Lawyers in Hot Water
By Harry J. Lew
Ned Racine, the bumbling attorney in the 1980s film “Body Heat” made the mistake of getting involved with a femme fatale, the sensuous Matty Walker played by Kathleen Turner. In classic film noir fashion, Matty manipulates the not-too-swift Racine, played by William Hurt, into killing her husband for his life insurance. Then she sets him up for the murder and life in prison, while she lives the rest of her days in a tropical paradise.
Clearly, Racine’s big mistake was getting involved with Walker. But before he falls for her, he makes another one: practicing law outside his specialty. Although he was a modestly capable criminal defense attorney, Racine had fallen on hard times financially. He decided to do some estate planning work for a new client to generate extra cash. But he screwed up the drafting of a will and was disciplined by his state’s bar association, hurting his reputation in the local community.
Most attorneys today are ethical enough—and competent enough—to avoid Racine’s mistakes. But that doesn’t mean they’re perfect. Since they’re human, they’re prone to making errors, from saying something that antagonizes their managing partner to being ignorant of a key point in the law, which causes them to lose a case at trial. But when they do, they also know how to recover from one, so they don’t irreparably damage their careers.
You could write a shelf of books—and make dozens of movies—about the mistakes lawyers make. In the first category, mistakes that damage careers, but not necessarily clients, are things like:
- Failing to ask for help when you need it
- Relying on your firm’s administrative systems instead of your own calendar
- Engaging in inappropriate behavior after hours
- Gossiping about clients and colleagues
- Putting off what you need to do today until tomorrow
- Being boneheaded about practice politics
All of the above mistakes can happen to even the best attorneys. But the aftermath of such errors, though potentially damaging to careers, may not lead to malpractice litigation. For that, you need to do something that financially harms a client such as:
- Failing to know or properly apply the law. Accounting for 11.3 percent of malpractice suits according to the ABA Standing Committee on Lawyer’s Professional Liability, this is the most common error lawyers make. When you do your legal research, but fail to uncover the key legal principles that apply to your client’s situation, you’ve exhibited a lack of mastery over the law.
- Making a planning error. Accounting for 8.9 percent of mistakes, this involves making an error in judgment about how a client’s case should be handled.
- Failing to do sufficient discovery of facts or investigation. Representing 8.8 percent of mistakes, this mistake involves attorneys failing to budget enough time to do adequate research, which can end up torpedoing a client’s case.
- Not filing documents when no deadline is involved. Here, attorneys simply neglect to file a document necessary to protect their client against another party’s claims. Example: not filing a mortgage to protect a mortgagee of a property. This type of mistake produces 8.6 percent of the malpractice errors.
- Failure to properly calendar crucial activities. Involving 6.7 percent of mistakes, these cases involves lawyers who have a hard due date, but never manage to enter the task into their calendar.
After making such a mistake, many attorneys have an entirely human reaction . . . they want to bury it so their client, practice leader, and colleagues never find out. According to Pearl Moses, Head of Risk & Compliance at The Law Society (U.K.), that’s absolutely the worst thing you can do. If someone else discovers your mistake, you will come off looking evasive, culpable, and in a worse position than if you had acknowledged and dealt with it forthrightly. Moses suggests a more productive course of action is to:
- Not give in to panic. Instead, keep your wits about you so you can evaluate the magnitude of your error and manage the situation going forward.
- Notify your supervisor. It won’t be easy, but you need to come clean with your supervisor or practice owner as soon as possible after you make a mistake.
- Devise a recovery plan. Swift action will often remediate the most damaging mistake outcomes. To this end, work with your supervisor to lay down steps needed to fix the problem, how long they will take, what results you expect, and your assessment of how likely the mistake can be resolved positively for all concerned.
- Accept responsibility. Moses says this involves being totally upfront with your client and disclosing the mistake even though it might put you in a negative light.
