Mistakes happen, don’t make it worse when they do

The possibility of making a mistake is something that can keep attorneys up at night. Missed deadlines or errors in drafting documents are things that every attorney tries to avoid. Unfortunately, mistakes happen, even to the most well-prepared or seasoned attorneys. When they do, the key is to avoid compounding the error by taking steps that could turn what might be a fixable or manageable issue into a much bigger problem.

When a mistake is discovered, it is helpful to take a deep breath and to not let emotions take over. Many attorneys may be embarrassed by the mistake and hope they can fix it or that it will go away by itself. In other instances, attorneys may feel the urge to immediately accept responsibility for the error and promise to pay the client for any damages.

There are other approaches to protecting the client's rights that do not involve the attorney falling on her sword. In particular, a mistake can often be handled effectively when an attorney takes the following three steps upon discovery of the mistake: (1) inform the client; (2) notify the law firm's legal malpractice insurer; and (3) consider whether to advise the client to seek other counsel. These steps are discussed below.

1. Advise the Client

Informing the client of the mistake is never easy. Because clients typically hire attorneys to fix problems, no attorney likes to tell her client that they potentially created additional problems for the client. However, failing to timely advise the client of the mistake typically will not look good for the attorney in hindsight, especially if the matter ends up before a jury.

For that reason, the initial communication to the client regarding the mistake can be extremely important. An attorney's failure to be fully transparent can be viewed as the attorney attempting to protecting herself at the expense of the client. It is critical that an attorney discuss the issue with in-house counsel or other legal advisors before proceeding, both to invoke the privilege and to ensure that the attorney is proceeding soundly in what can be an emotional situation.

Notably, telling the client about the error does not mean that the attorney should admit liability and agree to take any action necessary to fix the issue. It may seem like a fine distinction at times, but informing the client of the mistake is not the same as admitting liability for that mistake.

This is critical because evidence of a mistake, alone, is not the same as an act of "legal malpractice" as defined by the law. For example, in many jurisdictions, the client must prove a "case-within-a-case" in order to succeed on a legal malpractice claim, which involves demonstrating that the client would have achieved a better result but for the attorney's mistake. Thus, even if a mistake was made, it may be the case that the outcome for the client was unchanged by the mistake. Accordingly, in advising the client, there is generally no need to jump to the ultimate legal conclusion that the mistake could in fact support a valid legal malpractice claim, which certainly will be used against the attorney in a subsequent lawsuit.

In addition, admitting liability to the client could run afoul of the attorney's legal malpractice insurance policy, which may contain a provision (often referred to as a "No Admission" clause) that forbids a lawyer from admitting liability or agreeing to pay money without jeopardizing the legal malpractice coverage. The communication to the client can avoid any issues in this regard by simply describing what happened and what the risks are for the client.

2. Provide Notice to Your Insurer

Too often, attorneys believe that there is no need to involve their insurer until a demand is made by the client or until they are served with a complaint. However, it can be beneficial and may even be required to report the circumstances of the mistake even before an actual claim is received.

Legal malpractice policies are almost always "claims made" or "claims made and reported" policies, which means that they generally apply to claims against lawyers that are made (and if required, reported to the insurance company) during the policy period. As a result, the date the claim is made is certainly an important date and can trigger obligations to report that claim.

However, many policies also permit a potential claim to be reported as soon as the lawyer learns about any basis upon which a claim could be made, including a mistake. In legal malpractice nomenclature, such a report is called a "notice of a circumstance."

By providing notice of a circumstance, many policies will permit the attorney to obtain coverage for any subsequent claim regardless of when the claim is finally made or the lawsuit is filed. For example, if the malpractice coverage ends after the mistake is made but before the claim is made, the attorney may still be covered by the policy in effect at the time the circumstance was reported.

Also, by giving notice of a circumstance, attorneys can avoid some tricky issues in the renewal process for their malpractice insurance and avoid the possible application of policy exclusions. Many applications ask if any attorney applying for insurance is aware of a circumstance that might give rise to a claim, and failing to disclose any such circumstance can result in a forfeiture of coverage. Policies also often exclude claims from coverage where the attorney had knowledge of a circumstance that could lead to a claim before the start date of the policy. Thus, the risks of failing to report a circumstance can be severe.

3. Consider Whether to Advise the Client to Seek Counsel

When informing the client of the mistake, the client may ask the attorney for advice on how to proceed. This question can be problematic for the attorney. Although the attorney may feel the urge to be as helpful as possible to the client, it is possible that an attorney will be viewed as a having a conflict of interest in recommending a course of action in the face of a potential legal malpractice claim against the attorney.

For that reason, some attorneys in this situation will consider whether to document in writing or advise that the client can seek outside counsel to determine the implications of the mistake disclosed by the attorney.

Taking these steps in the immediate aftermath of a mistake can help limit the potential liability to the attorney while ensuring that the client's interests are protected. Mistakes may happen but, when they do, the key is to remain calm.