During the first quarter of the new year, this column identifies strategies to minimize the risk of claims in 2021.
The first strategy is to effectively terminate a representation once it concludes. In California, the statute of limitations for a claim against an attorney is tolled while “the attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or occurrence occurred.” C.C.P. § 340.6.
Below are three tips firms could implement to clarify representation has concluded to avoid inadvertently tolling the statute of limitations.
First, the firm should send a termination letter to its clients at the end of a matter. This is especially important if the representation does not have natural termination such as the settlement of litigation. The termination letter should clarify the date the representation was terminated, identify upcoming deadlines, and confirm the firm will not act on future deadlines. When appropriate, the firm should also include the reason for the termination. The firm should craft the tone of the letter to recognize it will be an exhibit if there is future litigation between the firm and the client.
Second, once a matter is over, the firm should not perform further work for the client. One court held an attorney continued to provide representation in a matter even after the judgment was final because the attorney represented the client regarding a substantive issue, post appeal fees and costs. Another court refused to grant summary judgment on the statute of limitations because the attorneys continued to bill the client for work although another firm had already assumed responsibility for the matter.
Third, to the extent any attorney at the firm spends time in a risk management capacity on a matter, the time should not be billed to the client file. If the time must be recorded, it should be to a separate internal firm billing matter. This will help to avoid any inference that the firm was continuing to perform services for the client.
Terminating an attorney-client relationship to avoid tolling of the statute of limitations also minimizes potential exposure for events that occur after the attorney-client relationship ends, such as missed deadlines or a client’s failure to compete certain activities. Properly terminating attorney-client relationships is an effective tool to minimize claims.
About the Author:
John Sullivan is a partner at Long & Levit, where he handles professional liability cases, attorney fee disputes, partnership disputes, and state bar disciplinary matters. He also served as 2020 Chair of BASF’s Legal Malpractice Section.