Keep an eye on your support staff; their miscues could cost you big time
Sole practitioners commonly rely on non-lawyer assistants to handle a variety of firm functions. Trust can build through these one-on-one relationships, and over time, secretaries, paralegals or bookkeepers may take on more independent responsibilities as your proverbial “right hand.”
While delegating administrative tasks is a good way to make a solo firm more productive, mistakes or malfeasance by staff members may lead to ethical lapses. If an assistant mishandles a trust account or forgets a filing deadline, can the attorney be sanctioned?
If you do not keep close attention, the answer is yes, according to the Illinois Rules of Professional Conduct.
The duty to supervise administrative staff is outlined in Rule 5.3, “Responsibilities Regarding Nonlawyer Assistance.” Under the rule — expanded this year to include outside contractors such as document and data management companies — lawyers must have procedures to train and supervise workers, protect client confidentiality and mitigate ethical violations when they occur.
Train and regularly supervise assistants
Rule 5.3 provides that lawyers with general managerial authority in a firm, or with direct supervisory authority over an assistant, must make “reasonable efforts” to ensure the worker’s conduct is “compatible with the professional obligations of the lawyer.”
The comments describe “reasonable efforts” as “measures giving reasonable assurance that non-lawyers … act in a way compatible with the professional obligations of the lawyer.”
The comments go on to advise that the duty to supervise includes “appropriate instruction and supervision concerning the ethical aspects of their employment” and should anticipate that assistants “do not have legal training and are not subject to professional discipline.”
The following cases caution that sole practitioners must train and carefully supervise their staff, no matter how long or how close the relationship.
- Mishandled firm accounts
See In re Swanner, 758 S.E.2d 711 (S.C. 2014) (solo suspended when his bookkeeper-wife failed to conduct monthly reconciliations of the trust and operating accounts); State ex rel. Oklahoma Bar Association v. Hill, 281 P.3d 1264 (Okla. 2012) (solo censured after his bookkeeper-wife drew funds from firm accounts without consent); In re Otlowski, 976 A.2d 172 (Del. 2009) (solo reprimanded after his bookkeeper-daughter embezzled funds from the firm’s escrow account); In re Cater, 887 A.2d 1 (D.C. 2005) (solo suspended after her secretary embezzled funds from two estates; “In delegating account monitoring duties to her secretary, it would have been a simple matter for respondent to have maintained the checkbooks securely and to have reviewed the monthly bank statements periodically”).
- Missed court deadlines
See Pagan v. Masterscapes of CT LLC, 2015 Conn. Super. LEXIS 1652 (Conn. Super. Ct. June 29, 2015) (unpublished) (solo responsible for discovery violations that led to non-suit; “counsel left responsibility for this case in the hands of her paralegal without counsel’s conducting own periodic file reviews or otherwise reviewing the paralegal’s work”).
- Delegated work that constitutes the practice of law.
See Attorney Grievance Commission v. Dore, 73 A.3d 161 (Md. 2013) (solo suspended for having assistants prepare and execute affidavits in his name without review); Attorney Grievance Commission. v. Chapman, 60 A.3d 25 (Md. 2013) (solo suspended for delegating loan modification work to consultant; “the clear reality is that [the consultant] obtained the client, staffed the case, directed the approach and only tangentially updated [the attorney]”).
Take remedial action when errors or misconduct occur
Lastly, if a mishap occurs, Rule 5.3 requires “reasonable remedial action” when the lawyer “knows of the conduct at a time when its consequences can be avoided or mitigated.” Not only is prompt mitigation required, but failing to take action could be considered ratification of the misconduct, which also violates the rule.
Consistent with Rule 5.3, prompt remedial efforts can lessen or eliminate the risk of discipline or a malpractice claim.
See In re O’Brien, 888 A.2d 232 (Del. 2005) (proposed suspension based on paralegal’s theft from escrow account reduced to reprimand in part because solo attorney “engaged in substantial remedial efforts … including retaining outside accountants and obtaining additional computer software.”); Shapiro v. Rinaldi, 2016 N.J. Super. Unpub. LEXIS 596 (N.J. Super. Ct. App. Div. March 18, 2016) (solo not liable for malpractice based on missed deadline when secretary failed to forward proposed client’s request for representation; attorney set up “reasonable efforts to ensure that his secretary complied with his professional obligations.”)
