Disclosing Potential Malpractice to a Client
Adopted: July 17, 2015
Opinion analyzes a lawyer’s professional responsibilities when she discovers that she made an error that may adversely impact the client’s case.
Introduction:
Lawyers will, inevitably, make errors, mistakes, and omissions (referred to herein as an “error” or “errors”) when representing clients. Such errors may constitute professional malpractice, but are not necessarily professional misconduct. This distinction between professional or legal negligence and professional misconduct is explained in comment [9] to Rule 1.1, Competence:
An error by a lawyer may constitute professional malpractice under the applicable standard of care and subject the lawyer to civil liability. However, conduct that constitutes a breach of the civil standard of care owed to a client giving rise to liability for professional malpractice does not necessarily constitute a violation of the ethical duty to represent a client competently. A lawyer who makes a good-faith effort to be prepared and to be thorough will not generally be subject to professional discipline, although he or she may be subject to a claim for malpractice. For example, a single error or omission made in good faith, absent aggravating circumstances, such as an error while performing a public records search, is not usually indicative of a violation of the duty to represent a client competently.
Although an error during the representation of a client may not constitute professional misconduct, the actions that the lawyer takes following the realization that she has committed an error should be guided by the requirements of the Rules of Professional Conduct. This opinion explains a lawyer’s professional responsibilities when the lawyer has committed what she believes may be legal malpractice.
This opinion does not address requirements under a lawyer’s malpractice insurance policy to give the insurer notice or to report a potential claim. Lawyers are encouraged to read their policies. This opinion also does not address settlement of a malpractice claim. Lawyers are reminded that Rule 1.8(h)(2) prohibits settlement of a malpractice claim with an unrepresented client or former client unless the person is advised in writing of the desirability of seeking and given a reasonable opportunity to seek the advice of independent legal counsel.
Inquiry #1:
When the lawyer determines that an error that may constitute legal malpractice has occurred, is the lawyer required to disclose the error to the client?
Opinion #1:
Disclosure of an error to a client falls within the duty of communication. Rule 1.4(a)(3) requires a lawyer to “keep the client reasonably informed about the status of the matter,” while paragraph (b) of the rule requires a lawyer to “explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” Comment [3] to the rule explains that paragraph (a)(3) requires that the lawyer keep the client reasonably informed about “significant developments affecting the timing or the substance of the representation.” Comment [7] to Rule 1.4 adds that “[a] lawyer may not withhold information to serve the lawyer's own interest or convenience or the interests or convenience of another person.”
In the spectrum of possible errors,1 material errors that prejudice the client’s rights or claims are at one end. These include errors that effectively undermine the achievement of the client’s primary objective for the representation, such as failing to file the complaint before the statute of limitations runs. At the other end of the spectrum are minor, harmless errors that do not prejudice the client’s rights or interests. These include nonsubstantive typographical errors in a pleading or a contract or missing a deadline that causes nothing more than delay. Between the two ends of the spectrum are a range of errors that may or may not materially prejudice the client’s interests.
Whether the lawyer must disclose an error to a client depends upon where the error falls on the spectrum and the circumstances at the time that the error is discovered. The New York State Bar Association, in a formal opinion, described the duty as follows:
[W]hether an attorney has an obligation to disclose a mistake to a client will depend on the nature of the lawyer’s possible error or omission, whether it is possible to correct it in the present proceeding, the extent of the harm resulting from the possible error or omission, and the likelihood that the lawyer’s conduct would be deemed unreasonable and therefore give rise to a colorable malpractice claim.
N.Y. State Bar Ass’n Comm. Prof’l Ethics, Op. 734 (2000). Under this analysis, it is clear that material errors that prejudice the client’s rights or interests as well as errors that clearly give rise to a malpractice claim must always be reported to the client. Conversely, if the error is easily corrected or negligible and will not materially prejudice the client’s rights or interests, the error does not have to be disclosed to the client.
Errors that fall between the two extremes of the spectrum must be analyzed under the duty to keep the client reasonably informed about his legal matter. If the error will result in financial loss to the client, substantial delay in achieving the client’s objectives for the representation, or material disadvantage to the client’s legal position, the error must be disclosed to the client. Similarly, if disclosure of the error is necessary for the client to make an informed decision about the representation or for the lawyer to advise the client of significant changes in strategy, timing, or direction of the representation, the lawyer may not withhold information about the error. Rule 1.4. When a lawyer does not know whether disclosure is required, the lawyer should err on the side of disclosure or should seek the advice of outside counsel, the State Bar’s ethics counsel, or the lawyer’s malpractice carrier.2
Inquiry #2:
Applying the analysis in Opinion #1, the lawyer has determined that her error must be disclosed to the client. Is the lawyer also required to withdraw from the representation?
Opinion #2:
No, unless the conditions in Rule 1.7, Conflict of Interest: Current Clients, that allow a representation burdened with a conflict to proceed cannot be satisfied.
Rule 1.7(a)(2) states that a lawyer may not represent a client if the representation of a client may be materially limited by a personal interest of the lawyer. When a lawyer realizes that she made an error that may give rise to a malpractice claim against her, the lawyer’s personal interest in avoiding liability may materially impair her professional judgment. Specifically, she may take actions that are contrary to the interests of the client to protect herself from liability. This is the essence of a conflict of interest.
