Legal Ethics: Top Mistakes That Lead to Malpractice

© 2016 Downey Law Group LLC. For educaƟonal purposes only.
Legal
Ethics:
Top
Mistakes
That

Lead
to
Malpractice
Michael
Downey
Raphael
Nemes
Downey
Law
Group
LLC
June
2016

11.3
8.9
8.8
8.6
6.7
6.6
5.9
5.4
5.3
5
0 2 4 6 8 10 12
Failure
to
Know/Apply
Law
Planning
Error
Inadequate
Disc/Investigation
Failure
to
File
Documents/No
Deadline
Failure
to
Calendar
Failure
to
Know
Deadline
Procrastination
Failure
to
Obtain
Client
Consent
Conflict
of
Interest
Fraud
10
Most
Common
Legal
Malpractice
Error
Allegations

Percentage
Source:
ABA
Standing
Committee
on
Lawyers’
Professional
Liability

Calendaring
• Failure
to
calendar
properly
• Failure
to
react
to
calendar
entries
4

Document
Completion
Errors

Lost
Files
&
Documents

Consequences

• Disciplinary
liability
(lawyers)
– Normally
not
from
single
mistake
– “Reasonable
measures”?
• Civil
liability
(lawyers
and
firm)
– Special
protections
for
special
information
– Notice
requirements
in
many
states
– (Insurance
coverage?)
9

Rule
1.1-‐ Duty
of
Competence
A
lawyer
shall
provide
competent

representation
to
a
client.
Competent

representation
requires
the
legal
knowledge,

skill,
thoroughness,
and
preparation
necessary

for
the
representation.
10

Rule
1.1
– Technology
Competence
• [8]
To
maintain
the
requisite
knowledge
and

skill,
a
lawyer
should
keep
abreast
of
changes

in
the
law
and
its
practice,
including
the

benefits
and
risks
associated
with
relevant

technology,
engage
in
continuing
study
and

education
and
comply
with
all
continuing
legal

education
requirements
to
which
the
lawyer
is

subject

11

Watch
the
Video
Before
Posting
It
• Attorney
posts
video
on
YouTube,
thinking
it
shows

police
planting
drugs
on
his
client
• In
reality,
the
video
showed
his
client
selling drugs
and

revealed
the
identity
of
a
confidential
source
• Attorney:
the
video
caused
a
“media
storm”
and

“people
who
have
known
me
my
whole
life
don’t
speak

to
me
now”
• Result:
attorney
suspended
for
five
months,
sues
the

ARDC
for
violation
of
his
1st Amendment
free
speech

rights
12
(http://www.abajournal.com/news/article/lawyer_suspended_for_posting_video_of_undercover_drug_buy_in_mistaken_belie/)

Rule
1.3-‐ Duty
of
Diligence
A
lawyer
shall
act
with
reasonable
diligence
and

promptness
in
representing
a
client.
13

Rule
5.1
– Responsibilities
of
Partners
[and]

Supervisory
Lawyers
(a) A
partner
in
a
law
firm,
and
a
lawyer
who
individually
or
together
with
other
lawyers
possesses

comparable
managerial
authority
in
a
law
firm,
shall
make
reasonable
efforts
to
ensure
that
the

firm
has
in
effect
measures
giving
reasonable
assurance that
all
lawyers
in
the
firm
conform
to

the
Rules
of
Professional
Conduct.

(b) A
lawyer
having
direct
supervisory
authority
over
another
lawyer
shall
make
reasonable
efforts
to

ensure
that
the
other
lawyer
conforms to
the
Rules
of
Professional
Conduct.

(c) A
lawyer
shall
be
responsible
for
another
lawyer’s
violation
of
the
Rules
of
Professional
Conduct

if:
(1) the
lawyer
orders
or,
with
knowledge
of
the
specific
conduct,
ratifies
the
conduct
involved;
or
(2) the
lawyer
is
a
partner
or
has
comparable
managerial
authority
in
the
law
firm
in
which
the
other
lawyer

practices,
or
has
direct
supervisory
authority
over
the
other
lawyer,
and
knows
of
the
conduct
at
a
time

when
its
consequences
can
be
avoided
or
mitigated
but
fails
to
take
reasonable
remedial
action.

