News Flash: W. Virginia Lawyer Sued by Client

It may not exactly be a news flash if a disgruntled West Virginia client alleges his attorney represented his ex-wife’s interests in a divorce matter since claims like this happen everyday, but the treatment that attorney Trent A. Redman is getting in the West Virginia legal press is a good example of how an attorney accused of malpractice can often feel like the harsh light of the publicity works against them.   The piece dated November 13, 2009 in the West Virginia Record, shows how sometimes simply the allegation that the lawyer was negligent is enough to be newsworthy.  The article covers several allegations in the client’s complaint, generally alleging that attorney Redman, a former family court judge, did not heed the client’s advice throughout the divorce trial and at one point ignored attempts by the client to contact Redman.  Certainly, attorney Redman will have a response to the client’s allegations, but unfortunately, unless the response receives the same level of publicity as the client’s complaint, the general public may never know Redman’s side of the story.  If the negative publicity of a malpractice claim hits the street before a formal answer to the complaint has been filed, the attorney responding to the allegations is often forced to say to a reporter, “No comment while the suit is pending,” when the desire is to defend your good name.

Attorney Sanction: $5000 and Credit Monitoring for Everyone

U.S. District Court Chief Judge Michael Davis recently issued an order assessing a $5000 sanction against a lawyer who mistakenly filed a document containing 179 Social Security numbers.  Details of the matter were provided by the MinnLawyer Blog, including excerpts of the October 20, 2009 order in which the Chief Judge writes, “The Court is  deeply concerned with the harmful and widespread ramifications associated with negligent and inattentive electronic filing of court documents.”   In August, Minneapolis attorney Vincent J. Moccio filed an affidavit that contained the names, dates of birth, and full social security numbers of 179 individuals.  The sanction goes beyond the $5000 that is to be directed to a charitable organization.  Moccio was also ordered to notify all the individuals named in the disclosure and provide each with individualized credit reports and credit monitoring for 12 months.   Judge Davis, in the order, expressed concern about identity theft, and the significant damage that can occur with electronic filing of court documents.  The case is a reminder that the onus for taking responsibility for what’s in a court filing is completely on the parties – not the court administration.  Rule 5.2(a) of the FRCP require that only the following may be included in any filing:

• The last four digits of a social security number;
• The year of an individuals birth;
• The initials of a minor;
• The last four digits of a financial account number.

Recognizing Pro Bono Lawyers

Today we are blogging from the 1^st District Volunteer Lawyer Recognition CLE in Dubuque, IA.  The program is sponsored by the Iowa Legal Aid Volunteer Lawyers Project.  Chief Judge Marsha Ternus of the Iowa Supreme Court kicked off the day by recognizing lawyers who have given much of their time through pro bono services.  MLM is scheduled to speak on preventing malpractice claims later in the program.  Earlier in the program, Assistant Chief Judge John Bauercamper of the 1^st Judicial District provided a good list of advice for lawyers dealing with judges during these times when so many judiciary budgets are tightening.  Here are the highlights:

• Late settlement creates problems for budget strapped courts who have a very tight calendar.  Too many case settled on eve of trial and although the cost of civil jury trial has reduced this problem somewhat, it is still a problem in criminal and family law areas.  Settling matters a little earlier is one of the best things lawyers can do to make the system work better.
• Communicating with judges by email saves time, especially with routine things, and judges encourage it.  You can send the email to the presiding judge or a clerk if a judge hasn’t been assigned yet and usually they will forward it.
• Judges who ride around the circuit aren’t always able to get to their U.S. mail.   If you owe the judge a brief, jury instructions, etc, send an email or they might not see it for several days.
• Judges prefer Word format in case they need to copy, and justify the format.  PDF is Okay but sending it in word is easier on staff time.
• Having forms like sentencing orders on your computer can help you better communicate with your client about plea bargains and help cut down on the mistakes that judges sometimes make when they don’t understand your plea arrangement.  With judges having fewer court reporters available, taking the time to use the format that the court is familiar with is a big help.
• Keep your addresses (email, etc) and fax numbers up to date.  Clerks spend a lot of time checking to see if things got delivered.  If you change your internet provider, let the court know.
• Have different fax numbers for incoming and outgoing faxes.  This tip helps prevent log jams in the fax paper tray.
• Something Judges like the least: discovery disputes.  Do your best to resolve them.  Bad things will happen to your client if they haven’t answered interrogatories.  Amazing amount of time spent on the hearing schedule dealing with interrogatory problems.
• Stay up to date in general.  Judge Bauercamper relayed a story about a lawyer who was recently served with a subpoena 25 years after the judge who signed it had retired.  There was quite a debate as to whether the subpoena was still valid.   This an extreme example, but you want to stay on top of things to prevent an embarrassing situation for you in front of judges, fellow lawyers and clients.

