“Focus on being productive instead of busy.” — Tim Ferris

Attorneys have a lot of responsibilities. From building business relationships to managing clients, deadlines, and all of the paperwork in between, there is a lot of room for errors to occur. Additionally, responding to all of these matters means there is almost no time to spend keeping up with the law or the changing nature of legal services.

When attorneys are so busy – whether they’re working on client matters or dealing with firm business – there is a greater risk of being exposed to legal liability claims. These claims can be costly and have lasting negative ramifications for the firm, as well as its partners and associates.

The ABA recently published its 7th study of national legal malpractice claims, which included some very good news on the technology front: “Better computer calendaring systems, e-filing, electronic record keeping, and multiple modes of communication with clients appear to have assisted attorneys in managing their law practice.”

Since the study began in 1985, substantive errors have been the number one cause of malpractice, making up more than half of all claims. These errors have increased by nearly 10 percent since 2011 and can put your firm at risk for malpractice. Practice management software that assists attorneys with tasks like calendaring and budgets has been shown to minimize the risk of liability.

Personal injury is still the riskiest practice area with 18% of all malpractice claims. Real estate claims have decreased since the 2012 study, likely because of the easing of pressure since the collapse of the housing market in the recession that started in 2008, according to Todd Scott, VP of Risk Management with Minnesota Lawyers Mutual Insurance Company.

One thing remains true, and that is the cost of settling claims. The ABA report shows the greatest share of increase in payouts between $10,000 and $250,000. Conversely, nearly two-thirds of claims result in no payment.

Here are some of the other top areas for malpractice as found by the ABA in the latest quadrennial report, as well as strategies that can prevent exposure to claims risk.

Planning Error – Procedure Choice

Sometimes an attorney has substantial knowledge of the legal principles and case facts, but may make the wrong decision about the best way to handle a specific matter. Especially in cases involving insurance coverage or business tax, for example, there is a chance a client’s case could be affected by a poor judgment call made by the individual’s attorney.

Technology has changed the way attorneys maintain client data, so many errors today are affected by newer data sources. For example, the percentage of errors from lost files isn’t usually caused by losing actual paper documents anymore. More attorneys today manage documents in electronic form so they can back up data regularly and reference it when necessary to recall details that will help make the most informed case decisions.

Those electronic files have their own set of malpractices dangers, though. According to Todd Scott: “These days attorneys are more likely to misplace tablets or flash drives.”

Protecting both your data and devices such as tablets or flash drives with encryption is essential to helping prevent malpractice today.

Inadequate Discovery/Investigation

The discovery phase of a case can be critical to the ultimate outcome. This area is also one of great risk for liability when a client’s view of the case progression does not align with the attorney’s. A client may consider certain details they felt were pertinent to a case aren’t being properly considered by the attorney. If the attorney is made privy to these concerns and can immediately document them, it could prevent a future malpractice claim. Making sure to maintain open lines of communication with clients is always key.

New technology can greatly assist in ensuring that initial discovery notes are thorough and secure throughout a case. Mr. Scott suggests that attorneys “include support staff in discussions of new technology decisions since they will also be using the programs.”

Creating specific processes, especially when implementing a new system or technology, can be critical for the firm’s success. Generating new templates, file name configurations, and folder organization should all be part of the discussion so that processes are consistent throughout the firm.

According to Mr. Scott, more than 35% of lawyers now use case management software. He believes the increase could be attributed to newer, user-friendly technologies being developed and more young attorneys starting firms or moving into leadership roles in larger firms.

Failure to Know/Ascertain Deadline

According to the ABA Report, this category has declined since the last study, but is still one of the top causes for claims. New technologies, especially those with calendaring systems, have helped attorneys do a better job of meeting all their deadlines. Having this data archived in an accessible system can help when there is an alleged error regarding a deadline.

Mr. Scott recommends finding a system that can handle the amount of detail required with your case log. “Common email programs are just not equipped with the type of calendaring needed,” he says. Appropriate case or practice management software can provide detailed reporting capabilities and timeline management functionality, along with ticklers and ToDos as reminders to keep you on top of details, which can ultimately lead to quality docket control and less chance of liability.

Small Firms Taking Steps to Reduce Claims

Past studies showed that small and solo firms have the most malpractice claims, though part of the reason may be that there are simply more firms in that category. Mr. Scott says he thinks smaller firms have improved significantly.

“Smaller firms know they need to maintain systems to prevent errors and make sure every detail is covered,” he says. He believes that claims are decreasing because attorneys are getting better at using and understanding their systems. They’re also more careful to back up data and use tools like encrypted drives.

With current firms hiring fewer attorneys, and the movement toward more solo firms, it will be interesting to see how the claims data continues to change.

 

Source: 2012 – 2015 Profile of Legal Malpractice Claims. Copyright © 2016 by the American Bar Association. Reprinted with permission. Copies of the 2012 – 2015 Profile of Legal Malpractice Claims are available from here (search by product code 4140047). This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
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