In sum, whether you recently hired an assistant or have been working with the same person for years, do not be complacent.
Assistants must be properly trained and regularly supervised — no matter how reliable and trustworthy. With your livelihood and your clients’ welfare in the balance, there is no alternative.
© 2016 Law Bulletin Publishing Company. All rights reserved.
Wednesday, June 15, 2016 • Volume 162, No. 117
Reprinted with permission from Law Bulletin Publishing Company
Glenn E. Heilizer, “Sole Speak” Column
glenn@heilizer.com
Barter transactions may benefit solos but know the risks involved first
Trading legal work for goods or services is not a new notion. According to a 1982 ABA Bar Journal article, Abraham Lincoln once accepted a military pistol as payment for a bill and other biographies recount his acceptance of room and board — and even a bottle of ink — in lieu of cash.
As current market conditions fuel alternative approaches to standard fee arrangements, lawyers again are taking non-monetary payments. A Florida law firm takes bartering to the extreme, advising prospective clients it will accept their surplus possessions and suggesting that “using an old engagement ring, jewelry or second car to pay for your legal services may be the best use for unneeded property to secure your future ability to produce income.” (See thehealthlawfirm.com and search for “barter” in the “areas of practice” section.)
Bartering is permitted under our state’s disciplinary rules. Comment 4 to Rule 1.5 of the Illinois Rules of Professional Conduct provides that a lawyer “may accept property in payment for services” and refers to “a fee paid in property instead of money.”
Given that bartering often involves a one-to-one exchange between individuals, moreover, sole practitioners may be well-positioned to trade with clients and generate new business from previously untapped sources.
But before you agree to swap your hard work for material objects or professional services, be aware such arrangements carry certain obligations and risks.
Assign a fair value; obtain written consent
Under Rule 1.8(a), any business transaction with a client or acquisition of a pecuniary interest adverse to a client must be on fair and reasonable terms and only with written informed consent. Comment 4 to Rule 1.5 suggests a barter arrangement may trigger Rule 1.8(a), so make sure the exchange is fair and obtain the proper consent.
Although accepting the client’s suggested price is a good basis for assigning fair value, there may be cases where the attorney has superior knowledge that could affect the valuation. If the lawyer accepts real estate as payment, for example, he or she may be aware of favorable zoning that boosts the property’s worth beyond the client’s expectations. This needs to be disclosed and addressed.
In addition, commodities such as gold may fluctuate after the items are taken as payment. A significant post-tender increase may leave the client regretful and unhappy. Those sorts of contingencies must be spelled out and agreed in advance.
Avoid taking an interest in the litigation
Comment 4 to Rule 1.5 further cautions against any barter transaction that would give the attorney a stake in the litigation, which is prohibited by Rule 1.8(i). Thus, accepting stock in a business that you are defending from dissolution would not be allowed, nor would accepting a lien against real property, where the litigation concerns the same land.
Report received goods or services as income
Any failure to report as income the fair market value of received goods and services will lead to trouble with the IRS.
Take the case of a two-person Indiana law firm that performed legal work for a roofing company. The roofing company reported to the IRS that it received legal services from the law firm valued at $49,000, and that it installed a roof at one of the attorney’s homes, also valued at $49,000. The law firm failed to report any income from the roof installation, and the lawyers found themselves in tax court.
Both attorneys tried to argue the $49,000 bill to the roofing company was still outstanding and unpaid, and the attorney with the new roof claimed he remembered little about the project at his home. The tax court was unsympathetic. The court treated the $49,000 in roofing work as income and imposed penalties. Badell v. Commissioner, T.C. Memo. 2000-303.
Barter exchanges may be permitted
The Internet has spawned a number of online barter exchanges, where participants pay a membership fee, provide goods or services and receive in return “barter currency,” which can be used to purchase goods or services from other members of the exchange.
