Wisconsin Lawyer
Vol. 78, No. 12 December 2005

Personal Injury Lawyers Beware

by Thomas J. Watson

Personal injury practice continues to be the riskiest practice area for lawyers. Nearly 25 percent of malpractice claims made against lawyers arise out of personal injury (PI) practice, according to the National Legal Malpractice Data Center. Thirty-three percent of defense and indemnity dollars spent by Wisconsin Lawyers Mutual Insurance Co. (WILMIC) since 1990 resulted from PI representation.

As if PI lawyers don't have enough pitfalls to avoid, another pitfall is the failure to discover and pursue all potential insurance policies that could provide proceeds to their clients.

Performing Due Diligence

Suppose you represent a client who suffered a serious back injury in an automobile accident that was not his fault. You settle the bodily injury claim for the adverse party's $50,000 policy limits. Your client is satisfied.

A few years later, the client's back injury flares up and he can no longer work. The "flare up" turns out to be a permanent injury, related to the auto accident, that results in a substantial loss of income.

When the former client consults a worker's compensation attorney, the client discovers there was an underinsured motorist insurance (UIM) policy in effect at the time of the auto accident. That policy would have provided the client with an additional $250,000 of insurance coverage for his accident-related injuries. This UIM policy, of course, was never brought to your attention when you settled the auto accident case.

Should you have known about the UIM policy? Brian Anderson, WILMIC claims counsel, has seen several cases in which a lack of due diligence claim regarding the discovery of insurance policies was made against the lawyer. "The theory against the lawyer is that he or she has an obligation to investigate, pursue, and secure all insurance policies available to the injured client." This means you may have a duty to contact insurance agents and carriers, as well as the client's family members who may have more information about insurance coverage than the client brought to you.

"I've seen cases where the client tells the lawyer `I'm satisfied with the settlement offer on the table' and the lawyer goes ahead and settles the case," says Anderson, who practiced primarily PI law for 11 years before joining WILMIC. When additional insurance coverage is later discovered, the client may have a change of heart. "Reasonable diligence by the lawyer in securing insurance proceeds may go beyond relying on what your client brings to your attention. That just isn't enough."

A client may jeopardize his or her ability to later make a UIM claim by accepting a policy limits settlement from the adverse party. Anderson says, "If a future insurance claim is later denied or is no longer available after you recommend the client accept a settlement, you could be found liable for the client's lost coverage opportunity." This is especially true if you failed to fully explore all possible insurance policies.

Wrongful Death Claims

Finding all the insurance policies with potential proceeds for your client can be especially challenging in wrongful death cases. For instance, the beneficiary on whose behalf the claim is made may not be aware of an umbrella policy that provides additional insurance benefits beyond the underlying policy that was brought into your office.

"Beneficiaries are often unaware of all the policies available to them under which a claim could be made," Anderson says. "That's why it is so important for the lawyer to really do some digging. It may be difficult, but the alternative can be much worse."

Make the Client Do Some Homework

Anderson suggests that clients should be encouraged to find as much information as possible. This may include asking family members, insurance agents, and others about policies that may exist. "At the very least, before recommending a settlement, make sure your client has done everything in his or her power to uncover any potential policies."

Other Common Mistakes

Uncovering available insurance policies is only one part of the PI lawyer's job. More malpractice claims arise due to mistakes in preparing, filing, and transmitting documents than in any other type of activity in PI cases, according to the most recent study by the ABA's Standing Committee on Lawyers' Professional Liability.

Anderson says the biggest complaint is missed deadlines. "More than 35 percent of all personal injury claims involved missed deadlines," he says. "Failure to file within the applicable statute of limitations is the most common mistake we see in claims."

Other common mistakes leading to malpractice claims include:

• practicing out of jurisdiction;
• notice problems in claims against municipalities, the state, or individuals employed by the state or a municipality;
• failing to prosecute claims or judgments against a debtor or adverse insurance carrier;
• failing to prosecute or prepare a claim and retain experts;
• failing to diligently move a claim forward;
• failing to comply with scheduling orders;
• failing to overcome summary judgment motions;
• failing to respond to counterclaims;
• failing to pursue or negotiate subrogation claims and claims made by medical providers;
• failing to accurately account for a client's medical bills; and
• failing to be straightforward with a client regarding the realistic value of a claim.

The following case illustrates other typical errors:

A woman suffered a serious neck injury in an automobile accident. The woman's attorney presented a substantial settlement demand based on his client's medical records, reports, and documentation he gathered on the case. He advised the woman to reject any settlement offer that did not meet the demand based on the apparent strength of his client's case. He then filed a lawsuit on her behalf.

During discovery and after the plaintiff's independent medical examination, the attorney met with the plaintiff's primary treating physician. To the attorney's surprise, the doctor indicated that most of the plaintiff's current complaints and all future medical expenses that she was likely to incur were directly attributable to a degenerative neck condition the plaintiff had at birth and were not related to injuries she sustained in the accident. The plaintiff was forced to settle the case in an amount far below the initial settlement offer.

The client blamed the attorney for not preparing her case better or advising her properly about the initial settlement offer.

What mistakes were made in this case? First, the attorney should have obtained the client's complete medical history before assessing the value of the case. Second, the attorney did not meet early enough with the client's primary physician to determine the full extent of the client's injuries and their causes. Third, the attorney did not gather the medical records as early as he should have to help determine whether the case warranted the filing of a suit.

That attorney is not alone. Those mistakes are among some of the common missteps made by PI lawyers, whether they practice PI full time or only occasionally.

Client Expectations

Personal injury attorneys often run into malpractice claims due to unreasonable client expectations. Anderson says, "Approximately 20 percent of personal injury claims involve procrastination by the lawyer who knows a claim is weak, but doesn't want to disappoint the client. If you are prosecuting a weak claim, it is vital to be upfront with your client early on in the process. If you can't agree on the value of the claim, it's best to seriously consider turning down the client."

Conclusion

From a malpractice standpoint, claims against PI lawyers are the most frequent type of claim and the most expensive to defend. While a settlement can compensate a plaintiff for financial loss, the pain, physical limitations, and lifestyle changes caused by a personal injury may remain long after a settlement or verdict.

Anderson says many personal injury victims ultimately feel dissatisfied after their case has concluded. This can leave their attorney as a vulnerable target. "Sometimes, people who are suffering may blame the lawyer who tried to help them, especially if they are not satisfied with the end result of their claim." Implementing risk management strategies that include due diligence can help you avoid being one of those targets.

Wisconsin Lawyer