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An Attorney’s Nightmare - Plaintiff and Defense Perspectives on Legal Malpractice

Editor’s Note: A legal malpractice suit is a nightmare for any attorney. To gain firsthand perspectives on these high-stakes matters, South Florida Legal Guide interviewed plaintiff’s attorney Warren R. Trazenfeld and defense attorneys Richard Critchlow, Deborah Corbishley and Elizabeth Honkonen. Here are their insights and suggestions.

    The Plaintiff’s Perspective

Warren TrazenfeldToday, any attorney is at risk for a legal malpractice lawsuit, says Warren R. Trazenfeld, founder and managing partner, Warren R. Trazenfeld, P.A. in Coconut Grove. “One of the first traps for attorneys is being unwilling to believe it could happen to you,” he says. “A lot of bad lawyers get sued for legal malpractice, but so do really good lawyers, big firm lawyers and solo practitioners. We are all at risk, so be careful and buy insurance coverage. You will be glad you did.”

In the past few years, Trazenfeld has seen an increase in malpractice suits in several areas of the law, including real estate transactions and family law matters such as adoptions and estate planning. Although commercial litigation spawns a large number of malpractice suits across the country, it is not a major factor in South Florida, says Trazenfeld.

“While there are some legal malpractice cases that have come to my attention that should never have been filed, there are far too many cases where a lawyer committed a provable error with resulting significant damages to his or her client,” he says. “Some of these attorneys are clueless, while others put their own interests first to the detriment of their clients.”

Generally, a lawyer can only be sued for malpractice by a former client, Trazenfeld says. However, there is an exception for beneficiaries named in a will. “Because the beneficiary lacks a personal relationship with the lawyer these cases often become acrimonious,” he says. “The transfer of wealth among several generations, also leads to legal malpractice suits, particularly when the deceased has multiple marriages with different children.”

When a plaintiff sues a lawyer for malpractice, it’s important for the attorney to advise the insurance company about a potential claim, says Trazenfeld. Otherwise, the insurer may deny coverage or reserve its rights. While a majority of malpractice cases ultimately settle, the plaintiff’s attorney should always be prepared to try the case, he adds. “If it comes down to whether a juror believes the lawyer or the client, the client wins almost every time,” he says.

Drawing from more than 25 years’ experience as a plaintiff’s attorney, Trazenfeld has several suggestions to reduce the risk of a malpractice suit.

  • Prepare effective engagement letters. “Clients think lawyers represent them on every problem they have,” he says. “Your letter should spell out exactly what you will do for the client. For instance, if you aren’t handling zoning in a real estate matter, you should spell that out. If it’s a personal injury case, let the client know you won’t handle the workers’ compensation issues. And if you don’t provide tax advice on a transaction, your letter should note that as well.”
  • Don’t take a case beyond your expertise. “We have seen cases where an attorney works on a transaction, and then litigates the problems that arise afterwards,” Trazenfeld says. “While some attorneys are good at both, you need to be aware of your own skill set and limitations. Otherwise, you are opening yourself up to a malpractice suit.”
  • Provide cost-benefit information. “Too many lawyers look at clients as a bucket of billable hours,” he says. “Instead, you have to look closely at the best way to achieve the client’s goals. If economic decisions are made, they should be well documented so the client understands them and the consequences of those decisions.”
  • Manage your client’s expectations. “I get a lot of calls where the client says it was a million-dollar case but at mediation, it’s become a $10,000 case,” he says. “That creates an angry client who’s ready to sue. If problems develop that reduce the value of the case, then you need to communicate that to the client.”
  • Return phone calls. Lawyers who are sued for legal malpractice almost invariable violate this rule, Trazenfeld says. “There is nothing clients resent more than being ignored by the lawyer they are paying to represent their interests.”
  • Don’t send hasty emails. “Clients demand immediate responses, but replying with a quick email is a common way to get into trouble,” he says. “Tell the client you need some time to think about this significant issue, and remember that incomplete advice is as wrong as bad advice. Many malpractice cases have turned on emails that attorneys wish they had never sent.”
  • Don’t forget your small cases. Even if your time and attention is spent on large matters, don’t let other cases sit on the bottom of your in-box. “Only rarely are lawyers sued by their most important clients,” says Trazenfeld. “Many times it’s the small case or the difficult case that gets neglected. The truth is there are no insignificant cases or transactions on your docket.”

Finally, Trazenfeld says the most important step occurs during client intake. “Don’t be afraid to turn down a client who has already been through three or four different lawyers or has extensive litigation experience,” he says. “If you feel wary about taking on a new client, trust your instincts, and just say no.”

The Defense Perspective

Critchlow Corbiishley HonkonenLegal malpractice lawsuits are on the rise for a number of reasons, according to Richard Critchlow, Deborah Corbishley and Elizabeth Honkonen, partners at Kenny Nachwalter in Miami who defend attorneys from midsize and large firms.

“When clients lose a lawsuit or a transaction does not turn out the way they expected, they often look to blame someone else for the result,” says Critchlow. “Often, the people clients look to blame are insured professionals, such as their attorneys.”