Recent feedback from some states suggests lawyers may participate in barter exchanges.
Last year, the Connecticut Bar Association’s Standing Committee on Professional Ethics issued Informal Opinion 15-04, which analyzed barter exchanges in depth and concluded they are not prohibited by the Rules of Professional Conduct.
Building on prior opinions from New York, Utah and North Carolina, the committee first determined that payment of the membership fee is not fee sharing with non-lawyers within the meaning of Rule 5.4(a), as long as the fee is “imposed uniformly on all members.”
Nor does the exchange violate Rule 7.2(c)’s proscription against payment for a recommendation, the committee decided, because the membership fee is applied to administration costs and the full list of available attorneys is provided to members without any particular recommendations.
However, the committee cautioned that attorneys must still comply with existing ethical obligations, such as specifying the form of payment in a retainer letter, addressing what happens if the exchange closes or the member withdraws, making sure the fee is reasonable, maintaining client confidentiality and using truthful advertising with no direct solicitation.
Finally, the committee warned that barter currency cannot be used for advance payments for legal services, because it cannot be held in a trust fund, and that, as a business transaction, working for a client through an exchange would require informed consent under Rule 1.8(a).
In short, if you are ready to explore alternative forms of payment with clients, barter away, but keep these important caveats in mind.
© 2016 Law Bulletin Publishing Company. All rights reserved.
Wednesday, May 18, 2016 • Volume 162, No. 98
Reprinted with permission from Law Bulletin Publishing Company
Glenn E. Heilizer, “Sole Speak” Column
glenn@heilizer.com
ARDC looks to stay ahead of curve
The Attorney Registration & Disciplinary Commission’s 2016 registration form required new details from attorneys in private practice. The questions were added pursuant to recently amended Supreme Rule 756, which now compels disclosure of “the type of entity at which the attorney practices law, the number of attorneys in that organization, the principal areas of law in which the attorney practices and whether that organization has established a written succession plan.”
The final count is not complete, but according to the ARDC, initial responses from sole practitioners could lead to more regulation in years to come.
Only one in six solos report written succession plan
James J. Grogan is the ARDC’s deputy administrator and chief counsel. With more than 35 years at the agency, Grogan knows from experience the importance of tracking how lawyers run their firms. Keeping an eye on current trends is a key factor in formulating effective regulatory and disciplinary strategies.
While the formal results await the ARDC’s next annual report, Grogan shared preliminary returns from sole practitioners on the pivotal issue of succession planning.
It is vitally important for solos to make end-of-practice arrangements, Grogan explained, as there are no in-house colleagues to assume control in the event of death or disability.
Early figures provide ample cause for concern. Grogan reports that only 16 percent of sole practitioners — roughly one in six — have a written succession plan in place. On top of that troubling statistic, Grogan points out that more than 40 percent of solos report they do not carry malpractice insurance.
As more lawyers approach retirement age, Grogan is concerned the lack of formal succession planning — aggravated by the lack of insurance in some cases — could be problematic for solos, their family members and clients. There is also added stress on state-funded projects such as the ARDC’s client protection program.
A proactive approach to attorney regulation and discipline
Although the current national model of attorney discipline is reactive — charges are brought after infractions occur — the ARDC is considering a more proactive form of attorney regulation going forward.
Known as proactive management-based regulation, this model has gained traction overseas in recent years. Instead of focusing primarily on after-the-fact enforcement, the new system emphasizes forward-looking measures to anticipate and avoid ethical lapses.
In such proactive jurisdictions overseas, agency resources are used to teach lawyers what programs and systems are needed to operate their firms effectively and ethically, thus avoiding potential problems with clients and regulators.
In Australia, for example, lawyers must assess and attain objectives in 10 discrete areas, including billing practices, conflicts of interest, employee supervision and trust accounts. Each firm must establish for regulators that each self-assessment process has been completed.
In the United States, regulators are starting to give the proactive approach a serious look. In Colorado, the state supreme court set up a subcommittee to study the model and already implements proactive procedures such as providing a self-audit checklist for small firms and sending high-risk attorney groups a letter describing ways to avoid common pitfalls.
