Protect yourself from suit: knowing when to say `no' to a questionable client or case can shield you from legal malpractice claims.

Attorneys facing legal malpractice claims often tell their own counsel, "There was something about that client." A slow day, a case with significant injuries but questionable liability, or a case with good liability but weak damages may tempt an attorney to accept a client who, in hindsight, the lawyer should have declined to represent.

Some clients are more likely than others to bring a malpractice claim or present other professional-responsibility problems. Sometimes, the best risk management technique is to say "no."

Some learn this lesson the hard way--through experience. Others avoid this fate by systematically analyzing the client and case to determine whether to accept the representation. Declining to take the case may not be necessary if you can identify and control the factors that could create a dissatisfied client.

If you are a sole practitioner, risk management starts and ends with you. Firms with several lawyers should implement administrative controls, such as a structured intake process in which the attorney uses a standard form to identify factors that need to be gleaned from the initial client interview, and a second partner approves the new client or matter.

Whatever screening process you use, you should evaluate the risk of a malpractice claim's being brought--either by a new client or by an existing client with a new matter.

The client

Most injured people are not likely to turn on their lawyers. They have reasonable expectations and appropriate motives, and they understand the limitations of the legal system's remedies. However, some prospective plaintiffs start their search for a lawyer with preconceived notions of the compensation they are entitled to, and those expectations may be unachievable. Other potential clients have motives or personalities that may make them difficult to work with. Or they may simply be "legal hypochondriacs," who turn to the legal system for wrongs that have not occurred or for remedies to which they are not entitled.

A client's expectation of compensation may be driven by financial need, a perception that he or she has been wronged, or the desire for revenge. A lawyer's agreement to represent a plaintiff is an implicit statement that the case has value. The client assumes that the lawyer would not agree to handle the case if it were unlikely to succeed.

Unrealistic expectations. Legal malpractice claims often arise from a client's unrealistic expectations regarding compensation or failure to understand that "inadequate" recoveries do occur. You need to explain carefully the legal value of the client's personal injury claim. The client needs to understand the challenge of persuading a jury that the pain he or she feels is real. Identifying the client's expectations before taking the case--and adjusting those expectations during the representation--is essential.

Adjusting expectations also means helping the client understand that even meritorious claims can be lost. Clients need to appreciate a lawyer's evaluation of the chance of winning. For example, a 60 percent chance of winning means that, of 10 identical cases all given equal service by the lawyer, 6 will be winners and 4 will be losers. There is no way to know in advance whether a given case will be won or lost.

Overstating the value of a case, as in pleadings, can come back to haunt you if you are sued for legal malpractice. In Thomas v. Bethea, a judgment for $125,000 was affirmed against a lawyer for an inadequate settlement of $2,500. The attorney had filed a pleading valuing the case at $1 million and then had to testify in the legal malpractice case that he believed the complaint was well founded in fact and law. (1)

Unlike many defendants, the typical personal injury plaintiff is not a regular consumer of legal services. You will usually need to explain the legal principles that apply to the case. A basic understanding of procedures and key substantive issues should help clients accept any setbacks that occur during litigation. Some clients will come to you believing that their cases can be handled easily and with little expense--expectations that are not likely to be met.

Communication is essential and can be based on a set of form letters designed to cover most of the issues that arise in personal injury cases. These can be customized for each client with slight modifications. You can develop such letters to forward copies of pleadings, discovery requests and responses, and notices of deposition, and to inform clients about the status of their cases.

Suspect motives. If the prospective client wants more than a reasonable amount of compensation for the injury, no outcome may be satisfactory. Watch for other suspect motives, including an unrealistic idea of what constitutes justice.

To some clients, perhaps especially those involved in wrongful death cases, justice means avenging their loss. The goal of the legal system is just compensation, and no amount can compensate for the loss of a loved one. If revenge is the client's ultimate goal, he or she will probably be unhappy with any outcome.

When a client's motives are fueled by anger toward the wrongdoer, and the wrongdoer is not adequately punished, the client's hostility may be redirected at the lawyer. You should try to reduce such feelings of anger and avoid further arousing your client's emotions. The client needs to understand that the legal system provides compensation, not vengeance.