For Firm Letterhead, What’s in a Name?

Is a sole practitioner required to also include their name on their firm’s letterhead if their name is already included in the firm’s name?   Seems like a minor point but the rules of ethics that address firm names (usually modeled after ABA Model Rule 7.5 Firm Names and Letterhead) in many cases do not specifically state  that any lawyer names are required on the firm’s letterhead.  We asked ethics lawyer Eric T. Cooperstein who confirmed that, at least in Minnesota, in the case of 2 person firm Smith & Jones, Rule 7.5 does not appear to require that attorney Smith also include his or her full name on the letterhead.  However, Cooperstein goes on to add that the letterhead could be considered a form of advertisement, triggering Model Rule 7.2(c), which requires the identification of an attorney responsible for the advertising.   As a practical matter, including the full names of the licensed attorneys on the firm letterhead may significantly help to prevent possible misidentification that a non-lawyer at the firm is a licensed attorney.  Also, a firm with common names such as Smith & Jones could easily be sharing the same name as another firm in the jurisdiction, so including the attorney names in full on the letterhead would help to prevent further misidentification.  As always, we recommend that you consult your local ethics rules (or a local ethics guru like Eric Cooperstein) for clarification on firm names and letterhead requirements.

Practice Alert: New Medicare Requirements in Settling Personal Injury Claims

New Medicare notice and reporting requirements, some of which take effect January 1, 2010, may have a significant impact on the way injury claims and settlements are handled for medicare recipients.  The new notice and reporting requirements of the Medicare Secondary Payer Act (MSP) require workers’ compensation, liability, and no-fault carriers to report certain information whenever there is a settlement, judgment award or other payment involving a current Medicare beneficiary.  With the new reporting requirements, it is important that defense attorneys and claim handlers know whether a claimant is a Medicare beneficiary before there is a settlement, judgment, award or payment made.  The penalties for late reporting are high: $1000 a day.  Whitney L. Teel of Cousineau, McGuire Chartered writes about how to settle cases without exposing clients to penalties under the MSP in the firm’s Summer 2009 newsletter.

Who Has Standing to Sue a Lawyer?

Legal malpractice usually involves an attorney failing in a duty or responsibility to a client.   So, are there ever times when a non-client has standing to bring a malpractice claim against an attorney?  Afterall, the attorney had no contractual privity with the non-client, such as a beneficiary of a trust, so if a mistake is made, can you really say to the attorney, “You had a duty to me?”   The general rule is that an individual must have a contractual relationship with an attorney in order to have standing to bring a claim of malpractice.  However, in many jurisdictions, there are exceptions that allow some non-clients to have standing too.  In the example of the beneficiary of the trust, in many jurisdictions such a party would have standing to bring a claim against the lawyer who created the defective trust because the party was a direct and intended beneficiary of the lawyer’s services.   Who is a direct and intended beneficiary is usually the issue at question for courts faced with a malpractice action against a lawyer by a non-client.  Hinshaw & Culbertson LLP writes about a recent case of Leonard v. Dorsey & Whitney LLP, 2009 WL 88855, __F.3d__(8th Cir. 2009),   where the Eighth Circuit examined the limitations of the standing issue finding that, although an investment bank was a loan participant in a matter where the firm represented another bank that oversaw the loan, the court reversed the decision of a lower court, applying the Minnesota Supreme Court’s rule that a lawyer cannot be found liable to the investment bank because it is not a third party that is a “direct and intended beneficiary of the lawyer’s services.”