The ARDC’s review of the proactive system is in the early stages, but Grogan sees the value of proactive regulation. In days gone by, Grogan notes, more sole practitioners obtained support through informal mentoring and office-sharing arrangements. Today’s legal arena is driven by technology, which can have isolating effects and leaves many solos completely on their own.
Given the sizable number of sole practitioners without formal plans to transition their practice when the unexpected occurs, proactive involvement by the ARDC may be needed. And preventative safeguards could assist in other areas as well. “The commission wants lawyers to succeed, period,” Grogan pointed out, and the proactive approach could help ensure that “as many of our attorneys as possible are successful.”
Self-regulate your practice with planning tools
Whether or not the ARDC implements such a proactive system going forward, solos should take basic steps now to protect their firms and avoid potential missteps.
First, complete a self-audit to check for potential trouble spots in your practice. A sample audit checklist is available on the Colorado Supreme Court’s website at coloradosupremecourt.com. Address any identified deficiencies and ensure your firm’s future.
Second, make a written succession plan. The Colorado Supreme Court’s website also has a downloadable guide for succession planning. Sample form agreements are included. Do not wait for the ARDC to make it mandatory. Draft a plan now and protect the practice you worked so hard to build.
Third, if you are not yet insured, consider including that cost in this year’s budget. Affordable coverage is available with limits as low as $100,000. Not only will your policy provide a measure of protection, but many insurers offer Continuing Legal Education courses, consultation hotlines and printed materials that can assist in the present.
Lastly, ask for help if needed. Among other options, join the Sole Practitioners Bar Association of Illinois at ilsolobar.org for free and access its website for links to sample attorney succession guides and forms. You also can post confidential requests to other members to serve as succession counsel and seek additional support in other areas.
Grogan knows that proactive regulation will not pre-empt every discipline problem, but the failure to engage in succession planning is an obvious omission that can be cured.
It is fair to assume that, sooner or later, the Illinois Supreme Court will make written succession planning mandatory. Gain peace of mind by making arrangements now, and you will be in compliance when it becomes the law of the land.
© 2016 Law Bulletin Publishing Company. All rights reserved.
Monday, April 4, 2016 • Volume 162, No. 65
Reprinted with permission from Law Bulletin Publishing Company
Glenn E. Heilizer, “Sole Speak” Column
glenn@heilizer.com
Getting online quick way to make a sole practitioner an army of one
When many of our state’s more seasoned sole practitioners first joined the legal ranks, attorney advertising was limited, the Internet was just coming online and marketing plans generally relied on word of mouth.
Back then, lawyers typically found clients through a local network of friends, business connections and colleagues. Having solid skills, a strong work ethic and a quality reputation seemed to be enough.
Not so much now.
Today, vibrant competition for legal services requires active online marketing efforts. As confirmed by Comment 1 to Professional Conduct Rule 7.1, "contrary to the tradition that a lawyer should not seek clientele," modern advertising can assist "the public’s need to know about legal services."
As long as the information is not "misleading or overreaching," the comment goes on, "lawyers should be allowed to make known their services … through organized information campaigns in the form of advertising."
Below are some basic online marketing options, and a profile of an adventurous solo who uses unconventional radio streaming to increase his client base.
Set up a search-engine-friendly website
For sole practitioners who have not set up a website, or allowed their site to become dormant, now is the time to act.
Paying for a Web presence is always an option, but setting up a site yourself has never been easier.
Among other low-cost options, consider using a “managed” Wordpress site through a Webhosting company like GoDaddy. Open an account; choose a domain name; choose a template; and publish your content. The process is straightforward, and the yearly cost for the domain name and basic hosting service can be as little as $70.
Next, make your site work for you by posting quality content on a frequent basis. Search engines like Google are tasked with including relevant, useful and responsive websites in search results
and exclude sites that are stale or merely copy or link to other locations.
With well-written submissions on your area of expertise, your website is more likely to reach people looking for the kind of services you provide.