Rule
1.1
– Co-‐Counsel
Arrangements
• Retaining
Or
Contracting
With
Other
Lawyers
• [6]
Before
a
lawyer
retains
or
contracts
with
other
lawyers
outside
the
lawyer’s
own
firm
to
provide

or
assist
in
the
provision
of
legal
services
to
a
client,
the
lawyer
should
ordinarily
obtain
informed

consent
from
the
client
and
must
reasonably
believe
that
the
other
lawyers’
services
will
contribute

to
the
competent
and
ethical
representation
of
the
client.
See
also
Rules
1.2(e)
and
Comment
[15],

1.4,
1.5(e),
1.6,
and
5.5(a).
The
reasonableness
of
the
decision
to
retain
or
contract
with
other

lawyers
outside
the
lawyer’s
own
firm
will
depend
upon
the
circumstances,
including
the

education,
experience
and
reputation
of
the
nonfirm
lawyers;
the
nature
of
the
services
assigned
to

the
nonfirm
lawyers;
and
the
legal
protections,
professional
conduct
rules,
and
ethical

environments
of
the
jurisdictions
in
which
the
services
will
be
performed,
particularly
relating
to

confidential
information.
• [7]
When
lawyers
from
more
than
one
law
firm
are
providing
legal
services
to
the
client
on
a

particular
matter,
the
lawyers
ordinarily
should
consult
with
each
other
and
the
client
about
the

scope
of
their
respective
representations and
the
allocation
of
responsibility
among
them.
See
Rule

1.2.
When
making
allocations
of
responsibility
in
a
matter
pending
before
a
tribunal,
lawyers
and

parties
may
have
additional
obligations
that
are
a
matter
of
law
beyond
the
scope
of
these
Rules.
15

Rule
5.3
– Supervising
Non-‐Lawyers
With
respect
to
a
nonlawyer
employed
or
retained
by
or
associated
with
a
lawyer:
(a)
a
partner,
and
a
lawyer
who
individually
or
together
with
other
lawyers
possesses

comparable
managerial
authority
in
a
law
firm
shall
make
reasonable
efforts
to
ensure
that
the

firm
has
in
effect
measures
giving
reasonable
assurance
that
the
person’s
conduct
is
compatible

with
the
professional
obligations
of
the
lawyer;
(b)
a
lawyer
having
direct
supervisory
authority
over
the
nonlawyer
shall
make
reasonable

efforts
to
ensure
that
the
person’s
conduct
is
compatible
with
the
professional
obligations
of
the

lawyer;
and
(c)
a
lawyer
shall
be
responsible
for
conduct
of
such
a
person
that
would
be
a
violation
of

the
Rules
of
Professional
Conduct
if
engaged
in
by
a
lawyer
if:
(1)
the
lawyer
orders
or,
with
the
knowledge
of
the
specific
conduct,
ratifies
the

conduct
involved;
or
2)
the
lawyer
is
a
partner
or
has
comparable
managerial
authority
in
the
law
firm
in

which
the
person
is
employed,
or
has
direct
supervisory
authority
over
the
person,

and
knows
of
the
conduct
at
a
time
when
its
consequences
can
be
avoided
or

mitigated
but
fails
to
take
reasonable
remedial
action.
16

Defamation
• Lawyer
makes
claims
adversary
considers
false
and

defamatory.

