§ 5.03 RISK MANAGEMENT

• Jurisdiction: Washington

§ 5.03 RISK MANAGEMENT

Law firm risk management is a broad topic that can vary greatly depending on firm size, individual practice area, and clientele. As an adjunct to the general treatment of malpractice law in this chapter, two facets of law firm risk management are addressed: (1) prospective actions firms can take to lower their malpractice risk and (2) considerations facing firms if a claim occurs.

[1] Prospective Actions to Lower Malpractice Risk

Three key elements of any law firm risk management plan are (1) conflict management, (2) calendaring, and (3) clear and consistent communication with clients.

[a] Conflict Management

In Jones v. Rabanco, Ltd., No. C03-3195P, 2006 U.S. Dist. LEXIS 53766 at *2 n.1 (W.D. Wash. Aug. 3, 2006) (unpublished), the court offered pithy advice in disqualifying a law firm that had not run a conflicts check until well into a case: "The Court notes that appearing in court and giving notice of representation before a conflicts check has been run is not advisable on any level." Jones illustrates a simple lesson for all firms—they must have conflict systems in place appropriate to their size, and they must use them. Although commercial products vary, at base a conflict system needs to include the names of current and former clients and adversaries—whether parties in litigation or counterparties in nonlitigation settings. In Atlantic Specialty Insurance Company v. Premera Blue Cross, No. C15-1927-TSZ, 2016 U.S. Dist. LEXIS 54333 at *45 (W.D. Wash. Apr. 22, 2016) (unpublished), the court offered equally succinct advice in disqualifying a firm that had not inputted complete information into its conflict system: "Similarly troubling to the Court was the fact that [Law Firm] could not advise the Court as to whether [Corporate Parent] was identified as a firm client in [Law Firm's] conflicts check system." Atlantic Specialty illustrates another simple lesson for all law firms—they must enter complete information into their conflict systems to receive accurate results. Although Jones and Atlantic Specialty were disqualification cases rather than malpractice cases, conflicts can form the core of breach of fiduciary duty claims against law firms or potentially heighten jury risk in negligence-based claims by making the law firm involved appear to be a bad actor.

[b] Calendaring

Lawyers constantly face deadlines, whether client- or court-imposed. Although some deadlines can be moved by agreement, others are fixed and unforgiving...