Market through LinkedIn, Facebook and Twitter
For solos who believe social media marketing is not useful or appropriate, think again. Judicious use of popular messaging sites — within the limits of ethical rules on advertising —can improve
your prospects. Further, the one-on-one collaborative nature of social media can be particularly suited to the self-employed attorney.
LinkedIn is a network of roughly 300 million professionals who maintain an online identity, keep in touch with connected colleagues, endorse each other’s skills and look for new employment opportunities. Join for free, describe your practice area, experience and abilities and connect with other professionals.
Add your publications, notify your connections of new posts and status changes and contact other members through the company’s messaging service.
Facebook also has a business application, called Facebook for Business. Easily set up the business page in your firm’s name, publish content and interact with other members for no cost. By
setting up the account with an identifiable address like facebook.com/smithlaw and supplying good content, your page will be accessible to more than 1 billion users.
Twitter, a real-time social media platform that limits posts (called tweets) to 140 characters, can be an effective marketing tool for sole practitioners. Open a free twitter account for your firm —
@SmithLaw, for example —and gain access to more than 300 million active users. Label your tweets with a descriptive hashtag symbol (#), such as "#familylaw," and any member’s search for that
term will include your tweets as well.
All three social media sites are free with add-on options for paid advertising and are readily populated with photos and content. Many solos already use these accounts effectively. Check them out and follow suit to boost your profile.
Tech-savvy solo merges old and new with radio streaming
Sole practitioner Timothy J. Fiscella is an experienced online marketer of his firm, the Law Office of Timothy J. Fiscella. He maintains a robust website and actively uses LinkedIn, Facebook
and Twitter.
Recently, Fiscella decided to take a bold stab at a less conventional marketing approach. He launched an impactful advertising campaign, through online streaming radio at a prominent Chicago
sports station, WSCR-AM 670.
Now in his ninth year as a lawyer and a sole practitioner, Fiscella concentrates in criminal defense and civil rights violations. Initially, he handled a large number of DUI and serious traffic
matters, but saw his traffic-based caseload wane as he devoted more time to complex criminal and civil rights actions in state and federal court.
Fiscella wanted to recover the DUI and traffic business that once formed the core of his practice.
From the start, Fiscella was attracted to online radio streaming, because it was an unusual marketing approach and combined a classic medium with cutting-edge advertising methods. In a world
where television ads and online pay-per-click models are popular in legal circles, Fiscella wanted to try something different.
"I wanted to zig when others zagged ," he explained.
Already familiar with WSCR, Fiscella knew the station’s typical listeners fell within his target client age range. He secured a well-produced spot that highlights his experience with DUI cases
and serious traffic offenses. The ad is streamed to a designated geographic area and is broadcast repeatedly to maximize Fiscella’s exposure, reaching a minimum of 125,000 listeners per month.
Although Fiscella’s radio marketing strategy is in the early stages, and an ongoing sizable financial commitment is required, he is encouraged by results so far. Not only have the radio spots provided instant name recognition, but Fiscella plans to build a long-term association with this practice area and sees online radio playing a key role.
Simply put, Fiscella wants his firm name to be synonymous with DUI defense, and he is taking forceful steps to bring that about. So take a page from Fiscella’s book and give your marketing
strategies a fresh look. Don’t be left behind. As @TJFiscella_Law might say in a tweet, #solosmarketsmart.
© 2016 Law Bulletin Publishing Company. All rights reserved.
Thursday, March 3, 2016 • Volume 162, No. 43
Reprinted with permission from Law Bulletin Publishing Company
Glenn E. Heilizer, “Sole Speak” Column
glenn@heilizer.com
Sit through a court call to gain some insights
If you plan on filing an important motion in your business litigation case, and you do not have a great deal of experience with your judge, consider sitting through a court call before you file.
Judges have their own preferences, procedures, and inflections when addressing complex, disputed motions. Some rely extensively on the briefs and only ask specific questions of interest, while others permit limited argument while still others allow counsel to present their positions with liberal time allotments. (Many judges today rely exclusively on the papers without oral argument at all.)
