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On Risk Management: Client Screening as a Risk Management
Technique
An effective screening process considers all of the following: * Is the matter appropriate given the size and scope of your practice? If not, you must decline the representation or engage qualified co-counsel. Many legal malpractice cases begin when practitioners take on matters outside their areas of expertise. If you routinely handle personal injury plaintiff matters, for example, do not assume that you know enough to handle personal injury defense matters. Be sure to avoid regulated or specialized areas of practice, such as patents, trademarks and copyrights or estates, probates and trusts. You must decide whether a few thousand dollars in fees is worth the risk of a potentially large malpractice claim and its damage to your reputation. * Why does the client want to proceed? Avoid clients who are proceeding on principle alone … who want blood at all costs. They normally do not understand the limitations of the legal system and will accept nothing short of a “complete” victory. This is certainly not the client for your firm! * Has the client changed attorneys in the past? “Beware of the client who comes to your office with his or her file in a shopping bag!” quips Al Frederick, partner at Eccleston & Wolf, in our “Avoiding Legal Malpractice” programs. There are several reasons to avoid such clients. First, if they are seeking your advice at the last minute, you may not have time to represent them properly, investigate the matter or draft the appropriate documents. Second, determine why the client was dissatisfied with the previous lawyer. It may be that the client, not the attorney, is the real problem. Finally, it could be that the client is just trying to avoid legal bills. Be sure to obtain a retainer before you start working on the matter. * Is the client price shopping, or overly concerned about cost? Taking on a client who cannot afford your fees is a losing proposition. The client will more than likely be dissatisfied with your bill, no matter what the result of your legal services. A significant percentage of today’s legal malpractice claims are generated by fee disputes: The attorney sues for fees, the client counter-sues for malpractice and both run up legal costs before finally agreeing to forget the whole thing. Attorneys with overly cost-conscious clients face another pitfall: the temptation to keep bills down by cutting corners, so that critical research is not completed and experts are not consulted. This, too, can lead to disciplinary complaints as well as malpractice claims. * Does the client have unrealistic expectations? Decline to represent clients who believe they deserve millions for a minor car accident. Inevitably, they will be unhappy with the results you get. * Does the client exhibit irrational behavior? Client participation is vital to the success of any legal matter, but an emotionally distraught client may be unable to assist you in the representation. Also, a client who instructs you to pursue a course of action “at all costs” may regret that decision a few months later — and blame you. * Is the client of questionable character? It’s one thing to defend a client in a criminal or even civil matter, and quite another to handle the same person’s business matters, securities issues or start-up ventures. You may be the last to discover that your client is dishonest or financially incapable of completing the deal, but frustrated investors and other third parties may see you as a deep pocket. Steps to take Before accepting a client, have a careful discussion of fees and check for any conflicts of interest. Obtain written clearance if conflicts are discovered and can be waived. If you decide to go forward, use a written engagement letter and a written fee agreement that clearly sets forth the client’s identity, the scope of the representation, the fee and any timing issues. Don’t just assume that you and your client are “on the same page” regarding the terms of your representation. Start the relationship off with a clear, concise document that records your expectations as well as your client’s. Finally, if you decide not to accept a client, send a declination or non-engagement letter — and send it by certified mail, return receipt requested. Many attorneys are surprised by malpractice suits brought on behalf of individuals they met only briefly during an initial interview. When drafting the non-engagement letter: 1. state your decision not to represent; 2. avoid stating opinions about the liability of various parties; 3. point out a critical deadline, if applicable, such as a statute of limitations, but do not specify the date; and 4. advise the declined client to seek other counsel as soon as possible. Conclusion Risk management is a dynamic process that both influences and reflects how you practice law. Integrating these rules and risk management concepts into your daily routines will help you select the proper clients for your practice and avoid costly malpractice claims. For more on these topics, see “Loss Prevention Self-Audit,” published by Alabama Insurance Mutual; “Avoid Malpractice Claims By Screening Undesirable Clients” by Anne E. Thar, Esq., ISBA Mutual (Illinois State Bar Association); and “Client Relations” by Ann Massie Nelson (Wisconsin Lawyers Mutual Insurance Co.). Resources "Loss Prevention Self Audit" - published by
Alabama Insurance Mutual Kay G. Kenny is assistant general manager of the Legal Mutual Liability Insurance Society of Maryland. This is the second in a series of articles that include claim prevention techniques, designed to minimize the likelihood of being sued for legal malpractice. The material presented does not establish, report or create the standard of care for attorneys; is not legal advice and does not represent a complete analysis of the topics. Readers should conduct their own appropriate research. |
Not
every client is right for your practice. A key step in any good loss-prevention
program is to establish a procedure for evaluating the potential client
and matter.
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