Whether you're hanging your own shingle straight out of law school or branching off on your own after years of practice, you'll want to make malpractice prevention a central part of your business plan. After all, legal ethics aren't something you want to pick up through trial and error and if you're starting your own practice, it can be easy to miss some of the malpractice safeguards larger firms have built in.
Thankfully, with a little planning, you can avoid some of the most common malpractice pitfalls facing new attorneys and solo practices.
1. Client Money Is Client Money, Not Your Money
Accounting mistakes and mishandling of client funds are a sure way to end up in ethics trouble. If you can't make your firm's utility payments, it's better to let the lights go out than dip into your clients' funds. After all, it's much easier to pay a late bill than it is to recover from disbarment. And there's simply no way to "borrow" from a client trust account without violating your professional responsibility. Similarly, ethics rules are very clear that attorneys can't comingle client funds.
Make sure you have a clear system to deposit all client funds into separate trust accounts. Institute accounting procedures so you can easily find out what money is where when. Ensure that you never use funds from one client to cover costs not related to their matters.
2. Take Care of Your Calendar
Administrative errors are responsible for almost 30 percent of all malpractice claims. If you're not properly managing your calendar from the get go, it can be easy to get overwhelmed by deadlines, conflicting responsibilities, and simple clerical errors. New firms should set up a strong, centralized calendaring system. It's best to have one person input deadlines and reminders in a centralized calendar, with a second pair of eyes to double check for accuracy.
3. Think Twice About Suing Clients
Is one of your clients refusing to pay their bill? You're a lawyer and know just what to do. Sue 'em! Right?
Probably not. When lawyers sue for unpaid bills, they're almost always met with a malpractice counterclaim. Many quickly drop their suits in order to get rid of the malpractice charges. Consider pursuing alternative channels, like arbitration, instead.
4. Be Careful About Shared Space
Sure, you're not incompetent, but what about the attorney across the hall? If you share office space, but not a practice, you could still get in hot water for another lawyer's errors.
If you do share an office with another solo lawyer or separate practice, avoid confidentiality and conflicts of interest by making sure that client records are kept separate and that shared staff are screened for potential conflicts. Clients should be away that the attorneys in the office aren't in a shared practice, lest you get caught by "partnership by estoppels." Finally, make sure that any referrals you give to office mates don't contradict your jurisdiction's referral rules.
5. Don't Forget the Insurance
Many jurisdictions require legal malpractice insurance, but you should pick some up even if yours does not. Check with your state and local bar associations for malpractice insurers in your area and don't be afraid to shop around. The best type of malpractice insurance for your firm (and its cost) will depend on a variety of factors, including your practice area, your disciplinary record, and your local market. If you're lucky, you'll never need to use it. But if you do, you'll be glad it's there.