This will be the first in a series of risk management articles this year which go back to the very basics of risk management principles and concepts. Sometimes words and phrases are used so often and the principles so standard that they end up forgotten. In my experience in working with numerous Insureds through the legal malpractice claim process, often it is the most basic principle that could have prevented, or at least reduced, the Insured’s exposure on that particular claim. Today’s article will discuss documentation – a concept well-established in the risk management arena, but often, not as well followed as it could have been in a number of claims situations.

So what is “documentation” and why should attorneys spend their valuable time and resources to document? When we say “documentation” in the risk management field we mean confirming in writing, certain key categories of communications between attorneys and clients. While a very nice side benefit of documentation is the risk management it provides to firms, really, the main benefit and reason attorneys should document is to service the client. Additionally, documentation assists in confirming that the attorney is meeting one of the fundamental ethical rules: communication with clients. The model rules state:

RULE 1.4 Communication

(a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable request for information

(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

However, although communication and documentation of that communication is a basic concept, many attorneys resist putting it into practice. Many attorneys indicate that they feel that following up an important conversation with the client is somehow insulting to the client, or that the only reason they are writing the letter is for “cya” purposes and is not for the client. Many attorneys indicate that they do not have the time, financial resources or staffing to properly document the file. Other attorneys indicate that it is just too overwhelming to even think about all that paper. Although these reasons are somewhat valid, when weighed against the failure to properly document, it is likely that most will conclude that documentation is something that can not only benefit the firm, but will also very much benefit the clients. Perhaps the task of documenting the file will not seem so overwhelming if we think of it in broad categories of the most important areas in which to document.

The first and possibly most important category of documentation is of course your engagement letter or fee agreement. Many states require this to be in writing and by and large, most attorneys do have a signed engagement letter at the beginning of the file. The area in which the documentation appears to slip is when the firm performs ongoing work for a long term client. Attorneys do not want to “insult” the client with a four page engagement letter every time the client retains them to work on a new matter. This is where the “Thanks for stopping by letter” can be very helpful. Such a letter would thank the client for stopping by or calling, set out the task/matter the client has requested of the attorney, confirm the fee for this matter, and possibly set out when the attorney anticipates providing an answer or the next steps on the file. This one-paragraph letter serves the purpose of outlining the scope, confirming the fee and letting the client know that you care about their business. It will also ensure that you correctly understood the client’s request.

The second category of communications to document is strategic decisions and judgment calls. Many times after a claim has been presented, the attorney will indicate to ALPS that they discussed the options with the client and the client chose that particular option. However, when the case did not go as expected, the client’s new attorney alleges that a different option should have been followed. Without documentation of these important decisions, it is the client’s word against the attorney’s word which makes for long, fact-based litigation impossible to resolve on motion practice. Attorneys are shocked when even sophisticated clients claim during the malpractice claim that they do not remember the conversation, did not understand the conversation, or are less than truthful. Having seen this in many claims, please note that a client’s differing memory can and will happen if things turn out less successfully than they had hoped, whether their hope was realistic or not.

A third category of communications to document is conversations that impact the client’s expectations. This includes providing the client with both the pros and cons of their case and can be optimistic, but also need to set forth the reasons why a best case scenario may or may not happen. Often attorneys are afraid to tell their clients the bad news and tell the client only what the client wants to hear. When the case doesn’t turn out as well as the client hoped, the clients are unprepared to handle that turn of events. An excellent idea in this area that some firms have implemented is providing a client with a settlement range letter when they send the client a copy of the settlement demand letter. Clients believe the settlement demand letter and often expect to receive exactly what is demanded rather than understanding that most of the time, a demand is the absolute best case scenario and often, a case will settle well below that demand. Many attorneys are very good at the conversations explaining this concept, but few document the conversation. It also assists in making sure the client agrees to the settlement range and has provided appropriate authority for settlement discussions.

A fourth category of communication to document is the final work on a matter for a client. While this is relatively straightforward in a personal injury case with the attorney generally sending the settlement check and returning client records, etc., it is more complicated in cases in which the matter has ended, but the client is an ongoing client of the firm. Firms do not want to send a letter to such clients for fear they will take their business elsewhere. One solution which accomplishes the purpose of a closing letter is for the attorney to send a short thank you letter to the client which thanks the client for the opportunity to work on that matter, sends the final documents on that matter, confirms that the final billing on that matter has been paid, and sets forth the firm’s file retention/destruction policy and then mentions something about looking forward to working with the client on their other matters. This closing letter can serve as a very professional marketing tool by letting the client know how much the attorney appreciates the client’s business. It also starts the time running for the file retention policy and often provides a nice date for the statute of limitations to begin running on any malpractice claims.

A final overall documentation strategy is to make sure that calls to and from clients are recorded somewhere in the file and that all attorneys are consistent. Many firms have a central call log in every file. Other firms accomplish this by making their billing records very detailed. Some firms note that the attorney called and left a message but instead of billing for the call, put a “no charge” indicator on the bill. These little details can make a big difference later if the firm finds itself in the position of defending a malpractice claim.

Some ways to implement these categories are to develop a form bank with standard engagement letters, thanks for stopping by letters, strategy confirmation letters, settlement authority letters, and closing letters. A clear outline/checklist provided to staff as to what should be in every file and why can assist the attorneys in making sure they have remembered to document the important categories in the case. Another strategy some firms employ to make sure everyone in the firm is properly documenting their files is to have some random checks of files and reward those attorneys and staff who have kept proper files when those files are checked. Most attorneys do not believe they will ever be subject to a malpractice claim so documenting a file for that remote possibility is often not particularly motivating. What does appear to motivate attorneys however is the idea that by properly documenting their file they are providing superb client service, which generally leads to happier clients, more referrals and a stronger client base. Getting back to basics, establishing solid parameters and systems of documentation, and following up to make sure files are getting documented will provide solid future dividends and no small amount of relief in the event of a malpractice claim or bar complaint.