by Chris Stiegemeyer, Director of Risk Management, The Bar Plan Foundation
Many lawyers accused of malpractice learn too late that minimal risk management procedures could have prevented a costly claim. Performing a review of your law firm’s risk management procedures is one way to determine your firm’s malpractice risks.
In order to make the review process manageable, consider breaking the project down in month-by-month segments addressing different risk management issues.
Month One: Client Intake Form
The intake form should be completed during the initial client interview and inquire about client background, nature of the representation, jurisdictional issues, and opposing parties. It serves as a reminder for the intake attorney to research any statutory, procedural, or administrative deadlines.
The critical dates stated on the intake form should be transferred to the law firm’s central calendar. After these critical dates are calendared, the attorney should perform a source documentation review to ensure the dates on the calendar correspond with the dates on the intake form.
- Do attorneys in the firm use a standard client intake form modified by the area of law?
- Does the law firm have a procedure for transferring information on the intake form to the firm’s centralized calendar? For organizational purposes, attorneys should maintain basic client and case information on an intake form within the client file.
Month Two: Conflicts of Interest
A failure to recognize a conflict of interest may result in a malpractice claim for breach of fiduciary duties, and ethics complaint, or both. Motions to disqualify based on a conflict of interest are a common litigation tactic employed by opposing counsel. Clients should be screened for conflicts of interest prior to the initial meeting, after the initial meeting, and throughout the representation.
The information maintained in a Conflicts of Interest checking system will vary according to a firm’s areas of practice and clientele.
Month Three: Engagement Letters
Engagement letters provide an opportunity for the lawyer to clarify the nature of the relationship to the client and should be used in EVERY representation. Suggested areas to incorporate into an Engagement Letter include:
- The identity of the client;
- Who is not the client (spouses, heirs, co-parties, employees of corporations);
- The nature of the representation;
- What is not the nature of the representation (ancillary claims, etc.);
- A description of services to be rendered;
- Appropriate methods of communication;
- The names of the attorney and support staff who will assist in the representation;
- The firm’s file retention policy;
- The billing arrangements;
- Identity of successor lawyer where appropriate;
- The need to maintain current contact information and the consequences of failing to do so, and
- Acknowledgement of conflicts of interest waivers (if applicable).
Month Four: Non-engagement Letters
The non-engagement letter confirms that there is no attorney-client relationship between the law firm and the potential client. Claims by “non-clients” that the attorney failed to protect some interest are on the rise. Courts generally determine the existence of the attorney-client through an examination of the client’s reasonable belief that such a relationship exists. The content of the non-engagement letter should reflect the facts and circumstances as the lawyer knows them at the time of the non-engagement. Suggested areas to address in a non-engagement letter include:
- The declined client’s name and the date of the meeting;
- That the matter was taken under consideration and is not being accepted at this time;
- That declination does not reflect an opinion on the merits;
- Urge the individual to seek other representation if they desire to pursue the matter;
- Where a deadline is imminent, strongly urge individual to timely seek other representation and the consequences of failing to do;
- If other work in a separate or related matter is to be performed, state the service to be rendered; and
- If the attorney received any documents during the interview, such documents should be itemized in the letter and included with the non-engagement letter.
Another way to confirm the absence of an attorney-client relationship is through the use of a non-engagement form completed during the initial interview. At the end of the interview, the lawyer should provide the client with a copy of the non-engagement form. A copy of the non-engagement letter or intake form should be maintained in perpetuity as a conflict of interest checking resource and as proof of the declined relationship if one is alleged in the future.
Month Five: Closing Letters
In addition to protecting the attorney from an unintended on-going attorney-client relationship, a well-drafted closing letter may also be a tool to secure future business from the client.
The first step in drafting a Closing Letter is to review the scope of the representation as set out in the Engagement Letter. Was it accomplished? Did other potential matters, related to the primary representation, arise? Discrepancies between the scope of representation and the actual representation, and the significance of the discrepancies, should be explained in the Closing Letter.
At the end of a representation, the lawyer should have a discussion with the client regarding housekeeping matters related to the representation. These conversations may address the firm’s file retention policy as well as the need to revisit the matter should the client’s life or financial circumstances change. This conversation should be the basis for the closing letter and should contain the following information:
- Confirmation that the firm’s representation has concluded and that the attorney-client relationship has ceased;
- A final billing statement for legal services rendered;
- The firm’s file retention policy; and
- A request to serve the client’s future legal needs.
Month Six: Fee Agreements
Under the Missouri Rules of Professional Conduct 4-1.5 Fees, a signed fee agreement is required in contingency fee agreements, where there is a division of fee between lawyers in separate firms, and in limited scope representations under. (see M.R.P.C. 4-1.5(c), 4-1.5(e)(2) and 4-1.2(c) Scope of Representation).
