A (Gene) Baker’s Dozen of Legal Malpractice Claims and Risk Management Suggestions

By Mark Johnson and
Michael Sprangers

Gene Barton, the editor of the KCBA Bar Bulletin, has given us "Baseball" as a theme for this issue. Not wanting to disappoint our Peerless Leader, the following discussion of 13 risk and claims management suggestions for lawyers is written not in honor of someone who makes and sells bread and pastries, and who, from time to time, generously adds an extra doughnut, but of Gene Baker, the second baseman for the Chicago Cubs from, primarily, 1954-56.

Baker, brought up to the Cubs as a shortstop in 1953, was moved to second base a short time later when the Cubs promoted another shortstop - a whippet-thin young man with lightning wrists by the name of Ernest Banks.

Baker's greatest distinction as a major league player is likely the fact that when the Cubs brought up Ernie, the two became the first African-American double play combination in the Major Leagues. Wrigley Field, the home of the Cubs, is hemmed in by four streets: Waveland, Sheffield, Addison and Clark, with Addison on the first-base side. Baker, from time to time, encountered difficulties making an accurate throw on the 6-4-3 double play, thereby resulting in the Cubs' double play combination being named: "Banks to Baker to Addison Street." Baker led the majors in errors by a second baseman in 1954, 1955 and 1956.1

Lawyers, like Major League Baseball players (and every homo sapiens who has ever walked the planet) make errors. Baseball errors are defined, expansively and in exquisite detail, in MLB Scoring Rule 10.12. The benchmark attorneys must meet to avoid being charged with an error is, oddly, much more amorphous, to wit: that of a reasonably prudent attorney in the same or similar circumstances.

It has been written that Gene Baker was a very fine shortstop and that his many errors were the result of being moved to second base, a position with which he had no experience and for which he lacked the mechanics. The same can be said of a not insignificant percentage of lawyer errors; inexperience and dabbling may be dangerous, as is the failure to pay attention to the proper mechanics of a law practice, such as accurate calendaring and attentiveness to that calendar.

What follows is a [Gene] Baker's dozen of risk and claims management suggestions for lawyers, written with the hope that it might, just once, eliminate that most uncomfortable attorney-client meeting; when an attorney must tell his or her client that the client's former champion is now his present defendant.

1. Your Professional Liability
Insurance Policy - Coverages

Professional liability insurance policies do not only provide coverage for garden variety malpractice claims. Your policy may provide coverage, albeit limited in amount, for such problems as: defense of disciplinary grievances; subpoena assistance; and "crisis event" assistance, such as death or departure of a principal, dissolution of the firm or an event that the insured believes will have a material adverse impact on the firm's reputation.

The latter coverage may pay up to a limited amount for the services of a public relations firm. Policies do not cover payment of sanctions, return or disgorgement of fees, punitive or multiplied damages, or civil or criminal fines. If a lawsuit is filed, most policies contain a coverage that compensates the lawyer for time lost in assisting in the defense of the case, including attending depositions, mediation and trial.

With respect to the limits of the policy, virtually every legal malpractice policy issued today is a "wasting" policy, meaning that the costs of defense are deducted from the liability limit. In a case that might approach the limits, retaining personal counsel should be strongly considered.

2. Your Professional Liability
Insurance Policy - Exclusions

Read your policy and familiarize yourself with the policy exclusions. Common exclusions include:

· intentional acts or omissions;

· criminal or fraudulent conduct;

· providing services as a business or investment advisor;

· providing services as a Realtor or accountant;

· ERISA violations;

· discrimination, employment or wrongful termination claims;

· claims arising out of a fee dispute and;

· claims against a lawyer in his or her capacity as a notary if the person whose signature was notarized did not personally appear and sign in front of the lawyer-notary.

3. Notice of Claim as
a Condition of Coverage

To our knowledge, all lawyers' professional liability insurance policies issued today are claims made polices. This means that coverage is triggered by the date the lawyer first becomes aware of a potential claim and notifies the insurer.

Although the triggering language regarding the duty to notify varies somewhat from company to company, claims made policies require that the lawyer notify the insurer of circumstances that might reasonably be expected to give rise to a claim and do so during the policy period in which the lawyer becomes aware of the possible claim.

