Screening Clients and Cases for Profit and Safetye By: Thomas P. Sukowicz, Director of Lawyers Risk Management Services, Hinshaw & Culbertson, LLP

Understanding the new generations of employees

A decision that can have very serious and far-reaching consequences is the decision to accept a new client or matter. This decision is important because some potential clients and cases are much more likely to make malpractice claims or bar grievances against you, to cause you to be the subject of motions for sanctions or claims of malicious prosecution, or to refuse to pay your fees.

Screening Clients

At some point in their careers, most lawyers will find themselves saying "I should never have taken that client." They reach this conclusion for various reasons, such as learning that the client has been unreliable or dishonest with them about the facts of the case, dealing with a client who tries to micro-manage the case, who does not communicate, who refuses to accept reasonable offers of settlement, who refuses to pay the fee, or who files a bar grievance or malpractice claim. Screening out those prospective clients who are higher risks will help avoid future claims or bar grievances.

Unrealistic Expectations. One characteristic of a problem client is an unrealistic expectation regarding the monetary value of the case. At the outset, it is important to discuss with the client what a person in his or her position can reasonably expect. Adjusting client expectations also means helping the client to understand that even meritorious claims can be lost. The client should be made to understand that there is no way to know in advance whether a given case will be won or lost. If the client's belief in the value of the case is well above what is possible, that client will never be satisfied, and will only blame the lawyer for not getting what the case was worth.

Overstating the value of a case, as in pleadings, can come back to haunt you. In Thomas v. Bethea, 718 A.2d 1187 (Md. 1998) a judgment for $125,000 was affirmed against a lawyer for an inadequate settlement of $2,500. The attorney had filed a complaint seeking damages for a client in the amount of $1 million and had to testify in the legal malpractice case that he believed the complaint was well founded in fact and law. Of course, the client tended to believe that his case was worth what the lawyer was seeking in the complaint. In that case, the amount sought in the complaint clearly had an impact on the jury in the malpractice case, even if the jury did not agree that the case was worth $1 million.

Motive. Sometimes, the client's motive is such that no reasonable result will satisfy the client. A lawyer should be wary when a prospective client appears in his or her office seeking justice or revenge, or wants to teach someone a lesson he will never forget. To some clients, perhaps most often in cases involving death or serious injury, justice means avenging their loss. The goal of the legal system, however, is “just compensation,” and no amount can compensate for the loss of life. If vengence is the client’s ultimate goal, he or she will probably be unhappy with any outcome.

When a client’s motives are fueled by anger toward the wrongdoer, and the wrongdoer is not adequately punished, the client’s hostility may be redirected at the lawyer. A lawyer should try to reduce such feelings of anger and avoid further arousing your client’s emotions. Do not readily agree with your client's characterizations of the opposing party and agree that the party must be punished. Instead, try to keep the client’s expectations reasonable with an eye on the legal system’s limited goal of just compensation. If that is not possible, consider declining the representation.

Personal Traits. Another personal characteristic that increases the likelihood of an eventual claim is instability. One warning sign is the use of alcohol and drugs. Another is behavior such as excessive gambling. A person’s employment history can also be important. Although frequent job changes do not necessarily predict an unstable client or a difficult relationship between the two of you, you should evaluate the reasons for those changes. Like substance abuse, a pattern of jumping from job to job can reflect instability.

Also watch for a history of legal problems such as criminal convictions, serious traffic violations (particularly those in which alcohol or drugs is a factor), divorces or paternity suits. Depending on the issues involved, a history of these kinds of problems could be a sign of a dishonest or irresponsible character.
Look for evidence of dishonesty or lack of integrity. A person who lies and cheats when dealing with others is likely to do the same with his or her lawyer. A dishonest client may make unfounded allegations, creating a substantial risk of Rule 11 liability or malicious prosecution claims. Also, people who have dealt with the client may perceive the lawyer as a coconspirator and sue him or her for fraud. Of course, there is no immediate way of testing the client’s truthfulness, but how the client answers may indicate his or her candor.

Another characteristic that should raise a red flag is the client who wants to control the representation. Allowing a client to control the litigation opens you up to later claims that you handled the case incompetently or negligently because you should have known better than to listen to the inexperienced client.

At the other end of the spectrum is the inattentive or unresponsive client - one who does not cooperate with requests for discovery and does not make himself or herself available to review the evidence obtained in discovery or to submit to a deposition. A client’s failure to cooperate in this way can result in sanctions and, in extreme cases, dismissal of the case.

Prior Relationships with Attorneys. Many clients have sought the advice of other attorneys in the past. It can be helpful to contact a prospective client's previous attorneys before accepting the new matter. For example, another attorney may have refused to take the case because he or she believed that the client was not being honest or perceived that the prospective client was unstable.

Avoid clients who have a history of not paying legal fees or of embroiling their attorneys in fee disputes. Not being paid for your services is bad, but so is chancing a countersuit for legal malpractice when you sue to collect unpaid legal fees or costs.

Another risky client is one who has filed grievance against other attorneys. Although some bar grievances are meritorious, many are not substantiated. Even if a client files a grievance in good faith, responding to bar inquiries takes valuable time and energy away from a lawyer's practice.

