Five Tips To Avoid Professional Liability Claims: Is Your Law Firm Overlooking These Malpractice Risks?

Posted by By Rob Diziki, Lawyers PL Program Executive on 22 March 2013 | 0 Comments

A survey conducted by the American Bar Association Standing Committee on Lawyers’ Professional Liability indicates that over 40 percent of all claims brought against law firms today involve administrative errors and matters involving client relations.

For this reason, it’s critical to understand where and why these particular claims happen, and how to proactively reduce the likelihood a claim will be made against your firm by establishing proper risk control techniques. 

While there are many aspects to effectively manage professional liability risks, here are five malpractice risks that are often overlooked by law firms, along with tips on how to avoid them:

  • Document client communications. Careful documentation can’t prevent all claims, but in many situations lawyers can avoid the possibility by documenting in writing all client communications. In particular, record advice or instructions that involve critical issues or outcomes—especially client instructions and decisions. Include all follow-up calls and instruct your staff on proper client documentation.
  • Implement a dual calendar system. Internal best practices include maintaining a centralized docket and dual calendar system that’s regularly checked by more than one person. Be sure it includes both litigation and non-litigation items and set reminders for both you and your staff. A failure to calendar is the fifth most common error in lawyer professional liability studies.
  • Fees and billing practices.  Be sure your agreement for all new clients confirms and outlines the agreed upon fee arrangement and collect enough to cover all initial work. Set up your accounting system to monitor and remind you when the amount is getting low, and replenish retainer funds before they become exhausted. Discontinue work if the retainer is not replenished. Try and prevent having to sue clients for unpaid fees, which can have a negative effect on your firm’s ability to secure professional coverage and potentially affect premium rates.
  • Mail handling: Adopt a policy of how to properly distribute, open, and date stamp mail. Since time deadlines faced by firms are contained within documents sent through the mail, you need to have mail sorted and delivered to individual lawyers within a specific time frame. Also, docket and calendar entries should be completed prior to delivery of the mail to individual lawyer.  
  • Update form agreements, letters, and contracts. Make it an annual practice to review and update many of the everyday forms that your firm uses. Your list should include documents that spell out the scope of your representation, intake forms, retainer and fee agreements. Purge outdated, incomplete forms.

Identifying your firm’s professional liability exposures isn’t always clear. But if you take the time to follow these best practices, your helping you firm better manage its risk.