Attorneys Beware: Do Not Provide Informal Legal Advice to Friends or Relatives

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Attorneys Beware: Do Not Provide Informal Legal Advice to Friends or Relatives

Posted on: March 1st, 2019 by David Lipson

No doubt you've been put in the following position (probably several times a year): You're at a party or family event, and a friend or relative approaches you with a simple legal question. They preface the question by telling you that it's a minor situation so it won't take you long to answer. Since it's someone who trusts you and someone close to you, you don't think twice about giving legal advice. In fact, you're happy to do the favor and it feels good knowing you're able to help them out. Not to mention, you really can respond quickly to their inquiry and save them some money in the process.

Providing legal advice like this can be very tempting for family members and close friends, but it could actually be quite damaging to you professionally. While your intentions are noble (we all want to help those closest to us), your actions might be harmful to you, your law firm and even to the person to whom you're providing advice. Remember that, as an attorney, when you give legal advice, it can come back to haunt you. Even given casually, your legal opinion may be less thought-out than usual and not backed by the research you would typically conduct if a paying client requested it.

 

Offering-Family-Free-Legal-Advice

 

Furthermore, by providing informal, free legal advice like this to friends and relatives, you might be creating a conflict of interest for yourself by giving advice to a person who has not been through a "conflicts of interest" check first. Do you really want to put yourself in that potentially disastrous position? There are much better ways that you can help friends and family without putting yourself into harm's way.

Paragon Underwriters reminds you that when asked a legal question by a friend, it may appear that you are merely giving advice to someone close to you, but you have to be aware when a relationship becomes a lawyer-client relationship. The minute this relationship is formed, lawyers are bound by the rules of their professional responsibility. The relationship begins when there is a mutual understanding that the client is going to confide in the lawyer and the lawyer is going to listen. The relationship may commence even if there is nothing in writing and even if no money has changed hands. Although there must be a mutual understanding that the client has engaged the lawyer and the lawyer has accepted representation, it is the lawyer’s responsibility to make it clear to the potential client when this has occurred, and when it has not. Defining the relationship with those seeking advice from the beginning can avoid confusion and ethical issues down the road. Providing casual legal advice to a family or friend can result in major legal liability, malpractice, or disciplinary action as the non-clients may have reasonably relied on the information given. Rather than put yourself at risk, make it clear to the non-client that though you are unable to offer them legal advice, you can refer them to legal resources intended to help those who maybe cannot afford representation.

Communication is key in these interactions. If a conversation is turning into professional work, it is the lawyer’s responsibility to either put a stop to it or make it clear that further discussion should take place in a more formal setting. Similarly, when the lawyer has no intention of representing a potential client, the lawyer has the responsibility to communicate that no lawyer-client relationship exists. It is also important to remember that if a family member or friend has a lawyer, you should resist the urge to give a “second opinion”. The fact is the other lawyer has spent a lot more time on the case than you and is familiar with a lot of facts that the person you’re speaking with may not have disclosed. Consider that before telling someone that you would handle a situation differently than that person’s lawyer.

Practicing Law in the Age of Social Media

Posted on: February 5th, 2019 by David Lipson

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Introduction

The evolving nature of legal practice requires continuous adaptation by attorneys and those who work to support them in their daily practice. Over the years, attorneys have adapted from using books for researching case law to online databases. Attorneys also must remain conversant with charges in statutes, regulations and case law. Similar to other professions, the practice of law has migrated from the use of physical files and written letters to cloud computing and email communications with clients. Clearly, the emergence of social media represents the most recent frontier in the ever-changing information age. The influence of social media on legal practice, client relationships, and the boundaries between professional and personal activities must be scrupulously navigated.

 

This guide will provide an overview of ethics concerns, practice challenges, potential benefits and pitfall of social media use related to the practice of law.

 

Attorney and Law Firm Social Media Presence

For more than twenty years, the American Bar Association (“ABA”) Legal Technology Resource Center has been publishing the Legal Technology Survey Report. 1

 

The most recent ABA TECHREPORT 2016 revealed a significant increase in law firm social network presence, from 17% in 2010 to 74% in 2016.2 The 2016 report also notes that law firms and individual attorneys are participating in social media to serve professional purposes.

 

The 2016 ABA TECHREPORT found the following law firm social media presence:

  • LinkedIn: 78%
  • Facebook: 57%
  • Blogs: 26%
  • None: 26%
  • Don’t Know: 10%

 

The report further demonstrated that LinkedIn, as a professional and career-centered social media forum, appears to be more suited to the legal environment than other social media sites. In contrast to Facebook, LinkedIn focuses on professional status and advancement. A law firm posting about a successful case, therefore, seems more appropriate in a forum focused on careers, rather than one integrated with personal posts about politics, personal milestones, and other informal references.

