Spring is not too far off, but as long as we’re still in the grips of winter, it’s not a bad time to consider resolutions for 2017. That includes thinking about how to improve your law practice – how to best serve your clients and reduce your risk of mistakes and thereby avoid a malpractice claim or Office of Lawyer Regulation (OLR) complaint.

First, a review of 2016 malpractice claims that came into Wisconsin Lawyers Mutual Insurance Co. (WILMIC) will be helpful. Then you can determine where you might want to improve your practice in 2017.

Top Malpractice Claims Areas in 2016

As I typically do at the start of each year, I recently consulted with WILMIC’s claims attorneys to find out which areas of law generated the most claims the previous year and what kinds of mistakes were made.

The top four areas of practice that produced the most claims last year were 1) estate, probate, and trust; 2) bankruptcy and collections; 3) real estate; and 4) family law. Each of these areas is discussed below.

Estate Planning

Claims made against lawyers practicing in the area of estate planning, probate, and trust law represented nearly 20 percent of the claims reported to WILMIC in 2016. Estate planning continues to represent a significant legal malpractice risk. The traditional family model has changed and clients are often looking for creative ways to protect assets and make distributions from their estates. Legal malpractice law exposes estate planning lawyers to claims made by nonclients (disenfranchised beneficiaries), because privity in these matters is not a valid defense when a lawyer negligently drafts a will or trust.

WILMIC senior claims attorney Brian Anderson lists the following as some of the common mistakes made in 2016 in estate planning cases:

• Disinherited beneficiaries of an estate blaming the lawyer for not carefully assessing the testator’s competency. These include claims that the lawyer failed to understand the testator’s intent with respect to his or her overall estate plan before execution of the estate planning documents or failed to explore whether the testator was acting under duress or an undue influence when the estate planning documents were executed.

• Overcharging a client for estate planning services.

• Negligently overseeing or administering a probate estate, resulting in certain beneficiaries receiving more and other beneficiaries receiving less than the decedent intended.

• Failing to timely transfer assets or advise the client of the divestment implications to qualify for Title 19 benefits.

• Failing to properly deal with tax consequences, including failing to advise of a tax exposure created by cashing out an IRA trust and failing to timely file estate tax returns resulting in IRS penalties and interest.

• Failing to timely draft and implement an estate plan or an estate planning document or to make changes to an existing estate plan before the client’s death.

Bankruptcy and Collections

Bankruptcy and collections work, similar to estate planning, produced nearly 20 percent of WILMIC’s malpractice claims last year. Anderson says mistakes in bankruptcy-case-related claims include miscommunication, filing a collection action in the wrong county, and failing to timely or correctly docket a judgment.

Anderson adds, “Claims associated with the Fair Debt Collection Practices Act (FDCPA) should also be included in this category. The FDCPA is a strict liability statute and collection lawyers continue to be the subject of claims for technical errors, wherein liability attaches even without intent, knowledge of an error, or any willful violation.”

Anderson says other mistakes he has seen include provision of incorrect advice regarding the filing of a bankruptcy; mistakes in the prosecution of a bankruptcy action after it is filed; and the decision to dismiss a pending bankruptcy action.

Careful calendaring of client matters and frequent and clear communications with the client remain, as they always have been, important risk management safeguards to avoid claims.

“The damages associated with these types of mistakes include placing a client in a bankruptcy that they did not have the financial ability to complete, clients losing an ownership interest in their home, and the failure to include assets on bankruptcy schedules resulting in a loss of assets or even the denial of a discharge.”

So what should lawyers consider when taking on a bankruptcy case? Anderson says, “Always make sure that you can diligently and competently handle a client matter before agreeing to accept the retention to do so. If the client’s needs are not realistic or consistent with your ethical obligations, don’t hesitate to just say no.