By monitoring a call, you can learn a great deal about what to expect in court. For example, you can track:
• how many cases typically are heard on given day
• how much time the court spends on each case
• whether the judge marks up the brief, comments on its length, or how he or she otherwise utilizes the written material
• whether the court review the written submissions as the argument progresses
• whether rulings are typically taken under advisement, made in writing or issued verbally from the bench?
Lastly, make sure to check the judge's standing order. The court may have specific requirements or expectations, and properly expect their rules to be followed.
Knowing the answers to these sorts of questions can make you a better in-court advocate for your client. The results will be well worth the effort.
Consider using the "respondent in discovery" statute in business litigation
Illinois has a statute that permits a plaintiff to name persons or entities as respondents in discovery. See 735 ILCS 5/2-402. The standard for naming any respondent is that the party is "believed by the plaintiff to have information essential to the determination of who should properly be named as additional defendants in the action."
Properly served respondents must "respond to discovery by the plaintiff in the same manner as are defendants."
If discovery reveals "probable cause" to add any respondent, the respondent may be converted to the status of defendant, on motion of the plaintiff. Additionally, any respondent may elect to be included as a defendant.
A plaintiff has six months to convert a respondent in discovery to a defendant, with one possible 90-day extension, "even though the time during which an action may otherwise be initiated against him or her may have expired during such 6 month period."
The respondent-in-discovery statute most commonly is used in tort actions, where, for example, plaintiffs wants to identify responsible parties in medical malpractice or personal injury cases. However, the procedure can be valuable in business and other commercial cases, such as shareholder disputes, enforcement of covenants, breach of contract, and injunctions. Consider past cases where you have dealt with threshold motions to dismiss, based on an alleged lack of facts. By using Section 5/2-402 and carefully crafted discovery requests, you can develop a firm case and avoid pitfalls down the road. Although this procedure does not make sense in all situations, remember that this powerful tool is available when needed.
Master voluminous discovery productions with database management system
Recently, I received a voluminous pdf document production in a federal business case involving a large institution. There was no apparent organized chronology to the production, making it extremely difficult to parse, analyze, and assemble for depositions.
Fortunately, I am a long-time user of Microsoft Access.
Microsoft Access is a useful tool for litigators handling bulk discovery productions. It essentially is a spreadsheet database, but with more capabilities than standard spreadsheet programs. Think of Access as a much more robust version of Microsoft Excel.
There are also free database management systems available, such as OpenOffice Base.
With Access, you can set up a variety of data fields, covering virtually any kind of information that may be contained in a discovery production.
Inputting the data can be time-consuming. I try to input the data in real time as I make my substantive review, thus getting the most out of my expended time.
Once the data in entered, the possibilities for extracting, analyzing and formatting the data are extensive. Using the program's "query" function, you will have powerful sorting capabilities, can perform arithmetic computations, use other formulas, and prepare reports that collect and present the data in meaningful ways.
In addition, you can prepare pleadings and other forms that will automatically insert data into the document as specified.
While there is an initial learning curve for use of a database management system, the results are well-worth the investment of time. Consider including this skill in your arsenal for your next big case.
Are Motions to Dismiss Really Necessary?
In summary, motions to dismiss can be worth the expense, because a well-written motion may have benefits and cost-savings beyond the mere disposal of a claim.
Litigation budgets today are tighter than ever, particularly in business cases. Clients understandably want to keep a close eye on the bottom line. Although no one disputes that a threshold motion to dismiss a complaint can be an effective way to obtain an early disposition in a case, the outcome is not always a sure thing.
Take a motion dismiss based on a statute of limitations. The subject matter may seem straightforward enough — the limitations period is a specified number of years, and the event either occurred within the period or not — but such is not always the case. There may be questions about which statute applies, for example. Or, the “event” may be continuing over a long period of time. Equitable tolling could come into play. The list goes on.
Given potential uncertainties, the trend today seems to weigh against early dispositive motions to dismiss, thus saving resources and reserving such issues for later in the case.
While that may be a sound strategy, clients should consider that motions to dismiss can serve other functions, beyond an outright dismissal.