It is not necessary for a lawsuit to be filed to trigger the duty to report a potential claim. Every application and renewal application asks whether the applicant firm is aware of any circumstances that might give rise to a claim. So, when the date to submit a renewal application approaches, every lawyer in the firm must be asked whether he or she is aware of any representation, or any act or omission, that might reasonably be expected to result in a claim.

The language with respect to the obligation to report varies from policy to policy; so, be familiar with the defining language in your policy. But err on the side of caution and report an unsettling event. Even if you think that it is highly unlikely that a claim will be pursued, report every event that you believe might possibly result in a claim; do so in writing and before the policy expires.

In the past few years we have represented plaintiffs in three cases in which the insurer has asserted a reservation of rights defense based on the failure to timely notify the insurer of a possible claim. Getting sued is a bad experience; not having coverage is a nightmare. The takeaways from these first three items above are that you must read your policy and understand the coverages, exclusions and conditions.

4. Know a Little Bit about the Law
Related to Legal Malpractice Claims
- The Statute of Limitations

The statute of limitations for malpractice actions against attorneys in Washington is three years from the date the client discovers, or in the exercise of reasonable diligence should have discovered, the facts which give rise to a cause of action. It is not necessary for the client to know that there has been malpractice, i.e., a violation of the standard of care.2

The statute is tolled until the end of the continuous course of representation (by the lawyer whose conduct is in issue - not by another lawyer or firm) for the matter about which the malpractice is alleged, even if the client knows that malpractice has been committed. The statute is not tolled by continued representation on unrelated matters.3

Once a client has no reasonable expectation that further services will be provided, unless the damages are not manifest, the statute should begin to run. So, a lawyer should always send an end-of-representation letter, clearly demarking that the relationship has ended.

5. To Whom Do I Owe a Duty?

The determination of the existence of an attorney-client relationship is a question of fact. But that factual determination turns largely on the client's subjective belief or intention that such a relationship exists and that the attorney is protecting the client's interests, if that belief is "reasonably formed based on the attending circumstances, including the attorney's words or actions."4

A finding of an attorney-client relationship does not depend on the payment of a fee or a formal retainer agreement. The same test applies to the scope of the relationship. The duty of care arises out of the existence, and scope, of the relationship.

In addition, Washington is among the overwhelming majority of jurisdictions that do not require an attorney-client relationship for the imposition of a duty of care, although plaintiffs in such cases "must show that there is some other basis upon which (the attorney) owed them a duty."5 Under Washington law, there can be no duty to a non-client absent a threshold finding that the attorney's services were intended to benefit the plaintiff.6

Thereafter, courts apply a multi-factor balancing test set forth in Trask. Applying Trask, the Washington Supreme Court has held that an attorney hired by a title insurer to represent its insured did not owe a duty to the non-client insurer because the representation was not intended to benefit the insurer.7

In an unpublished Division I decision, the Court of Appeals cited Stewart Title and found that an alignment of interests, purportedly between the non-client insurance company and the attorney it had retained to defend its insured, alone was insufficient to show that either the attorney or the client intended the insurer to benefit from the representation. Therefore, an attorney hired by an insurer to defend an insured does not owe a duty of care to the insurer.8

The importance insurers place on an attorney clearly defining the existence and scope of the attorney-client relationship is manifested by the fact that many policies contain a provision that, in the event of a claim, the deductible is reduced by 50 percent if there was a written retainer agreement.

Given that the existence and scope of the attorney-client relationship is largely based on the subjective belief of the client, lawyers should be aware of the risk of creating an unintended attorney-client relationship. In addition, if a client has more than one legal issue, it is just as important to advise the client, in writing, what you will not be doing, as it is to advise them of what you will be doing, e.g., representing the client in a personal injury case, but not a Labor and Industries claim.

6. Know a Little Bit about the Law
Related to Fee Disgorgement Claims

Fee disgorgement claims are a bit frightening. Although malpractice insurance policies likely provide for a defense of such a claim, a judgment requiring fee disgorgement will not be covered damages and will not be paid by the insurer.

