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Curbing legal malpractice claims

Four practice niches — personal injury law; family law; real estate; and trusts and estates — generate the highest percentage of legal malpractice claims each year.

Many of these claims stem from the emotionally charged nature of cases in these practice areas, from messy divorces and family feuds over inheritances to collapsed real estate deals and crippling auto accidents.

But several legal malpractice defense attorneys said lawyers in these high-claims practice areas can take several steps to reduce their risks of being sued for legal malpractice — even in emotionally volatile cases.

Personal injury

An American Bar Association study from 1985 through 2007 found that plaintiffs’ lawyers who handle personal injury cases consistently ranked at the top of the malpractice claims list, according to Carter Hampton, a solo malpractice attorney and consultant in Fort Worth, Texas.

As of 2007, 21 percent of all legal malpractice claims studied were against PI plaintiffs’ lawyers — more than any other category.

Hampton, a former insurance industry executive, said many of the claims could be eliminated by implementing better client intake procedures.

“My position is that client intake — how you screen the client – and then, once you’ve accepted the client, management of expectations, pretty much encompass 60 percent to 80 percent of where the claims come from,” he said.

Jett Hanna, senior vice president of the Texas Lawyers Insurance Exchange in Austin, Texas, agreed: “I think the expectations of clients are extremely high. Certainly, some of the publicized recoveries over the years have created expectations, and not every case is a winner.”

Attorneys need to be upfront with their clients, he said.

“One of the key things is educating the client and not getting [his or her] hopes [up] too high, letting them know realistically what can go wrong,” Hanna said.

Christine Mast, a malpractice defense lawyer and partner at Hawkins & Parnell in Atlanta, said personal injury lawyers must pay attention to deadlines, so they aren’t caught unaware of the tolling of a statute of limitations.

“The lesson for all lawyers handling litigation, particularly the plaintiffs’ side, is calendar early, by the most conservative date possible,” she said.

Family law

Family law attorneys generally do a good job of screening their clients and managing expectations, according to Hampton.

Considering the number of divorces in the nation, the number of malpractice claims filed against divorce lawyers “should be a huge number, and it’s not,” he said. Instead, family law accounts for 10 percent of all malpractice claims – less than half the rate of personal injury claims.

Even so, he said, many family law malpractice claims could be avoided by improved client communications.
Hampton suggested preparing printed materials that address frequently asked questions about divorce and child custody issues.

“You’re taking out a lot of the issues that people become confused about,” he commented.

One potential danger area for family lawyers is Qualified Domestic Relations Orders, Mast said.

It’s a specialized area, and attorneys need to either farm out the documents to an attorney who specializes in QDROs or “learn it well before you start doing them,” she said. Failing to discover hidden assets in divorces is another potential source of malpractice suits, Mast added.

Even if the less well-off spouse says she doesn’t care about the money, confirm in writing that you are not going to conduct an in-depth asset search, she advised.

Real estate

“Real estate is just an area where we’ll always be seeing a lot of claims,” Mast said.

Large commercial real estate deals often trigger legal malpractice suits when the deal goes sour, especially in a down economy.

Hampton said lawyers need to do some homework before taking on a client.

“I kick it back to client intake,” he said. “Have you ever met this guy? Where’s the money? What are they asking you to do?”

“Real estate claims tend to be more economy driven,” Hanna noted. “When there are multiple investors involved, misunderstandings about investments can be a problem. If the lawyer is representing more than one investor, or it’s unclear who they’re representing, that gets you into trouble.”

Mast said that, in Georgia, cash-strapped banks and title insurance companies are “going after closing lawyers and trying to conjure up a claim against the lawyer.”

“Really, they just have to be very careful when they’re performing the closings to make sure every closing instruction is adhered to,” she said. “And in the case of potential fraud … if there’s anything that seems in any way unusual it’s always better to tell the lender, preferably in writing.”

Trusts and estates

Family members can be quick to turn on each other if one of them feels shortchanged in a will.

“Clients often see what they get from an estate as being some kind of indication of how important they are, or how much they were loved,” Hanna explained. “So, that creates a factor that makes people sometimes think that the disposition is the lawyer’s fault.”

When one child is left out of a will or gets a much smaller share than another, “lawyers are stuck between a rock and a hard place,” he said.

The best a lawyer can do is make sure the testator understand all the ramifications of his or her decisions.

Also, make clear who you are representing.

Mast recalled a case that split a family into factions, where an outraged widow accused her husband’s lawyer of violating her trust by not informing her that her husband had changed his will.

“There was a perception by the wife that, although he was the husband’s lawyer, he was the ‘family’ lawyer,” Mast explained.

“Conflict situations are ones that scream out for disclaimer letters,” she said.