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Bar News - July 4, 2003 Good Client Relations: An Effective Risk Management Tool By: Emily J. Eichenhorn EVER SINCE LAWYERS were allowed to charge for their services, they have faced the possibility of being sued for malpractice. Lawyers today likely will be involved in at least one professional liability claim during the course of their careers. And the threat could present itself sooner rather than later. Experience shows that claims against lawyers appear to mirror the economy, increasing in both frequency and severity in the years following an economic downturn. In light of this trend, risk management looms important for lawyers in all sizes and types of practice. Whether you are a solo practitioner, an associate in a 10-lawyer boutique, or the managing partner of a large, full-service firm, efforts to control risk should be important to you. Lawyers who are committed to proactive risk management can lessen the likelihood they will be faced with a claim. And if, despite their best efforts, they are sued, that same planning can affect the magnitude of a potential loss. Even after you recognize the importance of risk management, successfully implementing sound risk management practices can be difficult. In this column, I will help you learn to recognize risk, evaluate its magnitude, and develop and implement risk management procedures. Examining Risk Throughout Practice Risk arises and can be addressed throughout all aspects of legal practice. Risk management can begin with business decisions about how to organize your firm. The way you seek business and set yourself up to perform services for clients can affect the risks you face and how effectively you are able to deal with problems that may arise later on. The initial stages of a representation arguably present both the greatest amount of risk and the greatest opportunity to exercise some control over risk. It is at this stage that you can try to avoid some risk altogether by turning away potential representations that appear to fall above your "risk threshold." On the other hand, initial interactions with potential clients can give rise to "hidden" obligations that are easy to fail to fulfill. Problems also can arise at the end of a representation, including improper withdrawal or mishandling of client property or fee disputes. Lawyers need to recognize and exercise control over risk as they wind down a matter, or withdraw from a representation prior to its natural conclusion. Most of all, we cannot overlook the importance of risk management in the actual delivery of the legal services. Ultimately, most lawyer professional liability results from plain negligence and mistakes committed while rendering legal services to clients. While lawyers are not held to a standard of perfection, they are held to a standard of diligence, which requires that they exercise their professional judgment on behalf of their clients, and that they perform services in a reasonably competent manner. Additionally, a lawyer is expected to live up to the full scope of fiduciary responsibilities raised by the attorney-client relationship. Risk management is most effective if it is embraced as a business philosophy and incorporated into all stages of practice. It requires regular, vigilant evaluation of the risks existing in any set of circumstances, as well as your professional judgment in addressing those risks. Managing Risk Through Good Client Relations With these thoughts in mind, let us begin our exploration of good risk management by considering a practice philosophy that not only is effective in managing risk, but also is smart business: good client relations. A commitment to exemplary client service and client relations is one of the most powerful and effective risk management tools available to you. Clients who are happy with the interactions they have had with you are less likely to sue you, even if the outcome of their matter was not what they had hoped. On the other hand, angry or disappointed clients who feel ignored or insulted may go out of their way to "get back" at an attorney for any perceived failure in the representation. Communication is Key Good client relations begin with good communication. One of the most frequent complaints registered against attorneys is that the lawyer failed to communicate adequately with the client. Too often, lawyers don’t return phone calls or keep clients apprised of developments. Returning phone calls promptly, responding to questions – even seemingly irrelevant ones – and openly demonstrating your concern for the client’s well-being goes a long way toward staving off dissatisfaction. Communicating proactively with the client also is important. This includes providing regular updates, even in dormant cases or in matters where you are waiting for the other party or the court to respond. Even a letter that says "no news yet" communicates to clients that you are thinking of their interests and keeping them in the loop. It is especially important to contact clients when situations go awry. If a client is expecting a contract at 3 p.m., it’s already 3:30 and it’s obvious you can’t deliver it until 6 p.m., pick up the phone and make the tough call – especially if the client has left a message regarding the contract. Nobody likes to admit he or she is going to miss a deadline, but it only compounds a bad situation if you don’t return calls promptly and then force clients to wait around when they could focus their attention elsewhere. If possible, make the call before the deadline arrives. You should create realistic expectations for clients about how often and quickly you will communicate with them. One consulting group surveyed law firm clients about their expectations with respect to the "prompt" return of phone calls, specifically asking what constitutes promptness in the client’s eyes. More than half defined promptness to mean "by the end of the day." Almost one-quarter of respondents said it meant within 24 hours. About 12 percent said "within one hour." The rest had some other definition. How do you know how to meet your client’s expectations? Tell clients your own policy regarding the timing of return calls, if you have one. This gives them an opportunity to either accept that parameter or ask you to comply with their own, different expectations. It’s a simple solution to a common problem, yet few lawyers actually do this. Listen Well to Clients and Your Own Staff Besides talking to your client, you need to listen well. Communication is a two-way street. If you are lucky enough to have a client who tells you clearly what he or she wants, don’t miss an opportunity to provide excellent service simply because you didn’t pay attention and substituted your own notions of good service. Some clients may be satisfied with simpler solutions than you anticipated at the beginning. Most importantly, listen for signs of disappointment, confusion or anger so that you can respond accordingly and, ideally, nip problems in the bud. To this end, turn to your staff as your best source of information and your first line of defense. Understand that clients often are more willing to express dissatisfaction or concern about your performance to a secretary or other staff person than they will be to you. Having said that, make sure your secretary feels comfortable passing those comments on to you; otherwise, you might not be alerted to the potential problem and thus won’t get the chance to address it before it blossoms into something worse. Tell all your staff that you want them to alert you to any apparent dissatisfaction or complaints on the client’s part, and always thank anyone who follows through on this request. Then respond quickly and directly to the problem. Client Appreciation Finally, remember that clients are not interruptions. Every lawyer has, from time to time, thought, "I could get so much more done if clients would just stop bugging me!" Of course, we all know that there would be no work to get done if it weren’t for the clients. They are the lifeblood of your practice, and their concerns and agendas should be of primary importance to you and everyone else in the firm. It’s good business – and good risk management. Emily J. Eichenhorn is the director of lawyers’ risk management for CNA Financial Corp., a leading provider of lawyers’ professional liability insurance for more than 30 years. She resides in West Bloomfield, Mich.
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