Running a business carries inherent risks. Among some of the problems businesses and firms encounter are malpractice claims. These lawsuits are usually initiated by unhappy clients who use the law as a final option. However, these suits are avoidable with planning and forethought. In fact, there are 10 ways firms can avoid malpractice suits.
1. Write it Out!
Most lawsuits arise out of a misunderstanding. Therefore, it is important to create clear, thorough contracts that cover all situations. There should also be a mention of how to approach problems as they arise, i.e. by contacting an appropriate representative.
2. Open the Lines of Communication
As insurance agency will tell you most clients get anxious when there is a lack of communication. Make sure to foster healthy communication between the firm and the client. This will help to evade bigger problems by revealing issues when they are manageable. It will also make the client feel more secure and confident in your services.
3. Check Up on Clients
Communication is important but it is also necessary to “follow-up” with clients. This communication occurs after the firm renders an action or service. For example, if the firm performs research on something for clients it is important to promptly advise them of the results.
4. Manage Expectations
One of the best ways to avoid using malpractice insurance is let customers know what to expect. If they are expecting the “moon and the stars” bring them back down to reality. Give them a real look at where they’ll be after your company performs its obligations. Clients can’t be disappointed later when they have an appropriate expectation at the start.
5. Don’t Be Careless
Making minor mistakes can cost you a lot in the end. Make sure all work is performed to the highest standards. Cutting corners can mess up an aspect of the service that is important to the client.
6. Use Outside Help When Needed
Sometimes firms take on more than they can handle. If your firm is dealing with an extraordinarily large contract it is best to seek additional help. This may mean sub-contracting parts of the job or using part-time employees. It may cost money to do this, but a successful completion of the job means more money for the firm in the future.
7. Use Empathy
Think of your business performance as your client would see it. Doing this helps you see problems you may not have realized before. If you can resolve these ahead of time you will avoid dealing with an unhappy client later.
8. Use Modern Business Practices
Paragon Underwriters advise that one way a firm can avoid lawsuits is to keep everything up to code. Following the latest business trends and regulations means that you are performing your role correctly. When you can show an unhappy client that you “do everything by the book” it will help dissuade them from seeking legal recourse.
9. Get Advice From Former Clients
Look to your happy customers to know what you’re doing right. Doing so can help you formulate a fail safe business plan.
10. Get Proper Insurance
If a firm has appropriate insurance it can prevent a lawsuit. Having an adequate liability policy will help compensate clients for their claims. When clients receive compensation through an insurance policy they have no reason to initiate a separate malpractice lawsuit. Paragon Underwriters can make sure your firm has the proper insurance coverage to prevent clients from taking the matter to court.
Let Paragon review your agency’s assets and liabilities to find out whether you need additional insurance. Paragon can provide commercial, vehicle and professional liability insurance for any need. Ensure that your firm is adequately insured to protect it from unnecessary litigation.
The inability of a lawyer to stay on top of new cyber-threats can harm a lawyer’s reputation and professional development. Let us not forget that just a few clicks for a hacker can reduce the hard-won loyalty of clients. Investment in cyber insurance, professional liability insurance, and ongoing user training in the cybersecurity landscape enables lawyers to stay ahead of these electronic pirates. Paragon Underwriters can also help increase a lawyer’s chance of success.
Here are top 5 threats to lawyers today:
1. Online fraud: employees have access to various online portals (sales, financial services, leave allowance, etc.) via a single sign-on procedure. The advent of the cloud has spawned a whole ecosystem of third-party services for businesses. When an employee leaves the company, he / she continues to have access to vital business information as long as his / her login credentials are not deleted.
2. IoT DDoS attacks: lawyers must be wary of IoT devices. [Internet of Things (IoT) is a system of interrelated computing devices with the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.] Hackers can exploit the power of IoT devices to launch massive DDoS attacks, capable of paralyzing websites and business operations. IoT devices are multiplying, but the security measures that protect them do not follow.
