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Archive for the ‘California LPL’ Category

Law Firms Under Increased Pressure, Increased Costs for Malpractice Claims

Posted on: October 31st, 2019

By: Gregory L. Blueford

Per a survey conducted by insurance broker Ames & Gough earlier this year, professional liability is becoming more and more expensive with big money payouts. In its 9th annual survey of top 11 professional liability insurance companies, Ames & Gough found that the number of claims resulting in multimillion dollar payouts increased from 2017 to 2018, with the majority stating that they had at least one claim payout of over $150 million and two had settlements which exceed $250 million.

The average cost to defend a malpractice claim, while varied amongst those insurance companies surveyed, increased from 2017 to 2018 for 10 of the 11 insurers surveyed. Two indicated the average cost to defend a claim exceeded $500,000; three stated their average defense costs were between $100,000 and $500,000, and the remaining six insurers all had an average cost between $50,000 – $100,000. 7 of 11 insurers said that the rates they are paying defense counsel to handle professional liability claims have risen from anywhere from 2 – 5%.

Further, conflicts of interest, including perceived conflicts, remain the most common alleged legal malpractice error, with 7 of the 11 insurers surveyed stating conflicts as one of their top two leading causes of legal malpractice claims. The largest number of claims stem from the following four practice areas: Business Transactions (cited by 63 percent of insurers surveyed), Trust and Estates (55 percent), Corporate & Securities (45 percent), and Real Estate (45 percent).

This survey demonstrates the importance of law firms ensuring that their conflict check system is functional and, most of all, practical in identifying potential conflicts, especially for large firms operating with multiple offices. Further, as stated in the survey, many attorneys handling business transaction matters often wander outside their area of expertise, as certain elements may appear quite different as the matter progresses. Thus, it is important for attorneys to make sure they are staying within their defined role for the particular matter they are working on and, if the issues stray outside that role, work with the client to bring in another attorney who has the necessary expertise.

The insurers participating in the Ames & Gough survey were: AXA XL, AXIS, Brit, CNA, Crum & Forster, Huntersure, Liberty, Markel, Sompo, Swiss Re, and Travelers.

You can read more about this survey or request a copy of the survey here.

If you have any questions or would like more information, please contact Greg Blueford at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

California Lawyers Now Have Duties To Clients “Who Got Away”

Posted on: September 24th, 2019

By: Greg Fayard

Under Rule 1.18 of California’s Rules of Professional Conduct, lawyers must now protect the confidences of prospective clients–even if a formal lawyer-client relationship never materializes.

That is, confidential information conveyed by a would-be client to a California lawyer, but where the potential client does not retain the lawyer, must be protected and can impact other matters handled by another lawyer in the firm.

For example, in a law firm that does family law, if Wife consults lawyer A in a divorce case and says she has a secret bank account, but Wife does not retain lawyer A, and Husband then consults lawyer A, lawyer A would need the informed written consent from both Husband and Wife to represent Husband.

Lawyer B in the law firm could represent Husband, but only if lawyer A is screened from Husband’s case and written notice is provided to both Husband and Wife. Consent from Wife is not needed.

This is an example of duties to the prospective client, the Wife—the client “who got away.” Just know that in situations where prospective clients meet with a lawyer, but no official attorney-client relationship results from that meeting, for future matters, sometimes informed written consent is needed, and sometimes notice and screening is needed.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

California Lawyers Now Have A Duty of Diligence

Posted on: September 13th, 2019

By: Greg Fayard

The prior rules of professional conduct for California lawyers required them to be competent but were silent on also being “diligent.” Under the latest version of the rules, California lawyers now have an express duty of diligence. (Rule 1.3) That is, California lawyers can now be disciplined by the State Bar for neglecting or disregarding a matter.

The State Bar, after all, is a consumer protection organization, and its focus is on protecting the public from unscrupulous or incompetent lawyers. It is not a trade association that promotes lawyer interests.

Hence, California lawyers now have a duty “to get the job done”—the new duty of diligence. Lawyers should therefore stay on top of their matters and not let them languish. Doing so could expose the lawyer to a State Bar complaint.

If you have any questions or would like more information, please contact Greg Fayard at gfaya[email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

Does a California Lawyer Have to Convey All Settlement Offers to the Client?

Posted on: July 31st, 2019

By: Greg Fayard

Not necessarily. Under Rule 1.4.1 of the ethics rules for California lawyers, in criminal matters, all terms and conditions of plea bargains or other dispositive offers, whether written or oral, have to be communicated to the client promptly. In non-criminal matters, all WRITTEN offers have to be promptly communicated. But what about a VERBAL offer in a non-criminal case? That’s a judgment call for the lawyer. If the lawyer believes the verbal offer is a “significant development,” then, yes, an oral offer should be promptly conveyed to the client. If, however, only a nuisance value oral offer is made, and the lawyer does not believe such offer is significant, then the lawyer cannot be disciplined for failing to communicate said offer. Of course, in the off chance the State Bar investigated the lawyer’s decision to not convey a verbal offer, the Bar would determine if the oral offer was significant or not.

That said, the best practice is to convey all offers, regardless of form, to the client, and to do so promptly.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

Are Verbal Fee Splits Among California Law Firms Okay?

Posted on: July 18th, 2019

By: Greg Fayard

The answer to this question is now “no.” When different law firms split a legal fee–say a contingency fee–verbal “gentlemen’s agreements” are not permitted under California’s new ethics rules. The old ethics rules allowed different law offices to verbally agree to a referral fee wherein the referring lawyer would get, say, 5% of any total recovery by another, unaffiliated lawyer. New Rule 1.5.1, now requires that the unaffiliated lawyers splitting or dividing such a fee have their own agreement in writing. Further, the client has to consent in writing to that fee split. The written disclosure to the client must disclose the terms of the fee split and the identity of the lawyers who are splitting the fee. As long as the total fee charged by all lawyers is not increased due to the agreed split, fee sharing among different law offices is permissible under California’s ethical rules.

The agreement among unaffiliated law offices need not be signed, however. An informal e-mail setting forth the terms of the fee split could suffice.

The lesson here is casual, oral arrangements among California law firms to split legal fees are no longer permitted under the ethical rules.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.