“Furthermore, if you believe a mistake has been made, don’t bury your head in the sand – report your claim concerns to your malpractice carrier immediately. Perhaps the carrier can help you repair the damage before a claim develops. When you are uncomfortable with a client matter, seek out a trusted colleague or use other resources available to you, such as the State Bar ethics counsel, to work through any issues causing concern.”

Real Estate

Claims made against lawyers practicing in the area of real estate represented almost 18 percent of the claims reported to WILMIC in 2016. Anderson says that real estate transactions often overlap with estate planning claims. “The impact a real estate transaction can have on a client’s estate plan may not have been appreciated or understood by the client or the attorney when the work was performed.”

Anderson cautions, “Real estate lawyers should make certain that they understand the client’s goals and estate plan before moving forward. Carefully defining the scope of retention can help avoid claims. For example, a conveyance of real estate without knowing or properly advising the client of the impact the transaction could have on their beneficiaries’ intended estate plan and on their Medicare or Medicaid eligibility.

“Another concern is failing to understand or advise the client with regard to the tax exposure associated with the real estate transaction being entered into. Finally, we have opened claims wherein the lawyer did not understand the intended use of property being purchased or sold and failed to properly advise the client prior to completing the transaction. After the closing, the lawyer is blamed for not maximizing the client’s interest in the property.”

Family Law

Family law is an area of practice that historically has not cracked the top four in terms of generating claims. However, in 2016, it did, representing 15 percent of WILMIC’s claims. Why?

Anderson says, “Lawyers continue to be blamed for errors associated with the drafting, handling, and filing of qualified domestic relations orders (QDROs). We saw several claims arise last year due to a dispute over the drafting of a QDRO. In addition, fee disputes have tended to plague family law practitioners, with clients often feeling that they did not achieve the result they were hoping for, after spending a lot of money going through a contentious divorce dispute.”

Always make sure that you can diligently and competently handle a client matter before agreeing to accept the retention to do so.

Those disputes often arise from unrealistic expectations, which sometimes comes down to communication with clients. Anderson urges lawyers to avoid overpromising and says that if a client conveys expectations that are not realistic, you and the client might not be a good match.

“Client selection is an important tool to avoiding a problem down the road. Lawyers should remember that ‘No’ is a complete sentence. Not every client is right for you.”

Other Frequent Claims Issues in 2016

Plaintiff’s personal injury work has historically been the most frequent source of claims, although last year it did not rank in the top four. Anderson says these claims can be costly to resolve. “Although the number of claims in this area only represented 8 percent of the claims reported to WILMIC in 2016, those claims once again were the most expensive in terms of claims paid, by far. They represented nearly 30 percent of our total indemnity payments for the year.”

Matt Beier, a claims attorney at WILMIC, says missing a deadline is the most common mistake made in plaintiff’s personal injury work. “This can happen in a number of ways. There may have been a clerical error causing the wrong date to be entered into the calendaring system. Or, a lawyer may have trouble securing experts in a timely manner to support the claim. And finally, we often see a failure on the part of a lawyer to account for the fact that the underlying accident took place in a different jurisdiction or involved a municipality or state or federal government, which creates a shorter statute of limitations period than anticipated.”

2017 Resolutions

All of this points to several new year’s resolutions that can help lawyers avoid the same pitfalls others ran into in 2016. Anderson says, “Careful calendaring of client matters and frequent and clear communications with the client remain, as they always have been, important risk management safeguards to avoid claims.”

In addition, he urges lawyers to carefully consider client selection to try and avoid a claim. “And, contacting your malpractice carrier as soon as you believe a mistake has been made in a case is an important consideration that can protect your coverage and could help you repair a claim or potential claim. Accurate and precise calendaring, caution when drafting QDROs, and taking on cases in which you have the appropriate expertise are very good malpractice avoidance procedures.

“I know those are a lot of issues to consider, but if you keep those things in mind, it may help avoid big headaches down the road. Practicing good risk management can help you avoid a claim or grievance before it happens, and it can also equate to great client service. That can lead to happy, well-represented clients and a great year in 2017!”