Rejecting Potential Clients and Avoiding Risks
By Thomas P. Sukowicz
Director of Lawyers' Risk Management Services
Hinshaw & Culbertson, LLP
Often, risk management is most effective when practiced before any attorney-client relationship begins. One important example of this is at the point at which the attorney decides whether to accept a potential client who has come to the lawyer seeking representation. I have counseled many attorneys about dealing with problem clients. Often they will acknowledge that, in retrospect, they should never have taken on a certain client who later became a problem. Some even admit that they had a bad feeling about the client from the beginning. Screening out such persons at the outset, and following certain procedures when rejecting them as clients, are significant ways to avoid malpractice claims.
You can avoid many legal malpractice claims, bar grievances and fee disputes by simply identifying those clients who pose greater risks of causing such problems and not accepting them as clients. "High risk" clients incude those who are unreliable or dishonest, who have unrealistic expectations, who try to micro-manage the case, who do not communicate, who refuse to accept reasonable offers of settlement, who refuse to pay legal fees.
If the prospective client has an unrealistic expectation regarding the monetary value of the case, the length of time the case will take or the legal fees that will be incurred in handling the case, the client is likely to be dissatisfied at the end of the case (if not before). The client's dissatisfaction is likely to manifest itself in a refusal to pay any outstanding fee, a demand for a refund of fees paid, a malpractice claim (particularly if the attorney sued for the unpaid fee) or a bar grievance. In a small community, it can also result in damage to the lawyer's reputation if the client talks about his or her dissatisfaction with others. For this reason, if the client does not come to the lawyer with reasonable expectations, or if the lawyer is unable to bring those expectations to a level of reasonableness, then the lawyer should seriously think about rejecting the client.
Sometimes, the client's motive is such that no reasonable result will satisfy the client. A lawyer should be wary when a prospective client appears in his or her office seeking justice or revenge, or wants to teach someone a lesson he will never forget. When a client's motives are fueled by anger toward the wrongdoer, and the wrongdoer is not adequately punished, the client will not only be dissatisfied with the outcome of the case, but the client's hostility may be redirected at the lawyer. If the lawyer cannot get the prospective client to acknowledge that only a reasonable monetary award is possible as an outcome within the legal system's limited goal of just compensation, the lawyer should seriously consider declining the representation.
A prospective client's unstable character also increases the likelihood of an eventual claim. Instability includes abuse of alcohol and drugs, excessive gambling, frequent changes in employment, a history of legal problems such as criminal convictions, serious traffic violations (particularly those in which alcohol or drugs is a factor), serial divorces or paternity suits. Depending on the issues involved, a history of these kinds of problems could be a sign of an irresponsible character or even dishonesty. A person who is dishonest when dealing with others may, in turn, be dishonest with his or her lawyer, creating a substantial risk of Rule 11 liability or malicious prosecution or fraud claims.
Prior Relationships with Attorneys.
Inquire about the prospective client's experiences with other attorneys (or professionals such as accountants). If the prospective client was dissatisfied with every lawyer he or she ever used, or if they have disputed legal fees or filed bar grievances or malpractice claims against previous attorneys, it might be an indication that the same could happen to you. It might be helpful to contact a prospective client's previous attorneys before accepting the new matter for non-privileged information about the prospective client.
Although there are many valid reasons for changing attorneys, a pattern could reflect a problem. At the very least, it may suggest that the person is not easily satisfied.
Even if the client does not trigger a concern, something about the legal matter you are asked to accept may increase the risk of a later claim. For example, there may be imminent deadlines or time limitations, the case may be too large or expensive for the firm, or the case may be outside the lawyer's primary practice area.
Experience will increase a lawyer's ability to identify prospective clients and matters that create a high risk of claims. Sometimes the prudent approach is to trust your instinct. Applying the "smell test," if a client or case makes you feel uncomfortable, do not accept it. You may never know whether a claim would have resulted, but that is better than having taken the matter and regretted it.
Avoid Advice or Opinions.
When a lawyer declines to accept a legal matter, he or she should be careful not to give any legal advice or opinion regarding the prospective client's claim. Any such advice can provide the basis for a later malpractice claim against the lawyer if it turns out that the advice or assessment was wrong and the prospective client relied on that advice to his or her detriment. In Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686 (Minn. 1980), for example, a lawyer rejected a possible medical malpractice claim after meeting with a prospective client for 45 minutes, after which time he told her that the case was not worth pursuing and that his firm would not represent her. Although the statute of limitations had not expired at the time of the consultation, it later expired before the woman consulted another lawyer. She claimed that she relied on the lawyer's opinion that he case was not worth pursuing in not seeking the opinion of another attorney until it was too late. A jury found the lawyer guilty of malpractice for giving her erroneous advice about the merit of her case and entered a verdict against him for $649,500.
The decision to decline a representation is best to communicate that declination in writing. "Non-engagement letters" should clearly inform the prospective client that the law firm will not represent the prospective client in that matter and that he or she should not rely on the lawyer for any advice or legal action.
It is not necessary or even desirable in every case to inform the client on which the statute of limitations will expire. In fact, sometimes doing so will create a basis for a claim of malpractice if the information is wrong. Never try to help a prospective client by guessing when the client's case must be filed. If the area of law is not one in which you practice regularly, you may not know the statute of limitations for that claim or, even if you do, you may not be aware of shorter notice requirements that must be met.
Although you should not give advice about when the statute of limitations will expire, it is important to tell the prospective client that claims may become barred if not filed within the time provided by law and that the client should immediately seek the advice of other counsel regarding the claim. This can be accomplished without giving an opinion about the exact date on which the claim will become time-barred.
Are You My Lawyer?
One way to increase the risk of a claim is to leave unclear whether or not you are representing a person in a legal matter. This can occur in a variety of circumstances. A lawyer's conduct may, by implication, create an attorney-client relationship between the lawyer and someone he did not intend to represent. In Kotzur v. Kelly, 791 S.W.2d 254 (Tex. App. 1990), for example, the court found that an attorney may be liable for negligence to a person who believes the attorney is representing him when the lawyer fails to make it clear that he is not representing that party. In that case, an attorney was retained by a man who was selling 225 acres of land to his two sons. The sons did not retain another attorney, but believed that their father's attorney also represented them. When they later learned of a lien on the property, they sued the lawyer for malpractice.
Because one of the sons testified that he thought the lawyer also represented him and his brother, and the attorney admitted that he was handling the matter on a "family-type basis," he was found to have represented the sons as well as the father and may be liable to the sons for any malpractice that he committed.
When a lawyer is involved in a transaction involving parties who are not represented by their own attorneys, it is prudent to put in writing who the lawyer is representing, and who the lawyer is not representing. Such a writing could prevent a non-client from even making a claim that the lawyer represented that non-client.
To reduce the risk of claims when declining to represent a client, send the prospective client a non-engagement letter clearly stating that the law firm will not represent the client in that matter. The letter should make it clear that the client should not rely on the lawyer for any advice or legal action and the letter should not contain any legal advice or opinion regarding the prospective client's claim. Removing any confusion in the mind of the prospective client as to whether or not you are representing him or her goes a long way in reducing the risk of a malpractice claim when that person's interests are not ultimately protected.