Wisconsin Lawyer: Managing Risk: Dangers of Dabbling:

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    December
    08
    2020

    Managing Risk: Dangers of Dabbling

    A large number of malpractice claims arise from lawyers taking on matters for which they lack experience or knowledge. Here are some things to know about dabbling, with a focus on three practice areas: immigration, bankruptcy and collections, and real estate.

    Thomas J. Watson

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    For some lawyers, especially newer lawyers, passing up business is not easy. It’s tempting to accept all potential new clients. Maybe when a really good case comes to your attention, you see it as an opportunity to make some money and expand your practice at the same time, even though you are not an expert in that area of the law. Too many lawyers can be tempted to take a case outside their areas of expertise, either for financial reasons or to expand their practice.

    As the economic effects of the coronavirus pandemic continue to be felt by businesses and individuals alike, many lawyers believe bankruptcy work will rise significantly for the next several months and probably longer. Bankruptcy and collections work might be an area that will bring in new clients, but are you really suited for that kind of work? Do you know enough about it to serve your clients well? Although it may be tempting, “dabbling” in an unfamiliar practice area may bring more trouble than it’s worth.

    Matt Beier, claims attorney at Wisconsin Lawyers Mutual Insurance Co. (WILMIC), says a high number of malpractice claims are directly related to dabbling. According to WILMIC statistics, more than 60 percent of the claims involve lawyers who practice less than 20 percent of their time in the subject area from which the particular claim arose. Conversely, lawyers who practice almost exclusively in an area of law account for less than 7 percent of claims. He says, “Don’t be afraid to refer a case if you do not have the required expertise. There are times when you simply have to turn away business – times when you just are not the right lawyer to handle a client’s matter.”

    Beier says that WILMIC isn’t suggesting lawyers should never take a case in an area of practice in which they have limited or no previous experience. But, “we would be remiss if we did not identify the risks associated with practicing in new areas. Three of the more noteworthy areas of dabbling claims are immigration, bankruptcy and collections, and real estate work.”

    Let’s take a closer look at these three areas of practice.

    Immigration

    Immigration claims are not typically at the top of WILMIC’s list when it comes to identifying risky practice areas. Immigration malpractice cases are rare. In fact, Beier says such claims were barely a blip on WILMIC’s radar, registering a mere 0.58 percent of all claims since 1986. But Beier notes that WILMIC has fielded more claims and potential claims in the past year than in the previous five years, combined.

    Thomas J. WatsonThomas J. Watson, Marquette 2002, is senior vice president and director of communications at Wisconsin Lawyers Mutual Insurance Co., Madison.

    If you follow the news on an even casual basis, you know that the issue of immigration has been thrust into the political spotlight. Consequently, there has been a surge of immigrants in need of legal assistance. Beier says, “As of the middle of last year, there were over 900,000 pending immigration cases in U.S. immigration courts. There are approximately 350 immigration judges nationwide in 58 immigration courts. Using those numbers, each immigration judge may have a backlog of more than 2,500 cases. It is clear that immigration attorneys have never been busier, so it is no surprise that WILMIC has seen an increase in claims among its insured immigration attorneys.”

    According to Beier, “Immigration law is very technical and deadline driven. To further complicate this area of practice, in the past couple years we have seen changes to regulations, policies, and procedures implemented rapidly, sometimes daily. It is no wonder immigration attorneys often find themselves in difficult situations.”

    Alicia Armstrong, an immigration lawyer in Sun Prairie, says issue spotting can be very difficult for even a seasoned, experienced lawyer who focuses on immigration law, let alone a lawyer new to this area of practice. “For this reason, it is vital to have two things: a foundation of good intake and eligibility screening materials and a mentor – at least two mentors. Some organizations like the American Immigration Lawyers Association provide a list of mentors to tap as part of your membership. These organizations also provide good toolkits for intake and screening and books and podcasts on common issues.”

    The U.S. immigration system is designed to be extremely selective, admitting only people within specific categories – for example, they are immediate relatives of a U.S. citizen or have employment or employer sponsors or they qualify based on age, marital status, or possession of investment capital. Beier points out that “for those who do not fit into any of the identified categories – or several of them – the system is impossible, and they will not be admitted. Moreover, if a mistake, such as a blown deadline or an error in choice of procedures, is made, a person with an otherwise winnable case can be forced to start the process over or worse, be deported.”

    Armstrong says that typically an immigration case will be open for a year or even several years. “With each step along the way you must be screening and fact checking, double and triple checking every move. Your clients may be with you across generations. You may be responsible for bringing their children here on visas, and eventually applying for everyone’s citizenship. Each time you take on a new matter for your client you need to repeat a thorough screening and check for issues that may be triggered by the rapidly changing landscape of immigration law.”

    Armstrong adds that the fast pace of changes in immigration is another big obstacle to lawyers new to the practice area. “The statutes have not changed much for the last 20 years or so, but immigration law is enforced by the executive branch. Administrative law is the venue for most cases. The Federal Register may bring new rules that change the substantive eligibility of your client’s case. Policy memos and executive orders are another source of constant change. These changes may create issues for your client that didn’t exist at the time they hired you.”

    Armstrong says, “A new immigration lawyer must lean on the cautious side before executing legal work for their client because subtle nuances in fact patterns could make or break the entire case. Every client’s case will be unique in some way. A new practitioner needs to have mentors. Lawyers who practice immigration law with success have tight networks with other advocates, immigration attorneys, professional associations, nonprofit groups, and even Facebook groups. Social media mentorship groups seem to double by the day. They are a wonderful resource with members new and old, ready to provide input on fact patterns, issue spotting, legal and procedural questions, resources, or even just to vent about the common woes of this field.”