First, a motion to dismiss allows for early presentation of your defense to the court, through your client’s eyes. Answers do not permit legal argument and persuasion. A well-written motion to dismiss can show the court how your client views the facts and the law, and can reap rewards down the line. The potential effect is intangible, to be sure, but experienced practitioners can attest to the importance of presenting your version of the facts to the court as soon as possible.
Second, a motion can make the plaintiff and plaintiff’s counsel aware of the weaknesses in their case. Seeing such issues in black and white — which they may never have considered — can have a profound effect, and may lead to a withdrawal or amendment of the complaint, or possibly an early settlement.
Third, a motion to dismiss can pare down the issues in dispute through partial rulings. A judge may find, for example, that a particular statute of limitations period applies, and dismiss some of the claims asserted in the complaint. Fewer claims now can lead to cost savings down the road. This possibility should be considered when evaluating whether to file a motion to dismiss.
Fourth, even if the court does not grant the motion, in whole or in part, the motion still may further your client’s defense in a significant way. Take the statute of limitations example. The court may decide that, although a specific limitations period applies, the timing of plaintiff’s discovery of the facts giving rise to the claim is not clear from the complaint, requiring denial of the motion.Yet both you and the plaintiff’s lawyer know that, eventually, the full record will show the plaintiff was aware of the facts early on, and that, at the summary-judgment stage, the plaintiff will lose the case.
As an example, I had a case where the court denied our motion to dismiss because the triggering of the limitations period was not completely clear from the pleadings, but the plaintiff knew he would eventually lose, and voluntarily dismissed the case. For the plaintiff, it was enough to see the judge rule that the limitations period would start on a given date, if the facts ultimately supported my client’s view of the case.
Lastly, if you are going to file a motion to dismiss, do it well. Slapping a quick motion together, just to get one on file, is pointless, and can actually damage your case. Take the time to draft a concise and persuasive motion that you and your client can take pride in filing.
So, when you and your client are deciding whether to file an early dispositive motion, consider these factors as you plan your budget.
No such thing as a routine court appearance
Who is your lawyer? The answer may seem simple, but when a larger firm is retained, the answer may not be so simple.
When a client retains counsel at a firm, the client should ascertain what attorneys will be handling the various aspects of the case, including all court appearances. If a firm has a policy of sending younger, less experienced attorneys to cover "routine" court hearings, keep in mind that no court hearing is necessarily "routine." Crucial issues can arise in court at any time, and the presenting attorney needs to be adequately prepared, and sufficiently experienced, to address all issues that may arise. The client should make sure he or she understands the firm's approach in this regard, and that the client is comfortable with the proposed plan for court appearances.
Being proactive best way to avoid malpractice claims and headaches
Malpractice is not a popular topic in legal circles. We try to keep a strict eye on deadlines, protect the client’s interests and never consider a claim could be lurking.
Yet good habits are not always enough. Exposure can occur in unexpected ways and at unexpected times. For sole practitioners, dealing with the economic, reputational and emotional stresses of a claim without assistance can be crippling. Solos should be proactive.
For advice on preventing legal malpractice, there may be no better resource than Tim Gephart, vice president of claims at Minnesota Lawyers Mutual Insurance Co. MLM insures lawyers across 15 states, including thousands of sole practitioners.
Gephart personally has steered MLM’s claims administration department for more than three decades and serves as a law school faculty member and frequent lecturer on loss prevention. When it comes to legal malpractice, Gephart has seen every variation.
Gephart offers some basic suggestions for minimizing claim exposure in solo practice.
Choose transition counsel and make a written succession plan
As more self-employed attorneys reach retirement age, and as Illinois moves closer to mandatory succession planning (see Professional Conduct Rule 1.3, Comment 5), Gephart confirms that failing to make a succession plan creates vulnerabilities for the sole practitioner or his estate.
The two core elements of succession planning are the selection of transition counsel in the event of disability or death and written instructions for handling active cases, addressing client funds and winding down or selling the practice.