• Defamation
– Elements
– False
statement
concerning
plaintiff
by
defendant
– Unprivileged
publication
of
statement
to
third
party
– Damages
to
plaintiff
18

Fraud
Claim
against
Lawyer
for
Lawyer’s
own
conduct
Claim
against
Lawyer
for
client’s
conduct
19

Elements
of
Fraud
(1) a
false
statement
of
material
fact;

(2) the
defendant's
knowledge
that
the
statement
was

false;

(3) the
defendant's
intent
that
the
statement
induce

the
plaintiff
to
act;

(4) the
plaintiff's
reliance
on
the
statement;
and
(5) the
plaintiff's
damages
resulting
from
reliance
on

the
statement

Rule
1.6(b)-‐(c)
– Disclosing
Client
Fraud
(b)
A
lawyer
may
reveal
information
relating
to
the
representation
of
a
client
to
the

extent
the
lawyer
reasonably
believes
necessary:

(1) to
prevent
the
client
from
committing
a
crime
in
circumstances
other
than
those

specified
in
paragraph
(c);

(2) to
prevent
the
client
from
committing
fraud
that
is
reasonably
certain
to
result
in

substantial
injury
to
the
financial
interests
or
property
of
another
and
in

furtherance
of
which
the
client
has
used
or
is
using
the
lawyer’s
services;

(3) to
prevent,
mitigate
or
rectify
substantial
injury
to
the
financial
interests
or

property
of
another
that
is
reasonably
certain
to
result
or
has
resulted
from
the

client’s
commission
of
a
crime
or
fraud
in
furtherance
of
which
the
client
has

used
the
lawyer’s
services;

.
.
.

(c)
A
lawyer
shall
reveal
information
relating
to
the
representation
of
a
client
to
the

extent
the
lawyer
reasonably
believes
necessary
to
prevent
reasonably
certain
death

or
substantial
bodily
harm.
21

Malicious
Prosecution
(1) the
commencement
or
continuance
of
an
original

criminal
or
civil
judicial
proceeding
by
the
defendant;

(2) the
termination
of
the
proceeding
in
favor
of
the

plaintiff;

(3) the
absence
of
probable
cause
for
such
proceeding;

(4)
malice;
and

(5)
damages.
22

Abuse
of
Process
(1)
the
existence
of
an
ulterior
purpose
or

motive
and

(2)
some
act
in
the
use
of
legal
process
not

proper
in
the
regular
prosecution
of
the

proceedings.
23

“Litigation
Privilege”
• Affirmative
defense
protecting
lawyers
from

being
sued
for
defamation
due
to
litigation-‐
related
conduct
• Applies
to
statements
related
to
a
judicial

proceeding
that
refer
to
the
matters
being

litigated
24

Waffle
House
Litigation

Problems
from
Past
Clients
26

Duty
of
Confidentiality
• Often
arise
when
an
attorney
violates
the
duty

to
protect
client
confidences
even
after
the

representation
ends
27

Rule
1.9(c)
A
lawyer
who
has
formerly
represented
a
client
in
a

matter
or
whose
present
or
former
firm
has
formerly

represented
a
client
in
a
matter
shall
not
thereafter:
(1) use
information
relating
to
the
representation
to
the

disadvantage
of
the
former
client
except
as
these
Rules

would
permit
or
require
with
respect
to
a
client,
or
when

the
information
has
become
generally
known;
or
(2) reveal
information
relating
to
the
representation
except

as
these
Rules
would
permit
or
require
with
respect
to
a

client.

Conflicts
from
Past
Representations
–
Rule
1.9(a)
and
(b)
(a) A
lawyer
who
has
formerly
represented
a
client
in
a
matter
shall

not
thereafter
represent
another
person
in
the
same
or
a

substantially
related
matter
in
which
that
person’s
interests
are

materially
adverse
to
the
interests
of
the
former
client
unless
the

former
client
gives
informed
consent.

(b) A
lawyer
shall
not
knowingly
represent
a
person
in
the
same
or
a

substantially
related
matter
in
which
a
firm
with
which
the
lawyer

formerly
was
associated
had
previously
represented
a
client
(1)

whose
interests
are
materially
adverse
to
that
person;
and(2)

about
whom
the
lawyer
had
acquired
information
protected
by

Rules
1.6
and
1.9(c)
that
is
material
to
the
matter;
unless
the

former
client
gives
informed
consent.