These are some of the basic principles pertaining to a fee disgorgement claim:

· A lawyer may not charge an unreasonable fee.9 It is not a defense to a claim that a lawyer charged an unreasonable fee that the lawyer did not intend to charge an unreasonable fee. The required showing is that the lawyer acted with "knowledge," which is defined in the ABA Standards for Imposing Lawyer Sanctions, Definitions, as acting with "the conscious objective or purpose to accomplish a particular result."10

· Attorney fee agreements that violate the RPCs are against public policy and unenforceable. Whether an attorney's conduct violates an RPC is an issue of law for the court.11

· An attorney's ethical obligation to refrain from charging an unreasonable fee continues throughout the term of the engagement, and a fee agreement that is reasonable at the outset may become unreasonable over time.12

· A trial court may deny or require disgorgement of fees for a breach of ethical duties to "discipline specific breaches of professional responsibility, and to deter future misconduct of a similar type."13

· An attorney requesting fees bears the burden of proving the reasonableness of the fees.14

· "A fee agreement between a lawyer and a client, revised after the relationship has been established on terms more favorable to the lawyer than originally agreed upon may be void or voidable unless the attorney shows that the contract was fair and reasonable, free from undue influence, and made after a fair and full disclosure of the facts on which it is predicated."15 In addition, since a modification of a fee agreement constitutes a business transaction with a client, the transaction is considered to be prima facie fraudulent. The attorney bears the burden of proving compliance with RPC 1.8.16

· "A finding of causation and damages is not required to support an order of disgorgement."17

· Courts have reduced, denied or disgorged fees in cases involving excessive compensation based upon a small amount of work relative to the fee charged, fee payments continuing for too long, modification of fee agreements, failure to disclose a conflict of interest and the failure to have a contingent fee agreement in writing.18

7. Social Media Accounts

Discuss with every client the importance of not referring to the case on social media and to discuss with you any changes in settings or content before they are made.

This is very important. The largest sanction against an individual attorney in the U.S. resulted from a lawyer allegedly telling his client - the plaintiff-widower in a wrongful death case - to "clean up" his Facebook account. The lawyer was sanctioned $542,000 and the client $180,000 to compensate the defendant for additional attorney's fees and costs in addressing the misconduct - the deletion of a photograph.19

We put the following italicized material in our fee agreement:

Notice Regarding the Duty to Preserve Evidence, Including Electronically Stored Evidence, such as Emails, Text Messages, Website Pages, Facebook and other Social Media Web Pages and Twitter Messages.

In lawsuits today, the parties to the case routinely seek to obtain documentary evidence from the other side that might be pertinent to a claim or defense in the case and under the rules that apply to civil cases, each party may be entitled to do so.

Increasingly, much of this evidence is stored electronically on a computer or a cell phone or is able to be viewed on a website, including social media sites such as Facebook.

It is very important that once you have decided to pursue a claim, even if a lawsuit has not yet been filed, for you to preserve all of your documents, including electronic information. Do not delete or change anything because it will leave you open to allegations that you have destroyed evidence.

In addition, you should not post information or send messages discussing your claim, or the events giving rise to your claim, or your damages. This information may be available to the other side in your lawsuit.

(End of Part One)

[GB: Given the long indent quotes, let's go with a three-column layout.]

[Begin here]

(In the first part of this article in last month's issue, the authors provided the first seven of their "Baker's Dozen" tips for avoiding legal malpractice. A regular half-dozen tips follow to round out the list.)

8. Advise Your Client
of Electronic Hazards

Courts have held in both civil and criminal cases that if a client communicates with his or her lawyer via a computer or cell phone provided by an employer, such communications are not privileged. A bank manager was held to have waived the attorney-client privilege in a criminal case by using the bank's computer to communicate with his lawyer.20 In Holmes v. Petrovich Dev. Co., the court held that an employee's emails to her lawyer regarding a lawsuit against her employer, sent on a company computer, were not privileged.21

Both the WSBA (Opinion 2217)22 and the ABA (Opinion 11-459) have issued ethics opinions regarding an attorney's obligation to warn clients about receiving or sending communications by way of an employer or other third party's computer. Both recognize a duty of reasonable care on the part of the lawyer to protect the confidentially of such communications.

We include the following italicized material in our fee agreement:

NOTICE REGARDING EMAIL AND CELL PHONE COMMUNICATIONS WITH LAW FIRM.

Opposing lawyers in a lawsuit generally cannot ask about conversations, whether verbally or in writing, between attorneys and their clients.

