How an Attorney Should Handle a Mistake
Although there are steps that attorneys can take to reduce the likelihood of making an error, mistakes still happen in the course of an attorney-client relationship.
An attorney might miss a tax lien during a title search or fail to take a certain action within the applicable statute of limitation. The attorney could make an error in procedure, foreclosing certain grounds on an appeal.
Every attorney makes a mistake at some time during practice. How an attorney responds in those critical moments upon discovering her or his own mistake (or that of a colleague) may determine whether a mistake can be rectified or whether it will grow into a claim.
Most attorneys instinctually try to fix a mistake. If the problem can't be fixed, the temptation is to either ignore it and hope that it just goes away, or fall on the sword for something that may not even be malpractice. More often than not, these actions create problems worse than the mistake itself. There is a better way: Stop. Take a breath. Think.
Then, take three simple steps to minimize risks and create a solid platform for moving forward to meet obligations to the client and reduce the likelihood that a mistake will develop into a claim for legal malpractice.
1. Tell the Client About the Incident
This first step is often the most difficult thing that an attorney will ever do. For many reasons (involving both disciplinary and malpractice exposure), it is also one of the most important. Remember, a decision not to tell the client about a mistake is a decision that the attorney may have to defend at a later date. When viewed through the prism of conflicts of interest, most juries view it as a decision to put the interests of the lawyer (i.e., hopes of fixing it, or that the client will never find out) above the interests of the client. That silence can be quite costly and can even extend the statute of limitation for a claim.
In virtually every case, the risks of nondisclosure far outweigh the risks of telling the client. The safer, ethical course is to tell the client about the incident. This does not mean to fall on the sword and agree to pay damages. Telling the client about the incident is very different from admitting that a mistake has been made or that malpractice has occurred.
Most legal malpractice policies contain provisions (typically called "no admission" clauses) that forbid a lawyer from admitting a mistake or agreeing to pay money without jeopardizing her/his legal malpractice coverage. As a result, it is very important that the disclosure to the client (and yes, it should be confirmed in writing) only describes as a matter of fact what has happened and what the risks are: "we filed the brief after the deadline, which means our request may be denied as untimely." The ultimate legal conclusion, i.e., whether it is legal malpractice, is best left out of the letter. Some attorneys have uncovered a mistake, told a client that their mistake constituted malpractice, and then learned later that the mistake did not otherwise support a claim for malpractice (either because it was fixable or there were other defenses, such as a lack of causation). If a claim is brought after an admission like that one, the attorney is starting out at a significant disadvantage.
2. Involve the Legal Malpractice Insurance Company
Many attorneys believe that it is better to wait for the claim (typically defined as a "written demand for money or damages") or a lawsuit before involving their legal malpractice insurer. In reality, the risks of waiting far exceed any perceived advantages.
Yes, most legal malpractice policies are "claims made" or "claims made and reported" policies. This means that the policy covers claims against lawyers that are made (and if required, reported to the insurance company) during the policy period. The important date is when the claim is made. This is the latest time when a claim must be reported to the insurance company.
On the other hand, most policies also permit a potential claim to be reported as soon as the lawyer learns about any basis upon which a claim could be made, including a simple mistake. In legal malpractice nomenclature, such a report is called a "notice of a circumstance."
By giving notice of a circumstance, a lawyer assures coverage in the event a subsequent claim results, regardless of when the claim is finally made or the lawsuit is filed.
Also, by giving the notice of circumstance, attorneys can avoid some tricky issues in the renewal process for their malpractice insurance. Many applications ask if any attorney applying for insurance is aware of a circumstance that might give rise to a claim. Attorneys who have not already reported the circumstance then face the obligation to do so in response the question. The failure to report a potential claim in an application for coverage or renewal can put coverage for the entire firm at risk. Once the malpractice insurer is involved, the better approach is to provide the client with the contact information for the professional liability insurance carrier. Basically, get out of the middle.
3. Advise the Client to Seek Other Counsel Regarding the Incident
Inevitably, upon learning of a mistake or error, the client will ask what the attorney thinks the client should do. There is no answer here that can help the attorney. Any information regarding the legal malpractice claim can only lead to problems.
At this point, there is typically a conflict. The attorney may be tempted to advise the client in a way that minimizes the attorney's mistake, rather than one that maximizes the client's interests. Even when the advice that would minimize the attorney's mistake and maximize the client's interests involves the exact same action, it is difficult for the attorney to rebut any suggestion that the attorney was not acting in the client's best interests. This is a fact scenario that may look bad to a jury hearing a legal malpractice case. And, where there are allegations that an attorney acted notwithstanding a conflict of interest, it raises the question of whether punitive damages are appropriate.
Hopefully, by this point, the attorney may have the benefit of advice from his or her own counsel or the firm's general counsel. It is recommended that the attorney admit that he or she cannot answer the question and that the client should consider seeking independent advice regarding what to do next.
Good things can happen when simple, effective steps are taken. So, when mistakes happen, don't panic.
Stop. Tell your client. Involve your insurer. And then recommend independent counsel.