Need for Client Disclosure
Client disclosure is an especially touchy matter, since it involves a situation in which your interests and those of your client may be at odds. That’s why state bar association codes of conduct often require attorneys to disclose all information to a client that is material to the engagement, especially to its timing or substance. In such cases, assuming the mistake is material, your desire to avoid getting sued by your client might limit your ability to continue representing the client, which is an untenable position for both you and the your client to be in.
Consequently, if you make a material mistake that you can’t fix, experts advise disclosing the error to the client and explaining that because of a conflict of interest, you may no longer be able to be the person’s attorney in the matter. You may also wish to encourage the client to get independent legal advice, since you no longer can provide unbiased representation.
That’s all well and good, but the need to disclose a mistake may not be a cut-and-dried decision. Making this call requires careful analysis (and often outside counsel) because of the many issues involved, including:
- The precise nature of the mistake
- Whether the error can be fixed
- The magnitude of harm caused to the client
- Whether your actions were negligent
- The likelihood of the mistake giving rise to a malpractice claim from the client
In short, according to a North Carolina state bar ethics opinion (2015 FEO 4), a material error that “prejudices the client’s rights or interests as well as errors that clearly give rise to a malpractice claim must always be reported to the client.”
The flip side, according to the opinion, is a negligible error that can be easily remedied and that doesn’t prejudice the client’s rights or interests. In that case, you may not need to disclose the mistake to a client. Although this specific opinion only applies to attorneys doing business in North Carolina, other states presumably have similar rules.
Still, assuming your mistake is serious and likely to result in a malpractice claim, it’s crucial to think hard about what to say to the client. A key goal, of course, is to make sure the person will have enough information to make informed decisions about the case. To that end, you’ll need to fully explain the mistake and what it means for the matter at hand.
Should you also tell the person that he or she might have a malpractice case against you? Here, state bars have various positions on whether such disclosure is required. Some such as Wisconsin and New York mandate disclosure. Others such as Colorado take the position you don’t need to tell clients they may have a malpractice claim against you. As a result, be sure to familiarize yourself with the rules in your state. At the very least, consider telling the person that the mistake may give rise to malpractice claims and that the person should get advice from another attorney to see if that’s the case here.
Now, let’s assume you disclose a mistake and your client reveals his desire to bring a claim against you . . . unless you lower your fee or offer some other concession. It might be tempting to accept such an offer in order to make the whole matter quickly go away. However, don’t do it unless you also advise the client in writing of the desirability of getting legal counsel first.
Finally, once you disclose your mistake, be sure to provide the client with a copy of all documents relating to his case, while also making copies for yourself.
Notify Your Insurer
Failing to properly acknowledge and deal with a material error doesn’t just relate to clients. It also involves your dealings with your malpractice insurer. If after making a mistake you sink into a swamp of indecision about what to do, then be advised you may create a problem not only with your clients, but also with your insurance company. Why? Because malpractice insurance policies mandate timely and proper claim reporting. Delaying may result in the company revoking coverage for your incident.
At this point, you’ve carefully thought about the mistake you made, tried to fix it, if possible, and made important disclosures to your supervisor (if any), client, and malpractice insurer. What else should you do? Debrief the case so you understand what went wrong and how you might prevent future problems in the future. You’ll want to identify:
- Where the case went south and why
- The role of everyone in the firm who contributed to the error
- How you might have prevented the mistake
- What new procedures or training are needed to avoid such errors in the future
Most importantly, you want to treat the whole episode as an excellent learning opportunity for all involved, not an opportunity to lay blame. Good advice, too, for “Body Heat” attorney Ned Racine. Had he learned the obvious lessons from both his estate planning and romantic errors, perhaps he would have avoided ruining his professional reputation in the first instance and avoided jail time in the second. Good lessons, indeed, for both real-life attorneys as well as celluloid ones.
This article should not be considered legal advice. If you made a mistake and believe you may be the target of a malpractice insurance claim, please seek counsel as soon as possible.
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