Ethical
and
Other
Obligations
• "The
departing
lawyer
must
also
consider
legal

obligations
other
than
ethics
rules
that
apply
to

[his/her]
conduct
when
changing
firms,
as
well
as
.
.
.

fiduciary
duties
owed
the
former
firm.
The
law
of

agency,
partnership,
property,
contracts,
and
unfair

competition
impose
obligations
that
are
not

addressed
directly
by
the
Model
Rule
.
.
.
" ABA

Formal
Opinion
99-‐414
31

Basic
Principles
for
Laterals
• Partners
owe
fiduciary
duties
to
other
partners
• Lawyer
employees
may
owe
fiduciary
duties
to
firm
• Courts
will
(almost)
always
look
out
for
clients
32

Translation
of
Principles
to
Action
• Notify
partners
first
• Then
notify
clients
– Clients
chose
who
represents
them
– now
and
in

the
future
– Lawyers
do
not
"own" clients
• Withdraw
from
matters
remaining
behind
33

The
Former
Firm
Should
NOT
.
.
.

• Withhold
client
files
• Misrepresent
the
lawyer's
current
association
• Hide
the
lawyer's
new
association
• Prevent
clients
from
learning
of
the
departure
34

Departing
Lawyers
Should
NOT .
.
.

• Seek
work
for
the
new
firm
before
notifying

the
old
firm
• Remove
client
files
from
the
old
firm
• Advise
clients
not
to
pay
former
firm's
bills
• Compete
by
comparing
confidential

information
from
the
former
firm
(rates,
etc.)
• Malign
the
former
firm
35

Insured
for
Prior
Work?
• Generally
policy
covers
legal
services
provided

by
"insured"
– Work
done
at
firm
– By
people
at
firm
or
associated
with
firm
• Services
at
prior
firm
typically
not
covered
– Right
to
indemnification
under
corporate
law
– "Tail" policies
36

Beware
Conflicts
• Krutzfeldt
Ranch
v.
Pinnacle
Bank (Mt.
2012)

– Lawyer
advised
plaintiff
on
tax
consequences
of
proposed

settlement
– Lawyer
billed
plaintiff
$2375
– Lawyer
joined
firm
representing
defendant
– Firm
was
disqualified
for
conflict
37

Lateral
Moves
and
Conflicts
Law
Firm
#2Law
Firm
#2
What
conflicts
do
laterals
bring
to

Firm
#2?

And
remove
from
Firm
#1?
Law
Firm
#1Law
Firm
#1
Moving
Lawyers

Ordinary
Imputation
Within
Firm
– Rule
1.10

(Imputing
1.7
and
1.9)
Conflicted
LawyerColleague ColleagueColleague Colleague

Imputation
of
Concurrent
Conflicts
Within

Firm
• Rule
1.10
– While
associated
in
a
firm,
no
lawyer

shall
knowingly
represent
a
client
when
any
one
of

them
practicing
alone
would
be
prohibited
from

doing
so
by
Rules
1.7
or
1.9
– Unless
prohibition
is
based
on
a
personal
interest
of
the

prohibited
lawyer
and
does
not
present
a
significant
risk
of

materially
limiting
the
representation
• This
disqualification
may
be
waived
under
conditions

set
in
Rule
1.7

Two
(Separate
Firms)
Law
Firm
#1 Law
Firm
#2Law
Firm
#2
No
imputation.

Lateral
Moves
– Part
I
(Receiving
Firm)
Law
Firm
#2Law
Firm
#2
What
conflicts
do
laterals
bring
to

Firm
#2?

