Lawyers Professional Liability insurance is a “must-have” for any law firm no matter its size. Whether it’s one attorney or several partners with a dozen associates, securing coverage is not enough. Today, all law firms and attorneys need to take steps in reducing potential malpractice claims and preventing any loss of coverage.
10 STEPS TO REDUCE LAWYER LIABILITY RISK:
All clients should be provided a letter of engagement outlining the services that will and will not be provided by the firm. It should also detail the firm’s fees and billing practices. This letter must be signed and dated by clients to acknowledge their consent.
In the event a firm declines to accept representation, a non-engagement letter should be sent with verification of mailing or delivery. The letter should advise of any important dates and/or statutes of limitations that may apply.
At the conclusion of representation, clients should receive a disengagement letter summarizing the services provided and outlining any necessary client action. The letter should also advise clients if a final bill would be forthcoming.
All law firms should use a docket control and calendar system to manage filing deadlines, statutes of limitations and other key dates for its various legal actions, motions and cases. Specifically, they should implement one with at least two different diary systems and institute a procedure to cross-check both on a regular basis.
Upon being approached for representation, firms need to check all new matters for potential conflicts of interest. Standard practice should be to notify a client in writing of any potential conflict and obtain a written waiver from all parties or decline representation.
Consistent, clear communication with clients regarding billing practices is one of the best ways to avoid client “billing shock” and reduce the likelihood of fee-related legal malpractice claims. Firms and clients should agree on the frequency of billing – weekly vs. monthly vs. one final payment. If the latter is selected, regular statements should still be sent.
If a firm is unsuccessful in collecting unpaid fees, any decision to sue or proceed with collection action should be made carefully and only by senior management. Clients who are unhappy with billing practices often countersue for legal malpractice. If pursued, suits should be delayed until after any relevant statutes of limitation for work product negligence.
Clear and precise communication is essential to a good attorney/client relationship. It keeps clients informed and provides an understanding of the legal principles associated with their respective case. Equally as important is the need to document such correspondence internally to avoid professional legal malpractice. All attorneys and staff should be trained in keeping proper client documentation as part of a firm’s risk management policy.
Data shows that the majority of legal malpractice claims are based upon substantive errors – those related to the practice of law and legal elements of an attorney’s practice. For this reason firms should avoid representation in cases outside their experience or expertise level. In the event that a law firm takes on a new area of law, it should confer with peers who have particular expertise in the relevant legal principles and confirm coverage with its professional liability policy.
Insurers polled have indicated that the main reason for policy non-compliance is the lack of timely reporting of claims or circumstances. This lack of timeliness could jeopardize coverage. Lawyers should also take note of policy provisions, which outline who has to get noticed, how the notice has to be given, and who has to give notice. Failure to strictly follow these instructions could also result in lost insurance coverage.