Personal traits. The prospective client may have personal characteristics that should raise red flags. For example, the person may be unstable. Unfortunately, this may become evident only when the result does not meet the client's expectations.

The goal is to identify potential instability at an early stage. One warning sign is the use of alcohol and drugs. The person's employment history can also be important: Although frequent job changes do not necessarily predict an unstable client or a difficult relationship between the two of you, you should evaluate the reasons for those changes. Like substance abuse, a pattern of jumping from job to job can reflect instability.

You may also want to watch for a history of legal problems, such as criminal convictions, serious traffic violations (particularly those involving alcohol or drugs), divorces, or paternity suits. Depending on the issues involved, such a history could be a sign of an irresponsible character.

Personal issues such as these need to be handled with some finesse. Some may be addressed on an intake form that the client fills out. Or they can be presented during the initial interview as routine background questions that you ask every client. Of course, there is no immediate way of testing the client's truthfulness, but how the client answers may indicate his or her candor.

Also, look for evidence of dishonesty or lack of integrity. Why would you believe that a person who lies and cheats when dealing with others will not do the same with you? A dishonest client may make unfounded allegations, creating a substantial risk of Rule 11 liability or malicious prosecution claims. Also, people who have dealt with the client may perceive the lawyer as a coconspirator and sue him or her for fraud.

Under federal Rule 11 and equivalent state rules, lawyers have a duty to conduct a reasonable investigation into the facts and law before filing a pleading, and they may be sanctioned for making unfounded assertions. Though it may be reasonable to rely on the information provided by the client, it is prudent to contact other sources to confirm the facts when possible. This investigation will help prevent fraud claims and motions for sanctions and malicious prosecution against you.

Another red flag is a client who wants to control most aspects of the litigation, or the opposite, one who pays little attention to the case. The client cannot control the litigation: He or she is too emotionally involved to make objective assessments and does not know the law, the rules of procedure and ethics, or how to properly litigate a case. Allowing a client to control the litigation opens you up to later claims that you handled the case incompetently or negligently because you should have known better than to listen to the inexperienced client.

At the other end of the spectrum is the inattentive or unresponsive client--one who does not cooperate with requests for discovery and does not make himself or herself available to review the evidence obtained in discovery or to submit to a deposition. A client's failure to cooperate in this way can result in sanctions and, in extreme cases, dismissal of the case.

Prior relationships with attorneys. Many clients have sought the advice of other attorneys in the past, or at least know other attorneys to whom they could have taken the new matter. You may need to determine why the client chose you and your firm instead of another. For example, in a personal injury lawsuit, another attorney may have refused to take the case because he or she believed that the client was not being honest. You can tell the client that knowing about his or her prior experience with lawyers will help you know what to explain as the case proceeds.

A client may have come to you because of a dispute over fees with his or her prior attorney. Of course, you want to avoid clients who have a history of not paying legal fees or of embroiling their attorneys in fee disputes. Not being paid for your services is bad, but so is chancing a counter-suit for legal malpractice when you sue to collect unpaid legal fees or costs.

Another risky client is one who has filed a grievance against another attorney. Although some complaints are meritorious, many are not substantiated. Even if a client files a grievance in good faith, responding to bar inquiries takes valuable time and energy away from your practice.

A prospective client may not volunteer information about relationships with prior attorneys, but may tell you about them if asked. Often, those who feel that their prior attorney has somehow done them wrong want to talk about it. You can easily work into the initial interview a question about whether the prospective client has ever had an opportunity to use an attorney before and whether he or she was satisfied with the lawyer's services. In most states, grievances before the state bar or disciplinary authority that did not result in discipline are confidential, so there is no way to independently verify whether the prospective client did or did not file a grievance. Asking the client may be the only way to find out.

A client's history of short-term work relationships with attorneys or other professionals, even if no reason can be identified, may be a red flag. Although there are many valid reasons to change attorneys, accountants, doctors, or dentists, a pattern of not sustaining long-term relationships could reflect a problem.

