All professions that rely on relationships carry a certain risk of facing malpractice claims. Whether it’s medical practitioners, brokers, accountants, or lawyers, clients expect a certain level of service. And when they feel that their expectations haven’t been met, it’s not uncommon for them to file malpractice claims.
Even a small mistake from a lawyer can be enough to motivate a client to file a legal malpractice claim. According to the Insurance Journal, the top practice areas that receive the most legal malpractice claims are business transactions, corporate and securities, real estate, and trusts and estates. Personal injury attorneys closely follow.
Clients can become dissatisfied if the outcome of their case doesn’t meet their expectations. If they lose a case in court or believe they could have received a higher settlement, they often blame the lawyer they hired.
However, it’s essential to understand that the legal landscape is complex, and lawyers can make genuine mistakes that could lead to a client-filed claim against them.
Common Professional Errors that Lead to Legal Malpractice Claims
Several common legal risks can lead to malpractice claims. These include administrative errors, missing critical dates, lack of knowledge in practice areas, failure to communicate effectively, misuse of client finances, failure to follow instructions, and inadequate investigation.
When clients sue for malpractice, they aim to recover what they allegedly lost due to the lawyer’s actions. Most claims are resolved through four scenarios: the plaintiff drops the charges, the case is settled, the case is dismissed due to administrative errors, or the case goes to trial.
It’s important to note that settlements can be reached at any point, even if the case is already in court. In such cases, the lawyer being sued would need to pay the agreed settlement amount and their attorney’s fees.
Ideally, lawyers hope for the charges to be dropped or dismissed, as this minimizes the impact on their reputation and future insurance costs. However, when deciding whether to settle or go to trial, lawyers should carefully analyze their options.
Going to Trial vs. Settling: Weighing the Pros and Cons
No matter how experienced an attorney is, facing a malpractice claim is never enjoyable. A surge in legal malpractice claims often occurs after an economic downturn, as is expected in the aftermath of the global COVID-19 crisis.
When a legal malpractice claim arises, the first step is to notify your insurer and seek their guidance on the best course of action. Deciding whether to settle or go to court is not an easy task. Let’s explore the pros and cons of both scenarios.
Going to Trial
As a lawyer, you understand the implications of taking a claim to court. Each case is unique, and thorough analysis is necessary before making a final decision. Here are some pros of going to trial:
- You have confidence in your actions and believe you can prove your innocence.
- Trials are public, so a favorable outcome can result in positive publicity.
However, trials also carry risks:
- Trials can be lengthy, leading to significant financial costs.
- If the jury rules in favor of the plaintiff, the financial consequences can be substantial.
- Losing a trial can damage your reputation.
Settling a claim out of court can provide benefits for both parties. Some lawyers choose to settle regardless of culpability, as the cost of a settlement may be lower than the expense of going to court. Here are the advantages of settling:
- Settling is much faster than going through a trial and waiting for a verdict.
- You retain control over the outcome of the claim.
- Settling does not require admitting guilt.
- Settlements are usually less expensive than a prolonged legal process.
However, there are downsides to consider:
- The settlement amount may exceed what you would pay if found not guilty.
- Settlements are permanent and cannot be renegotiated.
To make a decision, ask yourself the following questions:
- Is the claim against you valid?
- How much do you risk losing by going to court?
- How would a trial affect your reputation and future practice?
Answer these questions truthfully and provide your insurer with all the necessary information for sound advice. Historical data shows that most legal malpractice claims end in settlement, which is an important factor to consider.
How Legal Malpractice Settlements Work
Like any other case, a legal malpractice settlement is reached when both parties agree on the settlement amount. This agreement can occur even if the claim is already in court, should both sides decide to settle without a trial.
Settlements are formal agreements that outline the negotiated terms and conditions. In some cases involving a third party partially responsible for the damages, your insurer may initiate subrogation to reclaim some of the settlement money.
If necessary, the settlement agreement can include provisions for confidentiality.
Not having legal professional liability insurance can pose serious problems when covering settlement costs. In such cases, negotiating a structured settlement and paying the amount in installments may be an option. However, it’s always advisable to be prepared for malpractice claims by having a comprehensive insurance policy in place.
In some lawsuits, payments may extend beyond a lump sum, particularly in cases involving injuries to children. Additional payments can be agreed upon, often on a fixed schedule over the following years. In such cases, a court may intervene to ensure the adequacy of the settlement amount.
Further Considerations When Handling Legal Malpractice Claims
There’s a famous saying: “If you are your own lawyer, you have a fool for a client.” Hiring a lawyer to handle your case is generally the best course of action. Representing yourself may only be beneficial if the outcome is nearly certain, such as a motion to dismiss.
Objectivity is challenging when being sued by a former client. Lawyers usually take pride in their detached, impartial view, allowing them to see the bigger picture. But when they become the defendants, objectivity can be lost.
Additionally, most lawyers are not litigators, so defending themselves in a malpractice claim is not advisable. Having professional liability insurance is beneficial, as insurers can provide legal representation.
To achieve the best outcome, act like a model client. Be candid with your legal representation and offer your opinion when appropriate. However, avoid interfering excessively with your lawyer’s strategy.
If you still choose to represent yourself, consulting with an experienced lawyer can offer fresh perspectives and expert opinions.
Lastly, having a legal malpractice insurance policy is crucial. If you need to purchase or renew your policy, reach out to our expert brokers from Garrity Traina or visit our website for a legal professional liability insurance quote.
Garrity Traina: Experts in Legal Malpractice Insurance