Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

LAWYERS NOT ON FIRM FOOTING

Reprints

CHICAGO -- Changes in standards applied to lawyers are increasing their exposure to a variety of professional liability claims.

"There's been a very large proliferation of standards applied to our profession as we become less of a profession and more of a regulated business," noted Thomas P. McGarry, a partner with the Hinshaw & Culbertson law firm in Chicago.

Mr. McGarry moderated a panel on lawyers professional liability this month at the Professional Liability Underwriting Society's annual conference in Chicago.

As the profession is increasingly regulated, "Lawyers are routinely sued under consumer fraud and deceptive practices cases," said George W. Spellmire, also a partner at Hinshaw & Culbertson.

But more than the regulation and court rulings related to them, the future of lawyers professional liability is going to be shaped "by an increasing trend toward professional liability suits against attorneys of a very sophisticated nature," Mr. Spellmire said.

Those suits are being brought by aggressive, competent and creative lawyers backed by powerful technology and sophisticated expert witnesses, he said. That trend "is going to result in large exposures for many lawyers."

Lawyers professional liability suits aren't just being filed by individuals who claim their attorneys mishandled their work, Mr. Spellmire said, but by large corporations as well. "Major players are involved in these lawsuits," he said.

Jeffrey H. Bossard, a senior vp at CNA Insurance Cos. in New York, said he thinks the days are long gone when insurers' only concern in a claim was whether there was a negligent omission.

Now there are questions of fiduciary duty and the like, Mr. Bossard said, forcing insurers and their law firm clients to go beyond typical risk management techniques to look at "what's driving a firm -- economics, I guess -- to take 50% of the cases that they accept."

On the subject of breach of fiduciary duty claims against lawyers, Ronald E. Mallen, a partner at Long & Levit L.L.P. in San Francisco, said: "This is not a negligent lawyer. This is a dishonest lawyer."

Essentially, the fiduciary responsibilities facing a lawyer are to maintain confidentiality of information about the client and to provide undivided loyalty or independent judgment.

Breaches of that responsibility can include intentional conduct, "which is just outright fraud," Mr. Mallen said, a negligent breach of the responsibility or failure to obtain the client's informed consent, whether through the failure to disclose information, inadequate disclosure or a failure to seek consent.

In the case of adverse representation, Mr. Mallen said, "the traditional rule is that there must be proof of misuse of confidential information."

Despite the increased exposures facing lawyers, Mr. Bossard said that he isn't pessimistic. He said he thinks insurance companies and the lawyers they insure can work together to reduce the risk of suits.

"You could look at the market conditions and say, 'This looks pretty dismal,' " he said, referring to low rates being inadequate for exposures. "But it's important to remind yourself that the last line of defense here is the cost of claims."

Against this backdrop of talk of increasing exposures, Robert E. O'Malley, vice chairman and loss prevention counsel for the Attorney's Liability Assurance Society in Chicago, discussed the American Law Institute's drafting of a restatement of the law governing lawyers.

The group of lawyers, judges and academics has been working on the restatement for about 10 years, and it's about two years from completion, Mr. O'Malley said.

"Its effect will probably be very significant and maybe even enormous" in clarifying exposures, he said.