31% of lawyers with hiring authority said that their firm plans to add new positions in the second half of 2013, and 50% said their firm is seeking to fill vacancies, according to a survey by staffing firm Robert Half Legal.
55% of the respondents expect increased litigation work to drive their firm’s hiring, the most of any practice area.
Law firms should seize this opportunity to grow revenues in an otherwise stagnant market, but also be mindful of the high incidence of malpractice lawsuits in this area of practice.
CNA, a leading legal malpractice insurer, was so concerned about the frequency and severity of litigation-related malpractice claims filed against its law firm insureds, that it conducted a claims analysis.
Twelve categories of claims were identified, including:
Failure to understand the law or prepare, which was the most common category (18% of claims). 12 separate allegations comprised these claims, from the subjective: inadequate preparation for trial, lack of investigation, etc., to the objective/substantive: failure to know or react to a statute of limitation or other deadline, naming an improper party/failing to name a proper party, etc.
Subjective allegations frustrate attorneys, because their decision-making and expertise is being second-guessed, i.e., how much investigation or trial prep is “adequate”? Ac-cording to CNA, these allegations may be “simply based upon a bad result…(or) can be related to a client that, for cost reasons, limited the amount of work performed by the law firm”.
The best way to negate these claims is “continuous and effective communication with the client and documentation. Any strategic decisions, such as how much investigation to conduct, must be discussed with the client and the agreed upon plan must be documented.”
To avoid “objective” claims, i.e., missed deadlines, “law firms should exercise robust supervision over associates and paralegals that may not be as experienced. Careful calendaring and reacting to the calendar and deadlines are also important”.
7% of the claims arose out of allegations of a conflict of interest, which CNA states “have always been a common claim in legal malpractice claims”. However, given the large number of law firm mergers and acquisitions in recent years, “it has become more difficult for law firms to avoid all potential conflicts of interest.”
Further, while attorneys recognize the difference between potential conflicts and actual conflicts, and that not all actual conflicts are equally damaging, “jurors often see conflict situations as much more black and white, and often serious in all instances.”
As a risk management measure, CNA recommends that law firms “either designate an individual in the firm to conduct conflict analyses, hire conflicts counsel or work with outside counsel.” They should also send “‘closure letters’ to clients as soon as the work on the file is completed. The conflict analysis for a former client is often less strict than that for a current client.”
5% of the claims arose out of an alleged failure to communicate properly with a client regarding, i.e., settlement, expert retention, and a newer area, e-Discovery; CNA believes e-Discovery claims are “likely related to the failure of the attorney to effectively communicate litigation holds to their clients.” The clear risk-management solution is better client communication, which is also the foundation of good client service. The fact that “failure to communicate with the client is typically the number one ethical grievance against attorneys in most jurisdictions” should provide further incentive for attorneys to agree on a strategy with the client at the outset of a case, keep the client informed as it pro-gresses, and document their client communications. An attorney who doesn’t have time to draft a letter should send an e-mail.
Finally, the claims analyzed by CNA were distributed among 22 areas of practice: commercial litigation – defense (15%) and plaintiff (9%), civil litigation – defense (9%) and plaintiff (9%), and employment law (8%) generated the most claims.
The stress, cost, and lost productivity associated with legal malpractice claims are so onerous, that attorneys will benefit greatly by implementing the risk management measures recommended by CNA to reduce their exposure.
FURTHER READING
Informed Consent is Key to Client Care
Strategies for Avoiding Communication-based Malpractice Claims
Calendar and Docket Control: Choosing and Using the Best System
10 Calendar and Docket Control Training Topics for Your Staff
Best Practices for Avoiding Client Conflicts of Interest
Conflicts of Interest Risk Management and Self-Audit
For hundreds more links on these and other topics, visit LawyersInsurer.com/Law Firm Risk Management Linkbrary
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