“No We Didn’t Agree To Handle That Claim” —
- “One area that can lead to claims against lawyers occurs when the lawyer accepts one part of a representation but declines to represent the client in another matter. Any declination should be communicated clearly to the client and confirmed in writing. If you don’t do that, the client may later bring a malpractice claim against you.”
- “In Boukari v. Schwartzberg, LLC, 2024 NY Slip Op 01247 (March 7, 2024), the plaintiff hired the defendant firm to complete a Workers’ Compensation matter. The lawyers declined to represent the plaintiff in any personal injury action. Plaintiff sued alleging that the firm missed the statute of limitations on the personal injury claim. The Appellate Division held that summary judgment for the law firm should have been granted. The explanation:
- ‘Plaintiff’s legal malpractice action should have been dismissed. Contrary to the motion court’s finding, the record conclusively established, as a matter of law, that defendants had clearly informed plaintiff during their initial meetings in May 2014, by way of unambiguous writings confirmed by plaintiff’s signature, that defendants were only assisting her in substituting counsel in a Workers’ Compensation matter and that they had declined to represent her in any personal injury action against the building owner or any third party arising from her slip and fall. Plaintiff opposed the motion only with an attorney affirmation.’
- ‘She did not submit an affidavit setting forth her version of the initial conversations with defendants or any other interactions that would support her attorney’s contentions that she was under a reasonable impression that defendants had agreed to represent her on a personal injury claim or that the law firm did not clearly disclaim representation (see Zuckerman v New York, 49 NY2d 557 [1980] [an attorney affirmation is insufficient to put before the court facts of which she has no knowledge]'”
- “Comment: this problem can come up in any number of matters. Please disclaim in writing any claim you refuse to handle.”
“Why You Should Never Minimize the Significance of Client Driven Indemnity Provisions” —
- “I continue to get the occasional call from a lawyer wanting to know my thoughts about a new business opportunity. It’s a call that often starts out with the lawyer sharing that so and so company wants the lawyer to be their exclusive local point person and the lawyer is hoping I’ll give the idea my risk manager’s stamp of approval. After talking through the issues, I always ask the one question most callers rarely seem to think about. Is there an indemnification provision in the contract? I have yet to hear any lawyer tell me no.”
- “Truth be told, a number of the lawyers who call about various types of contracts they are considering signing seem surprised when I ask about the presence of any indemnification language. Apparently, they just gloss over certain sections of the contract. Trust me, that’s a misstep. Indemnification provisions are not something to be ignored because they raise very real and potentially significant insurance coverage concerns.”
- “Have you ever stopped to consider how a malpractice insurer might view client driven indemnity provisions? The language often used significantly expands what the lawyer may ultimately be liable for. Absent said language, the lawyer would be liable for any attorney negligence. However, depending upon the specific language at issue, by agreeing to an indemnity provision the lawyer can become liable for all kinds of client losses that are not the result of any attorney negligence. “
- “This is what creates the coverage problem. In short, by voluntarily agreeing to contractually expand your exposure, you can create a coverage gap because your malpractice insurance company isn’t going to be subject to the terms of this agreement. In addition, malpractice polices routinely contain language that will exclude coverage for obligations assumed by contract that go beyond the obligation to provide professional services. Often, however, signing an agreement that contains an indemnity provision does exactly that.”
- “Unfortunately, this concern isn’t limited to contracts a lawyer is thinking about entering into. Suppose a client inserts an indemnification clause into the boiler plate language of their guidelines and sends that to you. Might your continued representation after receiving the guidelines constitute an acceptance of that clause? I certainly wouldn’t want to be the one who ends up having to find out the hard way.”
- “Today, when more and more lawyers are being treated like general service providers as opposed to trusted advisors, what can you do to avoid this problem? At the outset, read client guidelines and contract proposals front to back. Don’t continue with the representation or sign anything without understanding what your true exposure will be. If you are not comfortable with that exposure, see if the client will remove the problematic language. In the alternative, you could see if inserting language along the lines of “but only to the extent covered by my malpractice insurance policy” at the end of any indemnity clause would be acceptable. Hopefully some clients (your good clients) will understand that the risk they are asking you to take is unfair and they will work to make the agreement acceptable. On the other hand, if any client responds by telling you everyone else signs this so if you want the work, you will too, then I guess you have a decision to make. At least now you know it’s going to boil down to how comfortable you are in self-insuring that risk.”