Avoiding Malpractice Claims through Time Management

Missed deadlines and time management-related errors are the second biggest cause of malpractice claims at all firms’ sizes.  Over the last decade, they have represented over 17 percent of all malpractice claims.

The most common time-related error is a failure to know or ascertain a deadline – missing a limitation period because you didn’t know it. The good news is that this specific error has declined by almost 50 percent over the last ten years. The bad news is that the other time and deadline-related errors are holding stable or increasing slightly.

While in the longer term, we expect that the new Limitations Act will result in fewer limitations period claims, at this stage, it does not appear to have had any impact. Indeed, it may have resulted in more claims over the last year due to confusion over transition provisions.

A calendar failure is the second most common time-related error (a limitation period was known, but it was not properly entered in a calendar or tickler system). The fourth most common time-related error is the failure to react to calendar error. In this case, the limitation period was known and entered into a tickler system but was missed due to a failure to use or respond to the tickler reminder.

Lawyers at firms of all sizes seem to have a dusty file or two that sits on the corner of their desks for far too long, and this makes procrastination-related errors the third most common time-related error. By count and costs, procrastination-related errors are on an upwards trend.

These deadline and time management errors are easily preventable with better time management skills and the proper use of tickler systems. Practice management software programs such as Amicus Attorney and Time Matters are excellent tools for helping lawyers manage deadlines and tasks and better manage client communications and relationships.

Settle and Sue Trend

A recent trend within the legal industry is the “settle and sue” lawsuit.   A plaintiff in this type of legal-malpractice action is unhappy with settling a prior lawsuit even after the plaintiff voluntarily agreed to settle the case. In classic buyer’s remorse mode, disgruntled clients regret deciding to settle and focus their litigation crosshairs on their former attorney who advised the “negligent” settlement.  In this case, the blame for that mistake is projected toward the former attorney.

An attorney may not be able to absolutely insulate himself or herself from a lawsuit raised by a former client post-settlement. Still, there are tips that one may follow to allow a more favorable opportunity to defend such a claim. Here are some suggestions:

Establish parameters early in the representation. Use an engagement letter to the client to underscore that your objectives are not necessarily to obtain the highest monetary settlement/verdict or to defend the case so that the least amount of money is paid. Rather, the goal of resolving the case is to reach a settlement that the client can understand and accept, given the strengths and weaknesses of the case. In short, don’t promise the moon. Merely promise that you will provide the best recommendations you can.

Get client input. Communicate with your client regularly regarding what his or her expectations of the case are and document his or her potentially evolving impression of the case in writing. Clients change their attitudes and goals frequently. Therefore, an attorney would be prudent to elicit regular input from his or her client to ensure that there is no miscommunication about what constitutes a “fair” settlement.

Fully explain the release. Clients frequently will assert that they could not understand the legalese of litigation and that no one attempted to explain the legal intricacies. Avoid that issue by showing your client a copy of a standard release early in the process and invite a discussion about the ramifications of signing such a release (for example, it may mean there is no admission of liability and one party is releasing all other potential claims). Again, document that this consultation took place.

Describe the mediation process in writing. If a case mediates, ensure that the client understands what the mediation process entails. This will require putting in writing (a) the qualifications and justification for the selection of the mediator, (b) the strengths and weaknesses of the case, (c) the possible settlement range and verdict range of the case, and (d) an acknowledgment that settlement could bypass a better result at trial. Reiterate that the parties are not obligated to settle just because a mediation has been scheduled and paid for by the parties. Rather, the client must be told in writing that they should ask questions if they do not understand any part of the process and should never feel forced to settle.

Alert the client to post-settlement responsibilities. The client must be aware of how any potential liens will affect the collectability of settlement, the time frame for payment, and how the attorney fees may be paid from that settlement. The case is not over the moment an agreement to settle is reached, and the client must be kept apprised of what will be done to bring a final resolution to the case.