The case

Often, even when the client does not trigger concerns, something about the legal matter may be troublesome.

Statistics reveal that a large percentage of malpractice claims arise from cases that are outside a lawyer's primary practice area. (2) Taking such a case can risk the client's losing his or her rights: For example, while most lawyers would ascertain and record the applicable statute of limitations for a personal injury, an inexperienced practitioner might not know that there may be a shorter notice requirement if the defendant is a state-run institution.

If the prospective client's matter is not within your primary practice area, you can still handle the case--but ethics rules and the standard of care require that you either increase your competence through study or associate with competent co-counsel. Remember, though, that if you have to learn a new area of law, the compensation you receive may not cover the time you spend on the case. The case may also conflict with the needs of your other clients, taking you away from their cases to spend time learning a new area of practice.

Even if the case is within your practice area, if it is too large or time consuming for your office to handle competently, your risk of facing a claim increases. If the case should be filed in another jurisdiction, assess whether you are familiar enough with the applicable substantive and procedural law to take the case.

Safeguards

Whatever else clients complain about, they do not complain that their lawyers communicate with them too often or give them too much information. The contrary is true. Every year, one of the most frequent bar grievances by clients is that their lawyers will not communicate. A client who hears from you regularly is more likely to feel that you are on top of the case and that you value his or her business.

Keeping the client informed requires some effort, but it doesn't have to be onerous. Return phone calls within 24 hours. Send periodic status reports, even if nothing significant has happened. Advise the client of all material developments. Send the client copies of all pleadings, motions, and correspondence.

The demanding client will require more time than others. The client with high expectations will want more frequent communication and explanation.

Be careful to document these communications and confirm client decisions in writing, especially when your advice is not followed. As discussed above, you can develop a collection of form letters to cover many types of communication. Filling in the blanks and printing out the letter takes little time and results in greater client satisfaction. Plus, if the client makes a claim against you, you will have a written record of your handling of the case. A lawyer's file, like a physician's chart, may be the most crucial evidence of what he or she did or failed to do.

One of the most effective ways a lawyer can avoid malpractice claims is to enter into an engagement agreement with the client that clearly states the parameters of the representation at the outset of the attorney-client relationship. This can be a letter from you to the client that the client signs and returns to you. So that there is no misunderstanding, the agreement should be written in clear and simple language.

Client identification. An engagement agreement should identify each person the lawyer is undertaking to represent. If a husband and wife come to you for legal assistance, do you represent one or both? If it is a personal injury case, do you represent only the injured person or also the spouse in a loss-of-consortium claim? If one partner or shareholder seeks your assistance for a partnership or corporate matter, do you represent that partner or shareholder, all of the partners or shareholders, or the partnership or corporation? The engagement agreement should also clearly identify the individuals who are not represented.

The scope of the engagement. The agreement should also clearly define the scope of the engagement at the outset of the representation. Make sure the client understands what is not part of the engagement. For example, if you agree to prosecute a workers' compensation claim but not any claims against third parties, make that limitation clear. Remember, under the rules of professional conduct in most states, any representation is a general one unless you limit its objectives and the client consents.

Your agreement should include the client's responsibilities as well as the lawyer's. For example, the client should understand that he or she is expected to provide you with current addresses and telephone numbers and with information regarding his or her condition. The client is also expected to be available to assist you in preparing the case and to submit to a deposition when necessary.

Fees. This section of your engagement agreement should be sufficiently detailed to eliminate any surprise to the client. When you agree to represent a person you have not regularly represented, Rule 1.5(b) of the Model Rules of Professional Conduct provides that you must tell the client the basis or rate of the fee either before or within a reasonable time after the representation begins.

It may not be enough to state the amount of the flat fee, the hourly rate, or the percentage of the amount recovered that will be paid to you. The client is likely to have questions about expenses, retainers, the frequency of invoices, and consequences of nonpayment. These matters should be detailed in the engagement agreement.

Other issues. Under the appropriate circumstances, you may want to address additional issues in the engagement agreement, including any potential or actual conflicts of interest or other ethical limitations on your handling of the case. You should confirm what documents you will hold and how long you will hold them after the representation has ended. You might also address the circumstances under which you may withdraw from the case or the client may terminate the agreement, and the consequences of these actions.