And
remove
from
Firm
#1?
Law
Firm
#1Law
Firm
#1
Moving
Lawyers

Scenario
• Lawyer
is
at
Law
Firm
#1
while
Law
Firm
#1

represented
Client
• Lawyer
moves
to
Law
Firm
#2
• If
there
was
a
conflict
for
Firm
#1,
would

Lawyer's
movement
bring
the
conflict
to
Firm

#2

What
Is/Was
Lateral's
Relationship
With
Client's
Work?
Lawyer's
Relationship

with
Client
Work
at

Firm
#1
Applicable
Rule Impact
on
Firm
#2
Client
work
comes
with

Lawyer
Rule
1.7 Conflict
transfers
to
Firm

#2
Lawyer
did
work,
but

work
stays
Rule
1.9(a) Conflict
if
"substantially

related"
Lawyer
did
no
work,
but

had
access
to

information
Rule
1.9(b) Conflict
if
information
is

material
Lawyer
did
no
work,
had

no
access
to

information
Rule
1.9
general No
transfer
of
conflict

Screening
for
Lateral
Hires
• Rule
1.10 (e)
When
a
lawyer
becomes
associated
with
a
firm,
no

lawyer
associated
in
the
firm
shall
knowingly
represent
a
person
in
a

matter
in
which
that
lawyer
is
disqualified
under
Rule
1.9
unless
the

personally
disqualified
lawyer
is
timely
screened
from
any

participation
in
the
matter
and
is
apportioned
no
part
of
the
fee

therefrom.

Imputation
Without
Screen
Conflicted
LawyerColleague ColleagueColleague Colleague

No
Imputation
With
Screen
Conflicted
LawyerColleague Colleague
Ethical
Screen Ethical
Screen

Lateral
Move
With
Screen
Law
Firm
#2
Screen
to
prevent
imputation
in
new
firm.
Law
Firm
#1Law
Firm
#1
Moving
Lawyers

Components
of
Rule
1.10(e)
• Screen
only
for
Rule
1.9(a)
or
(b)
conflicts
arising
from
prior

firm
• Screen
must
prevent
– Participation
in
matter
– Receipt
of
fees
from
matter

Lateral
Moves
– Part
II
(Departed
Firm)
Law
Firm
#2Law
Firm
#2
What
conflicts
do
laterals
leave

at/remove
from
Firm
#1?
Law
Firm
#1Law
Firm
#1 Law
Firm
#2
Moving
Lawyers

What
Is
Old
Firm's
On-‐Going

Relationship
With
Client's
Work?
Firm
#1's
Relationship
to

Client
Work
Applicable
Rule Impact
on
Firm
#2
Work
for
Client
remains

at
firm
Rule
1.7 Conflict
remains
at
Firm

#1
All
work
for
Client

leaves

firm
– but

information
remains
1.10(b) Firm
can
handle
adverse

matter
unless
matter

is
substantially

related
and

information
is

material
All
work

for
and

information
about

Client

leaves
firm
1.10(b) Firm
can
handle
adverse

matter

Non-‐Competes
Prohibited
Rule
5.6.
A
lawyer
shall
not
participate
in
offering
or
making:
(a)
a
partnership,
shareholders,
operating,
employment,
or

other
similar
type
of
agreement
that
restricts
the
right
of
a

lawyer
to
practice
after
termination
of
the
relationship,
except

an
agreement
concerning
benefits
upon
retirement;
or
(b)
an
agreement
in
which
a
restriction
on
the
lawyer's
right

to
practice
is
part
of
the
settlement
of
a
client
controversy.
54

Beware
the
“Failing
Firm"
• Lawyer
departures
may
trigger
a
default
on
a

firm's
line
of
credit
• Firms
that
inherit
lawyers
from
failing
firms

may
face
Jewel
v.
Boxer
(Cal.
App.
1984)
claims
55

Managing Risk
from
Failing
Firms
• Partnership
agreement
– Clear
dissolution
provision
– Jewel
v.
Boxer
waiver
– Handling
of
work
in
progress
• Personal
guarantees
• Tail
insurance
56