This privilege from disclosure (referred to as the attorney-client privilege) can be waived-lost if persons who are not clients have access to the conversations, such as being present while the conversations occur or by reading documents containing the lawyer's or client's thoughts about the case.

Because most people communicate by email or with cell phones today it is important that you communicate with us only with a computer or phone that only you use. Do not use an office computer or a cell phone provided by your employer to communicate with us because the emails and the conversations might later be held by a court not to be privileged and the opposing lawyers might be given access to them.

Please inform us of anyone who has access to the computer you use to send us emails or the cell phone you use to call us so we can determine whether the devices should be used to communicate with us.

9. No Matter How Small Your Law Firm Is,
Have a Confidentiality / Social Media Policy
and Have Every Employee Read It,
Agree to It and Sign It.

We all understand the importance of confidentiality, but the ubiquity of Facebook and other social media sites has added an element of additional vulnerability to the preservation of client confidences in addition to exposure to other types of ethical sand traps. Increasingly lawyers are getting sanctioned by courts, sued by their clients and suspended by their state bars because of problems related to the use of social media.

Some examples that fall into the sheer idiocy category:

· A Brooklyn assistant district attorney wore blackface and held a Confederate flag in a photo on his Facebook page.

· A Miami public defender was fired and a mistrial ordered in a murder case after she posted a photo of her client's leopard skin underpants on her Facebook page.

· An Indiana deputy assistant attorney general tweeted about using "live ammunition" on protesters.

· An assistant U.S. attorney in Beaumont, Texas, posted about the "Dalibama" and the Trayvon Martin case.

· A Kansas Court of Appeals research attorney tweeted about a former Kansas attorney general's disciplinary hearing.

· A Minnesota prosecutor commented on Facebook during an attempted-murder trial about "keeping the streets safe from Somalis."

· Multiple federal prosecutors in New Orleans admitted to posting pseudonymously about judges, pending investigations and cases.

There are many excellent articles regarding law firms and social media use available online, including sample social media policies. One sample policy that we think is topflight is published by the Meritas Leadership Institute. Meritas's Facebook page describes itself as "an established global alliance of independent, full-service law firms."

The Meritas Social Media Guide is much more expansive than most small law firms will need, but it can easily be distilled to its core concepts, including ensuring that lawyers and other employees using social media protect the confidentiality of clients and the law firm, avoid creating unintended attorney-client relationships, avoid offensive, demeaning, and potentially defamatory, posts and photographs, and avoid controversial subjects, including the "big three" - sex, politics and religion.

We utilize a short confidentiality agreement coupled with a social media use admonition:

Confidentiality Agreement

Confidentiality is very important to the attorney-client relationship. It is critical that our clients' confidences be protected at all times by everyone who works at our firm.

Confidentiality applies to both lawyers and non-lawyer staff. The duty of confidentiality to the client continues even after the legal representation of the client is over or even after you leave the firm. The duty of confidentiality applies to prospective (potential) clients as well. Our law firm requires every employee of the firm to maintain all confidences of clients without exception. A failure on the part of the firm to maintain confidentiality could compromise or prejudice the client and at the very least would be a serious breach of the client's trust in this firm.

No client confidences (including information that may be learned from casual conversation) shall ever, under any circumstances, be disseminated to anyone-spouses and family members included-outside the law firm. Even information that may already be "public knowledge" is not to be disseminated. This prohibition on the dissemination of confidences applies to all electronic mediums, including but not limited to Facebook, Twitter, Instagram, and Snapchat. You should not post anything relating to your employment on social media sites and you should never give legal advice. Beyond client confidences, you should never post anything that is offensive or demeaning to anyone in any way, including posts regarding sex, sexuality, gender identification and religious and political preferences.

Discussions with another member of the firm regarding a client's matter should whenever possible occur within the firm where the client's confidentiality can be best protected; however, if circumstances arise where you must discuss a client's matter while outside the firm you must take whatever precautions are necessary to prevent anyone else from overhearing you. Our clients deserve to have their matters handled in a professional and confidential manner at all times. The firm will not waiver from this principle. Any questions about this policy should be directed to Partner X or Partner Y.

10. Is There More Than One Person
Sitting in Your Office?

If you are going to work for two or more people, you must, of course, perform a conflicts analysis. Does a current conflict exist and, if so, is it waivable? If the answers are yes and yes, then you need a waiver. (That being said, Comment 21 to RPC 1.7 states: "A client who has given consent to a conflict may revoke the consent and, like any other client, may terminate the lawyer's representation at any time.")

