Professional Liability Matters

A modern-day offshoot of the contingency fee arrangement is “alternative litigation financing.” Also known as third-party litigation financing, A.L.F. is the practice of making cash advances, usually to a litigant, to be repaid from the proceeds from the litigation. There is plenty of room for debate the pros and cons of this developing trend. Supporters may argue that this practice allows an injured plaintiff to take an “advance” on an anticipated recovery to address financial hardship before reaching a settlement or verdict. This is particularly useful for injured plaintiffs who cannot return to work. But attorneys associated with litigation financing may be susceptible to claims when something goes awry.

Attorneys have an ethical duty to keep a client reasonably informed about the status of the representation. The rules of professional conduct generally require a lawyer to provide the client with sufficient information to participate intelligently in decisions concerning the objectives of the representation. Fulfilling this ethical obligation, however, may sometimes require the attorney to inform the client about personal matters that may affect the attorney’s ability to represent the client’s interest. For example, an attorney may be obligated to disclose her own health condition to a client, especially when imminent death is foreseeable.

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.