Hess
v. Bresney (7th Cir. May
4,
2015)
• Hess
was
terminated
from
K&A
• Hess sued
for
fees
for
cases
where
he
“did
all

the
work”
before
his
termination
– Employment
agreement included
bonuses
based

upon
fees
generated
• Potential ambiguity
– “generated”
versus

“received”
57

Business with
Clients
– Rule
1.8(a)
A
lawyer
shall
not
enter
into
a
business
transaction
with
a
client
or
knowingly

acquire
an
ownership,
possessory,
security
or
other
pecuniary
interest

adverse
to
a
client
unless:
(1) the
transaction
and
terms
on
which
the
lawyer
acquires
the
interest
are

fair
and
reasonable
to
the
client
and
are
fully
disclosed
and
transmitted

in
writing
in
a
manner
that
can
be
reasonably
understood
by
the
client
(2) the
client
is
informed
in
writing
that
the
client
may
seek
the
advice
of

independent
legal
counsel
on
the
transaction,
and
is
given
a
reasonable

opportunity
to
do
so;
and
(3) the
client
gives
informed
consent,
in
a
writing
signed
by
the
client,
to
the

essential
terms
of
the
transaction
and
the
lawyer’s
role
in
the

transaction,
including
whether
the
lawyer
is
representing
the
client
in

the
transaction.

Requirements
of
Rule
1.8(a)
• The
terms
of
the
transaction
must
be
fair
and
reasonable
to
the
client;
• The
terms
must
be
fully
disclosed
in
a
writing
transmitted
to
and

reasonably
understood
by
the
client;
• The
client
must
be
advised
in
writing
of
the
desirability
of
seeking

independent
legal
advice,
and
must
be
given
reasonable
opportunity
to

obtain
such
advice;
and
• The
client
must
give
informed
consent
by
signing
a
document
that
sets

forth
the
essential
terms
of
the
transaction;
and
• The
document
memorializing
the
transaction
must
indicate
whether
the

lawyer
is
representing
the
client
in
the
transaction,
or
not.
60

Key
Email
Mistakes
Common
ethics
issues
related
to
use
of
email
include:
• Using
an
unsecured
server
or
email
system
• Inadvertently
sending
email
containing
confidential

information
to
the
wrong
recipient
62

Rule
1.6(e)
– Protecting
Client

Information
• A
lawyer
shall
make
reasonable
efforts
to

prevent
the
inadvertent
or
unauthorized

disclosure of,
or
unauthorized
access to,

information
relating
to
the
representation
of
a

client.
63

Rule
1.6(e)
– Protecting
Client

Information
• A
lawyer
shall
make
reasonable
efforts
to

prevent
the
inadvertent
or
unauthorized

disclosure of,
or
unauthorized
access to,

information
relating
to
the
representation
of
a

client.
64

What
Are
"Reasonable"
Precautions
65

Evaluation
of
Safeguards
• Factors
to
be
considered
in
determining
the
reasonableness

of
the
lawyer’s
efforts
include,
but
are
not
limited
to,

– the
sensitivity
of
the
information
– the
likelihood
of
disclosure
if
additional
safeguards
are
not

employed
– the
cost
of
employing
additional
safeguards
– the
difficulty
of
implementing
the
safeguards (and)

– the
extent
to
which
the
safeguards
adversely
affect
the
lawyer’s

ability
to
represent
clients
(e.g.,
by
making
a
device
or

important
piece
of
software
excessively
difficult
to
use)
66

Two
Additional
Caveats
• A
client
may
require
the
lawyer
to
implement
special
security

measures
not
required
by
this
Rule
or
may
give
informed

consent
to
forgo
security
measures
that
would
otherwise
be

required
by
this
Rule.

• Whether
a
lawyer
may
be
required
to
take
additional
steps
to

safeguard
a
client’s
information
in
order
to
comply
with
other

law,
such
as
state
and
federal
laws
that
govern
data
privacy
or

that
impose
notification
requirements
upon
the
loss
of,
or

unauthorized
access
to,
electronic
information,
is
beyond
the

scope
of
these
Rules.