Even if there is no current conflict, one can arise unexpectedly in multi-client/joint representations, so a provision in your fee agreement or retention letter similar to the following is a good idea:

Important Information about Multiple Client Representation.

We will be representing (Smith) and (Jones). Whenever an attorney or law firm represents more than one client in the same matter, the possibility exists that a conflict of interest may arise during the course of the representation. While it is our opinion from the facts that we know at this time that we can competently and ethically represent both of you, if a difference in goals or objectives arises among you concerning the handling of the representation, and if you cannot resolve those differences, we cannot continue to represent any of you, and we must withdraw.

From the facts as we currently understand them, no conflict exists. However, that situation can change, particularly when settlement opportunities arise. For example, one of you may wish to accept a settlement offer, while the other may disagree and wish to reject the same settlement offer. Such a disagreement, if one arises, could either force you to retain your own counsel to resolve that dispute among yourselves or force us to withdraw from continuing to represent any of you.

You also need to understand that an additional ramification of joint representation is that we cannot keep secrets or confidences in favor of one of you against the other. Thus, anything one of you tells us cannot be kept from the other. You still have an attorney-client privilege as to all outsiders, just not among yourselves.

11. Know a Little Bit about Where
the Claims Are Coming from.

In September 2016, the ABA's Standing Committee on Lawyers' Professional Liability published its seventh study of national legal malpractice claims data, "Profile of Legal Malpractice Claims, 2012-2015." The study is available for purchase from the ABA. The study categorizes 44,185 claims against lawyers, inter alia, by area of law, type of activity and type of alleged error.

The study also broadly characterizes errors as substantive, administrative, client relations and intentional. As might be expected, substantive errors, such as failing to know or properly apply the law, inadequate discovery and drafting errors, accounted for the largest percentage of the claims (53.82%). Nearly 13 percent of the claims pertained to deadlines, whether it was not knowing of the deadline, not calendaring it or not reacting to it as calendared.

Importantly, administrative and client-relation errors combined accounted for nearly 37 percent of the claims. Administrative claims (23.5%) were categorized as:

· failure to properly calendar;

· clerical errors;

· failure to file a document (no deadline);

· procrastination in performance or follow-up; a lost file, document or evidence; and

· failure to react to the calendar.

Client relation errors (13.31%) were classified under the categories of failure to follow the client's instructions, failure to obtain the client's consent or to inform the client, and improper withdrawal. In other words, well over one-third of the claims had nothing to do with legal knowledge and a great deal to do with how we manage our offices and our clients' expectations.

12. If You Think You Made
a Mistake, Don't Do This

A legal malpractice claim may not be settled absent advice to the client to consult with independent counsel, even if no allegation of malpractice has been raised. In In Re Greenlee,23 the Washington Supreme Court upheld a six-month suspension of a lawyer based upon the attorney's failure to advise a client to seek independent counsel, before the attorney obtained a release of malpractice liability even though there was no claim made or proved.

13. Know at Least One
Professional Conduct Rule

Okay, we are supposed to know all of them but, for purposes of risk and claims management, RPC 1.6(b)(4), Confidentiality Of Information, is significant. The rule permits a lawyer to reveal information relating to the representation of the client "to secure legal advice about the lawyer's compliance with these Rules."

Although we most commonly think of ethical obligations in terms of conflicts, fees and trust account responsibilities, the first professional conduct rule, RPC 1.1, is Competence. RPC 1.1 tells us that capable representation is an ethical obligation and, therefore, an attorney is permitted by RPC 1.6(b)(4) to consult with outside counsel regarding standard of care-related problems. A reasonable interpretation of the rule is that it does not give a lawyer carte blanche to disclose all confidences, only the information required to secure the necessary advice.

One case to be aware of when discussing malpractice and ethical issues during the course of an ongoing attorney-client relationship is Versuslaw, Inc. v. Stoel Rives LLP.24 The Versuslaw Court held that in certain circumstances, to be determined on a case-by-case basis, intra-firm communications between attorneys regarding malpractice issues may be discoverable in a legal malpractice action arising out of the representation if the representation is ongoing during the time the communications are exchanged.

