Attorneys are often approached by friends and family for advice.   At times, the particular issue might not fall squarely within their area of expertise or may involve a matter outside of the jurisdiction in which they are licensed to practice.

In a recent decision, the Minnesota Supreme Court took a Colorado attorney to task for the unauthorized practice of law.  The attorney was licensed to practice law in Colorado where he maintained an environmental and personal injury practice.  The attorney’s practice also included debt collection, which he had done for several years.

The attorney was approached by his in-laws for assistance regarding a $2,368 judgment entered against them in Minnesota in favor of their condominium association.  The in-laws explained to the Colorado attorney that they had been harassed by an attorney for the condominium association, who was attempting to collect the debt.

The Colorado attorney sent an email to the association’s attorney in Minnesota informing the attorney that he would be representing the in-laws and to direct all future correspondence to him.  Thereafter, the attorneys exchanged approximately two dozen emails.  The Colorado attorney assumed that he was not required to hire local counsel if he could settle the matter without filing a lawsuit. The association’s attorney, however, asserted that the Colorado attorney’s emails constituted the unauthorized practice of law and filed an ethics complaint.

In addressing the ethics issue, the Minnesota Supreme Court noted that out-of-state attorneys may provide legal advice only on a temporary basis if the matter arises in a state in which the attorney is authorized to practice and the attorney reasonably expects to be admitted to practice in the particular proceeding as pro hac vice counsel.  The Court concluded that the attorney’s representation of his in-laws did not relate to his practice in Colorado and did not involve a body of uniform law, and that he was therefore engaged in the unauthorized practice of law.  Accordingly, the attorney was issued a reprimand.

Professionals must be cautious that in their attempt to help close friends and family, they do not unwittingly violate rules of professional conduct.  Even having a small role in handling simple matters out of state could be deemed the unauthorized practice of law, and lead to liability for counsel and jeopardize the client’s interests.

Over the past few years law firms have seen a dramatic rise in employee lawsuits against their firm for claims like harassment, age discrimination, failure to promote, unlawful termination, and racial discrimination.

In fact, according to the EEOC, almost 100,000 discrimination claims were filed by employees last year.

Before a claimant can press a discrimination claim in federal court, they need to bring an action before the EEOC. But even if the claims wind up being ruled unfounded, EPL cases can be a drain on time and monetary resources for a small or mid-sized law firms. The average tally for a discrimination case exceeded $235,000, according to the EEOC.

What can a law firm do to protect itself against EPL lawsuits? The following guide will show how businesses can take out special insurance, called EPL insurance, to protect against employee claims, the types of claims covered under EPL insurance, and other steps legal experts recommend businesses take to protect against EPL claims. 

What Is EPL Insurance?

EPL insurance policies protect businesses from the financial costs incurred from employment-related lawsuits filed for a range of reasons, from wrongful termination to harassment to discrimination and so on.  While every EPL policy is different, a company with $1 million in sales and 50 employees can likely get a policy for about $7,000 per year.

Leading Causes of EPL Claims

The leading charge filed in discrimination cases is an allegation of racial discrimination, at 36 percent of cases, according to EEOC figures. Gender-based discrimination was alleged in 30 percent of cases. Age-based claims made up 24 percent, and allegations from the disabled tallied 23 percent. In many cases, multiple allegations are made. One of the growing charges, according to the EEOC, is retaliation against employees for making discrimination claims, which can involve a job switch that the employee views as a demotion related to the initial claim.

Protections Against EPL Lawsuits

In general, the more protections a small business puts in place against EPL claims and the better internal policies and procedures that are implemented, the lower the business’s premiums will be for EPL coverage and the more likely the business will be considered a candidate for coverage. It’s essential that businesses have a written employee handbook with strong anti-harassment and anti-discrimination policies, but other efforts can also pay off.

The following steps are important for businesses to take in order to protect themselves against EPL claims.

