Instincts and Income -- Is There More to Client Screening?

Mark C.S. Bassingthwaighte, J.D.
Regional Risk Manager
mbass@alpsnet.com

A difficult task during risk assessment visits is determining a firm's client screening skill, and whether the firm has a standard approach among its attorneys. Some of you may have heard me place different emphases on this issue. I do not believe there are "standard" required client screening practices. However, I believe that attorneys may see a true malpractice risk reduction benefit by taking further steps in
their client screening practices.

A typical client screening approach begins with refusing to accept work in unfamiliar practice areas i.e., divorce or child custody work. Some attorneys make an exception if the prospective client is able to pay fees up front, or if the attorney has bills to pay and the prospective client means a new source of income.

After getting past the area-of-practice hurdle, the case itself often is the attorney's next concern. The attorney often tries to determine the likelihood of a positive outcome. If this hurdle is past, the attorney's individual screening style kicks in, and various other screens are used.

If a case "looks good," many attorneys will try to determine whether the client can pay for the services. Other attorneys simply follow "gut instinct" guidance in an attempt to predict whether the attorney and client will be able to work together. Sometimes they will conclude the answer is "yes," even if the relationship simply is one of mutual tolerance, rather than an effective and positive working relationship.

As is the case with all that we include in the Risk Management Report and On the Docket, this is not legal advice and is not intended to be responsive to any individual situation or concern. Independent research and analysis are always necessary to determine the constraints and best way to act for each attorney in each matter in each jurisdiction.

In many instances, the attorney's screening stops here. For those attorneys who further screen their potential clients, the remaining steps often include a minimal check for conflicts of interest, and in some instances a senior attorney or intake committee will review the prospective case. Unfortunately, the conflicts check may be memory-based and limited to a review of current and past client names, or informally circulating the client name among the firm's attorneys. Some firms' intake committees and senior attorneys will limit their case reviews to significant plaintiff's personal injury cases, with all other work left to individual attorney discretion.

I understand that attorneys and firms operate under certain real constraints. Bills need to be paid, and when legitimate work comes to the firm, it is difficult to turn down. However, I must add that taking "whatever comes in the door" is not effective risk management, and often it can result in a serious headache. You will be held to a high standard of care, even if the representation is outside your usual area of practice.

Some attorneys have enough experience with different people and clients to have developed an effective instinct about what types of people make trustworthy clients. Unfortunately, in many cases that experience was developed over time, from the hard lessons of unpaid bills and narrow escapes from costly mistakes. All attorneys should use at least a basic conflicts check that relies on the attorney's or firm's written records, not just the attorney's memory.

Many attorneys rely upon intake procedures limited to what I have presented here, and never have had a single disciplinary complaint or malpractice claim. Conversely, other attorneys have used additional screening techniques and had several serious problems arise. Unfortunately, no particular screening technique guarantees freedom from bar complaints or malpractice lawsuits. Still, you should ask yourself: can you take further screening steps and, if so, will the benefits justify the extra time and commitment required?

I believe that limited efforts indeed can help you identify the potential "problem client," and avoid him or her from the outset. I think most attorneys would agree that this result alone makes the extra effort worthwhile. In other words, the purpose of your screening should be to obtain quality clients and legal issues, and avoid the others.

The practice of law quickly is becoming as much a business as it is a profession. In the end, the higher the percentage of your clients who have had their matter successfully resolved and have paid their bills, the more successful is your business. Dissatisfied clients and clients who do not pay their bills (for whatever reason) represent significant risks to the ongoing success of the business.

There is no one effective approach to client screening. Screening truly is an ever-evolving process as clients, practices and issues change and evolve. However, I can recommend a starting place. I offer the following questions to review in your head and/or directly with the prospective client. They come from the various questions your peers ask in their respective intake processes.

1. Do you have the time to take on the new case and give it the proper attention that it deserves?

If not, say "no." A common trap is taking on a high-dollar case, thinking a fast settlement is possible, and then finding you are unable to litigate the matter and handle your other cases when the "high-dollar" case doesn't settle. The high-dollar case often receives the most attention, while several smaller matters get overlooked and this is where the claims will arise. Critical mistakes that lead to claims often come from firms with overwhelming workloads. Don't forget to consider the workloads of non-attorney staff, because errors also occur at the staff level.