Even if they embody the future, IoT provides cybercriminals with an additional attack vector. The vulnerabilities inherent in the wave of connected smart devices that have flooded the market make them easy prey for cyber criminals, who are increasingly turning to devices such as CCTV cameras.
3. Attacks on cloud services: the challenge in 2017 will be to control access to cloud services while ensuring adequate data encryption.
4. The theft of personal data: a breach of security or the inability to provide customers with requested data could have disastrous consequences on income and client loyalty. Many lawyers are unaware of the amount of client data they hold. The greatest difficulty for them, therefore, is to assess the volume of information for which they are responsible.
5. Mobile malware: any weak points on a network, such as a mobile phone infected with malware, opens the doors of the company to cybercriminals. With the rise of mobile work, employees use a myriad of applications to access corporate resources from different devices and locations.
Malpractice lawsuits seem to be more and more common. We hear about medical malpractice, legal malpractice, accounting malpractice, and many others. The best policy to prepare yourself in case of a malpractice suit is to obtain a professional liability insurance policy. This will provide certain protections, but there are many other ways to avoid legal malpractice suits. The American Bar Association (ABA) provides several steps to avoiding situations that often lead to clients filing suit. In a previous article, we discussed, in depth how client relations affect malpractice, but now we would like to go over three other tips from the ABA.
- Missing deadlines. Depending on the type of case, there are different deadline for filing a lawsuit and submitting specific information. If a deadline is missed, the whole case could be dismissed or no longer an option if the statute of limitations is exceeded. The best way to protect against this is to have a standard calendar system that includes reminders. It is also wise to add a policy that states each lawsuit must be filed three months before the deadline.
- Stress & Substance Abuse. Sadly, it takes only one attorney with a substance abuse or mental health problem to destroy a firm’s reputation and increase the number of malpractice suits brought against a firm. Due to this, it is vital that your firm understands how to recognize signs up substance abuse and mental health disorders. Stress due to long hours and heavy workloads can lead many to have increased chances of abusing substances or increase chances of suffering from depression. By recognizing the signs of these issues, the firm can provide professional help to those who need it. By providing these services, you can help each attorney at your firm recover and be the best attorney possible.
- Insufficient Client Screening. As an attorney, have you ever had a gut feeling about a client? Did you know that it was a bad idea to take the case? If you have, you understand how important it is to screen potential clients. Before taking on a case, you should ask some basic questions such as:
- Do you have the time to take on a case and give it the attention needed?
- Do you have the experience to handle this case?
- Is the client irrational or confrontational?
- Are you receiving this case at the last minute?
- Has the potential client used several other attorneys before coming to you?
- What are the clients expectations?
If you have asked these questions and feel uncomfortable with the case, do not agree to represent the client.
By using the advice from the ABA, you can avoid many lawsuits. The insurance agents at Paragon Underwriters are here to help you create the best professional liability insurance policy for you. Contact us today for a quote.
If you are interested in profession liability insurance, contact us today!
Each malpractice lawsuit begins with a client who is dissatisfied with an attorney or law firm. This is an obvious statement, as happy clients don’t tend to file lawsuits. Due to this, it is important to look at your client relations and ensure that you and your firm are doing all that is needed to help clients feel satisfied with the work done. According to the American Bar Association, the most common mistakes that lead to legal malpractice lawsuits include, failure to obtain proper client consent, lack of communication regarding case development, and ignoring or not following client instructions.
In order to avoid such mistakes, there are steps that each law office can take. The following steps are recommended by the American Bar Association, and by the staff at Paragon Underwriters.
- Take the time to explain clearly why the firm was hired, the fees associated with the case, reporting/billing processes, and the client obligations. Be sure to sit down and explain all of this orally, and have it written up so there is not confusion.
- Set realistic expectations. Explain the case, processes, and possible outcomes in clear, simple language to encourage realistic client expectations. Do not make promises that cannot be kept, or that only may happen. Be sure to document what you have been doing and what you expect to do for the next step.