 

Attorneys participating in the ABA TECHREPORT indicated the following as to the reasons for participating in social media:

  • Career Development/Networking: 73%
  • Client Development: 51%
  • Education/Current Awareness: 35%
  • Case Investigation: 21%

 

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Green Means Go? Mitigating Professional Liability Exposure in the Cannabis Arena

Posted on: February 5th, 2019 by David Lipson

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Background

Twenty-two years have passed since California voters passed Proposition 215, permitting the medical use of cannabis in the state. Since then, twenty-nine more states have followed California’s lead,1 with nine of those states and the District of Columbia also authorizing recreational cannabis use.2 Legalization at the federal level seems inevitable, but predicting a timeline for meaningful, long-term congressional action has so far been a fool’s errand.

 

In the meantime, cannabis growers, dispensaries, and ancillary service providers (“cannabis clients”), along with the professionals who represent them, are captive to the whims of each successive White House administration. Under President Obama, this meant assurances that the federal government would not interfere with state cannabis regimes pursuant to the Cole Memorandum, issued by the U.S. Department of Justice. President Trump, on the other hand, has offered no such assurances, and U.S. Attorney General Jeff Sessions rescinded the Cole Memorandum in January 2018.

 

Ethical Duties

The primary ethical consideration for attorneys representing cannabis clients is American Bar Association (“ABA”) Model Rule 1.2(d), which prohibits attorneys from “counsel[ing] a client to engage, or assist[ing] a client, in conduct that the lawyer knows is criminal or fraudulent” but adds that “a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.” This language has been incorporated into every state’s version of Rule 1.2 with only slight variations.

 

Cannabis is illegal under federal law, and in the wake of state legalization efforts state and local bar associations grappled with the conflict between Rule 1.2 and the cannabis industry’s need for legal services. With few exceptions, the majority of ethics opinions concluded that providing advice to cannabis clients is consistent with Rule 1.2 as long as the attorney also advises the client about related federal law and policy. Exactly what this disclosure might entail is discussed in the following section.

 

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Helpful Advice for Selecting Your Legal Malpractice Insurance

Posted on: February 5th, 2019 by David Lipson

Attorneys have to make decisions each day of their professional lives. Selecting legal malpractice insurance is certainly one of the most important decisions you will make. A law firm should do significant research before choosing which insurer to go with for their lawyers' malpractice insurance. At Paragon Underwriters, we have put together some helpful tips to consider before making that selection.

Look at the Forest for the Trees

Remember to look at the big picture rather than starting out by being overly specific with the details. Evaluate what the insurer is offering as well as that company’s financial stability and credit rating according to AM Best. Also, think about the agent’s past experience and reputation. Ideally, you'll want to stay with this insurer for a long time so consider this a long-term commitment and make sure you feel comfortable with both the agent and the insurer.

 

Experience

As the famous football coach, Vince Lombardi, said, "Practice does not make perfect. Only perfect practice makes perfect." Look into how long the insurer has been in business and what type of experience they've had. Just because an insurer has been around forever doesn't tell you enough about their success, culture or how they treat their clients. Before signing anything, you'll want to know if the insurer has specialized knowledge of lawyers’ professional liability insurance. You’ll also want to know if they are new to offering professional liability insurance or if they have a well-established book and proven track record.

Specialization

There are a lot of insurance agents out there. There are, however, very few who truly specialize in legal malpractice insurance. This highly specialized field has certain nuances that make it easy to miss key factors. Firms like Paragon Underwriters have been specializing in professional liability insurance for attorneys for nearly 60 years and have made this our niche. We know this part of the insurance industry better than most other firms, especially a general insurance agent who does mostly home, auto and business insurance – that agent may do one of these policies in his entire career, we do them all day every day and insure nearly 1,000 law firms in Michigan.

The Financial Stability Factor

Will you be able to rest assured that you're covered? After all, you have a lot at stake with your law firm. It's more than simply a financial decision to make. Your reputation as an attorney and your firm's reputation is on the line. You need to be positive that the malpractice insurer has the ability to continue to pay claims into the future.

We're in a Commitment Here

With claims-made coverage business, there's an easy entry to market for new malpractice insurers. Therefore, many new insurers target specific markets to collect as much premium as possible, but they won't be around when the claims come in. You want to ensure there's a commitment on the part of the insurer to stick around when the worst happens and you need the claims to be paid.