By letting clients know what to expect, you reduce the risk of unmet expectations. Written engagement agreements increase the likelihood that you will be paid in full and on time, and they provide essential evidence if a dispute arises.

Trust your instincts

The "smell test," especially for experienced lawyers, is surprisingly reliable. Trust your instincts. At least identify the factors that bother you and try to reduce the risks. Good lawyering and communication may be all that is needed.

Because the true character of a client may not be apparent during the initial interview, continuously evaluate the client and the case for signs of a problem. If you spot one, do not ignore it, or it may snowball. If communicating with the client can remedy a problem such as unrealistic expectations, address it immediately and continue the representation. If the problem centers on the client's character, or the case has become too large for the firm, you may be wise to withdraw--and the sooner the better. (3)

Avoiding risk is best done at the earliest possible time. A thorough initial evaluation and analysis of the prospective client and case will help you identify and eliminate risks that could ripen into a malpractice claim.

Remember, it is OK to say "no" to a prospective client. And it is much better than saying, "I should have said `no.'"

Notes

(1.) 718 A.2d 1187 (Md. 1998).

(2.) ABA STANDING COMMITTEE ON LAWYERS' PROFESSIONAL LIABILITY, PROFILE OF LEGAL MALPRACTICE CLAIMS: 1996-1999 (2001),

(3.) Lawyers may obtain a free subscription to Hinshaw & Culbertson's newsletter Lawyers' Malpractice Prevention Update, which contains summaries of recent decisions and changes in professional liability law. To subscribe, send e-mail to info@ hinshawlaw.com.

RELATED ARTICLE: A checklist for evaluating your risk.

The following questions can help you assess the risk posed by potential clients and cases. If you decide to take the case, referring to this list can help you watch for signs of problems. The questions might not apply in every situation, but you should consider them as a matter of routine.

1. Why is the prospective client requesting legal services from your firm?

* Does the firm have the necessary expertise?

* Is the fee structure reasonable?

* Is the client seeking to use the firm's reputation?

2. What is the client's prior experience with attorneys, as either a plaintiff or a defendant?

* Were prior relationships with lawyers terminated? If so, why?

* Has the client filed any grievances against a prior attorney?

* Has the client paid previous attorneys' fees?

3. Does the client display any high-risk characteristics?

* Does he or she have suspect motives, such as revenge?

* Does the client have unreasonable expectations regarding results?

* Is the client resisting a commitment to pay costs or fees as they become due?

* Does the client appear unstable or impatient?

* Does he or she insist on controlling the details of the representation or unduly limiting the extent of the representation?

4. Does the client have a troublesome background or engage in inappropriate behavior?

* Does the client use alcohol excessively or use illegal drugs?

* Does he or she have a history of gambling excessively?

* Does the client have financial problems, such as outstanding judgments, bankruptcy filings, or a poor credit rating?

* Is there a history of legal problems, such as criminal convictions, serious traffic violations, divorces, or paternity suits?

* Is there a history of litigation, as either a plaintiff or a defendant?

5. How will accepting the case affect the firm?

* Can the firm properly staff the matter?

* Will representing the prospective client be likely to preclude future representations because of potential conflicts?

6. What is your "gut reaction" to the case?

* Are you comfortable with the prospective client?

* Do you believe he or she will follow advice?

* Do you believe representing him or her will enhance either your or the firm's reputation?

* Has the client imposed unreasonable time constraints on getting the case resolved?

You may decide to accept a new client despite the presence of several negative factors, particularly if the positive indicators predominate. You may be able to eliminate some negatives by educating the client.

New matters from existing clients are less risky if you have evaluated the client properly before. You should make it a habit to reevaluate existing clients periodically for any change in their risk levels.

--Ronald E. Mallen and Thomas P Sukowicz

Ronald E. Mallen is a partner with Hinshaw & Culbertson in the firm's San Francisco office. Thomas P. Sukowicz is the firm's director of law risk management services and is based in the Fort Lauderdale, Florida, office.