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.

Lawyers Going Bare

“Going bare” has long been a phrase in the LPL insurance world referring to lawyers who choose to practice without professional liability insurance.  Some recent data collected by the Minnesota State Bar Association, Minnesota Continuing Legal Education, and Minnesota Lawyers Mutual Ins. Co. shed light on who is practicing law without insurance, despite the risks.   Of over 300 Minnesota small firm lawyers surveyed in July (from firms of less than 20 attorneys) 13% indicated they were without professional liability insurance coverage.   Lawyers practicing in the areas of criminal defense, real estate, intellectual property, and estate planning make up a disproportionate number of the uninsured lawyers – with criminal defense lawyers being the group that is most likely to go bare.  Those lawyers represent 4% of the overall respondents but 16% of the uninsured lawyers.   To view results from the overall economic survey, including information on billing rates, annual attorney income, retirement plans, and job satisfaction, go to Minnesota CLE’s web site at www.minncle.org or click here.

Susskind: The End of Lawyers?

When a guy with a PhD from Oxford in artificial intelligence and problem solving writes a book called, “The End of Lawyers?” he will tend to get a lot of attention.  That was the case this week at ABA Techshow 2009at the Chicago Hilton after noted author and futurist Richard Susskind took the podium to give yesterday’s plenary.  Susskind wrote on the commoditization of legal services and predicted that in a decade legal services will move from what he calls “bespoke” services – or highly tailored and individualized — to services that are systemized, packaged, and commoditized.  He uses the Deloitt example of commoditizing tax and accounting services after, “100’s of experts spending a decade transforming the packaged services.”

Lawyers will be forced to change.  Susskind points out that there are sustaining technologies – those that support the way a sector works – and disruptive technologies – those that cause change – and there are at least ten disruptive technologies headed on a collision coarse with the traditional practice of law.  These include:  closed client communities, online dispute resolution, embedded legal knowledge, and online marketplace. 

Are small firms headed the way of the dinosaurs?  Not really, is the feeling of many of the lawyers and consultants here at Techshow.  “Small is the new big,” is the way legal technology consultant Ross Kodner puts it.  To follow more techshow happenings click here.

Let’s Spread the Word…

Today we begin our 24^th season presenting ethics and malpractice CLEs to lawyers with a three hour seminar in northern Virginia.  It is a tradition that began out of necessity: going to our client’s towns and informing lawyers about malpractice claims we see every day, and reminding them that simple adherence to the rules of ethics will greatly reduce the risk of malpractice.  Before the season is over, we will have visited nearly 7000 lawyers in 40 cities in 9 different states, passing along advice and tips – along with a horrible claim story or two – in order to make lawyers better practitioners and more successful in their practice.  We hope you can join us this year.  Keep an eye on our list of cities where we will be presenting our popular seminars at no charge, at come see one of the best ethics programs for lawyers available.  You can find the list here.