- Maintain good client communication. This is perhaps the most important step you can take. Be sure to return all phone calls promptly and keep appointments on time. It is also important to send the client periodic updates about the case. This includes negative information, the reason for a delay, and always, a revised expected completion date based on the new information.
- All staff members should understand the importance of treating clients with respect and courtesy. The staff is the middleman between the client and the attorney, making it important that they treat the clients questions and concerns just as seriously as the attorney would. Be kind, polite, and cheerful.
While there is no way to guarantee that every client will be pleased with your firm, it is important to follow these tips to avoid legal malpractice suits. For those times, when despite your best efforts, a client proceeds with a lawsuit, Paragon Underwriters can ensure that you are protected with the best professional liability insurance policy for you. Call now to receive a quote today!
If you need professional liability coverage, contact us now.
Hinshaw & Culbertson, LLP recently wrote an article regarding M’Guinness v. Johnson, which pertains to lawyer’s professional liability. Below is a summary of the case and significance of the case as discussed in the Hinshaw & Culberston article. Click to read the full article.
In a recent case decided by the California Sixth District Court of Appeals, the complexities of legal representation were examined and the importance of structured legal agreements between the client and law firm were emphasized. The facts of the case M’Guinness v. Johnson are simple. A small construction company named Think It, Love It, Construct It, Inc (TLC) had three shareholders: James M’Guinness; Steven Johnson; and Scott Stuart.
In May of 2006, TLC sought the legal representation of a specific law firm. The nature of the legal representation was, “[a]dvice and representation concerning [TLC] and other general legal work directed by you from time to time.” The agreement between TLC and the law firm also included that TLC might “terminate” the relationship “at any time,” and that “at the conclusion of [the] engagement, at your request and at your cost for any file review, copy and delivery charges, we will review and deliver your files to you, along with any of your funds or property in our possession, charged at our hourly rate.”
On January 23, 2013, M’Guinness sued Johnson and TLC, claiming that Johnson had mismanaged the company. M’Guiness sought an involuntary dissolution of TLC. The law firm that Johnson retained was the same law firm that TLC had retained in 2006. Johnson argued that there was impermissible conflict of interest but the trial court held that the law firm was not disqualified. The Sixth District Court of Appeals overturned the verdict. The law firm was disqualified as the legal agreement between TLC and the firm was open ended and the representation was never officially ended.
This case highlights the importance of the legal agreement between the client and law firm. While a lawyer may be inclined to be a “jack of all trades” for a specific client, it expands the scope of duties the lawyer is obliged to provide and therefore the exposure to potential malpractice also increased. The best course of action is to clearly lay out the scope of the legal representation in the engagement agreement. Once the agreement is in place, both parties should abide by the terms.
Paragon Underwriters offers a comprehensive range of insurance options for professionals, including professional liability and commercial insurance. Contact us today to discuss the services we offer to fit your company’s specific needs.
Whether you just passed the bar and want to strike out on your own or you’re planning to leave behind your old firm, it can be intimidating to start up a law firm on your own. Just because you understand the legal side of starting your own practice, it doesn’t necessarily mean that you’re confident with the business side of matters. What should an attorney consider when starting up a firm?
Three Important Things a Lawyer Needs to Consider Before Starting a New Firm.
First of all, every business needs a website nowadays – every business. So the first thing you should do after you pick a name for your firm should be to acquire a URL. It should go on your business cards and be prominent in any TV, newspaper, magazine, or radio ads that you run. Be sure that the webpage has a ‘Contact Us’ feature that gives your phone number, email address, and a form to fill out directly. A blog is also a good idea as you can use keywords to attract new clients from web searches.
Another important factor is to select the right office space. You need enough room to operate. You will need a waiting room, a place for a receptionist, room for files, and an office where you can both speak to clients and comfortably spend long working hours. At the same time, you want to keep your overhead low, so don’t bite off more than you can chew space or cost wise. Don’t forget to factor in things like a cleaning service.