Often, those who are dissatisfied with their prior attorneys are very willing to talk about it. During the initial interview, ask the prospective client whether he or she has used an attorney before and ask whether they were satisfied with that attorney. In most states, bar grievances that did not result in discipline are confidential, so there is no way to independently verify whether the prospective client did or did not file a grievance. Asking the client may be the only way to find out. Bar grievances aside, a history of short-term relationships with attorneys may itself be a red flag. Although there are many valid reasons to change attorneys, a pattern of not sustaining long-term relationships could reflect a problem. At the very least, it may suggest that the person is not easily satisfied.

Personal issues such as these need to be handled with some finesse. Some may be addressed on an intake form that the client fills out. Or they can be presented during the initial interview as routine background questions that you ask every client.

Screening Matters

Even if the client does not trigger a concern, something about the legal matter you are asked to accept may increase the risk of a later claim. For example, there may be imminent deadlines or time limitations, so that you have insufficient time to investigate the merits of your client's claims. If so, you run the risk of being sanctioned for filing a frivolous suit, or the risk of responding to a bar grievance.
The case may be one that is too large, time consuming or expensive for your firm. If so, taking the case may cause you to become overwhelmed and unable to attend adequately to all of your client matters. Such a situation obviously increases the opportunities for missed deadlines or other errors that can later result in claims.

If the case should be filed in another jurisdiction, assess whether you are familiar enough with the applicable substantive and procedural law to take the case. If not, the risk of missing deadlines or incompetently handling the case increases, as does the risk of a later claim.

A large percentage of malpractice claims arise from cases that are outside the lawyer’s primary practice area. Client rights are easily lost or damaged before their unwary lawyers even learn of certain dangers in unfamiliar areas of practice. For example, while most lawyers would know to ascertain and record the applicable statute of limitations for a claim, an inexperienced practitioner might not know of a shorter notice requirement for that claim, and might not know enough to determine whether there is such a notice requirement.

If the prospective client’s matter is outside your primary practice area, ethics rules allow you to handle the case, but those rules and the standard of care require that you either increase your competence through study or associate with competent co-counsel. Remember, though, that if you have to learn a new area of law, the compensation you receive may not cover the time you spend on the case. The case may also conflict with the needs of other clients, taking you away from those cases to spend time learning a new practice area.

Referring the case is another possible solution, but be sure to consult the applicable ethics rules in your jurisdiction about whether referral fees are allowed and, if so, what disclosures need to be made to the client, what consent must be obtained from the client, whether it must be in writing, and the responsibility to be accepted by the referring attorney for the handling of the case.

Sometimes, it is helpful to refer to a checklist of factors to consider when trying to determine whether to accept or decline a case. One such checklist is provided here:

CLIENT ISSUES

• If this is a current or past client, did the firm have problems with the client in its previous representation?
• If the prospective client was referred by a past or present client, did the firm have problems with the past or present client?
• Does any attorney or employee of the firm (and/or the person’s spouse and/or the person’s minor children), directly or indirectly, have or propose to have a financial interest in the client?
• Is any firm attorney serving as a trustee, executor, administrator or escrow agent for the client?
• Are the client’s expectations (with both the outcome and the time involved) unreasonable?
• If so, is this prospective client unable to adjust his/her expectations to make them reasonable?
• Is the client likely to be overly demanding or likely to want to control the representation?
• Is the client likely to be uncooperative or unavailable?
• Will the client indicated be difficult to control as a witness?
• Are the client’s motives principally revenge, vendetta or an unrealistic perception of justice?
• Is the motive likely to cause the client to be unable to accept a reasonable settlement or an unfavorable outcome?
• Has the client shown himself/herself to be dishonest or to lack integrity?
• Has the client retained prior attorneys in the same matter?
• If so, did the previous attorney-client relationships terminate for reasons that reflect poorly on the prospective client?
• Has the client made claims or grievance complaints against any prior attorneys?

SUBJECT MATTER

• Are there any imminent deadlines or time limitations?
• Is the case too large, time consuming or expensive for the firm to handle?
• Does the matter have insufficient merit to prevail?
• If credibility is likely to be an issue, does the client lack corroborating evidence?
• Does any attorney or employee of the Firm (and/or the person’s spouse and/or the person’s minor children, directly or indirectly, have or propose to have a financial interest in the transaction?
• Is the estimated fee to be earned too small to justify accepting this matter?
• If this is a non-litigation matter, is any party not represented by counsel?
• Is the case one that is pending or that must be filed in another jurisdiction?
• If so, are you unfamiliar with the local statute of limitations, other filing deadlines, substantive issues and procedural rules?
• Is the matter outside your area(s) of practice?
• Would the time required to become competent in that area exceed the expected fee?
• If the case is outside your area of practice, it is also outside the area of practice of all other firm attorneys?
• If the case is referred to an attorney in another firm, and you intend to receive a referral fee, might that attorney expose your firm to a malpractice claim or ethical grievance?
• Are you unaware of the disclosure and consent requirements imposed by the applicable ethics rules related to referrals?

Experience will increase a lawyer's ability to identify prospective clients and matters that create a high risk of claims. Sometimes the prudent approach is to trust your instinct. Applying the "smell test," if a client or case makes you feel uncomfortable, do not accept it. You may never know whether a claim would have resulted, but that is better than having taken the matter and regretted it.

Editor: Brian Gedeon (BHGedeon@duanemorris.com) (This publication is the property of the Atlanta Association of Legal Administrators. Reproduction or reprint without prior permission is strictly prohibited. Click here to request reprint permission.)

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