67

In
re
Eisenstein (Mo.
4/5/2016)
• Eisenstein
represented
Husband
in
divorce
• Husband
accessed
Wife’s
email
without
permission,
and
gave

Eisenstein
documents
including
questions
Wife’s
attorney
had

prepared
for
direct
examination
• Eisenstein
did
not
produce
the
documents
received
from

Wife’s
email,
until
giving
them
to
opposing
counsel
as
exhibits

during
trial
69

Consequences
in
Eisenstein
• Eisenstein
was
found
to
have
used
improperly

obtained
information
(violating
Rule
4-‐4.4)

and
concealing
documents
with
evidentiary

value
(violating
Rule
4-‐3.4)
• Eisenstein
received
an
indefinite
(minimum
6

month)
suspension
70

Commingling
or
Mismanaging
Funds

Trust
Accounting
Violations
• Improper
or
inadequate
paperwork
• Commingling
lawyer’s
funds
with
client
funds

or
funds
belonging
to
a
third
party
• Misappropriation
72

Rule
1.15
A
lawyer
shall
hold
property
of
clients
or
third
persons
that
is
in
a
lawyer’s
possession
in

connection
with
a
representation
separate from
the
lawyer’s
own
property.

Funds
shall
be
deposited
in
one
or
more
separate
and
identifiable
interest-‐ or
dividend-‐bearing

client
trust
accounts
maintained
at
an
eligible
financial
institution
in
the
state
where
the
lawyer’s

office
is
situated,
or
elsewhere
with
the
informed
consent
of
the
client
or
third
person.

For
the
purposes
of
this
Rule,
a
client
trust
account
means
an
IOLTA
account
as
defined
in

paragraph
(i)(2)
(j)(2),
or
a
separate,
interest-‐bearing
non-‐IOLTA
client
trust
account
established

to
hold
the
funds
of
a
client
or
third
person
as
provided
in
paragraph
(f).

Funds
of
clients
or
third
persons
shall
not
be
deposited
in
a
non-‐interest-‐bearing
or
non-‐dividend-‐
bearing
account.

Other,
tangible
property
shall
be
identified
as
such
and
appropriately
safeguarded.
Complete

records of
client
trust
account
funds
and
other
property
shall
be
kept
by
the
lawyer
and
shall
be

preserved
for
a
period
of
seven
years
after
termination
of
the
representation.
73

Retainers
• Retainers
– Type
-‐-‐ “true”
or
“security”
or
“advance

payment”?
– How
much?
– Where
do
you
deposit
them?
• Where
should
a
lawyer
put
an
advanced

payment
of
a
fixed
fee?
74

Basic
Rule
on
Handling
Funds
Paid
for

Legal
Services
WorkPayment Payment
Trust
Account
Operating
Account
75

Three
Exceptions
in
Illinois
• Funds
received
as
a
fixed
fee,
a
general

retainer,
or
an
advance
payment
retainer
shall

be
deposited
in
the
lawyer's
general
account

or
other
account
belonging
to
the
lawyer.

• Fixed
fee
– set
payment
for
work
– Note:
Missouri

requires opposite
treatment
• "General
retainer" – for
availability of
the
lawyer
• "Advance
payment
retainer"
76

Advance
Payment
Retainer
• An
advance
payment
retainer
may
be
used
only
when
necessary
to
accomplish
some

purpose
for
the
client
that
cannot
be
accomplished
by
using
a
security
retainer.

• An
agreement
for
an
advance
payment
retainer
shall
be
in
a
writing
signed
by
the
client

that
uses
the
term
"advance
payment
retainer"
to
describe
the
retainer,
and
states
the

following:
(1) the
special
purpose
for
the
advance
payment
retainer
and
an
explanation
why
it
is

advantageous
to
the
client;
(2) that
the
retainer
will
not
be
held
in
a
client
trust
account,
that
it
will
become
the
property
of

the
lawyer
upon
payment,
and
that
it
will
be
deposited
in
the
lawyer's
general
account;
(3) the
manner
in
which
the
retainer
will
be
applied
for
services
rendered
and
expenses
incurred;
(4) that
any
portion
of
the
retainer
that
is
not
earned
or
required
for
expenses
will
be
refunded
to

the
client;
(5) that
the
client
has
the
option
to
employ
a
security
retainer,
provided,
however,
that
if
the

lawyer
is
unwilling
to
represent
the
client
without
receiving
an
advance
payment
retainer,
the

agreement
must
so
state
and
provide
the
lawyer's
reasons
for
that
condition.
77

Dealing
with
Mistakes
If
you’ve
made
a
real
mistake:
(1) confirm
that
you
really
did
make
the
mistake
(2) Enlist
the
help
of
another
lawyer,
such
as
a
mentor
or

trusted
senior
lawyer.