This is a no-brainer for lawyers, but obviously you have to protect yourself from lawsuits and so insurance is a must. Whether you refer to it as Legal malpractice insurance, professional liability insurance or E&O insurance, you know what we are talking about. Be sure to shop around and don’t just take the least expensive insurance you can find. Not all legal malpractice policies are created equal. You don’t want to get stuck finding out later on that your professional liability insurance doesn’t cover grievance matters. Also, be sure to check the fine print to see the effect that defense costs have when it comes to malpractice actions. Have a frank conversation with your insurance agent to be sure that you understand fully what you are getting. If you are not sure where to start, this is one area where many colleagues and even competitors will be happy to share what has worked for them.
Obviously, there is a lot to consider when starting your own firm and we have only begun to scratch the surface here. Developing a business plan, acquiring capital, opening a bank account, coming up with a marketing strategy, having business cards made, hiring staff, and more is needed to get the business going right. A website, the right office, and professional liability insurance are just three of the many things that will help you to get off on the right foot.
Written by: Paragon Underwriters, Inc.
Source: CNA PROfessional Counsel
Cloud Computing – An Overview
Lawyers are increasingly looking to cloud computing as a way to increase the efficiency of their firms’ practice management and document storage solutions. While cloud computing is reshaping law practice management, lawyers must recognize and manage the related risks inherent with this new technology.
Vendors offering “cloud services” provide document storage services as well as access to law practice management software on a pay-as-you-go basis. These services store documents in the cloud, making them available from any secured device from any location. In addition to offering document storage solutions, “cloud” vendors also offer a number of law practice management applications such as email, calendaring, integrated billing programs and client management tools.
The Potential Benefits of Cloud Computing for Law Practice Management
Numerous companies are now offering cloud-based services focused specifically on the needs of law firms. These cloud vendors market various benefits in seeking to move law practice management functions to their cloud. These benefits include the following:
1. Reduced Cost/Reduced Capital Expenditures
3. Accessibility of Data Across Different Devices
Make sure to vet all of your vendors to know what type of situation you are getting in to, where your data is being stored and how/when that data can be accessed.
Ethical Implications of Using the Cloud in Law Practice
The two ethical rules implicated when engaging a cloud vendor are… Read the Full Article >
Cloud Vendor Checklist >
Service Level Agreement (sample) >
List of Cloud Vendors >
Draft Letter Advising Client of Use of Cloud Storage >
Source: CNA PROfessional Counsel
The Latin term “Pro Bono” literally translates to “for the good.” Although state and bar associations have varying criteria for what constitutes pro bono work, it is generally understood to refer to legal services performed free of charge for the public good, often on behalf of individuals or organizations of limited means.
Pro bono work can enrich a lawyer’s practice and prove beneficial for law firms. All lawyers, especially those newer to the profession, can gain knowledge and experience by handling pro bono matters that involve substantive legal work. The satisfaction of contributing to the public good and improving the lives of clients has its own humanitarian rewards that are impossible to quantify. Law firms encourage pro bono work in order to:
- Train their associates.
- Recruit law students and other lawyers.
- Enhance their own public reputation by giving back to their communities.
- Develop business.
More corporate clients are requiring substantive responses from law firms regarding their pro bono programs on Requests for Proposals and Requests for Information. While no states currently require their attorneys to perform pro bono work, several states have adopted American Bar Association Model Rule 6.1, which encourages lawyers to devote at least 50 hours per year to providing legal services to those clients of limited means.
While pro bono work can be a positive experience for lawyers and law firms, it remains the practice of law and thus has inherent risk. Problems often occur when lawyers and law firms take an inattentive approach to pro bono matters, failing to dedicate the attention and care that would be given to a paying client. READ MORE >
One step can greatly reduce legal malpractice claims: incorporate engagement agreements into a firm’s standard operating procedure.
