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Bar News - November 22, 2002 Suing for Fees: The Number One Cause of Legal Malpractice Claims By: Suzanne Morand ACCORDING TO J.P. Flanagan, a large Midwestern insurance broker specializing in professional liability insurance, the number one source of legal malpractice claims is suing for fees, which often (up to 50 percent of the time) will draw a counterclaim for malpractice. What can a firm do to prevent this? Require a retainer up front and mandate that it be replenished if it falls below a set dollar amount. Also, be sure your engagement letter clearly states that you expect your client to maintain a positive balance and that you may withdraw if fees are in arrears. Don’t wait for a client to run up a large bill. Review your receivables on a monthly basis and deal with any that are over 60 days out or are larger than a certain set amount. Call the client and find out why the bill hasn’t been paid. Listen to the client’s concerns, which may allow you the opportunity to cure the problem and resolve the issue quickly. Consider using the NHBA Dispute Resolution Committee to assist in resolving the dispute on an informal basis. For more information on the Bar’s Dispute Resolution Committee, visit the "For Members" area of the NHBA Web site or contact Denice DeStefano at 224-6942 or at ddestefano@nhbar.org. Review the file. Was the matter handled in a way that was free of any action or omission that may lead to a counterclaim? If you do decide to sue, evaluate the likelihood of success and estimate the cost of your time and the effort that will be expended in pursuit of the fee. Is it worth it, or should you just write the matter off? Have another attorney objectively review your file. Do not hand the case over to a member of your firm. Seek an opinion from an outside source and listen to that advice. In this ever-hardening insurance market, firms that institute numerous fee suits are scrutinized carefully and, in some cases, standard insurance companies are declining to offer coverage. Remember that communication, foresight, care and a consistent approach are the keys to avoiding fee disputes with your clients and ensuring the availability and affordability of your firm’s professional liability insurance. Suzanne Morand, AAI, CIC, is senior account executive for the NHBA Insurance Agency. She has more than 20 years of experience in the insurance industry.
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