Vol. 80, No. 3, March 2007
The American Bar Association says that, on average, each lawyer will be the target of three malpractice claims during his or her career. If you're practicing in plaintiffs' personal injury, real estate, family law, or estate planning, the odds might be even higher.
Thomas J. Watson, Marquette 2002, is director of communications at Wisconsin Lawyers Mutual Insurance Co., Madison.
Those are the four areas of practice that generate the most frequent malpractice claims. Two of them, plaintiffs' personal injury and real estate work, also result in the most money paid out for claims.
When it comes to grievances filed with the Office of Lawyer Regulation (OLR), more than half of all complaints are in the areas of criminal law and family and juvenile law, far outpacing other categories, according to statistics from the OLR as of July 2006.
Why do these areas generate the most claims and grievances, and what mistakes are lawyers making?
Where Are the Risks?
Plaintiffs' personal injury work has generated the most malpractice claims for many years and continues to lead the way. Sally Anderson, vice president - claims for Wisconsin Lawyers Mutual Insurance Company (WILMIC), says this practice area can be fraught with pitfalls.
"Personal injury work is so competitive. Often lawyers work hard to attract clients. Call it puffing or whatever you like, but sometimes that raises expectations and promises are made. Most lawyers, in the initial stages of a case, truly believe they can deliver, but sometimes the case turns out to be very different. The client remembers that meeting and is disappointed." Anderson says the best a case will ever be is on the first day a lawyer meets with the client. "It can get progressively worse from that day forward. The client tells you everything they want you to hear, so you will be their strong advocate. Once the facts start to evolve, the client's position can sometimes deteriorate." And if promises were made or a client with high expectations perceived that promises were made, the result can be a very unhappy client and a malpractice claim.
Plaintiffs' personal injury work packs a double whammy - it is the first both in frequency and in severity of claims. In this as in other practice areas, Anderson says, client selection is of paramount importance. She says lawyers sometimes take on cases against their better judgment and regret it later on. "If your gut says no - follow it. For most lawyers, that gut feeling is the single best predictor of a successful attorney-client relationship."
Claims in real estate work trail only plaintiffs' personal injury work claims in frequency. Anderson, who practiced real estate law before she joined WILMIC, says this work is far more complex than it was 20 or even 10 years ago. "We see mistakes that didn't even exist a decade ago," she says.
Family law has typically generated the third-highest number of malpractice claims and is second to criminal law in the number of grievances filed with the OLR. Malpractice claims in family and criminal law do not generate as high of amounts paid out as personal injury claims do, but they are troublesome nonetheless, according to Anderson. "Clients are at emotional lows in their lives and these are also areas of practice in which sometimes lawyers promise results that are not always possible. Just like in personal injury work, disappointed clients look to blame their lawyers."
Two areas of practice that have seen an increase in the number of claims over the past five years are estate planning and corporate and business practice. Anderson says the severity of business law claims has doubled in the past decade. "The complexities of business models and the willingness of lawyers to accept representations involving conflicts of interest have contributed to this trend."
Anderson expects the number of claims involving estate planning to rise. "As baby boomers age, this area will continue to grow. Lawyers are getting increasingly involved in difficult family situations."
Many malpractice claims arise as a result of mistakes that often can be avoided. Calendaring errors account for most of the claims that WILMIC deals with. "Missed deadlines account for more than one in every five malpractice claims," Anderson says. That includes failing to know the correct deadline, procrastinating, failing to properly calendar important dates, and failing to react in a timely manner to a deadline. "Those things can mostly be avoided with a good calendaring system and some due diligence," Anderson says.
Lack of diligence also is a problem that can spark an OLR grievance. According to OLR statistics, it is the number one allegation in the complaints the OLR saw in the fiscal year that ended in June 2006.