If the communications are probative with respect to a conflict between the client's interests and those of the firm, the documents and other communications are probably discoverable, so seeking outside counsel is likely the best option to retain a privilege from discoverability of the communications.

The takeaway is that a lawyer should not try to solve ethical dilemmas on his or her own. Good counsel is never more valuable.

______________________________________________________________________________

Mark Johnson and Michael Sprangers are the owners of Johnson Flora Sprangers PLLC in Seattle. They limit their practice to the representation of plaintiffs in serious injury and medical and legal malpractice cases. Johnson is an elected Fellow in the American College of Trial Lawyers. In 2008-2009 he was president of the Washington State Bar Association. He has been listed in every edition of The Best Lawyers in America since 1995 and in 2011, 2013 and 2015 Best Lawyers Publishing named him Seattle's Plaintiffs' Legal Malpractice Lawyer of the Year. In 2015, Sprangers presented at the 13th Annual WSBA Conference on the Law of Lawyering on the topics of professional liability insurance, legal malpractice and professional grievances. Johnson and Sprangers can be reached at [email protected] and [email protected] or 206-386-5566.


1. After Baker's playing days ended, he achieved another, and decidedly more positive, distinction. Baker left the Cubs in 1957 and finished his playing career with the Pittsburgh Pirates in 1961. He later became a minor league manager in the Pirates' organization and then a coach for the Pirates. According to a 2015 article by Ryan Grossman in The Chicago Tribune: "Then on Sept. 21, 1963, when Baker was a coach with the Pirates, manager Danny Murtaugh was thrown out of a game for arguing. Baker took over, making him the first black manager of a major league team - for the final two innings of the game."

2. Peters v. Simmons, 87 Wn.2d 400, 403-06 (1976).

3. Janicki Logging & Const. Co., Inc. v. Schwabe, Williamson & Wyatt, P.C., 109 Wn. App. 655 (2001).

4. Bohn v. Cody, 119 Wn.2d 357, 363 (1992).

5. Strangland v. Brock, 109 Wn.2d 675, 679-82 (1987).

6. Trask v. Butler, 123 Wn.2d 835 (1994).

7. Stewart Title Guar. Co. v. Sterling Sav. Bank, 178 Wn.2d 561 (2013).

8. Doctors Co. v. Bennett Bigelow & Leedom, P.S., 2015 WL 3385264.

9. RPC 1.5; In re Disciplinary Proceeding against Preszler, 169 Wn.2d 19 (2010).

10. Id. at 21-22. See also In Re Brothers, 149 Wn.2d, 575, 585 (2003).

11. Holmes v. Loveless, 122 Wn.2d 470, 475 (2004).

12. Id. at 477. See also Cotton v. Kronenberg, 111 Wn. App. 258, 271-72 (2002).

13. Eriks v. Denver, 118 Wn.2d 451, 463 (citing In Re Eastern Sugar Antirust Litig., 697 F.2d 524, 533 (3d Cir. 1982)).

14. In Re the Settlement/Guardianship of AGM & LLM, Minors, 154 Wn. App. 58, 73 (2010).

15. Valley/50th Ave. LLC v. Stewart, 159 Wn.2d 736, 743-44 (2007).

16. Id. at 745-46.

17. Behnke v. Ahrens, 172 Wn. App. 281 (2012), rev. denied, 177 Wn.2d 1003 (2013). See also Eriks v. Denver, 118 Wn.2d at 462.

18. See, e.g., Re the Settlement/Guardianship of AGM and LLM, Minors, 154 Wn. App. 58 (2010); Eriks v. Denver, supra, note 13.

19. Allied Concrete Co. v. Lester, 736 S.E.2d 699 (2013).

20. Hanson v. First Nat'l Bank, Civ. No. 5:10-0906, 2011 WL 5201430.

21. 119 Cal. Rptr. 3d 878 (2011).

22. http://mcle.mywsba.org/IO/print.aspx?ID=1668

23. 158 Wn.2d 259 (2006).

24. 127 Wn. App. 309 (2005), rev. denied, 156 Wn.2d 1008 (2006).

https://www.kcba.org/For-Lawyers/Bar-Bulletin/PostId/30/a-gene-bakers-dozen-of-legal-malpractice-claims-and-risk-management-suggestions

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