Ethical requirements aside, a signed fee agreements is a valuable risk management tool regardless of the nature of the representation. Fee agreements should address the following: the amount of the fee; how the fees will be calculated; the length of billing cycle; and the consequences of the client’s failure to pay his bill.
From a risk management perspective, the lawyer should also include the client’s obligation to inform the attorney of any changes to his contact information or circumstances. This “Responsibilities of the Parties” clause should address the consequences of failing to fulfill those responsibilities. Should the client disappear during the representation and later resurface after the case has been time barred, a “Responsibility of the Parties” clause may allow the attorney to successfully assert an affirmative defense of abandonment.
It is recommended that attorneys, when reviewing their agreements, look at the sample fee agreements at the Missouri Bar website, Missouri Formal Opinion 128, and cases such as In re Coleman, 295 S.W.3d 857 (Mo. 2009).
Month Seven: Billing Procedures
- What is the firm’s policy for establishing billing arrangements?
- How does your law firm calculate and bill for its services?
- Do billing arrangements include contingent fees retainers, advance fees, flat fees, hourly billing, or a combination of all of the above?
- Does the firm ever accept representations as co-counsel in a matter?
- Does the firm charge non-refundable fees or attempt to predicate the rendering of services on payment of fees?
This is also an appropriate time to review your law firm’s trust accounting policies to ensure compliance with M.R.P.C. 4-1.15 Safekeeping Property.
Month Eight: Calendaring Procedures
The law firm’s calendaring procedures should include programming heads-up reminders to alert the attorney of approaching deadlines. The heads-up reminders should provide the attorney with an adequate amount of time to accomplish the task associated with the deadline.
- Does the firm have a centralized calendaring system with a single attorney responsible for reviewing the firm’s calendar to ensure deadlines are being met?
- A central calendar, reviewable by all employees of the firms, incorporating Source Documentation Review is essential to properly managing firm deadlines.
- A law firm’s central calendar should account for the following dates and deadlines: statutes of Limitations; pleading deadlines; court dates; discovery response dates; adverse party deadlines; and vacation schedules.
Month Nine: File Retention Policy
Every law firm should have a protocol for the retention and destruction of client files to ensure that files are handled in a manner that meets the lawyer’s fiduciary and ethical obligations. When creating a file retention policy, consider the nature of the firm’s caseload, malpractice statutes of limitations, and storage capacity. Under M.R.P.C. 4-1.22 File Retention, Missouri lawyers are required to securely store the client’s file, absent a contrary agreement between lawyer and client, for six years from the last date of representation. Please also note that representations terminated on or before June 30, 2016 shall be kept for 10 years from the last date of representation.
For malpractice avoidance purposes, law firms should maintain an accurate record of the client’s names; the dates the file was opened and closed; the reason for the destruction; the date of destruction; and the attorney authorizing the destruction of the file.
Month Ten: Lawyer’s Death or Disability
The comment to M.R.P.C. 4-1.2 Diligence suggests that a lawyer designate another competent lawyer to assume responsibilities of the client files in the unexpected death or disability of the designating lawyer.
The Missouri Bar has addressed the issue of planning for your clients in the event of your death or disability with the publication of Planning Ahead: A Guide to Protect Your Client’s and Your Survivor’s Interests in the event of Your Disability or Death.
The managing lawyers should also consider the firm’s ability to access the deceased or incapacitated lawyer’s email accounts, Facebook pages, LinkedIn accounts, law firm blogs, voicemail mailboxes, etc. These types of accounts often require passwords to access. If these accounts contain firm or client information, the law firm should implement a policy requiring such passwords be securely available to the firm in the event access is necessary in the absence of an attorney.
Month Eleven: Disaster Recovery
In the event client files are inaccessible or destroyed, the lawyer’s obligations to clients will continue despite the firm’s misfortune. Maintain an off-site back-up server as well as a client contact list maintained at a second location.
- If a disaster strikes, does your firm have a business continuity plan that will allow the firm to continue operations?
- Has the firm studied the potential impact on the firm of various catastrophic events?
- Does the firm maintain a master client contact list away from the principle firm office? Phone, address, email, case number, court contact info, adverse counsel contact info.
Month Twelve: Law Firm Marketing
As lawyers continue to look for innovative ways to market their practice, many are turning to the internet and social media to market their law firm. If your firm maintains a website, ensure that the appropriate disclaimers are in place so that your firm does not stumble into an attorney-client relationship or conflict of interest.
Much helpful guidance can be found in ABA Formal Opinion 10-457 – Lawyer Websites.
- Create a firm-wide policy regarding social media policies and procedures.
- Develop an approach for client acquisition: bar participation, local service organizations, articles, traditional advertising (Yellow Pages, mailings), newsletters.
- Implement tracking of new clients.
More information on business development tips for law firms, can be found here.
Risk Management Help
If you or your firm have any questions about the ethics or risk management issues related practicing law, contact the appropriate ethics authority in your state or contact us at Foundation@TheBarPlan.com.