Keeping a written record of all client communications, including what may seem like trivial interactions, can be critical for effective risk management.
Dissatisfied or disappointed clients may try to blame you for the outcome of their matters. They may allege that you failed to advise them properly, did not act as they instructed you, or were otherwise negligent.
Small firms may be particularly vulnerable to allegations of malpractice. According to the ABA’s quadrennial Profile of Legal Malpractice Claims
, firms of up to five attorneys and solo practitioners were on the receiving end of 62.51% and 32.33% of claims from 2015–2019.
Fortunately, having a paper trail of the entire attorney-client relationship may help prevent such situations from spiraling into expensive and time-consuming legal malpractice claims.
Attorney-Client Relationships May Turn Sour: 3 Cautionary Tales
The following scenarios draw on real-life claims highlighting the risks of relying on undocumented oral communications with clients.
1. Workers' Compensation or Bodily Injury?
The law firm in this scenario represented a client in a three-year-long workers’ compensation claim. He had fallen off a ladder and sustained bodily injuries while working on a construction site.
The client eventually obtained an award of lost-wage benefits. At this point, his attorneys ended the representation as they thought the matter had concluded successfully – but the client did not seem to be on the same page.
He believed his compensation was not enough and filed a bodily injury action against the owner of the property where the accident took place. By that time, however, the statute of limitations had run.
The client then brought a malpractice claim against his attorneys, alleging that:
- He relied on them to advise him of all his rights and options arising from the accident.
- They had failed to properly advise him in relation to a possible bodily injury action.
In response, the law firm argued that:
- The client had retained it to pursue a workers’ compensation claim only.
- The firm had no experience in bodily injury claims and would have been unable to properly represent the client in this type of matter.
However, the attorneys could not produce a written agreement, such as a letter of engagement
, that defined the scope of the representation. They also could not show any correspondence advising the client to consult someone else about the bodily injury action.
The result? The court found the law firm had a duty to advise the client of the potential bodily injury action or at least refer him to another firm.
2. To Oppose or Not to Oppose?
The law firm in the following scenario represented a corporation and its shareholders. Two former principals of the corporation had brought a lawsuit alleging it had defaulted on a note and sought to obtain payment of the balance.
Five years after the start of the lawsuit, the principals filed a motion for summary judgment. As the corporation did not oppose it, the court issued a final judgment.
At this point, the law firm closed its file only to soon find out that its clients were suing for legal malpractice. They alleged that their attorneys had failed to:
- Oppose the motion for summary judgment
- Advise them of the entry of the final judgment
- Keep them properly informed throughout the action
The attorneys spent the next three years unsuccessfully defending the legal malpractice claim. They argued that their clients had:
- Sought to prolong the action and avoid a judgment for as long as possible
- Agreed that filing an opposition to the summary judgment motion was not likely to be successful
- Decided to avoid incurring additional legal fees by not opposing the motion
However, the firm did not have written records to confirm it had kept its clients informed of the status of the action or that they had agreed not to oppose the motion. As a result, the court ruled in favor of the claimants.
3. The Benefits of a Paper Trail
The law firm in this instance represented a client in a bodily injury action against their homeowners’ insurance carrier. The client alleged the defendant had failed to retain a construction company that could properly repair the client’s home.
The attorneys effectively litigated the action. When all parties convened for a settlement conference, the client consented orally to a proposed resolution and short-form settlement agreement drafted by the defendant. Later, however, the client refused to execute the agreement.
The law firm advised its client that a refusal to execute would likely result in sanctions. The relationship with the client subsequently deteriorated, causing the firm to withdraw as counsel and place an attorney’s fees lien on the action while it was pending.
Eventually, the court ordered the client to execute the settlement agreement, and the law firm received its attorneys’ fees.
The client then retained new counsel, alleging that their previous attorneys:
- Failed to properly advise and obtain the client’s consent in relation to the settlement
- Participated in a conspiracy to force the client into an improper settlement
- Did not have a right to claim attorneys’ fees and owed restitution of all previous fees
Unlike the attorneys in the scenarios above, this law firm had kept detailed records of the representation, including:
- An engagement letter that clearly outlined the billing terms
- Communications and documents regarding the client’s consent to the settlement and the potential risks they faced if they continued to refuse to finalize it
The correspondence also provided evidence of the deterioration of the attorney-client relationship. Therefore, the firm was able to show that its withdrawal was proper under the circumstances.
The law firm then drafted a detailed response to their client’s new counsel. Upon receipt of the response, the new counsel declined to pursue the matter further.
Risk Management Tips for Lawyers and Law Firms
These best practices may help reduce your vulnerability to legal malpractice claims:
- Draft detailed engagement letters setting out the scope of the services you will be providing
- Consider writing disengagement and non-engagement letters where appropriate
- Inform clients of the status of their matters regularly and promptly
- Keep a written record of all client communications
- Confirm all strategy decisions in writing, especially if a client instructs you to go down an unadvisable or risky route
- Periodically review and update your risk management strategy to help keep potential liabilities to a minimum
Bonus Tip: Read Up on Risk Management Best Practices
At the end of the day, you may not be able to prevent all malpractice claims. However, adhering to a handful of risk management practices can provide you with a degree of security and some much-needed peace of mind. For more tips on reducing your liability exposure, consider browsing our risk management library.
Contributions by Scott R. Schaffer, Esq. And John P. Sovich, Esq., of Wilson Elser Moskowitz Edelman & Dicker, LLP.
This article is provided for general informational purposes only and is not intended to provide individualized advice.