The Seven Deadly Sins: Part II

THE SEVEN DEADLY SINS

WHY ATTORNEYS
 GET STUNG BY JURIES IN
 LEGAL MALPRACTICE CASES

Harry W.R. Chamberlain II

Harry W.R. Chamberlain II is a shareholder of  Buchalter Nemer in Los Angeles where his practice emphasizes the representation of lawyers and other professionals in complex litigation. He is certified as an Appellate Specialist by the California State Bar Board of Legal Specialization, and has argued hundreds of appeals on behalf of clients in multiple jurisdictions. The following article is an edited version of Mr. Chamberlain's 2007 AIM CLE lecture on this subject.  This is part two in a series.

[Sins 1 and 2 respectfully, edited]

Deadly Sin: Lack of Organization or Preparation

Some of the most common errors resulting in malpractice claims are the simplest to identify and prevent. "Administrative errors" are basically clerical mistakes, such as miscalendaring the statute of limitations, missing a filing deadline for appointment of expert witnesses or poor recordkeeping that results in loss of client documents and material evidence. (Kelly Warnken, Poor File Room Procedures Increase Risk Of Malpractice, 72 ABA J., Jan. 1986, at 144; Stern, Reducing Your Malpractice Risks, at 52.)

So-called "substantive errors" are also frequently the basis of malpractice claims. Lack of preparation, inadequate investigation, failure to know the law and simple math errors fall into this category. Together, substantive and administrative errors account for more than two-thirds of the lawsuits brought against attorneys. In the ABA's most recent survey of malpractice claims for the period 1990 through 1995, administrative errors and substantive errors represented approximately 70% of all malpractice claims reported). (ABA Standing Committee on Lawyers' Professional Liability, Legal Malpractice Claims in the 1990s, Dec. 1996, at 13-15.)

More law firms (with encouragement from their legal malpractice insurers) are developing in-house loss prevention programs to help identify and minimize these risks by auditing case files and evaluating internal office procedures. (Nancy Blodgett, HEADS UP!: Malpractice Alert Issued, 74 ABA J., Oct. 1988, at 28 (hereafter "Blodgett, HEADS UP!"); David A. Schaefer, Avoiding Malpractice Claims: Help Yourself Because Juries Won't, 60 Def. Couns. J. 584 (Oct. 1993) (hereafter "Schaefer, Avoiding Malpractice Claims").) In addition, many firms appoint a professional liability partner or committee to handle peer review issues and act as the liaison between malpractice insurers and defense counsel when malpractice suits arise. This practice avoids the inevitable tensions that occur when the lawyer accused of the error is also assigned the task of evaluating and responding to charges involving his conduct. (Don J. DeBenedictis, The Law Firm-Defendant, 76 ABA J., Jan. 1990, at 35 (hereafter "DeBenedictis, The Law Firm-Defendant"); Schneider, See You In Court, at para. 11.)

Internal audits and other loss prevention methods can add to the overhead and administrative burden of your law practice. But a growing number of insurance companies are requiring such procedures as a condition of coverage, and even when not required, outside loss prevention services are readily available from bar associations at a nominal cost. (Duke Nordlinger Stern, The Right Amount Of Coverage: Taking Inventory Of Risks Helps Determine Malpractice Insurance Limits, 82 ABA J., Jan. 1996, at 84.) In the long run, this "ounce of prevention" can pay for itself by avoiding the financial impact of just one malpractice verdict, not to mention the personal and professional costs for the lawyers who are sued.

Of course, no loss prevention system is foolproof. A simple error can mean million-dollar loss exposure. The following example is typical:

Example

Laura and Tom are preparing to celebrate their 20th Wedding Anniversary. Laura is a successful executive earning a six-figure income. They have two teenage children, and their oldest daughter will enter college in the fall. Laura has been experiencing severe "migraines" off and on for the past two years. She is under a doctor's care and takes medication for this condition. Just before the anniversary party, Laura is diagnosed as having an inoperable, malignant brain tumor. She dies a short time later.

Jake is a trial lawyer and sole practitioner who advertises as a "medical malpractice specialist." Jake recently started his own practice after working several years at an established plaintiff's malpractice firm. Tom asks Jake to evaluate a possible legal action against Laura's treating physicians for failure to diagnose her condition sooner.

Jake agrees to take the case for the family. His trial calendar heats up. His secretary quits and the statute of limitations expires without a complaint being filed.

Jake's error is crystal clear. Should he admit liability and confess to a judgment? Not so fast. This is a classic "case within a case." * (Mattco Forge, Inc. v. Arthur Young & Co., 52 Cal.App.4th 820, 832-837, 60 Cal.Rptr.2d 780, 787-790 (Cal.App.2d 1997) (digesting cases from numerous jurisdictions applying the case-within-the-case or trial-within-the-trial doctrine); see also John C. Boeckeler, Practical Suggestions For Handling The Plaintiff's Legal Malpractice Case, 36 N.H. B.J. 60 (June 1995) (hereinafter "Boeckeler, Practical Suggestions").) While Jake should promptly advise Tom (and his malpractice insurer) of the problem, committing the error does not mean that Jake's liability for malpractice is automatic. So far, the only "loss" suffered by his clients is their opportunity to litigate the underlying medical malpractice case.

