Fall 2007 issue of Horizons

knowledge. commitment. value. CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

Client Rejection Client rejection can be both a risk management tool and a potential malpractice risk. Firms should use non- engagement letters when needed to state the lack of the attorney-client relationship, warn an individual of immediate actions that may be needed due to statutes or limitations, or even to direct an individual to obtain another lawyer’s opinion in a timely fashion. Keys to managing risks associated with client rejection include: Client Representation Administrative errors are common reasons for malpractice claims. Procedures should be in place to minimize these errors. • Avoid missing deadlines by maintaining a centralized control system that protects the firm from missed dates and deadlines. This type of calendar system enables a firm to utilize a form of checks and balances and provides added protection against lost data and overlooked deadlines. • Client funds (retainers, cost advances, etc.) should be handled appropriately. Internal controls should be in place to help protect the firm from potential fraud. • Maintain consistent and clear communication with clients. When providing services, be sure to discuss all possible outcomes with the client and confirm the client’s decisions. • Relay all important and relevant information in writing to ensure the client is up-to-date on the status of his or her particular case. • Document all matters relevant to the client’s case. Items that should be documented include correspondence and meeting notes, phone conversations and other pertinent facts. • File all documents accurately in an organized filing system for easy access. It is vital to create a backup system, especially for computers, to make certain no files or data are lost. • Use disengagement letters when an engagement has been terminated and services will no longer be provided. Clearly indicate that the firm’s responsibilities have been fulfilled.

• Ensure that lawyers are participating in continuing education to keep up with changes in state and federal laws, new techniques and court decisions. Firm Communication Topmanagementmust communicate theriskmanagement process to all lawyers and employees of the firm. Firm management should establish procedures that are embedded in the firm’s culture to continuously practice good risk management. Firms will be successful in the long run if they manage their risk by detecting potential claims before they occur. Conclusion In order to avoid malpractice claims, a firm needs to be knowledgeable as to why such claims arise and establish effective and proactive risk management procedures to avoid such claims. These procedures should analyze malpractice risks from client acceptance to client termination. Any risk management program that is adopted should be carefully communicated to all members of the firm so it becomes a part of the firm’s culture.

Questions? Contact Don Esstman, CPA Partner-in-Charge, Law Firms Services Group 314-290-3384 don.esstman@rubinbrown.com

The key to avoiding malpractice losses is to establish proactive risk management procedures.

34 u winter 2007 issue