A purchaser stricken with buyer’s remorse is consumed by the type of regret evidenced by plaintiffs in “settle and sue” lawsuits. Most jurisdictions agree that settlement of an underlying action does not automatically bar malpractice claims. Regardless of a plaintiff’s motive, the defendant-attorney must understand the law of his or her jurisdiction regarding these types of cases and must take comprehensive steps during the underlying litigation to ensure that there are ample grounds to defend the claim if one arises. The execution of a settlement agreement is usually the final chapter of litigation. At other times, it serves as a prologue for the “settle and sue” lawsuit.

Avoiding Bad Clients

Bad clients can make you question your skills, destroy your reputation, and result in the worst money you have ever made.  Learning how to spot and avoid them can be the best decision you ever make.

All Clients Are Created Equal, Right?


Bad clients have an amazing way of sapping time and energy in ways you cannot bill for.  Remember, you cannot bill for stress. You cannot bill for screaming when you get off the phone. You cannot bill for not sleeping well. You cannot bill for spending an hour talking about why you already wrote off a third of your time and why your bill is reasonable.

Bad Clients Chase Away Good Ones

Bad clients can cause you to turn down good clients for two reasons:

  1. Bad clients have an amazing way of sucking up more time than they should. That means you will probably turn down good clients because you are so busy dealing with your problem client.
  2. The mental fatigue is greater than you realize. When you are in the middle of dealing with a bad client, it can make otherwise good clients seem like bad clients.

It Doesn’t Get Better

You are doing yourself a disservice if you tell yourself, “it can only get better” or “it has to get better from here.” Sure, you can cross your fingers and hope they suddenly start responding to phone calls or emails, but that probably won’t be the case.  Hopefully, your retainer has a provision for these scenarios, and you should not be afraid to invoke it and terminate your representation.

Check the Warning Signs

Now that you understand all money is not created equal, you can sharpen your intake skills to avoid bad clients. Someone might call with what sounds like the greatest case in the world, but your intuition may make you question the case or the client.  Instead of talking yourself into cases, trust your instincts and turn them away.

If you are not ready to live and die by your gut, here are some other warning signs that trouble could be brewing down the road:

  • Your client calls with a  legal emergency but then doesn’t return your call for days.
  • Your client doesn’t know who you are because they have called so many different attorneys.
  • He leaves a message without any specific details, other than he knows “it’s a great case,” and you need to call back immediately.
  • She sends multiple emails with documents before ever talking to you.
  • Makes an appointment and then no-shows or reschedules repeatedly.
  • The client tries to bargain on your rate or explains why you are too expensive.
  • Explains they previously hired another attorney but want to give you a shot.
  • Tells one story over the phone and a completely different one in your office.

That is not an exhaustive list by any means. Those are just some of the red alerts that should warn you about potential issues looming.  This is also the perfect opportunity to bounce the case off another attorney and get some feedback. But never try and convince yourself that any client is a good client. It’s not that simple.

Coverage Denial Due to Colleague’s Misrepresentations

About the only thing worse than getting slapped with a malpractice suit is learning that your firm is not covered despite the professional’s belief that insurance was in place.  Consider the possibility that one of your colleagues’ actions could result in a firm-wide declination of coverage— a scary thought. A recent decision demonstrates how one colleague’s actions could result in a denial of coverage for everyone.

In Illinois State Bar Ass’n Mut. Ins Co. v. Law Office of Tuzzolino and Terpinas, the Illinois Supreme Court ruled that an insurance company could rescind the entire malpractice policy for a Chicago law firm due to one partner’s false response on a renewal application.  In the underlying malpractice suit, one of the law firm defendant’s partners (“Partner A”) was tasked with filing a client’s bankruptcy action.  The suit was dismissed when he failed to timely file.  Instead of promptly reporting the error to the client and the firm’s malpractice insurer, Partner A allegedly lied to the client and represented that the suit was still pending.

Shortly after the client uncovered the truth about the action, Partner A attempted to renew his firm’s malpractice insurance policy.  He submitted a renewal quote and acceptance form to his insurance company on behalf of himself, his law partner (“Partner B”), and the entire firm.  One of the questions on the renewal form asked, “[h]as any member of the firm become aware of a past or present circumstance(s) which may give rise to a claim that has not been reported?”  Partner A responded “no” and signed the verification indicating the information contained in the renewal application was “true and complete to the best of [his] knowledge.”