2. Do you have the expertise necessary to handle the case?

Don't dabble! There is no such thing as a simple will or a cut-and-dry personal injury case. If you aren't prepared to handle the difficult cases in a given area of practice, don't accept the apparently simple ones.
Even in a "simple" case, inexperience or insufficient expertise can cause you to miss legal issues or potential problems.

3. If this is a contingency fee case, do you have adequate funds to take the case on?

Avoid situations where case management decisions are dictated by economics instead of good judgment. Rely-ing only upon economic concern can be a recipe for disaster. Firms have imploded over such dilemmas. Again, don't count on fast settlements make sure you and/or your firm can handle the case if it doesn't settle.

4. Can the client afford your services?

If not, say "no" or consider handling the matter pro bono. If your client cannot afford your services, by accept-ing the matter you are courting a fee dispute. At the very least, collection is likely to be difficult and if a fee dispute develops, a malpractice claim often follows.

5. Is the prospective client a family member or friend?

Don't be fooled into taking work as a favor to a family member or friend. Remember that if you wouldn't do the work for a stranger, you are not qualified to do it for a friend or family member. If the work is not satisfactory, they still can and will sue for malpractice.

6. Has the prospective client brought you the matter at the last minute?

If so, say "no." If you do not have adequate time to perform a thorough investigation, you run the risk of failing to detect a possible affirmative claim or a defendant, or missing a statutory deadline. You don't want to end up paying for your client's procrastination.

7. Has the prospective client had several different attorneys?

Heed the warning light! The client may wish to avoid paying fees or may be impossible to satisfy. Or, you may unknowingly walk into a matter that a prior attorney mishandled or neglected, and might not catch the prior attorney's errors until it is too late.

8. Does the prospective client behave irrationally or appear confrontational?

If you are unable to work effectively with someone during the initial interview, the relationship is unlikely to get better over time. The difficult client can become the angry client who will not hesitate to sue you for malpractice.

9. Is the prospective client likely to be "high maintenance?"

This is difficult to assess, yet important to consider. An attorney can unintentionally create a "problem client" simply by not addressing the client's expectations. If you are not able to adjust your delivery of services to meet the needs of a demanding client, then don't accept the matter. Your inability to meet the client's needs will result in a dissatisfied and frustrated client.

10. Does the client have unrealistic expectations?

You must determine what the expectations are up front. If they truly are unobtainable and you cannot convince your client of this fact, then refuse the matter. With an unreasonable client, it does not matter if an objective
outsider believes that under the facts, you obtained an outstanding result. The potential fee isn't worth the headaches and possible malpractice suit that often follow such a client.

11. If it is a prospective business client, is the client financially stable and ethically sound?

This factor is particularly important in deciding whether to assist a client with a start-up business venture. Don't place yourself in the position of being the deep pocket (i.e., the insured attorney) when you discover too late that the client was dishonest, financially unsound, and unable to successfully establish the business. Defrauded investors will look to you for their recovery. Prudent transactional attorneys therefore will investigate the background of a prospective client before agreeing to represent that client. Follow their lead.

12. Do you have trouble just saying "no"?

A surprising number of attorneys struggle with the inability to refuse a client. Let me suggest a different approach to saying "no." You could instead say something like "You have an interesting matter, but my other commitments prevent me from giving your matter the attention it deserves. May I suggest that you contact the state bar referral line?"-- or -- "Unfortunately, loyalties to current clients prevent me from accepting your matter at this time." Either statement can be quite effective. Remember that you never will do your best work with clients you didn't want or on matters that you simply never wanted to do.

When coupled with an effective conflict checking system, a screening process can be a significant risk reduction tool. Periodically review your screening questions and decide with the other attorneys in your office, what issues each of you should address. A sense of assurance will follow a standardized screening approach. Remember that each of you is responsible for the clients that your fellow attorneys bring into the firm. Personally, I'd want to know that everyone approaches client selection with the same level of commitment and priority. Every poor judgment directly affects your firm's profit and reputation, and client screening helps protect your firm's reputation and profitability.

CASE NOTES: A compendium of risk management cases

Case One. When Estate Attorney Drafts a Trust and Will to Implement a Decedent's Estate Plan, Trust is not "Extrinsic Evidence" of the Decedent's Estate Planning Intent. Bullis v. Downes, ___ Mich. App. ___, ___ N.W.2d ___ (April 11, 2000).