What's the Insurer's Reasoning

Finally, make sure to research the insurer's claims philosophy. What type of consideration do they put forward to determine whether to pay a claim? Will they be the type of insurer to fight for every dollar or will they be willing to settle without a struggle?

At Paragon Underwriters, we want to see you succeed. We sincerely care about our clients and help steer them toward smart, financially prudent decision making. We believe the relationship between the insurance agent and the law firm is a very important factor in determining the best coverage and the best insurer to use. We will provide additional insight as to which insurer best fits your needs. These decisions take time and we believe in calculated decision making. We will begin to work with you early on in the process and ensure the insurer is the right choice for your firm. That's why we're here... to serve you and to always have your best interests in mind. Call us today to start the process and we guarantee you'll be happy with the experience.

How Engagement Letters Mitigate Claims

Posted on: February 5th, 2019 by David Lipson

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Lawyers’ Toolkit 4.0: A Guide to Managing the Attorney-Client Relationship

 

Introduction

Documentation of the attorney-client relationship represents a critical risk control technique. CNA has developed the following Lawyers’ Toolkit 4.0: A Guide to Managing the Attorney-Client Relationship to assist attorneys in creating documents that will enable them to better manage their interactions with potential and actual clients. Documentation of the scope of the representation and the mutual responsibilities of the attorneys and their clients can often be a deciding factor in determining the responsibilities of both parties. These sample documents are designed to establish client expectations, reduce client misunderstandings, improve client communications, and provide opportunities for additional services. The use of these documents may not prevent legal malpractice claims, but can support a stronger defense in the event a claim arises.

 

This Guide includes the following sample documents:

  • 20 engagement agreements
  • 2 awaiting further action letters
  • 2 non-engagement/declination letter
  • 4 conflict of interest waivers
  • 1 closing matter/disengagement letter
  • 20 Other Engagement Letter Clauses
  • 2 termination/withdrawal letters

 

Several of the sample documents include language addressing joint or dual representations and discuss prospective and actual conflicts of interest. Sample conflict of interest waivers are included for reference. Attorneys also should consider applicable legal ethics rules as well as the relevant risks associated with joint or dual representations prior to accepting such engagements. Joint or dual representations should be undertaken only with full disclosure to clients regarding the relevant risks, and only when such representation is in the best interests of the clients. From a professional liability perspective, engagements undertaken where a conflict of interest exists are inherently risky, irrespective of obtaining signed conflict of interest waivers.

 

In addition, the first three sample engagement agreements include draft language for contingent fee, hourly fee, and flat fee arrangements. Attorneys should incorporate the appropriate fee-agreement language from one of these first three sample engagement agreements when using one of the seventeen other engagement agreements included herein.

 

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Family Law – Professional Liability Fact Sheet

Posted on: February 5th, 2019 by David Lipson

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Description of Practice Area

As an area of practice, family law includes all litigation and legal services related to antenuptial and domestic relationships, separation and divorce, alimony and child support, child custody, surrogacy and adoption.

 

Frequency of Family Law Claims

CNA claim frequency in the family law area of practice has been consistently higher when compared to all other areas of practice in the last six year. In fact, the most recent data reflects and upward trajectory of family law claims.

 

Claim counts arising from family law have increased from 98 incurred claims in 2007 to 245 incurred claims in 2016.

 

Quick Stats

  • Average of 498 claims reported per year
  • Average of 181 claims paid per year
  • Average cost per claim: $65,755
  • Average yearly cost of all family law claims: $11.9 million
  • #4 claims area by count

Source: CNA Lawyers Professional Liability Claim Data 2007-2016

 

Top Causes of Family Law Claims

This chart represents the most common claim allegations against family law practitioners between 2007 and 2016. Disciplinary grievances are excluded from the data, which, if included, would represent more than one third of total reported incidents in the area of practice over that time.

 

Risk Management Tips

Screen New Clients

Be cautious when a prospective client has been represented by one or more prior attorneys for the same matter. Also be wary of a client who is overly concerned with fees or otherwise indicates an inability to pay. Most states do not permit contingency fees in domestic relations matters, but consider requiring a retainer up front to alleviate long-term financial stress.

 

Be Wary of Conflicts

Even where a divorce is uncontested, an attorney cannot ethically represent both parties. Less obvious conflicts involve the prior joint representation of both spouses in a substantially related matter (e.g. estate planning or real estate transaction). The practice of “conflicting out” potential attorneys- meeting with several attorneys solely to preempt their retention by the other spouse- can result in a disciplinary complaint if not properly recognized.