Nevertheless, in many instances the lawyer may reasonably believe that she can mitigate or avoid any loss to the client by taking corrective action.3 For example, an error made in a title search may be readily repaired or a motion in limine may prevent the use of privileged communications that were improperly produced in discovery. It is often in the best interest of both the lawyer and the client for the lawyer to attempt such repair. When the interests of the lawyer and the client are aligned in this way, withdrawal is not required if the conditions for consent in Rule 1.7(b) are satisfied.
Rule 1.7(b) allows a lawyer to proceed with a representation burdened by a conflict if the lawyer reasonably believes that she will be able to provide competent and diligent representation to the client and the client gives informed consent, confirmed in writing. If the lawyer reasonably concludes that she is still able to provide the client with competent and diligent representation—that she can exercise independent professional judgment to advance the interests of the client and not solely her own interests—the lawyer may seek the informed consent of the client to continue the representation.
Of course, when an error is such that the client’s objective can no longer be achieved, as when a claim can no longer be filed because the statute of limitations has passed, the lawyer must disclose the error to the client and terminate the representation.
Inquiry #3:
If an error must be disclosed to a client, what must the lawyer tell the client?
Opinion #3:
The lawyer must candidly disclose the material facts surrounding the error, including the nature of the error and its effect on the lawyer’s continued representation. If the lawyer believes that she can take steps to remedy the situation or mitigate or avoid a loss, the lawyer should discuss these with the client while informing the client that the client has the right to terminate the representation and seek other counsel. Rule 1.4.
Whether a lawyer must inform the client that the client may have a malpractice action against the lawyer was addressed in Colorado Formal Ethics Opinion 113. The opinion states that
The lawyer need not advise the client about whether a claim for malpractice exists, and indeed the lawyer’s conflicting interest in avoiding liability makes it improper for the lawyer to do so. The lawyer need not, and should not, make an admission of liability. What must be disclosed are the facts that surround the error, and the lawyer should inform the client that it may be advisable to consult with an independent lawyer with respect to the potential impact of the error on the client’s rights or claims.
Co. Formal Ethics Op. 113 (November 19, 2005). The Colorado approach appropriately limits the possibility that a lawyer will attempt to give legal advice to a client about a potential malpractice claim against the lawyer. To do so would place the lawyer squarely in a nonconsentable conflict between the client’s interest and the lawyer’s personal interest. However, the lawyer is required to tell the client the operative facts about the error and to recommend that the client seeking independent legal advice about the consequences of the error.
Under this approach, the lawyer is not required to inform the client of the statute of limitations applicable to legal malpractice actions, nor is she required to give the client information about the lawyer’s malpractice insurance carrier or information about how to file a claim with the carrier. Nevertheless, the lawyer should seek the advice of her malpractice insurance carrier prior to disclosing the error to the client, and should discuss with the carrier what information, if any, should be provided to the client about the lawyer’s malpractice coverage or how to file a claim.
Inquiry #4:
Is there any information that the lawyer should not provide to the client when disclosing her error to the client?
Opinion #4:
The lawyer should not disclose to the client whether a claim for malpractice exists or provide legal advice about legal malpractice. See Opinion #3.
Inquiry #5:
When is the lawyer required to inform the client of the error?
Opinion #5:
The error should be disclosed to the client as soon as possible after the lawyer determines that disclosure of the error to the client is required. See Rule 1.4(a)(1) (lawyer shall promptly inform the client of any decision requiring consent).
Inquiry #6:
Is filing a motion to undo the error based upon excusable neglect sufficient disclosure to the client if the client is copied with the motion? May the lawyer wait until the court has ruled on the motion to send a copy of the motion and order to the client?
Opinion #6:
As noted above, comment [3] to Rule 1.4 explains that a lawyer must keep the client reasonably informed about “significant developments affecting the timing or the substance of the representation.” If the client will lose a significant right or interest if the motion fails, the client is entitled to know about the error in order to determine whether the client is willing to allow the lawyer to attempt to correct the error or would prefer that the motion be handled by another lawyer. The client must be advised of the error prior to filing the motion to allow the client to make an informed decision about the representation. Rule 1.4(b).
Inquiry #7:
When disclosing the error to the client, may the lawyer refer the client to another lawyer for advice?
Opinion #7:
Yes, if the lawyer concludes that she can exercise impartial, independent professional judgment in recommending other counsel to the client. See Opinion #2.
Inquiry #8:
If the client has paid legal fees to the lawyer, is the lawyer required to return some or all of the fees that she received?
Opinion #8:
Rule 1.5(a) prohibits a lawyer from collecting a clearly excessive fee. As stated in 2000 FEO 5,
there is always a possibility that a lawyer will have to refund some or all of any type of advance fee, if the client-lawyer relationship ends before the contemplated services are rendered. At the conclusion of the representation, the lawyer must review the entire representation and determine whether, in light of the circumstances, a refund is necessary to avoid a clearly excessive fee.
Therefore, the lawyer must determine whether, in light of the lawyer’s error and its consequences for the client’s interests and legal representation, a refund is necessary to avoid a clearly excessive fee. In addition, the lawyer should never charge or collect legal fees for any legal work or expenses necessitated by the lawyer’s attempts to mitigate the consequences of the lawyer’s error.
Endnotes
- The “spectrum” concept of legal errors is borrowed from Colorado Formal Ethics Op. 113 (November 19, 2005).
- Rule 1.6(b)(5) allows a lawyer to disclose confidential client information to secure legal advice about the lawyer's compliance with the Rules of Professional Conduct.
- Insurance carriers are experienced at repairing malpractice. A lawyer should seek the advice and assistance of her carrier.