rules 1.1 and 1.6 may allow a law firm to avoid an ethics violation stemming from a breach if it has acted competently (e.g., having a strong security program) to protect its client data from disclosure.

Accordingly, a strong security program may help shield a firm from an ethics violation caused by not appropriately protecting client data, and it may help them beat a negligence charge. Still, it does not impact the Rule’s requirement to inform clients of security incidents. A good security program does, however, reduce the likelihood that such a painful conversation will have to take place. Altogether, it is clear that an up-to-date security program is the best defense that a law firm can have. Whether large or small, taking measures to establish a strong security posture is not only the right thing to do, it’s the ethical thing to do. It may help save the firm cases, clients, and reputation.

How are commercial insurance property rates determined?

Understanding Commercial Insurance Property Rates

Insurance companies use underwriting to determine how likely your business is to file a claim. The greater the likelihood of a claim, the higher the premium. If an insurance company determines that your business is at increased risk for a loss, it may decline to issue you a policy.

Fire risk is usually the primary factor determining a business’s commercial property rates—state-licensed fire inspectors contract with insurance companies to perform inspections as part of the underwriting process. Inspectors use a standard rating system and weigh five factors in determining a structure’s fire rating. The five factors for determining commercial insurance property rates are:

  • Construction materials. Buildings made of potentially explosive materials will have higher premiums, while those made of fire-resistant materials could earn a discount. Additions to an existing structure might negatively affect a fire rating, so it’s good to talk to your agent or insurance company before remodeling. Internal structural elements can also affect a fire rating. Using wood partitions, floors, and stairways in an otherwise fire-resistant building will likely nullify any rate reduction. Fire-resistant interior walls, floors, and doors can help maintain a good fire rating.
  • Location. Buildings in cities or towns with good fire protection typically cost less to insure than buildings outside a city where fire protection may be limited.
  • Occupancy. A building’s use also affects its fire rating, and an office building will likely rate better than a restaurant or auto repair shop. In a building with multiple tenants, one hazardous occupant will negatively affect the fire rating of the entire building. If your business is in a building with a more hazardous company, your premiums will be higher.
  • Fire protection measures. Automatic sprinklers can reduce a building’s fire rating by 50 percent. Buildings with fire extinguishers, automatic alarms, and those within 500 feet of a standard fire hydrant will usually have lower ratings.
  • Exposure. Nearby hazards increase a building’s fire risk, and proximity to external fire hazards, such as a lumberyard or oil storage tank, will affect a fire rating. Internal exposure risks might include cluttered buildings and grounds, heavy mechanical or electrical equipment, or on-site storage of volatile materials.

Additional insured may be required by a contract for your firm.

What is an additional insured?

We are often asked what an additional insured is and why it is required on some law firm insurance policies. Hopefully, the following definition will provide some insight:

A person or organization is not automatically included as an insured under an insurance policy that is incorporated or added as an insured under the policy at the request of the named insured.

A named insured’s impetus for providing additional insured status to others may be a desire to protect the other party because of a close relationship with that party (e.g., wanting to preserve firm volunteers performing services for the company or to comply with a contractual agreement requiring the named insured to do so (e.g., project owners, customers, or owners of the property leased by the named insured).

In liability insurance, additional insured status is commonly used in conjunction with an indemnity agreement between the insured (the Indemnitor) and the party requesting the status (the indemnitee). Having the rights of an insured under its indemnitor’s commercial general liability (CGL) policy is viewed by most indemnitees to back up the promise of indemnification.

If the indemnity agreement proves unenforceable, the indemnitee may still be able to obtain coverage for its liability by making a claim directly as an additional insured under the indemnitor’s CGL policy.

In property insurance, this status is most often used in conjunction with a premises lease agreement between the named insured as the lessee and the owner of the leased building, in which the insured tenant is required to purchase insurance on the leased building and name the building owner as an additional insured on the insurance policy concerning the leased building.

Law firms should consider umbrella insurance.

Why your firm should consider umbrella insurance.

Umbrella insurance provides liability coverage over and above the coverage afforded by your basic general liability policy. If you have also purchased commercial auto liability or employer’s liability coverage, your umbrella should also apply excess of that coverage. To understand how an umbrella works try thinking of it as a building. Your basic (primary) policies are the building floor, and the umbrella is a roof with overhangs. The height of the building represents the umbrella policy limits, and the overhangs represent coverage afforded by the umbrella not covered by the basic policies. An umbrella protects your firm against potentially devastating lawsuits. Here are some things to consider before purchasing a policy:


The limits your firm needs largely depend on the nature of your business. For instance, roofers and pharmaceutical manufacturers are subject to catastrophic losses, and thus, they are likely to need higher umbrella limits than retail stores.


The umbrella should provide coverages not afforded by your basic liability policy. The coverages your company needs depend on the type of business you operate. For example, if your company engages in print or online advertising, you might want an umbrella that affords broader coverage for personal and advertising injury than your basic policy. Some umbrellas cover humiliation or discrimination unrelated to employment as part of advertising injury.


The amount and scope of coverage an umbrella can vary widely from one insurer to the other. Thus, it is essential to shop around and compare policies. An excellent place to start is to obtain an umbrella quote from the insurer that issued your basic policy.


There are a few things to keep in mind when shopping for an umbrella. First, many umbrella insurers have replaced the old “legalese” with simplified language like that found in most primary policies, making umbrellas easier to read. However, some umbrellas are so similar to the basic policy that they do not provide much broader coverage.

A second thing to consider is that an umbrella policy may contain exclusions not found in your basic policies. Alternatively, an umbrella may contain the same type of exclusion as your primary policy, but the exclusion in the umbrella may be broader. For example, the pollution exclusion in your basic liability policy may retain some pollution coverage while the exclusion in the umbrella retains no coverage at all.

Thirdly, some umbrellas contain self-insured retention or “SIR.” It represents the amount your firm will pay out of pocket for each occurrence covered by the umbrella but not the basic policy.

Policy Period

Finally, when buying an umbrella, make sure it begins and ends on the exact dates as your basic policies. Policy dates are essential because many umbrellas limit coverage to damages resulting from injuries or damage occurring during the policy period of the umbrella.