Economic Downturn Means More Lawyer Business, Risk
Managing Risk
More people are seeking legal advice, but many of
the same factors that prompt people to file lawsuits lead to legal
malpractice claims.
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Ann Massie Nelson is director of communications at
Wisconsin Lawyers Mutual Insurance Co., Madison. Past risk management
columns appear at www.wilmic.com
with the permission of the State Bar of Wisconsin. |
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by Ann Massie Nelson
WHEN THE ECONOMY GOES into a slump, the legal business traditionally
sees an upturn. People have a heightened sense of righteousness, and the
urge to sue any possible source of recovery is enhanced, according to
Ward I. Richter, an attorney with the Madison firm of Bell, Gierhart
& Moore S.C.
The same circumstances that prompt clients to retain lawyers,
however, can lead to a concurrent rise in legal malpractice claims.
Legal malpractice claims have steadily declined, both in number and
severity, during the past few years. "During good times, fewer people
look to pin the blame for bad business or legal results on their
lawyers," says Melvin G. McCartney, president and chief executive
officer of Wisconsin Lawyers Mutual Insurance Co. (WILMIC).
When times are tough, clients will examine the value of a lawyer's
work with a more critical eye. Even legal work performed in the past may
come under closer scrutiny as clients and third parties attempt to
uncover any overlooked sources of recovery.
"Work done in good times comes back to haunt lawyers in bad times,"
McCartney notes. "Claims against lawyers rise, as well as the costs
associated therewith."
While you can't do much about past representation, there are some
techniques you can use to reduce your risk of a malpractice claim when
the economy goes soft. Richter offers the following recommendations.
Be Selective
Screen new clients and new matters carefully. In an economic
downturn, the client who postponed action may come to you just before
the statute of limitations runs out, putting you in the difficult
position of managing an overripe matter in a short time. Think to
yourself, "I can afford to be choosy."
"When you get busy, it's easy to work on the good cases. The ones you
think you will win are fun. But if you're not attentive to the other
cases - the ones where the clients are difficult or the case is weak -
your risk of a malpractice claim looms. You tend to let the bad cases
sit and fester until time runs out," Richter says.
Your ability to spot difficult clients may be clouded by your empathy
for their situation. People who have been laid off or undergone a
cutback in hours may be seething with anger at their employers. The
divorce client who needs to renegotiate a child-support agreement will
probably be vexed, no matter what the outcome. The slip-and-fall
accident that would have been covered by health insurance when the
client was employed now becomes a personal injury claim against the
property owner.
Be cautious in how you proceed with people who are hurting
emotionally, financially, or physically. You don't want their anger or
vindictiveness to ricochet in your direction.
Don't Dabble
More and more areas of practice require highly specialized knowledge
to provide competent representation. A lawyer who takes a personal
injury or medical malpractice case as a favor to a friend or long-term
client, for example, may not comprehend the subtle nuances of the
law.
One attorney, practicing outside his area of expertise, represented a
patient in a medical malpractice claim. The attorney was unaware that
notification requirements are shorter for physicians employed by
government agencies than for those in private practice. When notice was
served too late, the medical malpractice claim became a legal
malpractice claim.
WILMIC's claims statistics show a disproportionate number of claims
are reported and paid in areas of law where the attorneys rarely
practice, according to their insurance applications. "If you don't have
the expertise in an area of practice, you need to refer the matter to
someone who does," McCartney says.
Market Preventive Legal Service
Encourage clients to seek your counsel before making serious,
life-changing decisions, Richter says. Let clients know you are aware of
the challenges they are facing. Remind them that preventing legal
problems is far easier and less costly than cleaning up mistakes. For
example:
- If you represent an employer who is contemplating layoffs, send a
letter suggesting the client talk with you first about sensitive
questions dealing with age, sex, or race.
- When you see an article or Web site with news related to a client's
industry, send a copy with a "thought you would be interested" note or
email.
- Help clients identify needs and direct them to other lawyers or
professional service providers who can help them. For example, your
business client may need to review her personal estate plan. The
unemployed engineer may need help exercising stock options. The couple
filing bankruptcy may need family counseling.
- Offer a free seminar to the public or to a selected group of
clients, when appropriate.
- Engender referrals. In times of uncertainty, people rely on word of
mouth to find competent professional services. Make it easy for your
clients to refer you to others by making your business card or firm
brochure available.
Fine-tune Your Office Systems
Make sure your office procedures are functioning smoothly. Could your
office systems accommodate a 10 percent increase in business? A 25
percent increase?
- How adequate is your tickler system? Do you schedule reminders well
ahead of the deadline?
- How can you use software for case management, billing, and document
assembly to increase your firm's productivity? Are you getting the
maximum benefit from the software you own?
- Does your telephone and voicemail system improve clients' perception
of your accessibility?
- Does your filing system allow easy and quick document
retrieval?
- What standard letters and forms do you have in place for routine
matters?
- How comfortable are you asking for a retainer or explaining your
billing method?
- Do you bill - and collect - regularly, or do you let uncollected
fees go until your service is a distant memory?
Wisconsin Lawyer