The unwelcome holiday claims letter… what should you do?
Close your eyes and imagine: you are in your office, working away and getting ready for the holidays, when your assistant brings you a delivery from a well known colleague. Opening the envelope, you expect to see some end of the year holiday greetings, but instead you receive a letter claiming that you committed some error, breached some duty, violated a Rule of Professional Conduct, or otherwise harmed a former client by something you did during the representation over a year ago. The letter demands a huge amount of money, and your holiday cheer collapses into the pit of your stomach.
We have observed a few basic responses to claims letters like this. Some lawyers create excuses and simply do nothing in the hopes that the problem will go away. Others panic and immediately contact the opposing counsel, trying to talk their way out of it, desperate to avoid having to report it to their insurance carrier. A third type of response tends to blend those two basic responses in varying degrees, although the end result tends to fall back into the first, ostrich-type most often.
Playing ostrich—sticking your head in the sand—is probably the absolute worst move you can make when you get a claims letter. First, you can jeopardize your insurance coverage by failing to provide timely notice of the claim. This could also be a problem if you’ve received a claim, sat on it for week or two, and renewed your policy in the interim. Typically when you renew your policy, you will have to certify that you have disclosed all potential claims you’re aware of, and if you didn’t do that, even if it was simply an oversight… you may find yourself facing a denial of coverage. Remember, whether you believe the claims are valid or not doesn’t change your obligation to disclose them on your malpractice insurance renewal application.
On the other end, trying to talk your way out of it can be just as bad… panic stricken lips do, sometimes, sink ships. This category of lawyers who receive claims letters call the opposing counsel, or if it was a Bar grievance they call the Bar, or they call the client who filed the grievance. More often than not, the lawyer ends up unwittingly saying something which could be used against them.
So what should you do in response to a claims letter, or a lawsuit? We recommend that any lawyer who receives a claim letter, Bar grievance, or a lawsuit, take a few first steps to help establish a solid defense and maximize the chances of a favorable outcome.
First, don’t panic. Review the letter or grievance carefully, put it down, and collect your thoughts.
Second, open a claim or grievance file on your computer, in which you will save all communications and documents related to the claim or grievance.
Third, review the claim letter or grievance carefully, and assemble all documents and communications which could be used in your defense. These documents should be stored in the file you opened on your computer. Be very careful about inadvertently deleting or destroying documents after you’ve received a claims letter, as you could trigger spoliation sanctions or other problems.
Fourth, review the client’s file and make sure you retain a copy of the file for use in your defense. Many times, claim letters also include a request for the client’s entire original file. While you are obligated to return the client’s file under the Rules of Professional Conduct—and you cannot hold the file hostage pending the payment of reproduction costs—you absolutely must save a copy of the entire file for your defense counsel, or you could face a complaint by your carrier that you compromised the defense of the claim and, consequently, put your coverage in jeopardy.
Fifth, do not make any sort of gesture or offer to pay the claim or grievance right away. Doing so could also jeopardize your coverage, by offering to make a voluntary payment to the claimant, which could also be considered an admission. For example, it’s not wise to offer to pay a claimant on a small claim the amount of your deductible, just to avoid reporting it to your carrier.
Sixth, review your malpractice policy, especially the section which governs reporting a claim or incident. Follow the carrier’s reporting requirements to the letter. Be vigilant that you receive a response from your carrier confirming receipt of the notice and assigning a claim number. Depending on the circumstances, you may have to act quickly and respond to the correspondence from the claimant. If that is the case, you should contact counsel—hired directly or through your carrier—immediately to discuss your options and next steps. Again, you do not want to respond on your own, say too much, and possibly compromise your defense.
Remember, legal malpractice claims are much easier to defend than they are to prosecute. Legal malpractice claimants in Georgia and most other states face an uphill battle to prove the “case within the case.” Do not overreact and compromise your defense.
If you find yourself facing a claim or grievance, contact Chandler & Moore Law or assistance.