After the renewal application was submitted, Partner B learned of the impending malpractice claim against Partner A and promptly notified the firm’s malpractice carrier.  A malpractice suit was eventually filed against Partner A, Partner B, and their firm. In turn, the malpractice insurance carrier filed suit against the firm and partners to rescind the policy based upon Partner A’s material misrepresentation.

The appeals court found that the “innocent insured” doctrine protected Partner B.  Partner B was therefore entitled to malpractice coverage even though Partner A was not.  However, the state high court disagreed, holding that the “innocent insured doctrine” is inapplicable in rescission and contract formation cases.  The court distinguished between applying the innocent insured doctrine to scenarios where the insured’s actions may trigger some exclusion in the policy instead of the instant scenario where the policy itself is voided through misrepresentation in the formation of the contract leading to rescission.

The court reasoned that in rescission cases, the focus is the effect of a misrepresentation on the validity of the policy, not the innocence of other insureds.  The court’s decision was fatal to all insureds’ insurance coverage under the firm’s malpractice policy.

The decision also serves as a good reminder to properly detect and report potential claims promptly.  The process of applying for insurance should be treated as a serious and significant event, and a firm should carefully designate a representative who will act thoroughly and truthfully when interacting with the insurer because one dishonest or careless colleague could result in rescission for everyone.

After being served with a malpractice action, attorneys will often mutter, “I knew·I shouldn’t have taken on that client.” These “problem” clients are often the result of ineffective client screening.

Successful practitioners augment their “gut feelings” with standardized office-wide screening procedures. A firm-wide policy of screening each prospective client according to a predetermined set of standards is critical. Each member of the firm is responsible for the clients the other members bring to the firm. With a standardized and effective screening process, potential disaster clients may be identified and avoided.


A set of screening questions subject to review and modification goes a long way toward weaning out undesirable clients. A periodic review of problem cases to decipher warning signs of potential danger also makes sense.

  • Do you have the time to take on the new case and give it the proper attention that the case deserves? If not, say no.
  • Do you have the expertise necessary to handle the case? Don’t dabble! There is no such thing as a simple will or a cut-and-dried personal injury case. If you are not prepared to handle the difficult cases in a given area of practice, do not accept the seemingly simple things.
  • If this is a contingency fee case, do you have adequate funds to take the case? You want to avoid being placed in a situation where case management decisions are being dictated by economics instead of by legal judgment.
  • Can the client afford your services? If not, say no.   A fee dispute is in the making if you accept a client who is on a different financial footing.  Minimally, the collection is likely to become an issue,  and if you are compelled to collect the fee, the odds of facing a malpractice claim increase significantly.
  • Is the prospective client a family member or friend? Don’t be fooled. First, if the work is not satisfactory, favor or not, even the family member or friend will sue. Accepting work under this situation is foolhardy. Second, if you are unqualified to represent a stranger in a particular matter, likewise, you are unqualified to represent a friend or family member. Don’t be pushed into something you are uncomfortable handling.
  • Has the prospective client brought you the matter at the eleventh hour?  If so, say no. If you do not have adequate time to perform a thorough investigation, you run the risk of missing a possible claim, failing to identify a defendant, or letting the statute of limitations run. You don’t want to end up paying for your client’s procrastination.
  • Has the prospective client had several· different attorneys? Heed the warning light!  The client may wish to avoid paying fees, may be impossible to satisfy, may be bringing a case all others before you believed lacked merit, or will be impossible to resolve satisfactorily.
  • Does the prospective client behave irrationally or appear confrontational? If you are unable to work·effectively with someone during the initial interview, it is unlikely to get better over time. The difficult client all too readily becomes the angry client who will not hesitate to bring a suit.
  • Does ·the client have unrealistic expectations? You cannot guarantee results nor obtain a million-dollar judgment on a simple slip and fall. Do not take on clients whose expectations are simply unobtainable.