In recent years, there has been a 14 percent increase in malpractice lawsuits* filed, compelling lawyers and law firms to devote time and resources to sustain their firm’s reputation. Including one simple step when agreeing to represent a new client or assume a new representation for a prior or existing client can significantly reduce the likelihood of a client filing a malpractice claim against them: the creation of an engagement agreement.
Engagement agreements help establish client expectations at the beginning of the attorney-client relationship. They serve as a written agreement to ensure that the attorney and his or her client have the same understanding of the scope and timing of the project before any work is undertaken. In the absence of such documentation, attorneys and clients may have a different understanding of the working relationship and its parameters, resulting in client dissatisfaction and even a lawsuit.
SAMPLE ENGAGEMENT AGREEMENTS >>
Real World Situations:
An engagement agreement can outline the scope of work.
In an Ohio case, a law firm sued its former client for fees that it was owed. The client attempted to evade payment by contending that the law firm had told him that it would seek its attorneys’ fees from the opposing party. The court reviewed the engagement agreement between the attorney and client, which stated that it was the client’s responsibility to pay the law firm’s legal fees. It then ruled against the former client, citing the parol evidence rule.
An engagement agreement can outline what falls outside the scope of work.
In a New York case, a law firm represented a client in his administrative proceeding before the Internal Revenue Service (IRS). The client contended that the law firm committed legal malpractice by failing to pursue third parties for liability concerning the outstanding taxes. After reviewing the engagement agreement, which stated that the law firm was only representing the client in the administrative proceeding with the IRS, the court ruled in favor of the law firm.
No engagement agreement leaves verbal agreements open to interpretation.
In Nevada, a family law attorney represented a client in her divorce proceeding. The client later sued the attorney for legal malpractice, asserting that the attorney failed to bring a personal injury lawsuit against the client’s ex-spouse. The attorney conceded that she and her client discussed the possibility of bringing a personal injury lawsuit, but ultimately made a joint decision not to do so. Unfortunately, the attorney neither drafted an engagement agreement nor memorialized the decision. Accordingly, the court denied the attorney’s motion for summary judgment in the legal malpractice action.
SAMPLE ENGAGEMENT AGREEMENTS >>
As part of CNA’s commitment to helping lawyers mitigate their exposure to professional liability claims, we have created 11 sample engagement agreement templates for use in the practice of law. These agreements include illustrative language that attorneys may wish to consider using in their own engagement agreements. The CNA Risk Control team utilized the American Bar Association Model Rules of Professional Conduct as a guide in creating these sample documents. However, attorneys must consult their applicable state rules of professional conduct, as well as the case law and ethics opinions of the relevant jurisdiction, when drafting their own agreements, letters and waivers.
Sample engagement letters and other pertinent risk management information have been posted at www.lawyersinsurance.com under the Risk Control Tool Kit tab, Lawyers’ Toolkit: A Guide to Managing the Attorney-Client Relationship.
*Source: CNA Lawyers Professional Liability Claims data from 2010-2012.
One or more of the CNA companies provide the products and/or services described. The information is intended to present a general overview for illustrative purposes only. It is not intended to constitute a binding contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. CNA is a registered trademark of CNA Financial Corporation. Copyright © 2013 CNA. All rights reserved.
Parnes v. Parnes,___ N.Y.S.2d ___, 2011 WL 102664 (N.Y. App. Div. 3d Dept. Jan. 13, 2011)
In a divorce proceeding, the wife’s counsel sought to depose the husband’s lawyer based on e-mails between the husband and his attorney that the wife had obtained, mostly improperly. The husband’s lawyer successfully moved to quash the deposition, suppress use of the e-mails, and to disqualify the wife’s counsel for using privileged information. The New York Appellate Division affirmed the trial court’s decision quashing the deposition and prohibiting use of the e-mails but reversed the disqualification of the wife’s attorney.
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