The financial costs of a malpractice claim can be enormous—often enough to derail a solo or small firm practice permanently.
The problem is that the costs resulting from a claim can be complex and multifaceted, often compounding as they go on. These costs can include legal defense fees, settlement or judgment on the substantive claim, and higher malpractice insurance rates going forward. A malpractice claim also requires the lawyer affected to take time and energy away from representing clients and earning fees, further impacting the finances of their practice.
A malpractice claim may also be accompanied by an ethics claim, which requires more legal fees to fight, and may result in a sanction of suspension or even disbarment.
On top of everything, the stress of defending a claim is unquantifiable, even if the lawyer is ultimately vindicated.
Given the steep price lawyers pay when a claim is brought, all lawyers should take steps to avoid the risk of malpractice.
But, what if, despite all the precautions you take, a claim is filed against you anyway? How do you mitigate the consequences of a claim regardless of the outcome?
What to do with a malpractice claim
When the unthinkable happens, managing all potential outcomes of a claim becomes a top priority. You should know what precautions to take when dealing with a claim, how and where to get support, and how to handle the situation that initially sparked the claim in the first place.
Here are six steps to take in the event of a malpractice claim.
1. Notify your malpractice carrier immediately
Notify your malpractice carrier as soon as you realize that a claim may be on the horizon. This could be when you recognize that you made a mistake, or it may be when you get a letter from the client accusing you of a mistake you did not make.
It doesn’t matter whether you believe the claim is viable or not; if a client may bring a claim, notify your carrier. Insurance companies can deny coverage for a claim that you failed to report in a timely fashion.
2. Seek counsel
Your carrier may refer you to counsel, or you may already know who to call. Either way, consult someone who is knowledgeable about defending malpractice claims, and listen to their advice. This can be an emotional time, and you may be too defensive to view the case dispassionately.
3. Mitigate the damage
Take whatever steps you can to mitigate the damage of your mistake (or the perceived mistake).
This does not mean you should capitulate to every unreasonable client demand. Some clients will demand full refunds at the outset. In theory this may mitigate the entirety of the damage, but agreeing to full refunds to every disgruntled client may lead you unnecessarily to bankruptcy.
What mitigation does mean is that you should see what you can do to keep the client from being harmed—or harmed further.
4. If you are still engaged in the representation, withdraw
If you are at a stage in a matter where you need court permission to withdraw, explain to your client that you are going to seek leave of court if they do not substitute you out immediately.
A client who is bringing a malpractice claim probably does not want you representing them as it is, but pursue this to complete withdrawal to make sure you have no ongoing duties to the client as you seek to defend yourself.
At the same time, provide the client with their file, and make sure their receipt of the file is well-documented.
5. Cease direct communication with the client
Once you’ve withdrawn your representation and provided the client with your file, stop direct communication with the client. Get counsel involved instead.
6. Analyze what went wrong
How did this situation get to the point of a malpractice claim? What safeguards can you put in place to make sure this situation is not repeated?
Address problems before they cause harm
Managing outcomes in the event of a malpractice claim is best done before problems arise. Implementing the proper systems and ensuring all your staff are trained on all your firm’s operations is key. Read How to Minimize Risk and Prevent Client Claims to learn more about how to prevent risk of malpractice claims before they happen.
Read How to Minimize Risk and Prevent Client Claims
About Megan Zavieh
Megan Zavieh is a runner, Spartan racer, mother of four school-age Montessori children, and a legal ethics attorney focusing primarily on California State Bar defense. She passionately believes that none of her colleagues should face the State Bar alone, so she represents attorneys and provides consulting assistance to lawyers representing themselves in ethics investigations. Megan built her broad range of litigation experience through a federal clerkship in New York and employment at three New York area law firms. In 2010 she launched her own practice focusing on California State Bar defense.
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