Client Screening - Selecting a Client is Your Choice!

Implementing risk management strategies for your firm starts with effective client screening. The client intake process is crucial for your firm in determining whether a prospective client is a good fit for your practice, as well as whether the prospect might spell trouble for you down the road.

Here are some of the red flags you need to be aware of, along with some questions to ask.

While the promise of a big payout for relatively minimal work may be enticing, attorneys should think twice before marketing and acting as a Paymaster.  

• Is the client seeking financial transaction services that are better or more routinely performed by a bank? 
• Is Paymaster the only service being requested?
• Does the client have an unusual business plan or are the funds to be transferred internationally?

Tip: Paymasters who ignore red flags for money laundering, fraud or tax evasion may face criminal or disciplinary charges. Note that acting as a Paymaster is not included in the definition of PROFESSIONAL SERVICES under your policy with Swiss Re Corporate Solutions.

Your potential client will likely have expectations of their desired outcome in a case.  They may also have ideas on the length of time tasks will take or how much a case will cost.  However, they may blame you if their expectations do not come to fruition.  

• What are the client's expectations with both the outcome and the time involved?  Are they reasonable? 
• Is the client intent on betting on an unlikely win or financial issue?  Are you and the client able to agree upon what defines a win? If not, is this client able to adjust his/her expectations to make them reasonable?
• Does the client's motive include unreasonable anger or a vendetta?  Is the motive likely to cause the client to refuse to accept a settlement or question a reasonable result as insufficient?

Tips: Discuss and then document in writing for the client what you can reasonably accomplish.  
If you determine that the client's intentions are not well-meaning, then do not accept the engagement.  

• Has the client shown themselves to be dishonest or to lack integrity? Do documents contradict the client's verbal representations? 
• Has the client indicated that they will be difficult to control as a witness? Do they look to blame others for their own mistakes?  Is the client controlled by a third party?  Does the client bully you or have crazy ideas about what should be done?  
• Has the client retained and then discharged prior attorneys in the same matter? Does the client complain about prior attorneys? Are the issues overly subjective critiques that you will likely be accused of replicating? 
• Why did the previous attorney-client relationship(s) terminate? 
• Has the client filed bar complaints against any prior attorneys? 

Tips: Do not enter into an attorney client relationship with an individual that lacks credibility.

Whether a potential client shows a history of dissatisfaction with prior attorneys may be the greatest indicator that the client may complain of dissatisfaction with your services. Listen carefully to a client when they complain about prior attorneys. 

• The "failure to know or apply the law" is one of the most frequent driver of claims.
• Is the client's matter within your primary area(s) of practice? 
• Are there any imminent deadlines or time limitations? 
• If the case is one that must be filed in another jurisdiction, are you familiar with the local substantive and procedural rules? Do you know enough about the foreign jurisdiction to evaluate the value of the case? 
• Does the case involve a municipality or is the potential defendant owned by a governmental entity (e.g. school or hospital) that may have notice or additional filing deadlines? 
• Is the case too time consuming or expensive for your law firm to handle? 

Tips: Consider rejecting an assignment if it involves dabbling in an area of practice that you are unfamiliar with as it may lead to legal malpractice issues. 

Missing filing deadlines related to governmental entities is a common mistake that leads to malpractice claims because the deadlines are generally much shorter than the standard statute of limitations. 

Procrastination when you do not ultimately believe that you will take the case leads to missed deadlines. If you do not want the case, turn it down immediately and document the non-engagement to the client in writing. 

One of the largest drivers of legal malpractice claims involves attorney fee disputes. 

• Is the client financially able and capable of retaining you for services? 
• Is the client evasive or reluctant to abide by or sign a fee agreement?   
• Is the client overly critical of your billing guidelines or projected expenses?
• Has the client refused to pay legitimate invoices for legal fees? 
• If you have referred the client to another attorney and have received or expect to receive a referral fee, have you sent the client a letter disclosing what is required by the applicable ethics rules and have you obtained the client's written consent?
• Does the client have outstanding legal fees and costs from prior legal counsel? 

Tips: Avoid a client that displays issues with your fees from the outset. Some attorneys suggest charging for the initial consult to prepare the client for the receipt of invoices.

Once the case is accepted, invoicing the client monthly may assist with keeping account receivables current and the client's failure to pay will be limited to one month's services. Demand the client stay current on invoices to avoid a future fee dispute.

If the case is outside your area of practice, you may know an attorney with whom you could associate or refer the case. 

• If you refer the case, do you remain active in the case so that the client may believe that you are still his or her attorney? 
• Do you trust that the receiving attorney is competent and will not expose you to a malpractice claim or ethical grievance? 
• Do you use written referral agreements in all cases that are referred to and from the firm? 
• Is the receiving attorney insured? Do you have a copy of the client's insurance declarations page or a certificate of insurance for your file? 
• Are you aware of all disclosure and consent requirements imposed by state ethics rules? 
• If fees are split, is this arrangement communicated in writing to the client and allowed by state ethics rules? 

Tips: Many attorneys wish to satisfy the client that they are keeping up with the case or "watching" the case after the referral, which may lead to exposure if the receiving attorney makes a mistake. If the receiving attorney is uninsured, you are indemnifying them for their mistakes. Disclaiming language in the referral agreement may be appropriate to help avoid a negligent referral recommendation. 

When a lawyer declines to accept a legal matter, they should be careful to not give any legal advice or opinion regarding the client’s claim. Any advice can provide a basis for a surprise malpractice claim down the road, especially if the advice turns out to backfire.

If you have declined to represent the client:

• Have you sent a non-engagement letter that clearly informs the client that you are not representing them?
• Have you expressed no opinion about the matter and that the matter may be affected by a statute of limitations (this information may be controlled by state specific requirements) 
• Have you advised them that they should seek other representation as soon as possible? 

Tips: Non-engagement letters should clearly inform the client that the firm will not represent their case and that he or she should not rely on the lawyer or firm for any advice or legal action at any time. That is an opportunity to explain in detail why the client was not chosen and an opportunity to be honest and upfront.

Remember that not all claims follow a substantive mistake.  Many claims stem from clients who pose a greater risk of causing problems. Identify those potential clients and avoid taking them on as clients. By considering the above factors before entering into an attorney client relationship, lawyers can avoid many legal malpractice or negligence claims and fee disputes.

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