Plaintiff was personal representative of her deceased mother's estate, which included three real properties. Defendant attorney drafted a will and trust for plaintiff's mother. The mother signed the will and trust, and conveyed two of the real properties to the trust. Although the trust was silent on distribution of the real properties, the will explicitly conveyed those two properties to plaintiff daughter. As personal representative of the estate, plaintiff tried to convey the two real properties to herself. Her brothers sought to remove her from her personal representative position, claiming that the trust required equal division of all estate property. In that estate dispute, the defendant attorney testified that the mother intended that plaintiff receive the two real properties. He testified also that the mother conveyed the properties to the trust rather than having them
go through the estate or treating them as a gift during her lifetime. Plaintiff and her brothers settled the estate dispute, and plaintiff then sued the defendant attorney for malpractice.

The trial court dismissed plaintiff's malpractice case, finding that she could not sustain a case against the attorney. The court relied on a prior case allowing will beneficiaries to sue for malpractice, and held that the prior case "only requires the attorney to draft a will that properly effectuates the distribution scheme set forth" in the will. The trial court therefore ruled that plaintiff could not use extrinsic evidence to demonstrate the decedent's intent, and could not use the deeds to show that the defendant lawyer had frustrated the mother's estate planning intent.

The appellate court disagreed and reinstated the malpractice action. Without commenting on the merits of the case, it determined that the trial court too narrowly construed the existing cases. The appellate court held that in modern estate planning, attorneys use many documents to effect the decedent's intentions. In this case, the court determined that as stated in the defendant attorney's testimony regarding the mother's estate planning intent, the deeds were part of the estate plan.

ALPS Comment: The attorney here could not use the extrinsic evidence rule to successfully defend a malpractice claim, because the court determined that other documents comprising a decedent's estate plan were not "extrinsic." This case illustrates the need for attorneys to develop and continually improve their writing and drafting skills.

The estate attorney explained his drafting decisions on the ground that the will was clear, and the trust document contained references that the will's provisions should be implemented first. However, the attorney could have chosen an easier way to ensure fulfillment of the decedent's intent namely, insert a clause in the trust to specify that the decedent's real property should be distributed according to the will. We don't know if the attorney's interpretation carried the day on remand. We do know that differing interpretations existed as to the decedent's intentions, as is so often the case in estate litigation. And even if the attorney eventually "wins" his malpractice case, more careful drafting certainly would have prevented the anguish and expense of defending the malpractice suit.

Case Two. Attorney Creates Attorney-Client Relationship Even Though He Entered an Unauthorized Appearance on the Client's Behalf. Warren v. Williams, ___ Ill. App. 3d ___ , ___ N.E.2d ___ (May 16, 2000).

Defendant was attorney for a town that a crime suspect sued for federal civil rights violations by two of the town's policemen. In federal court, defendant attorney entered an appearance for the town, as well as for the two police officers who allegedly violated the suspect's civil rights. Attorney advised the court that his joint representation appearance was necessary to clear the town of any liability. However, once attorney success-fully got the town dismissed from the action, he failed to perform further services on behalf of the two police officers. The federal court later entered a default judgment against the officers, awarding $40,000 in damages against the officers. One of the officers then sued attorney in state court for malpractice. In that action, attorney argued that he never created an attorney-client contractual relationship with plaintiff, because he never contacted plaintiff regarding the civil rights action, and never discussed the case with plaintiff. Thus, attorney claimed that he lacked the element of duty required for plaintiff's malpractice action. The trial court rejected attorney's argument, and found in plaintiff's favor.

The appellate court agreed, stating that when attorney entered his appearance in the federal action on behalf of plaintiff, the town and the other policeman, attorney created an attorney-client relationship with plaintiff. The court held this was so even if plaintiff did not expressly authorize attorney to represent his interests. The court emphasized that legal malpractice actions do not require contractual attorney-client relationships.

ALPS Comment: This case highlights two potential pitfalls: (a) entering a formal appearance for a party that you do not intend to make your client; and (b) thereafter, neglecting to perform any follow-up work on behalf of that party. Remember that you should not enter an appearance on behalf of any party unless that party consents and you intend to fully represent that party as your client. This is true even if you think the original formal appearance for the other party will help you advance your client's position. You cannot undertake representation of a party solely to benefit another client, and then abandon that party once you have achieved your goal on the other client's behalf.