Avoiding a (S)he Said, (S)he Said Situation
By Scott R. Schaffer, Esq. and John P. Sovich, Esq.
The attorney-client relationship from beginning to end generates a series of agreements between the parties. Throughout the life of an engagement an attorney will advise the client regarding what strategies are available, and the attorney and client will agree on how to proceed.
But what happens when a client becomes dissatisfied or disappointed by the outcome of the matter? At times a client will blame the attorney for a negative outcome and allege that the attorney negligently handled the matter or failed to keep the client properly advised as to status. Without a clear written record documenting the attorney’s representation of the client, the attorney may very well become embroiled in an expensive and time-consuming legal malpractice claim. The following scenarios are based on real-life claims and highlight the risks associated with an attorney’s reliance upon undocumented oral communications with clients.
Law Firm represented Client, in a workers’ compensation claim. Client had fallen off a ladder while working at a construction site and suffered bodily injuries. Law Firm successfully represented Client for three years, and on behalf of Client obtained an award of lost-wage benefits. Law Firm ended its representation of Client as it believed that the matter had been concluded. However, Client believed that he was entitled to more than lost-wage benefits and sought to file a bodily injury action against the owner of the property where he was injured. Unfortunately, by the time Client brought an action against the property owner, the statute of limitations for the bodily injury action had run. Client then brought a legal malpractice claim against Law Firm alleging that it failed to properly advise Client in relation to his bodily injury action. Law Firm argued that Client had retained Law Firm to pursue the workers’ compensation claim only and Law Firm had no obligation to advise Client in relation to a bodily injury action. Moreover, Law Firm had no experience pursuing bodily injury actions and it would not have been able to properly represent Client in that type of matter. Law Firm could not produce a written agreement as to the scope of its representation of Client nor any correspondence advising Client that he needed to consult a different attorney in relation to the bodily injury action.
Client argued that he relied on Law Firm to advise him of all his rights and options arising from his injury. As Law Firm was unable to produce any evidence, except for its own testimony, regarding the limited nature of its representation, the Court found that Law Firm had a duty to advise Client of the potential bodily injury action or that Law Firm should have, at the very least, referred client to another firm for the bodily injury action.
Analysis Scenario 1
This scenario demonstrates the importance of a written agreement outlining the scope and nature of Law Firm’s engagement. The first agreement between an attorney and client is the establishment of the attorney-client relationship. Many jurisdictions require that an attorney’s engagement be memorialized in a writing that outlines the parameters of the engagement, including the scope of the legal representation, the extent of the attorney’s authority in the matter and the payment structure.
An attorney who chooses to represent a client based on a verbal agreement substantially increases the risk of a malpractice claim being brought in the future. Without a written agreement as to the scope of the engagement, an attorney may find he is liable for failing to advise the client with regard to a matter the attorney never intended to pursue on the client’s behalf.
A written agreement would have removed any ambiguity regarding Law Firm’s representation and would have put Client on notice that he had to retain additional counsel for the bodily injury action. Without a written agreement, Client will likely successfully argue that he did not understand Law Firm’s limited representation and based on his reliance on Law Firm’s advice, or lack thereof, Client could no longer pursue the bodily injury action.
Law Firm represented a corporation and its shareholders (Clients) in a lawsuit brought by two former principals of the corporation. The former principals alleged that Clients had defaulted on a note and the former principals were suing to obtain payment of the balance. For five years Law Firm represented Clients in the action. Final judgment was entered when a motion for summary judgment filed by the former principals was unopposed. Upon entry of final judgment against Clients, Law Firm closed its file. However, Clients eventually sued Law Firm for legal malpractice. Clients alleged that Law Firm failed to advise them of the entry of final judgment, Law Firm failed to oppose the motion for summary judgment and Law Firm did not keep Clients properly informed throughout the action. Law Firm argued that Clients’ strategy was to prolong the action to avoid a judgment for as long as possible. Further, Clients allegedly agreed that filing an opposition to the motion for summary judgment would not be successful anyway, and to avoid incurring additional legal fees Clients agreed that Law Firm would not file an opposition to the motion.