New Lawyers and Malpractice Insurance

William Mitchell College of Law in St. Paul, MN is hosting a four part seminar series for new lawyers on starting a solo law practice.  We were asked to join the seminar discussion on Tuesday September 29, 2009 in a session titled, “Setting Up Your Law Firm” and were taken back by the number of questions from new lawyers and 3rd year law students about the availability of malpractice insurance.  With so many new lawyers establishing solo practices upon graduation from law school, and only having a small handful of clients at the startup, many were concerned about the economics of paying for malpractice insurance while having very limited income.  What most new lawyers don’t not realize is that many insurers provide low cost policies for beginning lawyers or lawyers in certain kinds of practices.  A newly licensed attorney will often qualify for a $200,000/$600,000 policy with a $1000 annual aggregate deductible for around $500 a year.   New lawyers have significantly less exposure to a malpractice claim because they don’t have the prior acts exposure of an attorney who’s been in practice for a decade or more.  Consequently, the cost of the insurance premium can be somewhat less for the new lawyer.  Keep in mind, prices vary with the risk exposure so consider checking with an insurance representative to compare pricing.

New Question for Voir Dire: Do You Tweet?

Social media tools are changing courtrooms across the country. Jurors Tweet during trials, lawyers blog and judges face calls for mistrials. Recently, NPR host and commentator Neil Conan interviewed Judge Gary Randall of the District Court of Douglas County, NE and Hinshaw attorney Michael Downey to discuss social media in courtrooms.  “In picking juries recently, we’ve determined that jurors have had access and been posting information on Facebook,” Reports Judge Randall.   ”If it’s a high media or high profile trial, they’ve been getting responses from their friends saying, maybe you’re going to be on so and so’s case…”  Judge Randall points out that education by judges and lawyers on what is acceptable use of social media during a trial is a must, and that banning electronic devices in the courtroom is common, but not always the most helpful approach.    More than ever, attorneys need to understand social media and how it may affect their client matters.  For more information about the interview and what judges are doing to control electronic courtroom behavior, click here.

FTC’s “Red Flags Rule” May Require Attorney Compliance

A new Federal Trade Commission rule designed to protect consumers from identity theft may impose duties on lawyers who regularly defer client payments while providing legal services.  The Red Flags Rule, requires creditors to develop and implement plans to detect and respond to activity signaling possible identity theft.  The American Bar Association has recently asked the U.S. District Court for the District of Columbia to bar the FTC from applying its Red Flags Rule to practicing lawyers.  The ABA’s position is that the FTC is exceeding the powers delegated to it by Congress and misinterpreting the Rule, the ABA is seeking declaratory and injunctive relief in advance of pending FTC Rule enforcement on Nov 1, 2009.  The ABA complaint alleges that the FTC in preparing the regulation, failed “to articulate, among other things: a rational connection between the practice of law and identity theft; an explanation of how the manner in which lawyers bill their clients can be considered an extension of credit under the FACTA; or any legally supportable basis for application of the Red Flags Rule to lawyers engaged in the practice of law.”

 If injunctive relief is not forthcoming, you may want to know more about the Red Flags Rule and whether your firm billing practice require that the firm take measures to comply with the new rules.  “Red Flags Rule: Will You be Compliant or Complacent?” was published recently in the July/August issue of The Ohio Lawyer and is a good overview of the new regulations.  How should a small firm lawyer comply with the new trade regulation?  Jim Calloway’s Law Practice Tips Blog suggests that maybe the answer is to reduce to writing the many protections of our clients’ confidentiality we already have in place.  Click here for more tried and true tips for preserving client/matter confidentiality and file security.  To follow the ABA’s lawsuit in US District Court, click here.

What happens to a Firm if a Lawyer Doesn’t File Taxes?

A recent case from South Carolina  reported in All Business demonstrates that by failing to follow tax law, attorneys also violate state rules of professional responsibility.  And for law firms, especially small practices, the loss of an attorney’s revenue because of a suspension or other disciplinary action could pose significant business problems.   One complicating factor is that some law firms that are structured as LLPs or LLCs issue partners K-1 tax forms and not W-2s, meaning that a firm may not know if its partners are informing the IRS of the correct amount of their income — or filing their taxes at all.   For more analysis about the firm’s exposure in this matter read the rest of the All Business article here. 

The problems with lawyers and tax obligations is not exclusive to law firms.  An associate law professor at Hamline University whose law school bio lists tax law as one of her specialties was charged Wednesday with multiple counts of tax fraud and evasion.  Because of the professor’s work in criminal justice, the case creates potential conflicts of interest, causing prosecutors to move the matter to nearby Dakota County.   Read more about this case here and the response by Hamline University here.