 

Manage Emotions and Expectations

Keep expectations realistic by having frequent discussions about the client’s goals and explaining all possible outcomes. In the interest of obtaining a favorable resolution and avoiding a disciplinary complaint, maintain integrity and civility with opposing counsel, notwithstanding client pressure to the contrary.

 

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Selecting Your Legal Malpractice Insurance with Intelligence

Posted on: January 24th, 2019 by David Lipson

Lawyers have to make decisions each day of their professional lives. Selecting their legal malpractice insurance is certainly one of the most important decisions an attorney will make. A law firm should do significant research before choosing which insurer to go with for their lawyers' malpractice insurance. At Paragon Underwriters, we have put together some helpful tips to consider before making that selection.

Look at the Forest for the Trees

Remember to look at the big picture rather than starting out by being overly specific with the details. Evaluate what the insurer is offering as well as whether you trust them. Think about the insurance agent’s past experience and reputation. The same is true of the insurer. Ideally, you'll want to stay with this insurer for a long time so consider whether you feel comfortable with the relationship at the outset.

 

Selecting Your Legal Malpractice Insurance with Intelligence

 

Experience

As the famous football coach, Vince Lombardi, said, "Practice does not make perfect. Only perfect practice makes perfect." Look into how long the insurer has been in business and what type of experience they've had. Just because an insurer has been around forever doesn't tell you enough about their success, culture or how they treat their clients. You’ll also want to know if the insurance company insures many other law firms or if they are new to this type of exposure. Always elect an insurer who specializes in professional liability and has a large book of business – the larger programs offer premium stability, superior policy forms and many value-added benefits which firms can take advantage of.

Specialization

There are many insurance agents and brokers out there. There are, however, very few who specialize in legal malpractice and professional liability insurance. This highly specialized field has certain nuances that make it easy to miss key factors. Firms like Paragon Underwriters have been focused on professional liability insurance for attorneys and financial professionals for a very long time. We have made this our area of expertise and we are proud to be a part of the Michigan legal community.

The Financial Stability Factor

Will you be able to rest assured that you're covered? After all, you have a lot at stake with your law firm. It's more than simply a financial decision to make. Your reputation as an attorney and your firm's reputation is on the line. You need to be confident that your malpractice insurer has the ability to continue to pay claims into the future – when you may need them most.

With claims-made coverage business, there's an easy entry to market for new malpractice insurers. Therefore, many new insurers target specific markets to collect as much premium as possible, but they won't be around when the claims come in. You want to ensure there's a commitment on the part of the insurer to stick around when the worst happens and you need the claims to be paid.

What's the Insurer's Reasoning

Finally, make sure to research the insurer's claims philosophy. What type of consideration do they put forward to determine whether to pay a claim? Will they be the type of insurer to fight for every dollar or will they be willing to settle without a struggle?

At Paragon Underwriters, we want to see you succeed. We sincerely care about our clients and help steer them toward smart, financially prudent decision making. We believe the relationship between the insurance agent and the law firm is a very important factor in determining the best coverage and the best insurer to use. We will provide additional insight as to which insurer best fits your needs. We will begin to work with you early on in the process and ensure the policy you select is the right choice for your firm. That's why we're here... to serve you and to always have your best interests in mind. Call us today to start the process and we guarantee you'll be pleased with the experience.

Early Notice of a Claim is Important in Risk Management

Posted on: January 3rd, 2019 by David Lipson

At Paragon Underwriters, Inc., we know that a law firm’s commitment to proactive risk management coupled with sound business practices can lessen the likelihood that a lawyer will face a malpractice claim. It can also help mitigate potential losses should a lawyer be sued. Our Risk Management Program for CNA's Insured Lawyers is ideal for Michigan's law firms. Minimizing and managing an attorney's risk is essential. At Paragon Underwriters, we take great pride in putting together the best professional liability insurance coverage for our clients, but we also make it a part of our mission to teach (and preach) good risk management. One of the most important aspects of a responsible risk management program is for attorneys to bring their insurer into the claims process as early as possible – ideally as soon as a claim is noticed.

This practice is the most responsible action and can save a lot of money -- both the attorney and the law firm. When a lawyer contacts the insurer or agent as soon as trouble is brewing, it helps get everyone prepared to handle the situation.

