Legal Developments and Risk Management Tips Impacting the Professional Liability Community.
All insurance policies are not created equal. Some policies contain exclusions that many professional may not expect. Take for example a recent decision that evaluated whether a law firm’s advertising practices were covered under a D&O policy. In Rob Levine & Associates, Ltd. v. Travelers Casualty, a Rhode Island federal court considered whether conduct relating to Internet and television advertisements was considered “professional services.”
A fundamental risk management pointer is to properly document your file. As a result, many professionals are great note-takers; they follow-up conversations in writing, confirm strategy and clearly document instructions. These are all risk aversion tools to protect the professional, to hold others to oral commitments, and provide clarity in future disputes. But, professionals cannot take this too far. There is a difference between jotting notes or confirming conversations on the one hand, and secretly recording or transcribing conversations on the other. Such secret recordings may run afoul of state privacy laws and lead to potential civil and criminal liability.
Document production is often an arduous task made more so by e-discovery requirements. Electronically stored data results in exponentially more complicated, time-consuming and expensive discovery. Many law firms have protocols to efficiently handle e-discovery or they work with a vendor to lend a hand. However, recent decisions suggest that courts have heightened expectations and are less likely to overlook mistakes by firms who handle sensitive data. A recent decision out of California serves as a reminder that failure to follow reasonable e-discovery standards may result in sanctions.
Professional Liability Matters would have little to discuss if professionals were perfect. Needless to say, we are not. Often, it is how the professional responds to the inevitable error that can mean the difference between soon forgotten mistake and malpractice. Upon the discovery of an error, some professionals are confronted with a difficult conflict: their interest in confronting the error and discussing it with the client on the one hand, without making an admission that could jeopardize insurance coverage on the other. This conundrum places the professional in a very difficult position.
Courts are facing an unprecedented number of pro se litigants. Whether due to the economy, a changing attitude over litigation, technology, or other causes, courts flooded with pro se litigants have struggled to come up with a solution. In certain practice areas such as family law and property cases a high percentage of all suits involve at least one unrepresented party. This places an administrative stress on the courts. Some jurisdictions are experimenting with a potential answer to the “pro se problem” through the use of limited scope representation or “unbundled” legal services. The idea is to reduce the costs of representation and increase access to the courts. This is appealing to an overburdened court but poses some significant ethical issues for attorneys.
Professional Liability Matters has previously advocated the benefits of a well-drafted mediation or arbitration agreement in the professional engagement letter. The judicious application of alternative dispute resolution can help to mitigate costs, expedite conflict, and preserve business relationships. Although an ADR provision can lead to efficient resolution of the substance of a professional liability suit, invoking the provision itself can sometimes lead to contentious litigation in its own right.
Fans of the popular series “Breaking Bad” will be familiar with the trials and tribulations of Saul Goodman, an attorney who frequently receives and accepts referrals to handle all types of legal issues. Saul provides the perfect example of the real world risks facing referring attorneys when the subsequent professional commits malpractice.
Recent technological advances have made it relatively easy for professionals to maintain a virtual office. A wireless connection may be all that is needed to practice, without the stress of lease payments, utilities, commuting expenses and other costs. Some attorneys have taken advantage of technology to maintain out-of-state offices in order to appeal to a larger client base. But, despite the various temptations to utilize a virtual office, there are serious risks of doing so.
Many states do not permit the assignment of legal malpractice claims. This anti-assignment rule is based on the well-rooted policy that legal malpractice claims are uniquely personal and therefore cannot be assigned. Since malpractice claims typically involve the nature of the attorney’s duty to the client and the confidentiality of the attorney-client relationship, the theory goes that malpractice claims should not be subject to assignment out of fear of creating a “market” for these claims to the highest bidder. A recent decision suggests that there may be at least one exception to this rule.
Generally an attorney only owes a duty of care to her client. Thus, a predicate to a meritorious legal malpractice action is the existence of an attorney-client relationship. But, identifying this relationship and determining to whom that duty extends is not simple. A recent decision demonstrates that an attorney may be exposed to malpractice based on the expectations of non-clients.