COVID-19 has presented many new challenges to law firms, from shelter-in-place orders to temporary closures to a remote workforce. In a challenging business environment where circumstances are continuously changing, law firms must remember the fiduciary duties owed to clients and their ethical duties as defined by their jurisdiction’s rules of professional conduct.
By identifying and responding to the key issues highlighted below, law firms can potentially manage professional liability risks and emerge in a better position to serve their clients and maintain their law practices.
1. Communication with Clients. In these stressful times, clients may expect enhanced reassurance and communication from their lawyers. If law firms temporarily close their physical offices, the closure should be communicated to clients, including any updated contact information. Law firms also should ensure that phone numbers and voicemail messages are routed to the appropriate personnel working remotely, as well as mail and packages sent to the law firm’s office.
2. Remote Work Security. Lawyers always should implement safeguards to prevent unauthorized or inadvertent disclosure of client information, and working remotely may require additional layers of security. Telecommuting can place any company at increased risk of a cyberattack, but recent reports indicate a surge in cybercrimes that specifically target law firms. Because working remotely presents certain cybersecurity risks – e.g. phishing attacks, accessing/sending information through unsecure Wi-Fi networks, and using unsecured personal devices – it’s important to follow stringent security guidelines and review data breach response plans to ensure that every practice setting is prepared to respond quickly to any incident.
3. Financial Concerns. The disruption to the business community caused by the pandemic may lead to reduced work and less revenue for many law firms. Some firms may be tempted to sue clients for outstanding fees and legal expenses to boost their accounts receivable during these difficult economic times. Before initiating a fee collection action, however, lawyers should weigh the financial benefits against the risks of any collection action resulting in a complaint of legal malpractice against the law firm. Some lawyers also may be tempted to dabble in practice areas in which they have no experience. Since failure to know the law may lead to claims and disciplinary complaints, however, representations for these matters should be declined until developing the expertise to provide competent representation.
4. Potential Increase in Claims. While the full extent of the economic fallout from the COVID-19 pandemic is not yet known, it is clear that the economy is suffering. Claims of malpractice against lawyers tended torise during a weak economy. In the last recession, which started in 2008 and lasted for a couple of years, virtually all areas of practice experienced an increase in claims. During this pandemic, it is anticipated that the business transactions, real estate, and wills, trusts, and estates areas of practice may be subject to some of the highest percentages of claims.
5. Engagement Agreements. Engagement agreements represent an effective method for minimizing exposure to legal malpractice claims. Every engagement letter should include a well-written “scope of representation” section that clarifies precisely the legal services that the law firm will provide. Any changes to the original scope of representation during the pendency of the case or matter must be memorialized and sent to the client as well through a new engagement letter or an addendum to the original engagement letter. If a law firm provides legal services outside the scope of representation and does not document such a change in writing to the client, it renders the scope of representation null and void and, therefore, expands the potential risk of a claim.
6. Well-Documented Client Files. While the engagement letter records the expectations of both parties at the outset of the representation, other decisions and circumstances should be documented as the representation continues. The lawyer should write any advice provided to a client, especially when the client fails to heed the advice. The facts surrounding key decisions in the representation, such as whether or not to allege a particular charge, must be memorialized in writing. In factual disputes between a lawyer and a client, the lack of a well-documented client file often leads to findings and verdicts adverse to the lawyer.
No one knows exactly what will occur throughout the COVID-19 pandemic, but one probable outcome is an increase in professional liability and other claims against law firms. Following the suggestions in this article may constitute key risk control measures that your law firm may wish to consider during these uncertain and unsettling times.
Disclaimer: The information, examples and suggestions presented in this material have been developed from sources believed to be reliable, but they should not be construed as legal or other professional advice. CNA accepts no responsibility for the accuracy or completeness of this material and recommends the consultation with competent legal counsel and/or other professional advisors before applying this material in any particular factual situations. This material is for illustrative purposes and is not intended to constitute a contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. “CNA" is a registered trademark of CNA Financial Corporation. Certain CNA Financial Corporation subsidiaries use the "CNA" trademark in connection with insurance underwriting and claims activities. Copyright © 2020 CNA. All rights reserved.