The Insurance Journal reports a rise in legal malpractice claims. Incredibly, there has been no hand wringing about increased malpractice rates for lawyers or fears that lawyers will no longer be able to keep their practices open as their insurance rates rise. We have never had a legal malpractice claim yet our rates continue to increase. No one cries for us.
A part of the rise in the number of legal malpractice claims is countersuits against lawyers who are suing their clients to pay their bill. But I think the larger problem is what the article calls "door law," a phrase I have never heard before but I really like. Door law is when lawyers take any client who walks through the door who might generate a fee. When law firms step outside their areas of expertise, bad things are going to happen.
As I have always said, the biggest personal injury cases typically come not to personal injury lawyers but to domestic, workers comp, and criminal lawyers. Why? Because everyone’s got a "guy" when there is a catastrophic injury case. Because of the nature of these areas of practice, these lawyers see a higher volume of clients than personal injury attorneys who are only handling serious cases.
The smart play for these lawyers – and, believe me, I get that this is self serving, but stay with me – is to refer the case out to someone who knows how to handle the case.
In terms of the overall number of claims filed with legal malpractice insurers, I think countersuits are a big part of the story. As Above The Law quoted yesterday, the Boston Globe recently ran an article on a growing number of fee disputes between corporate clients and "BigLaw" firms:
Although the matter is still being contested — Northland has asked a court to reduce its bill still further, to zero — the arbitrator’s finding calls into question the business model Goodwin and many other large law firms have relied on for decades: Deploying huge legal teams to pursue clients’ cases, often assigning more than a dozen lawyers to compile research, conduct depositions, and draft motions.
The promise of such treatment is part of what attracts clients to large firms, but it can also leave them shocked when they get bills for work by a multitude of lawyers, each costing upward of $250 an hour, and some much more.
The standard business model at big corporate law firms is called "leverage" for a reason: the firm "leverages" each senior partner’s cases by overworking them with a pyramid-shaped phalanx of junior partners, senior associates, and junior associates. Of course, there’s no guarantee that all that money will get you a better result; consider the utterly, totally botched McCourt divorce which just left ownership of the Dodgers in limbo.
But Ron’s point is well-taken: most solo and small firm lawyers are better served by referring large-damages — and thus potentially large-malpractice-liability — cases off to specialized firms that routinely handle those cases. Although there are plenty of "domestic, workers comp, and criminal lawyers" (and lawyers who handle issues relating to unions) who are wise enough to refer everything of substantial size off to a specialized plaintiffs’ firm and then collect a big check a year or two later, many lawyers don’t even recognize the full potential of many of their cases. I’ve heard many lawyers talk about catastrophic, permanent injury cases that they settled for less than $50,000, cases where the client — and the lawyer — could have done much better by referring it out.
The difference between specialized plaintiffs’ firms and smaller generalized practices isn’t just experience, though that helps, but that the firm is structured to handle these types of expensive, time-intensive cases. Firms which include a substantial practice of major personal injury cases (e.g., medical malpractice, catastrophic injury, wrongful death, etc) are set up in a completely different way from most small firms and corporate firms; for example, they’re better capitalized, have in-house nurses and paralegals familiar with the cases, have databanks of experts and legal research, and have multiple checks in place for ensuring that critical deadlines (filing of complaint, response to motions, completion of discovery, disclosure of expert reports) are met.
But the door does swing both ways. There’s a temptation at specialized large-damages firms to take "little" cases to increase cash flow. Same goes for the hourly billing cases.
There’s nothing that forbids large-damages plaintiffs’ firms from taking these types of cases — just like how there’s nothing that precludes a well-prepared and adequately-capitalized solo practitioner from taking on a large-damage case — but the moment you bring on a "little" case is the moment you set yourself up for either (a) an inefficient use of your time and energy overworking a "little" case or (b) not devoting enough time and energy on a "little" case. The former doesn’t serve your interests or your other clients’ interests; the latter doesn’t serve your "little" clients’ interest.
That’s not to say that lawyers have to specialize on a particular type of claim; consider the aforementioned McCourt divorce, in which the warring McCourts brought in, respectively, Stephen Susman and David Boies, neither of whom can even pretend to any notable experience or specialization in California family law. That’s okay: the nature of the claim was similar to their experience and specialization, and they both brought along family law experts to help them out.
But unless you or your client has five, six or seven figures of cash just waiting to be spent on specialized assistance, be careful taking "just one" or "just a few" of cases that don’t fit in your firm portfolio.
If you have been seriously injured, contact a personal injury lawyer.