Not all claims are avoidable, and a disgruntled client may sue even absent attorney error. However, there are proactive steps a law firm’s general counsel should consider to reduce the risks of a claim against a firm.
Although taking proactive steps to prevent claims can cost money and require attorney time, it will be money and time well spent. A firm faced with a claim likely will incur defense and settlement expenses. In the years following the claim, the firm will probably pay higher premiums for professional liability insurance. Time that could be spent attracting new clients or serving current clients will be spent resolving the claim. In a high-profile case, the firm may suffer harm to its reputation. For these reasons, good loss prevention is good business and worth the investment.
The first and most effective step a firm’s general counsel can take is to establish a culture where attorneys understand the firm’s values. Ethical rules and the firm’s commitment to them should be discussed and embraced by the firm’s attorneys. Firms should provide continuing legal education that address ethics issues related to the firm’s practice. The firm should encourage attorneys to raise and discuss problem cases or clients with the firm’s leadership before the problem gets out of hand.
Procedures and policies should be in place to avoid preventable mistakes. This includes a calendaring system so that deadlines are not missed; a conflicts check system to avoid clients with conflicting interests; and clear policies on opening and closing cases. Just as important as having procedures and policies is educating all attorneys – not just general counsel and management – about these policies and procedures.
Finally, because mistakes do happen, firms should carry adequate insurance. Professional liability policies are declining limits policies. If a firm’s practice includes multi-million dollar deals, a $500,000 policy may be inadequate. Insufficient policies can make cases more difficult to resolve, and strain relationships at firms.
While not all claims are avoidable, proactive risk management can eliminate some.
About the author:
John Sullivan is the Vice Chair of BASF’s Legal Malpractice Section. He is a partner at Long & Levit, and a contributor to Long & Levit’s Lawyers and Judge’s Blog, www.longlevit.com/blog/, which is searchable by topic and case name.