Today, most law firms live in two worlds – the world of paper client files and electronic client files.  The big issue now is how to properly conserve each file type to ensure you keep proper documentation.

Paper vs. Electronic Records

There is no distinction between paper and electronic record retention; the same retention period applies.

Electronic Records

Electronic records can include the following:

  • Documents – This would include anything that you would store in your “electronic client file” (from administrative documents to trial documents and everything in between) or your document management system or including voicemails, videos, and any other type of “document.”
  • Email – Email is a convenient way to communicate with clients. Some attorneys move their client emails to their practice management system, but many stores their email folders by client name in Microsoft Outlook. When considering an “electronic client file,” email is an essential part of the puzzle.
  • Time, Billing, and Accounting records – Typically, these types of records are stored in an accounting system and should be included in your procedure for closing client files. We will not address these specifically here, but they are considered part of the electronic client file.

Now that we know what documents we need to consider, let’s start by looking at a couple of key areas of electronic client files:

  • Active paper files
  • Closed paper files
  • Offsite paper files

Active Paper Files

By starting electronic record management with your active files, you create a plan for the future and the past. Most active cases today are a combination of electronic documents and paper documents.

There are three rules for active cases that will help you in your future records management:

  1. Scan anything paper related to the case to PDF. Have a procedure in place to make sure this happens.
  2. Shred the paper. Once the document is electronic, you can print it again if it becomes necessary. There are companies available for shredding and recycling. They will even provide bins for you to dispose of your paper. Depending on your office size and the amount of paper you generate, you may want to purchase an industrial shredder.
  3. Make sure the documents are searchable. This is key. You will want to find documents later, so you need to make sure they are searchable today. Contact your copier vendor or IT vendor to ensure that any documents you scan on a multi-functional copier are automatically made searchable.

Closed Paper Files

Most firms have closed files in their office. Consider implementing the following strategy for closed files:

  1. Scan anything in the paper file to a searchable PDF. You can hire a scanning company or hire a file clerk or a law clerk to scan the documents.
  2. Export the Email. To maintain all case-related information in one place, export the case-related email. If it is sitting in MS Outlook, the email is separated from the rest of the client file. Export it from Outlook and save it with the rest of the electronic files.
  3. Shred the paper.
  4. Make sure the existing electronic files are searchable. MS Office files are already searchable, but your older PDF files might not be. Invest in Adobe Acrobat Professional to convert multiple PDF documents to searchable text at one time by using their Recognize Text in Multiple Documents feature.

Moving Closed Files

Once your closed cases are all electronic, organize them and move them to a designated closed file area.

  1. Create an Electronic Destruction Policy –This should be part of your file closing procedures and should document when a file is closed and when electronic data is destroyed. In addition to informing your staff, include this information in your engagement letter so the client is aware of your electronic data destruction policy.
  2. Create an electronic closed files storage area. These documents should be organized by year or month and year of closing depending on the volume of cases and your firm’s destruction policy. If your policy is to destroy them once a year, plan on January 1st for destruction. If it is every month, use the end of the month.
    By creating this secondary storage area for closed files, they can be separated from your existing active cases but still available. If they need to be relocated to cloud-based storage or some alternative storage, all of the files will be in one area with a destruction date set.
  3. Backup, Backup, Backup. Your data backup for your active files and your closed files should be the same. A good rule of thumb is that your data should be stored in three different locations.
  4. Calendar your destruction dates.  Create a recurring appointment for you or your staff to destroy the electronic documents. If it is on the calendar, it is more likely to be done regularly.
  5. Maintain destruction records. Like paper destruction, records of destruction for electronic documents should be maintained indefinitely and should include the file name and destruction date.

