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Biglaw Does Everything Bigger -- Malpractice Is No Exception

Generally speaking, large law firms do everything "bigger" than small firms.  Large firms staff cases with more attorneys, charge more substantial rates and frequently handle the kind of "bet the company" cases with big consequences.  And not surprisingly, there's something else that's "bigger" for large law firms than for small fry:  malpractice liability.  At least, that's one of the conclusions that I gleaned from this this interesting article (The Recorder 12/6/07), by legal malpractice attorney William Gwire.  Gwire writes that over the past three decades, clients big and small, "are more demanding and more willing to seek redress for mistakes they perceive their attorneys have made."  And more significantly, the nature of malpractice claims has changed, with big and small firms committing different types of mistakes.

For large firms, Gwire cites several factors fueling malpractice.  First, partners with marquee names remain in hot demand, but they run the risk of stretching themselves too thin.  Big firm compensation exacerbates the problem, by rewarding partners for the business they bring in, and giving them a cut of the hours generated by lower-level, but less qualified associates whom the lead lawyers may not have time to train or supervise.  Not surprisingly then, Gwire writes that many of his biglaw malpractice suits have involved excellent lawyers who failed to properly manage a matter or delegated work to someone down the food chain who committed an error.  And where once clients might not have pursued a malpractice claim, with rates what they are, clients are more adamant than ever about getting what they paid for.  As Gwire puts it, a client who's been "sold the Ferrari of the firm's litigation corps, only to end up with a Chevy" will want redress.

Also, as law firms grow, conflicts are increasingly causing problems for big firm litigators.  Gwire seems puzzled that firms don't pay more attention to the ethics rules that govern conflicts, but I think the inverse is true.  As I see it, large firms are so desperate to retain business that they'll attempt to contort the rules in any way possible to avoid jilting a client.  In fact, I've long been predicting that large firms will attempt to force changes in existing ethics rules to reduce the barriers to representation of clients with unremediable conflicts, i.e., conflicts so substantial that they cannot be mitigated through disclosure and consent.

For small firm lawyers, there's some good news.  Missed deadlines, once a common small firm foible (at least, if you believe what the bar associations have always claimed), are no longer as prevalent, having been addressed through the introduction of inexpensive computerized calendaring systems.  Instead, Gwire believes that small firms and solos are often taking on work that they lack the expertise to handle, and then find themselves forced to accept a low-ball settlement for a fraction of what the case is worth.   As Gwire puts it "inexperience is not a defense to malpractice." 

Just as technology helped minimize the "missed deadline" types of malpractice claims, I believe that it will also rescue solo and small firm lawyers from the "lack of competence" cases.  With the rise of blogs, lawyers have a better-than-ever opportunity to educate themselves about new areas of law, and to recognize what's manageable and what's not.  And through listserves, blogs and other social networks, a lawyer can build alliances or form virtual affiliations with lawyers who have the necessary expertise, so that the solo won't necessarily be forced to give up the client entirely to provide the level of service necessary to avoid malpractice claims.

For large firms, I'm not so sure that technology helps unless firms implement structural changes.  So long as firms charge top-dollar rates and run up billable hours, clients will demand top-dollar value.  If they don't get it, they're going to sue.  As to conflict of interest, while existing ethics rules do allow some leeway for potential conflicts (with disclosure and consent), some conflicts are so significant that they can't be waived.  Unless firms can change existing ethics rules to redefine what constitutes a conflict of interest (and I believe that we'll see these attempts, especially if firms move towards the model of a publicly-traded law firm), the number of conflicts based malpractice actions will proliferate.

Of course, at the end of the day, all of us lawyers are in this together.  With more lawsuits against large firms for malpractice, firms large and small will all experience something big:  a big increase in malpractice insurance premiums. 

Posted by Carolyn Elefant on December 10, 2007 at 04:49 PM | Permalink | Comments (0)

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