    Immigration is definitely a growing practice area. Beier says, “One thing is clear, immigrants who have an attorney’s assistance fare far better than those who don’t. As our insured lawyers continue to meet the needs of the immigrant population, it is imperative [they] put themselves in the best position possible to be able to competently and diligently assist their clients.”

    Bankruptcy and Collections

    In 2010, Americans were still in the midst of the recession that hit in 2007. At the time, the number of bankruptcy filings was soaring. Until recently, the trend had certainly changed, as bankruptcy filings fell in the last several years. But that doesn’t make bankruptcy work for lawyers less risky. David Krekeler, of Krekeler Strother SC, Madison, says bankruptcy practice is more complex now than ever before.

    “The burdens and duties on bankruptcy lawyers are still there, and in many ways, no less onerous,” Krekeler says. For one thing, he says, clients often wait until the last minute to ask for legal assistance. “They put off financial problems, hoping things get better, using their credit cards, help from a relative, whatever they can, to alleviate their debt. But they often realize they are in over their head, and by then, it’s pretty late in the game.”

    Krekeler had a recent case in which the client knew he was on the verge of bankruptcy but did not come to Krekeler until very late in the process. “We filed his bankruptcy, but that triggers all kinds of schedules and deadlines. The bankruptcy scheme imposes numerous short-term deadlines, which create time pressures on lawyers.”

    More than 60 percent of the claims involve lawyers who practice less than 20 percent of their time in the subject area from which the particular claim arose. Conversely, lawyers who practice almost exclusively in an area of law account for less than 7 percent of claims.

    Another burden, says Krekeler, is the sheer volume of the information that must be processed and analyzed. “That volume continues to grow with each revision of the schedules, [Bankruptcy] Code, and rules. The bankruptcy rules seem to change every couple of years or so. The case law continues to grow.”

    According to Krekeler, “I’m not saying lawyers who don’t have a lot of experience in this area should never take a bankruptcy case. But if they do, my advice is make sure you study the statutes and case law carefully. Spend the necessary time to educate yourself. Seek mentoring if you think you need it.”

    Beier says consumer collections also can be a particularly troublesome source of claims. “I often field calls from lawyers who take on a collections matter as a favor to an existing client – a one-off, if you will. Those lawyers quickly learn that the Wisconsin Consumer Act and its federal counterpart, the Fair Debt Collection Practices Act, are highly technical, strict-liability statutes that invite litigation. Although the penalties don’t seem like much at first glance, even the most technical violations are easily demonstrated, and the fee-shifting provisions in both statutes can ramp up the value of the claims fairly quickly. Consumer collections matters seem simple, but what lurks beneath requires specific knowledge and experience to avoid. Absent that knowledge and experience, it would be better to refer such cases to a lawyer or firm that handles a larger volume of similar cases. Or, if a lawyer desires to expand his or her practice in this area, it pays to associate with a more experienced lawyer to learn the ropes.”

    Real Estate

    The mistakes WILMIC sees most often from dabblers in real estate matters include 1) inadequate discovery and investigation (18 percent of claims) – for example, failure to properly identify the correct acreage and full legal description of property purchased by the client; 2) planning error in choice of procedures (12 percent) – for example, failure to timely provide proof of funds to the seller in accordance with the offer to purchase; and 3) failure to obtain consent from or to provide information to the client (10 percent) – for example, failure to advise a prospective purchaser of a condominium about tax liabilities and maintenance fees before closing.

    “As real estate matters become more complex, lawyers should strongly consider referral or association as a good alternative to handling alone,” Beier says.

    Krekeler says that real estate practice has changed considerably over the past few decades, and the paperwork has become more voluminous. “If a client bought a house or refinanced back when I was a young lawyer, there would be about five documents – a deed, a transfer return, a note, a mortgage, and a settlement statement. That was about it! And we would go through every document with a client. But now, nobody reads all the documents. Nobody wants to pay or take the time to read everything.”

    Krekeler also agrees about the increasing complexities. “There’s no doubt there are more ways now than ever before for a lawyer to get tripped up. And if you are relatively new to this area of practice, the chances of a mistake grow exponentially.”

    Beier says there are several precautions a lawyer can take to help reduce the risk of an error. “First, make sure you understand your clients and the details of the transaction. Review all the documents being signed. Take nothing for granted (that’s true regardless of the type of legal matter you are handling). You should explain all the documents to your clients and make sure they understand them. You also want to be sure the documents comport with your clients’ objectives. If there is something out of the ordinary, address it in writing and get your clients’ acknowledgment in writing.”

    Beier adds that the most important thing might be to not let clients rush you into a closing. “They may resist your efforts to complete your review and properly advise them and assure you that all the issues in the transaction have been taken care of. If they insist on getting it done before you are ready, you may want to consider whether you should be handling the case at all. Because if a mistake turns up later on, who do you think they’re going to blame?”

    Conclusion

    Taking on cases in areas of practice that are new or relatively new is not necessarily a bad thing. But, as Beier cautions, break into new practice areas the right way. “Make sure you can devote enough time to learn it. Using a mentor or consulting with a more experienced attorney in that particular area of the law is a good idea. This may be the opportunity you need to learn and develop new expertise.”

    Three of the more noteworthy areas of dabbling claims are immigration, bankruptcy and collections, and real estate work. With the right precautions and due diligence, lawyers can provide effective legal services to clients in these areas of the law. Beier says, “Get help when you need it, refer when you need to, and as Attorney Krekeler says, educate yourself by studying the statutes and case law carefully.”

    Cite to 93. Wis. Law. 57-59 (December 2020).




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