Failing to know and properly apply the law is the second biggest problem for lawyers who are hit with a malpractice claim, with inadequate investigation and discovery coming in a close third. Anderson says failing to know the law can be avoided. "Lawyers, under pressure, sometimes do things without checking the statutes or doing adequate research. They rely on what worked before or some idea about what seems right. And the law changes, so you cannot assume it's the same as the last time you handled a similar issue."
Technology has made a big impact on how lawyers practice. Its speed has raised expectations - clients expect things to be done quickly. While technology has made life easier in many ways for lawyers, Anderson says it can be a double-edged sword. "We are seeing claims that arise as a result of lawyers making mistakes with technology. One lawyer missed some case law while doing online research because he simply did not scroll down far enough on his computer screen. That wouldn't be likely to happen with old-fashioned book research."
Fee disputes also can cause malpractice claims. This is an issue WILMIC has only tracked for the last five or six years, but Anderson says, "We see this with significant frequency. Lawyers need to be very careful about which clients they sue for fees." Unreasonable fees also show up in the top six on the list of allegations in grievances filed with the OLR.
While many lawyers focus on diligent investigation, knowing the law, skilled and zealous advocacy, and trial strategy, they sometimes overlook possibly the most important part of a case - client communication.
Knowing your clients, keeping them informed of case developments, responding to their inquiries in a timely manner and providing them with sufficient information to allow them to participate in their representation in a meaningful way can help you and your client work well together. And all of that communication must be documented.
"Letters of engagement that state your goals in the representation and include risks and costs can make your life much easier down the road," says Anderson. The value of on-going communication as a case unfolds cannot be overstated. "Letters documenting risk, costs, alternative approaches, and status reports can save you from a malpractice claim or OLR grievance."
Indeed, lack of communication is the second-most frequent allegation in OLR grievances, behind lack of diligence. In addition to keeping your client informed, Anderson says don't forget to listen. "Good listening skills are characteristics common in really good lawyers. Provide your client with an opportunity to speak and be heard. You can learn a lot about a case and about your client that way."
Failing to follow client instructions also is among the most frequent complaints in both malpractice claims and OLR grievances. And that, Anderson says, goes back to listening. "It's about making sure that you and the client understand each other."
Another allegation that shows up in malpractice claims and OLR grievances is conflict of interest. "We can't emphasize this enough," Anderson says. "We see lawyers run into this more often than you'd think. Lawyers just can't be all things to all people. Sometimes, especially in small communities, it is difficult to turn away a prospective client. Lawyers want to help and so they take cases that may have an element of a conflict. It's easier to see that after the fact, but by then it's often too late."
Impact on Malpractice Insurance
Many lawyers worry that they will lose malpractice protection if they report a claim or a potential claim, or at the very least, will be hit with a premium increase. That's not necessarily the case, says Dennis Marx, WILMIC vice president - underwriting. "It is not WILMIC's underwriting practice to automatically penalize or drop a policyholder simply because a firm reports a claim or even multiple claims. We don't necessarily increase premiums either," says Marx. "Some of our insured lawyers have had a few claims, but those claims were either dismissed or didn't result in the payment of any losses. We take the entire claims history of a lawyer into account before impacting premium."
What about suing for fees? Marx says WILMIC relies on the sound judgment and good office management practices of policyholders. Some insurance carriers increase premiums for this practice, and some carriers even drop lawyers who sue for fees. "We don't even ask about a law firm's fee collection methods on our applications. We will help lawyers with practice tools, but we don't want to tell lawyers how to run their practice."
Fee disputes can sometimes be a symptom of other problems in a practice. Marx says, "WILMIC is more interested in helping cure the root causes of those problems." Lawyers must determine why clients are not willing to pay. Could the client screening process be improved? Is the lawyer's work sub-par?
No matter what areas of practice you focus on, a few prevention methods can keep you sleeping better at night. As Anderson says, "Don't be afraid to say no to a client you shouldn't represent, check for conflicts, use your calendaring system meticulously, practice in areas you are comfortable [with], and communicate with your clients. If you do those things, you're way ahead of the game."