March 2009

What's Law Got to Do with It?

by WSBA President Mark Johnson

In September 2008, the American Bar Association's Standing Committee on Lawyers' Professional Liability issued its fifth study analyzing legal malpractice claims. Entitled "Profile of Malpractice Claims," the study analyzes 40,486 claims against lawyers in 2004–2007. The study categorizes claims against lawyers in a variety of ways, including by area of law, number of attorneys in the firm, and type of activity.

The study concludes that 70 percent of claims occur in firms consisting of one to five lawyers, and half of all claims occur in three practice areas. Plaintiffs' personal injury practice, which has accounted for the highest percentage of claims in each of the five studies dating back to 1985, remains in the lead at 21.56 percent of all claims. Although the authors caution that there is insufficient data (primarily the absence of information regarding the total amount of attorney time spent in a given practice areas) from which to draw conclusions regarding the "riskiness" of any particular practice area, it seems axiomatic that the deadline-intensiveness of a plaintiffs' personal injury practice, particularly limitations periods, claim filing requirements, and service of process issues, are an enormous source of the claims, and the study does conclude that 17.32 percent of all claims result from errors in "commencement" of an "action or proceeding," defined by the authors as "formal activities in starting a contested proceeding."

Real-estate practice is number two at 20.05 percent, and the report states that claims in that practice area over the past four years have "surged." Family law is third at 10.33 percent.

The most remarkable finding revealed by the study is that, although substantive legal errors represent the largest single source of malpractice claims at 46.61 percent, 40 percent of negligence-based claims, categorized as errors in administration (28.63 percent) and errors in client relations (11.22 percent), have nothing to do with legal knowledge. In addition, 13.53 percent of claims were the result of intentional misconduct including fraud, malicious prosecution, slander, civil-rights violations, and abuse of process, up nearly four percent from the last study published in 2003. Therefore, over half of all claims do not result from lack of legal knowledge.

The study classifies administrative errors into six broad categories: (1) failure to file a document necessary to protect a client's interest which is not a pleading or related to a contested matter (deed, mortgage, lease); (2) those where the lawyer is aware of a deadline but the item is not calendared; (3) those where there is no formal time deadline but a client opportunity is lost, such as a lost witness or an opportunity to purchase a business; (4) those where an item is calendared but the lawyer fails to react to the calendar; (5) those involving a clerical, as opposed to a legal, error in a document, such as an error in a legal description or a "transposition" of numbers; and (6) a lost file or evidence.

Client-relations errors are classified as follows: (1) the client asserts that he was not fully informed and would have taken a different action had he been fully informed; (2) the lawyer intentionally or negligently fails to follow a client's instructions; and (3) improper withdrawal.

Administrative errors seem to be largely the result of deficient office procedures and procrastination. For example, at least three types of calendaring errors — failure to calendar, failure to react to the calendar, and entering incorrect information into the calendaring system — account for approximately 11 percent of all claims. Procrastination and the failure to file a document result in another 16 percent of all claims.

Client-relations errors seem to be almost invariably errors in communication, and the significant number of those claims reinforces what we all know but often, in the press of a busy practice, may overlook — that it is critically important to document the beginning of the relationship, the financial terms of the representation, the scope of the representation (not only what we are doing but, if the client has multiple matters, what we are not doing), who the client is (and who the client isn't), and the end of the relationship.

The study, embodied in a 29-page report, contains much more important information than this short article reveals, and it is an important risk-management tool. It is available for purchase through the ABA. To order a copy, call 800-285-2221 and refer to product code #4140044.

WSBA President Mark Johnson can be reached at 206-386-5566 or mark@johnsonflora.com.