By William C. Saturley and Joseph S. Callanan
Risk-Free Business is an occasional feature intended as a guide for lawyers on the topic of professional liability insurance.
There is no stomach-churning sensation like the one you get when you realize you may have made an error in a client’s matter. Overcoming that feeling, and acting appropriately, can help protect not only this year’s bottom line but also your license. What follows is some advice on averting that queasiness:
Strive to stay calm — Fight the inclination to hope the issue will simply go away. Your clients pay you to dispassionately assess legal issues and situations; apply some of that training to this fact pattern.
Get another’s counsel — There is a variety of sources for this counsel. Big firms frequently have in-house counsel of their own; smaller firms have risk-management partners, or at least gray-haired sages. If you are on your own as a solo, you may need to draw on a friend or an outside mentor whose judgment you trust. Consider formally engaging the person so your discussions will be privileged.
If you cannot think of anyone to call, the Board of Bar Overseers, the Boston Bar Association and the Massachusetts Bar Association can provide names of people willing to help. Or call your broker, who should be experienced at dealing with these situations and capable of supplying you with practical suggestions. One of those suggestions will be whether it is time to notify the carrier.
Think before you act — The American Bar Association’s Standing Committee on Lawyers' Professional Liability recommends, in these situations, that you ask yourself three questions: Did I make an error that can affect my client’s interests? But for this mistake, would my client’s interests have been better off? Can I fix this error?
If you lack the resources to help you with this analysis, check with your broker, who may be able to help. Several carriers have hotlines set up specifically to help answer these questions, for example.
Act, not in haste, but without delay — Consider whether you can correct the mistake or mitigate its effect by some simple action. For example, have you miscalculated the deadline to oppose a motion for summary judgment by one day? Call your opposing counsel. A polite request for a one-day extension of time may solve the problem.
In deciding whether you should notify the carrier, you will need to look at the policy to know what is required of you contractually. There are common law standards that have evolved in further interpreting your reporting obligations, which we will discuss in a future column.
Consult your broker about whom to contact and how. Early notification serves two purposes: First, experience shows that claims can be satisfied much less expensively when fresh. Secondly, and consequently, you increase your likelihood of policy renewal by divulging your errors early.
Notify your client — While failing to report a potential claim to your carrier may result in a denial of coverage, failing to notify your client may subject you to bar discipline. Further, legal-malpractice statistics consistently confirm that former clients are less inclined to sue their lawyers over bad news if the lawyers come right out and share that bad news.
In addition to the threat of discipline and the increased likelihood of a malpractice claim, failing to notify your client may toll the statute of limitations and subject you to a consumer protection claim under G.L.c. 93A.
Take steps to minimize the pain — You can do things now that will help you should you one day realize you have made a mistake.
Store all your insurance policies in a single, readily identifiable location. Confirm the current contact information for your carrier and your broker, and place that information with the policy. Then attach a memo to yourself on how to respond to an error and a claim. And, if and when necessary, use the telephone numbers for assistance in evaluating the seriousness of a situation in which you find yourself. MLW
Attorneys William C. Saturley and Joseph S. Callanan are in the commercial litigation and professional malpractice groups at the Boston firm of Nelson, Kinder, Mossau & Saturley. Saturley can be contacted at wsaturley@nkms.com; Callanan is at jcallanan@nkms.com.
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