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RISK MANAGEMENT

Six easy ways to open the door to a malpractice claim

Answering a malpractice claim is a wretched experience that worsens as it goes along, because once a client files a malpractice claim, “there’s a high possibility that an ethical grievance will come from the same incident,” says Nancy Byerly Jones, a management consultant who focuses on preventive management, mediation, and dispute resolution.

“Yet,” says Jones, “some firms all but invite the misery by failing to make a conscious effort to prevent it.”

Whenever a legal malpractice suit comes to the discussion table, the same risk factors have invariably gone on unnoticed for more than a little while. Here are six of those risk factors.

1. Focusing on quantity, not quality of work.

Often the firm has been compounding its risk “with what looks like a sign of success”—a too full case load.

When the volume is continuously too heavy, the attorneys start overlooking the quality control measures they would otherwise follow. Conflicts checks get made too quickly.

Or, in the effort to expand, the intake process gets breezed over and clients the firm would otherwise reject get added to the queue. Sometimes it’s nothing more than a matter of the attorneys’ “getting greedy” for more work.

A law firm is not “a high volume furniture dealer,” she says. The money—and malpractice safety—come from the quality of the work, not the quantity.

2. Complacency

Also inviting disaster is the complacency that often settles over experienced lawyers.

Jones views it as malpractice arrogance. The attorneys have been practicing successfully for many years “and think it’s never going to happen to them.”

New attorneys generally are aware of malpractice risks and avoid exposure, says Jones. But as time goes by, experience lulls them into abandoning the precautions.

Malpractice suits also come to be as a result of what she terms “lousy attitudes,” or a pervasive firm-wide negative frame of mind. When attorneys get burned out, they view safety measures as “someone else’s job” or take the attitude of “I’m too busy” to pay attention to them.

3. Lack of leadership

Another trait Jones sees among firms that get sued is “the total absence of leadership.” Neither the administrator nor the managing partner has the experience and training to run the business.

Too many managing partners get thrust into the position because of their seniority or because of their good track record as rain makers. But seniority and legal skills are not the qualifications needed for management.

The firm manager has to have the ability as well as the authority to set and enforce policies on everything from conflicts checking to monitoring filing deadlines to calendaring on down to entering time and returning phone calls.

In almost every malpractice claim, she says, the initial impetus is a simple element of bad management such as unreturned phone calls that could and should have been prevented. She also points out that the firm needs to keep succession in mind for the managing partner. “It’s dangerous to have just one person with those skills.” There needs to be ongoing business management education for several attorneys so there’s always a management presence.

What’s more, the managing attorneys need to be paid for the time spent managing. Otherwise there’s an obvious incentive to devote as little time as possible to management. That, says Jones is a “critical absence” in many firms.

4. Overlooking policy violations

Lack of accountability also has a glaring presence in malpractice.

Every firm needs written policies for its checks and balances and written consequences for failure to comply with them. With both policies and consequences in writing, the firm can follow through with each violation, because the partners have signed off on them. But with no written support, the managing partner can do little more than nag people about the rules.

In many malpractice cases, she finds that the managing partner talked with and even chastised the offender, yet never went beyond that.

It’s not necessary to set severe penalties for every offense, she says, but there do need to be consequences to demonstrate clearly “that the firm means business and holds everybody accountable for policy violations.”

To keep the atmosphere from becoming oppressive, the firm can even “have some fun with the consequences” for the lesser violations, but there still has to be a sting.

For example, if the policy is to enter time daily, the consequence for the first violation might be having to deliver everybody’s lunch and for the second violation to buy everybody’s lunch. While scarcely severe, those penalties are aggravating enough to act as a deterrent.

5. Lack of unity

Also at the bottom of many claims is the business arrangement where a firm operates “in name only” and is actually several solo practices under the same roof.

There, the attorneys share the costs—and the liabilities—but have their own practices and staff. There are no policies, each person does things a different way, “and the firm is liable for everything.”

Because the practice is not “a unified force,” a single attorney has the ability to expose the entire group to liability.

6. Lack of training

Finally, there’s the risk that comes from poor hiring, training, and supervision of staff. Clerical errors—entering wrong dates or missing conflicts— “continue to be a leading cause of malpractice,” Jones says. And in many malpractice cases, the cause of those errors is poor hiring practices. The firm “moves too quickly just to get a warm body in place” and doesn’t spend time interviewing job applicants to see if they are qualified and responsible.

And besides the risk of bringing in someone whose sloppy work invites a claim, there’s the money loss. In time and lost productivity, staff turnover costs as much as $15,000 per employee.

Jones recommends evaluating applicants with questions that produce usable information. One question she finds telling is: name three things you did at your last job that were above and beyond your duty and that benefited the organization. Often what the applicant considers exceptional work was nothing more than the minimum requirement for the job.

Along with the hiring, Jones says, it’s important to evaluate the training both new and current staff are given and the quality checks that are made on their work. In most firms, this training is inadequate.


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