  • Distribute an employee handbook. Generally speaking, it’s not as important how long or detailed it is as what topics are in there. The handbook should contain the business’s equal employment opportunity policy. It should also provide employees with an internal mechanism to complain about discrimination or harassment ‘so maybe you can head off a lawsuit at the pass.. If the employee doesn’t use that procedure, your business may be able to use that as part of its defense, saying that the employee didn’t exhaust internal channels for seeking resolution to the problem.
  • Develop a code of ethics policy. This policy tells employees that they shouldn’t do certain things, like giving kickbacks and engaging in other ethical violations. This reduces the employer’s exposure to punitive damages, which may not be covered by EPL insurance policies anyway, if the business is sued over the actions of an employee.
  • Include an anti-retaliation provision. In light of the new rise in claims of retaliation, it is recommended that you include a statement saying that it’s the policy of the business not to retaliate against employees over accusations of discrimination or harassment.
  • Institute handbook auditing procedures. Having an audit procedure in place under which the handbook is periodically updated to keep up with changes in the law is also important and can help in the defense of a business.

Missed deadlines and time management-related errors are the second biggest cause of malpractice claims at all sizes of firms.  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, over the last year it may have resulted in more claims due to confusion over transition provisions.

A failure to calendar 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 for helping them better manage client communications and relationships.

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 the decision 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, but 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. An attorney therefore 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 will be paid for by the parties. Rather, the client must be told in writing that he or she should ask questions if he or she does 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 made 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 type 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 prologue for the “settle and sue” lawsuit.

It should come as 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 sort of 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 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 doing 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 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.

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.

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 the actions of one of your colleagues could result in a firm-wide declination of coverage.  A scary thought. A recent decision demonstrates how the actions of one colleague 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 bankruptcy action for a client.  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 cases involving rescission and contract formation.  The court distinguished between applying the innocent insured doctrine to scenarios where the insured’s actions may trigger some exclusion in the policy as opposed to 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 cases of rescission, 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 the insurance coverage for all insureds 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.

Although it is uncommon to ignore legal precedent, it does happen from time to time when it is outdated, no longer applicable or due to the political/philosophical makeup of the presiding judiciary. Also, new laws can create problems for attorneys.  When the law is clear, an attorney’s obligations are clear – he or she must apply the applicable law to the facts of the case.

What happens, though, when the applicable precedent is overruled altogether?  The attorney cannot be expected to anticipate the change of law, right?

A recent decision holds that an attorney does not have an obligation to anticipate a change in precedent. In Minkina v. Frankl, the Massachusetts Supreme Judicial Court declined to hold that a defendant law firm committed malpractice when it failed to anticipate a substantial change in the law that eliminated the existing precedent.

The Case
In the dispute, the law firm represented a plaintiff in an employment discrimination suit.  At issue was an arbitration provision in the plaintiff’s employment agreement and its enforceability.  The defendant sought to enforce arbitration by pointing out a well-established precedent that supported the provision’s enforceability.  The court ruled in the defendant’s favor and compelled arbitration.

However, after the decision was rendered, the Supreme Court actually changed the associated law thus eliminating the well-established precedent.

After the Supreme Court decision, the plaintiff then sued his former counsel alleging that the firm was negligent in its failure to anticipate the change in law.  The law firm successfully moved for summary judgment using the argument that it had no duty to foresee the changes.  The Supreme Court held the decision on appeal.

The Supreme Court’s decision affirms that attorneys have an obligation to apply the current law, but cannot be expected to anticipate changes to the law or its established precedent.  This is simply too high of a standard to hold an attorney.

What this case does do, though, is highlight the need for attorney malpractice insurance.  While the suit against the law firm held no merit, there were still costs associated with defending the firm.  A solid malpractice policy, in addition to paying any necessary claims, provides all necessary defense costs (above the applicable deductible) to exonerate the accused party.

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 in 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, maybe impossible to satisfy, maybe 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 ti. Me. 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.

Most law firms today live in two worlds – the world of paper client files and the world of 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

As far as your obligation to clients, 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 in 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 store their email in 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 the process of electronic record management with your active files, you create a plan for the future as well as 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 be able to find documents later so you need to make sure they are searchable today. Contact your copier vendor or IT vendor to be sure that any documents that you are scanning 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. In order 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 on a monthly basis, use the end of the month.
    By creating this secondary area of storage 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 type of 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 on a regular basis.
  5. Maintain destruction records. Just like with 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 extraordinarily expensive 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 in accordance with their electronic data destruction policy. This policy is good for removing some of the files from storage, but it varies depending on the record keeping for the firm.
  2. Firms find that the cost of retrieving the paper files, scanning and destroying files is 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 have a 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 for the future.