Archive for November, 2011

Why Do Bad Things Happen to Good Attorneys?

November 21, 2011

Kelan J. Vorbach, CIC

About 90% of professional liability claims against lawyers end up closing without any payment of damages. Defending groundless claims is expensive, a hassle and a waste of time. While there is no magic way to prevent groundless claims there are some things you can do to reduce your risk.

  • Client Communication – Clients who are kept informed are more inclined to like you and feel you care about them. Clients that have those feelings are far less likely to sue you.
  • Client Selection – Trust your gut if you have a bad feeling about a potential client in the initial consultation. It is surprisingly common for lawyers with claims to tell me how they ignored warning signs and accepted clients against their better judgment.
  • Conflict of Interest – Do the conflict check before you agree to represent the client and be extremely careful about acting in dual capacity, even with a waiver. Just because you have signed conflict waivers doesn’t mean you won’t have a claim. 
  • Control Expectations – If you keep the client in the real world from the beginning they are far more likely to understand and accept the outcome.
  • Define the Scope – Whether you use engagement letters or retainer agreements define the scope of services and the terms of the attorney – client relationship. True story, aNew Jerseyreal estate firm successfully closed a deal on a commercial property after another firm failed to do so. The client then sued for failure to advise them they might have malpractice claim against the first firm. An engagement letter limiting the services to doing the closing could have saved big money. 
  • Declination Letters – If someone is a bad potential client they may be even worse if they come back long after the initial consultation claiming you said you would take care of everything. Use declination / statute letters when you’re not going to take a case. 
  • Calendar Management – Whenever possible use redundant systems with two different people making entries. Then cross check them regularly to be sure noting was missed.
  • Timely Payment – Collect sufficient retainers and send regular monthly invoices. This helps the client understand the costs and helps prevent having to sue for your fee. Fee suits often result in counter-claims for malpractice. 

The items above are not a comprehensive risk management plan, its just food for thought.   If you would like to discuss or if you have any questions related to insurance for a law firm, give me a call at 732-223-6611. 

Kelan J. Vorbach, CIC is the Professional Liability Program Manager with John B. Wright Insurance. You can check him out at www.LawFirmInsuranceExpert.com.

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