To promote proper succession planning, Gephart helped write a downloadable practice guide for MLM insureds. Sample plans also are available on various state bar association websites, including California, New Mexico and West Virginia, and are easily located by performing a simple Google search for “sample attorney succession plan.”
If you have not yet selected transition counsel and prepared a succession plan, put it at the top of your list. For help finding a colleague to serve as transition counsel, join the Sole Practitioners Bar Association of Illinois (ilsolobar.org) for free and post your confidential request to other association members.
Avoid “dabbling” in new areas of law
Recent strains on the economy have caused lawyers to consider new areas of law outside their comfort zone. Gephart calls this the “dabbling effect” and warns such forays can lead to client assertions of legal neglect.
Gephart directs all counsels contemplating new areas to the “competency” requirements of Professional Conduct Rule 1.1 — which requires “the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” Do not be seduced by a subject’s apparent simplicity. You may miss the nuances and pay dearly for it.
If you are determined to expand to new types of law, Gephart suggests a temporary apprenticeship with experienced co-counsel, who can teach you the ropes.
Use caution when crossing state lines
As new communication technologies blur geographic boundaries, solos should consider whether activities directed out-of-state may constitute the unlicensed practice of law. Many states have restricted pro hac vice work in recent years, and various non-litigation activities — such as preparing legal documents, providing advice or sending demands to non-Illinois residents — may be prohibited.
In such cases, Gephart recommends you seek guidance from the target state’s ethics commission or bar association and avoid potential legal hazards.
Fee collection may be perilous
Gephart stresses that malpractice claims often surface as counterclaims in fee collection lawsuits.
Before suing for fees, solos should balance the risks against the chances and costs of recovery. Collection lawsuits may be hampered by expensive discovery, appeals, bankruptcies and general collectability problems. A counterclaim for malpractice, no matter how baseless, may turn a potential recovery into a liability.
Finally, Gephart emphasizes that collection problems can be avoided through retainer arrangements and careful client screening. If your gut signals a potential client may be a problem, listen to your instincts.
Watch out for Internet scams
Internet scams have infiltrated the practice of law, and sole practitioners may be prime targets.
For example, Gephart describes an ongoing collection scam that has victimized counsels across the country, involving a prospective “client” and opposing “debtor” who are in league with each other.
The client retains unwary counsel to collect a hefty sum from the debtor, who promptly capitulates and surrenders a cashier’s check. The attorney-victim deposits the check in his client trust account, retains his fee and wires the balance to the client.
After the attorney wires the funds, he discovers the cashier’s check was a phony instrument, leaving a negative balance in the client trust account. The deficiency balance not only triggers an ethics inquiry, but may spawn malpractice claims by other clients with funds in the account.
Report potential claims promptly
Self-employed practitioners may be reluctant to report potential problems to their insurer, hoping the matter will go away quietly and never rise to a claim. Gephart counsels against this.
First, timely reporting may be essential to trigger the insurer’s coverage obligations. If you believe there may be an issue with a client or former client, report it. Don’t gamble with your practice on the line.
Second, early reporting gives the insurer a chance for early resolution, known in the insurance world as “claim repair.”
When a lawyer misses a lien for a real estate closing, for example, early notice may allow the insurer to file a quick quiet title action and allow the sale to close. Similarly, with early notice on a missed statute of limitations, insurance counsel might invoke tolling or seek application of a longer period. Rapid assistance from your insurer could make the difference.
Use your insurer’s resources
Gephart’s parting advice to solos is to make liberal use of insurance company resources. Among other things, MLM offers Continuing Legal Education courses, online practice guides and a telephone hotline to address questions impacting coverage, risk management and claim avoidance. Explore what your insurer has to offer. It will be worth the effort.
In sum, take the time to consider steps for mitigating the chances and effects of legal malpractice claims on your sole practice. Thinking it will never happen is not a solution.
© 2016 Law Bulletin Publishing Company. All rights reserved.
Thursday, February 4, 2016 • Volume 162, No. 24
Reprinted with permission from Law Bulletin Publishing Company
Glenn E. Heilizer, “Sole Speak” Column
glenn@heilizer.com