Offsite Paper Files

Offsite storage of paper documents is costly, and most firms have been doing it for years. Just looking at the monthly cost for offsite storage will make most attorneys weak in the knees. But, your firm needs to come up with a plan for those paper documents and how they should be managed. Typically, there are two strategies for offsite paper documents:

  1. Firms retrieve paper files that have been sent offsite and scan and destroy the files following their electronic data destruction policy. This policy is good for removing some of the files from storage, but it varies depending on the firm’s record-keeping.
  2. Firms find that the cost of retrieving the paper files, scanning, and destroying files are too expensive and continue to store files until the destruction dates. Then, the storage facility will destroy the existing files, and offsite storage is no longer necessary.

Both of these strategies work, so your decision should be based on how long you have been storing documents offsite, how much storage your firm uses, and how organized your offsite records are. The offsite storage issue may not be fixed in the short-term, but at least the firm will plan to move into the future.

Plan for the Future

As they say, the future is now. By implementing document retention and destruction strategies for all of your files, you can bring your paper documents under control, making them searchable and accessible anywhere, and saving on offsite storage costs. In short, by creating a written policy for electronic document retention and destruction, informing your clients and staff of the policy, and implementing the policy, your electronic documents and paper documents will be organized with a plan.

Hired one thing, but then sued for another? It may be a more common problem than you think.  In a recent decision, an appellate court held that an attorney tasked with a seemingly simple and defined engagement might actually be on the hook for much more. This serves as an important reminder to effectively communicate with the client to ensure a consensus as to the scope and limits of the engagement.

Plaintiff Attorney (“PA”) decided to retire from Law Firm (“Firm”).  In so doing, he hired the defendant Outside Law Firm (“Outside Firm”) to concretize his departure from the Firm by preparing the necessary documents. After the departure was finalized, PA brought a legal malpractice claim against Outside Firm when he discovered that the agreement did not contain a provision related to payouts from a 401(k).

Initially, the trial court granted summary judgment on behalf of the Outside Firm.  That court found that Outside Firm merely acted as “scriveners,” in that their primary function was to take the terms and language of the departure agreement provided by PA and turn them into a binding agreement. Outside Firm was not responsible for negotiating these terms orchestrating any other aspect of PA’s departure from Law Firm. On this basis, the trial judge concluded that Outside Firm did not technically represent PA but merely acted as an instrument in effectuating his departure.

On appeal, however, the court reversed and held that, despite Outside Firm’s seemingly limited involvement, the potential scope was a matter of factual dispute.  Among other concerns, the appellate court noted that there might well have been representation by Outside Firm on behalf of PA, as the acceptance of professional responsibility by a law firm “need not necessarily be articulated.” The appellate court further found that, despite Outside Firm’s primary responsibility to effectuate the terms of the departure agreement as provided by PA, it may well have had a professional responsibility to explore further the terms of this agreement, particularly concerning the 401(k).  Ultimately, the appellate court decided that this matter had too many factual wrinkles to be decided by summary judgment.

So, what does this teach us? Never assume that even the most seemingly simple representation is as appears at first blush. Even if hired for what seems to be the most rudimentary task (i.e., something akin to a “scrivener”), it behooves any attorney or firm to approach that task with a fine-toothed comb and to ensure that the scope of the agreement is clearly spelled out and understood. Since the scope of representations continues to impose professionals’ risks, clearly documented communication may be the key.

It should be no surprise that attorney/client communication errors are the leading cause of malpractice claims.  In fact, over the last decade, more than one-third of malpractice claims are caused by some communication error.

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 the case will typically come down to how well the attorney documented his or her file on the matter in question.  Without significant notes or documentation, the chances for the attorney to win decrease significantly.

The second most common communication error is a failure to obtain the client’s consent or 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 communication with a client is the third most common communication 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 doing something during or after the matter (e.g., sending lease renewal notice to the landlord, renewing 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 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 by carefully documenting instructions and advice, and confirming what work was done on a matter at each step along the way.

Law firms are being targeted more and more for cyber attacks, as was evidenced by a recent attack on 50 prestigious law firms targeted by Russian hackers.  The targeted firms tended to be transactionally oriented; the hackers’ apparent plan was to obtain confidential, market-moving information and trade on it.

To help keep your firm safe, here are five tips to keep your firm safe.