Jake's position might be defensible – or it might not – depending on the merits of the original lawsuit.

Deadly Sin: Take Anything That Comes In The Door

Taking on new clients, and assignments outside your areas of expertise, are among the most fertile sources of malpractice claims. (Schaefer, Avoiding Malpractice Claims, at 584-86; Schneider, See You In Court, at paras. 3 and 5.) Establishing effective client-intake procedures for screening new business is therefore essential to maintaining the proper balance between the firm's economic and professional interests, and can be the key to avoiding some "fatal" liability exposures. According to loss prevention attorney Robert O'Malley, a "fatal" combination for a firm of any size without proper screening is "a new client, a start-up enterprise and an initial securities offering." (Paul Marcotte, ‘The Biggest Malpractice Risk,' 73 ABA J., Aug. 1987, at 32.) If the firm declines the representation, be sure to send a letter confirming that decision to the potential client. (See Russ M. Herman, "Stop . . . Look . . . Listen: Interviewing And Choosing Clients, 31 trial 48 (June 1995); Boyd S. Lemon, Avoiding Legal Malpractice: Thirty Ways To Protect Yourself, Los Angeles Lawyer, Feb. 1992, at 14; Schafer, Avoiding Malpractice Claims, 60 Def. Couns. J. at 586-87.) Here are some things to look for when "selecting" a client:.

Example

Mary is a soft-spoken elderly woman who consults you after several years of litigation with her late husband's business associates over the value of his interest in a closely-held company. Mary is frustrated about the lack of progress being demonstrated by her present counsel (a well-respected local firm) and also complains about "the enormous amount of fees they've charged me without anything to show for it."

Mary wants to know if you will take her case. She needs your answer right away because the trial is scheduled only a few months from now. Mary also asks your advice about "possible malpractice claims" against her present attorneys. You politely decline to comment on prior counsel's work (instead referring Mary to another law firm) but agree to assume Mary's representation in the business dispute.

Mary seems pleased and promptly pays your retainer. She tells you that she wants to see "justice done to those people who have stolen my husband's business." And she doesn't care "how long it takes or how much it costs."

After conducting some additional discovery in preparation for trial, you conclude that Mary's legal position is not as strong as she apparently believes. You recommend she consider a negotiated settlement. Mary declines. The case goes to trial and she is "disappointed" by the outcome.

A short time later, you receive a summons joining you and your firm in Mary's malpractice suit against her former lawyers. Only then do you learn that prior counsel had also recommended settlement and several other attorneys turned down the case before Mary consulted you.

Mary's case illustrates the need for proper guidelines to identify "problem clients" and cases. A client-intake checklist and more thorough investigation might have highlighted some of these "red flags" identified by risk management attorney Stephen M. Blumberg:

•  The client is changing attorneys in the middle of a case;

•  The case already has been rejected by one or more firms;

• The client wants to proceed with the case out of principle, regardless of cost;

 The case has an element of avoidable urgency (e.g., a closely pending trial date.) (Stephen M. Blumberg, Risk Management: Preventing Malpractice Claims, 13 Legal Economics 52 (Sept. 1987) (parentheses added) (hereafter "Blumberg, Risk Management"); see also Maurice E. Bone, Client Screening — Stop Trouble Before It Starts, 80 Ill. B.J. 390, 390-91 (Aug. 1992).)

Theoretically, "an attorney does not guarantee a client's success in litigation" or business ventures. (Bily v. Arthur Young & Co., 3 Cal.4th 370, 424, 11 Cal.Rptr.2d 51, 85 (1992) (dis. opn.); Cypers, Shrinking Attorney Liability, at 2.) Jurors in malpractice cases seem willing to accept the fairness of that proposition, even if the "problem client" is not. (O'Neill, Do Jurors Treat Lawyers Fairly?, at 248.) But that won't avoid the expense of a malpractice suit.

Plaintiffs' malpractice attorneys carefully screen their cases before taking them, and so should you. (Jill Schachner Chanen, Just Say No To Problem Clients: Adequate Screening Upfront Can Prevent Dissatisfaction Later On, 82 ABA J., Apr. 1996, at 96. James Bartimus & Christopher J. Eaton, Should You Accept the Case? 32 trial 50 (May 1996); Ronald E. Mallen, Choosing Clients and Cases, 25 Trial 28, 28-29 (Aug. 1989).) Because some clients will never be satisfied no matter what you do, and like Mary, they have a name for their former lawyers. They call them "defendants."

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*Ed. Note: Alabama applies the case within a case requirement for proof of a legal malpractice claim. Morrison v. Franklin, 655 So. 2d 964 (Ala. 1995); Kessler v. Gillis, 911 So. 2d 1072 (Ala. Civ. App. 2004).