Law Firm advised that it orally updated Clients regarding the status of the action and Clients verbally agreed to the proposed strategy of prolonging the action for as long as possible. Law Firm did not have any written records to confirm that it kept Clients apprised of the status of the action nor that Clients agreed that the motion for summary judgment should not be opposed, an odd strategy as it would clearly result in a significant judgment against Clients.
Analysis Scenario 2
Throughout an engagement an attorney will consult with the client about strategy or whether or not the client should agree to a resolution. These are routine conversations during the course of any attorney-client relationship, and an attorney may never consider it necessary to document the agreed-upon strategy in writing. In most instances this will never be a problem. The attorney will obtain direction from the client and the matter, for better or worse, will go on.
In this instance, without any evidence to support its position, Law Firm spent the next three years unsuccessfully defending Clients’ legal malpractice claim. Had Law Firm maintained written records of its communications and agreed-upon strategy with Clients, the legal malpractice claim could have been avoided or better contained. As a general rule, it is wise to confirm major strategy decisions in writing with a client, especially if the client advises the attorney to undertake an unadvisable or risky strategy.
Law Firm represented Client in relation to a bodily injury action. Client alleged that the defendant, the Client’s homeowners’ insurance carrier, failed to retain a construction company that could properly repair Client’s home. Law Firm effectively litigated the action and all of the parties convened for a settlement conference. At the settlement conference, Client orally consented to the proposed resolution and executed a short-form settlement agreement. However, Client subsequently refused to execute the formal settlement agreement drafted by the defendant. Law Firm advised Client that its refusal to execute the formal settlement agreement would likely result in sanctions being assessed against Client. The attorney-client relationship subsequently deteriorated, and Law Firm withdrew as counsel while the action remained pending and placed an attorney’s fees lien on the action. The Court eventually ordered Client to execute the formal settlement agreement, and Law Firm received its attorney’s fees from the settlement consideration.
Client retained new counsel who issued a letter to Law Firm alleging that Law Firm (1) failed to properly advise and obtain Client’s consent in relation to the settlement and (2) participated in a conspiracy to force Client into an improper settlement. Finally, as Law Firm had withdrawn prior to the execution of the formal settlement agreement, it was alleged Law Firm was not entitled to its attorney’s fees and Client demanded restitution of all legal fees paid to Law Firm.
In this instance, Law Firm maintained detailed records of its representation of Client. The engagement letter clearly outlined the terms by which Law Firm would be paid. Additionally, Law Firm preserved its written communications and documents regarding Client’s consent to the settlement and the potential risks Client faced if it continued to refuse to finalize the settlement. This correspondence also provided evidence of the clear deterioration of the attorney-client relationship, which showed that Client began to believe that Law Firm was allegedly conspiring against her. Therefore, Law Firm was able to show that its withdrawal was proper under the circumstances. Armed with its records, Law Firm drafted a detailed response to Client’s new counsel refuting the allegations of malpractice. Upon receipt of Law Firm’s response, Client’s new counsel declined to further pursue Law Firm.
Analysis Scenario 3
Unlike scenarios 1 and 2, this scenario represents the clear benefit of maintaining a written record documenting the agreements between Law Firm and Client with regard to settlement and case strategy. Law Firm was able to disprove the allegations of malpractice early on and avoid a long and costly lawsuit initiated by Client.
Attorneys may believe that documenting oral communications or obtaining a client’s written consent throughout an engagement may be unnecessary for numerous reasons, such as the matter isn’t complicated, the attorney-client relationship is solid, or the attorney believes the objectives of the engagement are clear. Proceeding with the representation of a client based on oral communications can lead to major headaches and complications. Therefore, best practices dictate maintaining written records outlining the scope of the representation, the strategies or tactics to be employed, and the extent of an attorney’s authority granted by a client. This practice will serve not only to keep a client well informed regarding the status of the engagement but also to ensure the attorney can rely on written agreements to mitigate or quickly dispose of an alleged claim of legal malpractice, rather than relying on his or her word against that of the client.