Early Notice of a Claim is Important in Risk Management

Reporting a potential claim early enables the malpractice insurer to begin working on a resolution, which helps get the attorney and the firm back to business without any external hassles or distractions. The insurer may determine that it is appropriate to retain legal counsel to assist with a pre-claim situation. Other services may include grievance coverage, subpoena assistance, 24/7 risk management hotline, deductible reduction and oftentimes cyber liability coverage.

It is very important to remember that making certain actions without consultation with the insurer can result in a coverage denial. Examples of this include admitting liability, assuming damages, voluntarily making any payments, or incurring claims expenses. Such actions will likely violate policy conditions, which may result in a denial of coverage. Policyholders should not take action without first receiving guidance from their insurance agent or insurance company. Early reporting may trigger deductible reduction features and the attorney's policy may offer a feature which reduces the deductible if you report claims early or settle claims within a certain period of time (usually 12 months). This could reduce your deductible by as much as 50 percent.

Contacting your insurer or agent is a good way to avoid costly mistakes and problems. For example, misstatements on insurance applications may result in a higher premium or even the rescission of a policy based on wrong information. Call your underwriter or agent with questions about the application and the information requested. A phone call is an easy way to correct errors before they occur.

Do not hesitate to contact our professional liability team at Paragon to work with you in protecting your business. We make it our mission to help you manage the risk and avoid a catastrophic situation.

We Protect You So Your Valuable Time is Honored

Posted on: December 13th, 2018 by David Lipson

As an attorney, we know that you put your heart and soul into your law practice. You spend much time, energy and care in representing your clients. 99% of your clients are going to be grateful to you for your hard work and your dedication to them. However, there remains the 1% of clients who will turn around and sue and/or grieve their attorney. Sometimes this lawsuit or grievance is initiated several years following the conclusion of your work on their behalf.

Without sufficient professional liability insurance, all your hard work can quickly be for naught. Unfortunately, we have seen the horror stories of attorneys who work their entire career and then they're left unprotected when a client sues them for professional negligence or “malpractice”. Everything they worked for leading up to that point – their clients, their assets, their REPUTATION – are all in jeopardy.

 

Time is Valuable at Paragon Underwriters

 

Paragon’s clients know that they work too hard to risk throwing it all away when one client takes them to court for malpractice. It is essential to have the proper, paid-up professional liability insurance so that you are protected in the unfortunate situation when a distraught client tries to make you pay for their disappointment. The many clients who praise your devotion as an attorney won't mean anything when you lose everything. Call Paragon Underwriters today to discuss how we can help you be insured and protected in case of an unforeseen litigation by a current or former client. We put our decades of experience at work for you -- to protect you, your property, your people and your practice.

Paragon Underwriters is Grateful For You

Posted on: November 30th, 2018 by David Lipson

It's hard to believe that the year 2018 is almost over and planning for 2019 has already begun. Paragon Underwriters is a third generation business and has been serving attorneys for decades, but we still think of ourselves as a startup. The reason is that it keeps us thinking up new and fresh ways to innovate and improve. The insurance industry is constantly changing and we see it as our mission to keep ourselves a few steps ahead of the pace. As they say, "Be the lead dog or enjoy the view."

Our insurance products are constantly evolving to meet the needs of our clients. But as we constantly strive to improve your experience, the recent Thanksgiving holiday gave the team at Paragon a chance to step back, reflect and count our blessings. We are so very grateful to our clients, who have put their trust in us since we first opened our doors as an insurance agency in 1974 when my grandfather Alex Lipson launched our firm. Over the past 45 years, we’ve learned so much and met so many amazing people; we are enormously grateful for each and every one of you. During this holiday season, we wanted to take a moment to say "Thank You" for helping to make the past 45 years, and 2018 in particular, such a big success for Paragon Underwriters.

Insuring thousands of attorneys in Michigan and throughout the United States is something we take very seriously. The gratitude we receive when a client is protected from a malpractice lawsuit or attorney grievance is truly all the thanks we need. Insurance isn't an investment that lawyers want to make, but it's necessary to protect yourself in today’s legal environment. We know that there are choices your law firm has to make when it comes to professional liability insurance and we appreciate you choosing us.

During this winter holiday season, we give thanks to all the good we have in our lives. The Paragon Underwriters team is grateful for our company, but we recognize that there is so much more for which we must be thankful. We hope you can take some time for family and friends during the winter holiday season. Eat, drink, watch football and throw in some holiday shopping. Thank you all again. And from the Lipson family and the entire team at Paragon Underwriters, we wish you a joyous and blessed holiday season and a successful ending to 2018.