Ethics/risk
management
counsel
and/or
the
supervising

attorney
may
need
to
be
notified
(3) Attempt
to
formulate
a
solution
(4) Notify
client
of
the
problem
if
client
is
materially
affected
78

Dealing
with
Potential
Malpractice
• Ordinarily
a
lawyer
must
notify
his/her
insurer

in
writing
of
a
potential
malpractice
claim
• An
insurer
may
provide
additional
resources

to
mitigate
or
avoid
a
claim
• Admitting
liability
or
settling
may
waive

coverage
of
a
claim
• A
potential
malpractice
claim
may
impact
the

underlying
representation
in
a
number
of

ways
79

Responding
to
Sanctions
Motion
• Before
submitting
a
response,
ask
an

uninvolved
lawyer
to
review
it
• Avoid
attacking
the
accuser
as
a
means
of

defense
• Consider
notifying
your
professional
liability

insurer
• Do
NOT
ignore
a
motion
for
sanctions
or
a

disciplinary
complaint
80

11
Tips
for
Responding
to
an
Ethics

Complaint
• Take
a
breath

• Consider
notifying
your
insurer
• Consider
retaining
counsel
• Review
the
file
81

11
Tips
for
Responding
to
an
Ethics

Complaint
• Review
the
law
• Prepare
a
careful
response
• Provide
details
• Be
succinct
82

11
Tips
for
Responding
to
an
Ethics

Complaint
• Provide
proof
• Be
professional
• Be
honest
83

Risk
Management
and
Mistakes

Dealing
with
Mistakes
• Confirm
you
made
the
mistake
(quickly)
• Enlist
help
from
another
lawyer
– Re-‐confirm
presence
of
mistake

– Who
• Mentor
• Ethics/risk
management
counsel
• Supervising
attorney
• Client-‐relationship
attorney
• Practice
group
leader
• Insurer
85

More
on
Addressing
Mistakes
• Formulate
possible
solution
• Discuss
issue
with
client
(as
appropriate)
– Fiduciary
obligation/Rule
1.4
– Avoid
admitting
liability
• Attempt
to
resolve
problem
• Rule
5.2
issues
86

Professional
Liability
Insurance
• "Claims
made" policies
– when
claim
is
made,
not

when
malpractice
occurs
– "Claim" is
very
broad
• Demand
letter
• Lawsuit
– "Pre-‐claim" coverage
varies
greatly
by
policy
• MO
Bar
Plan
-‐-‐ $5000
for
disciplinary
work
• Many
policies
$0
• Some
policies
$25,000
or
more
87

"Claims"-‐Made
Policies
• If
you
leave
your
firm
(coverage
source),
you
may

lose
coverage
for
subsequent
claims
• A
"tail" policy
may
be
available
88
Work

Done
Policy
A Policy
B Policy
C
Demand
letter

received
Settlement/

Judgment
Paid
X X X

How
Much
Coverage?
• "Self-‐insured
retention" (deductible)
• "Burning”
or
“wasting”
policy
– coverage
limit

is
for
defense
and resolution
89

Cost
of
Insurance
• Cost
– solos
sometimes
spend
$60-‐100
per

month,
while
large
firms
may
spend
$500
per

month
• Variables
– coverage,
practice,
claims
history
90

Ethics
Rules
and
Insurance
• Oregon
requires
LPL
insurance
• Many
states
require
disclosure
of
whether
a
lawyer

has
insurance
– Sometimes
to
clients
– Sometimes
to
bar
regulator
91

Michael
Downey
Downey
Law
Group
LLC
(314)
961-‐6644
(844)
961-‐6644
toll
free
mdowney@DowneyLawGroup.com

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