1. Backup, backup, backup — early and often.

You need to have your data backed up if you suffer some misfortune, such as a fire or flood in your office or a massive hack of your computer system. Backing up to the cloud is an increasingly popular option, but be careful when selecting a service. Some services are more vulnerable than others.

2. Use two-factor authentication.

Two-factor authentication is an increasingly popular and effective way to protect the security of online accounts.  Yes, it can be a pain since it’s slower and more cumbersome than simply entering a single password. But the security it offers can be extremely beneficial.

3. Consider using a password manager.

Ideally, it would be best if you had a different password for everything you log into.  Most often, though, that’s simply not practical.  Password managers can help keep your passwords organized and secure.

4. Educate your colleagues about cybersecurity.

You might be savvy about cybersecurity, but all it takes is one weak link in your organization to throw your computer system into chaos. For example, a Florida firm was recently hacked after a secretary clicked on an email attachment labeled “résumé for your review,” but it was actually malware.

5. Don’t let the perfect be the enemy of the good.

Unfortunately, you can never be 100 percent secure. A good starting point is assessing your computer systems to figure out what your potential issues and biggest risk points are. This is what several law firms are now doing in the wake of the hacking reported, often with outside consultants or technology firms’ help.

Lawyers wear many hats; the key is not to wear them all simultaneously.   Many lawyers are well versed in areas outside of the law and can be sources of non-legal knowledge for clients.  However, lawyers need to be mindful when their services extend beyond the traditional landscape of legal advice.  Mixing business interests and legal advice can easily get you in hot water if the transaction goes awry.  Take, for example, the case of Burk & Reedy, LLP v. Am. Guarantee & Liab. Ins. Co.in which a professional liability insurer denied coverage for an attorney involved in both the legal and business aspects of a transaction.

The case stemmed from a failed business transaction.  Plaintiff (an attorney) was a co-managing member with an ownership interest in a Company.   Plaintiff executed an agreement with an outside investor (Investor), whereby Investor was to secure collateral for a loan to the Company in exchange for a percentage of ownership in the Company.  The investor ultimately used his personal property as collateral and secured the loan for the Company.   The Company, however, defaulted on the loan, and the lender foreclosed on Investor’s real property to repay the loan.

The investor sued Plaintiff to recover the money and real property he lost in the business venture, alleging, among other things, that Plaintiff committed legal malpractice.  Investor alleged that Plaintiff provided legal advice in connection with the decision to invest; Plaintiff communicated his consent to act as counsel for Investor concerning obtaining the loan; Plaintiff breached the Rules of Professional Conduct by acting as counsel to the Company while maintaining ownership in the Company, and Plaintiff conducted business with his client, Investor.

Plaintiff was insured under a professional liability insurance policy. The insurance policy specified that the insurer would pay claims “based on an act or omission in the Insured’s rendering or failing to render Legal Services for others.”  However, the policy also contained two important exclusions.  These exclusions precluded coverage for any claims based upon or arising out of 1) the insured’s capacity or status as an officer, director, partner, trustee, shareholder, manager, or employee of a business enterprise and 2) the alleged acts or omissions by any insured for any business enterprise in which any insured has a controlling interest.  The insurance company refused to defend Plaintiff because of these two policy exclusions.

Plaintiff then filed a separate action against his insurance company.  The court found that the malpractice claim clearly fell within the policy exclusions.  As the court stated, the “allegations demonstrate that [Plaintiff] simultaneously wore two hats while advising [Investor] to invest in [the Company]—that of an attorney and that of a managing member of [the Company].”  The court further found that Plaintiff not only provided legal assistance to Investor during the loan application process but also simultaneously engaged in conduct that advanced the business interests of [the Company].  The court concluded the insurer did not have a duty to defend or indemnify the Plaintiff in the underlying action.

This case serves as a good reminder that attorneys need to be cognizant of their ethical obligations at all times.  Failure to recognize when the lines are becoming blurred can not only be an ethical violation but, as in this case, result in a lack of malpractice coverage.