Another reason for the upturn in legal malpractice cases is the pressure to generate new business, adds Corbishley. As a result, an attorney may take on a new case without considering the risks involved in handling a matter for that client. “Don’t shortchange your assessment and underwriting process,” she says.

Corbishley says the “red flags” on client intake include an entrepreneur in financial trouble, a business owner who needs help with refinancing, a client who has fired multiple prior attorneys, or any client who may be engaged in criminal activity. “These clients are looking to solve an immediate financial problem and think they can make a quick buck by suing their attorney,” she says “They may even threaten the attorney with reputational damage by saying, ‘You don’t want to see this in the papers.’”

The risk of being sued for malpractice is there for any attorney, whether at a small firm or a large firm, says Critchlow. “Nobody ever thinks they will be sued by a client they’ve known for years, but things can change quickly,” he says. “Professionals like attorneys and accountants are perceived as having deep pockets, making them attractive targets for a plaintiff’s suit. However, insurance companies don’t want to be perceived as ‘soft,’ and will fight these cases rather than give in with a quick settlement.”

In fact, Critchlow, Corbishley and Honkonen approach every case as if it will ultimately go to trial. “We want to be able to explain the case in an easily understood manner,” says Honkonen. “We also want the jury to see our client as a likeable person with strong legal skills.”

Having adequate insurance protection can provide financial protection against a malpractice suit, says Critchlow, who suggests purchasing a policy based on the scope of the practice. “If you are handling transactions of $1 million or more and you only have a $500,000 policy, you are underinsured,” he says. “Some attorneys get insurance from low-premium companies who have the power to control who the lawyer hires and what they are willing to pay to defend the case. But if it’s a ‘bet the firm’ case, you want an experienced attorney defending you.”

Sufficient coverage is vital for attorneys in securities, banking and intellectual property because they are high-exposure legal fields with “land mines” that can result in malpractice suits against even good lawyers, Critchlow adds. For instance, a calendaring error that leads to a missed deadline in a patent, copyright or trademark case can cause serious problems for a client.

Critchlow also recommends getting “tail coverage” on a policy to provide coverage for incidents that occur during the coverage period but are not asserteduntil after the coverage period. “In real estate, for instance, a problem may not show up for several years,” he says. “Tail coverage can also protect a lawyer from any claim dating from actions at a prior firm.”

From their long experience, the Kenny Nachwalter defense team has several suggestions for reducing the risk of legal malpractice suits.

  • Identify the client. Critchlow says that’s not always a simple issue. “You might get hired by a friend who happens to be the president of the company,” he says. “But in the event of a suit you might have to take action against your friend, because you represent the corporate entity, not the officers.”
  • Look for possible conflicts. In a corporate engagement, that means taking the time to look at the subsidiaries, affiliates and parent company, as well as the ownership structure, Critchlow says. Due diligence at the start is much better than having to mount a defense later on, he add. If conflicts arise during the course of the case, they should be disclosed immediately to the client.
  • Be wary of joint representation. “These engagements are fraught with problems,” says Corbishley. “If you are taking representation of more than one client, you should declare what happens if a conflict arises in the future. Otherwise, you may lose the client, forfeit your fees and still get sued.”
  • Carefully review engagement letters. Engagement letters should be reviewed carefully so the scope of the work is clear, Critchlow says.
  • Avoid ‘engagement creep.’ “If the engagement letter says the scope of the engagement is X, don’t take on tasks related to Y,” says Corbishley. “Although clients have high expectations, you need to take the time to formalize each new engagement and clearly set forth the scope of what you have been asked to do.”
  • Document the client’s decisions. “When you pick up the phone and talk to a client, document the discussion in writing,” Critchlow says. “That’s very important because there can be vast differences in recollections.”
  • Be thoughtful of internal emails as well as external communications. “Many lawyers will say things to their colleagues that could be damaging in a lawsuit,” says Critchlow. “Think about whether or not you would want to see it on the front page of the newspaper – or if you’d want your mother to read it,” adds Honkonen.
  • Tell the client if you make a mistake. Nobody likes to communicate the bad news, but you have let your client know right away, Critchlow says. “You also need to communicate with your loss prevention group so they are aware of the issue.”
  • Don’t panic when facing a problem. “Nobody makes good decisions when feeling emotional pressure,” Corbishley says. “Sometimes, it’s not the error but the response to an error that gets a lawyer sued.”
  • Look at the ethical issues. A plaintiff may bring in an expert that says the attorney violated the rules of professional conduct. Even though that’s not cause for a suit, you need to be prepared to address that issue.

Finally, an attorney should be prepared to end a bad engagement, even if it results in a financial loss. “If you sue a client for a fee, be ready to defend a counterclaim for malpractice,” says Critchlow. “Even if you didn’t do anything wrong, that suit will cost you time and money and distract you from your law practice. Do what you can to collect your debt, but at a certain point, close the file and consider it a lesson for the future.”

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07/01/2016

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