Malpractice & Ethics Claim Avoidance in Debt Collection

More than any other area of law, malpractice claims against attorney debt collectors have increased significantly over the last four years. According to a study published by the ABA Standing Committee on Lawyers’ Professional Liability, claims in the Collection and Bankruptcy area jumped by 1.93 percent between 2007 and 2011. The jump in claims occurred after years of an overall decline in this area since 1985.

Overall, the ABA study published in 2012 indicated that 9.2% of all malpractice claims reported during the four-year period of study were asserted against attorneys practicing in the area of Collection and Bankruptcy. Although the claim category reported by the ABA includes all aspects of federal bankruptcy law, the jump in claim activity is generally attributed to a sharp rise in malpractice claims asserted against collection attorneys, acting on behalf of a third party, and are alleged to have violated a provision of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §1692 et seq.

The recent downtown in the American economy may have contributed to the increase in FDCPA claims against attorney debt collectors. The more consumers default on their credit agreements, the more attorneys are hired by companies to pursue the debts. For the many new lawyers trying to handle debt collection matters, the FDCPA can be a minefield of malpractice concerns. Lawyers who regularly defend FDCPA claims asserted against collection attorneys provide the following advice:

Understand whether you are a debt collector. The FDCPA applies only to “debt collectors” and defines a debt collector as one who, “regularly collects or attempts to collect, directly or indirectly, debts owed or due, or asserted to be owed or due another,” 15 U.S.C. §1692a(6). Whether the attorney is presumed to be a debt collect as defined the FDCPA can depend on the percentage of debt collection matters that make up an attorneys practice. However, keep in mind that any effort to collect a debt on behalf of a third party, whether they are your client or even a family member, can potentially subject an attorney to an FDCPA claim, and taking on these matters should be considered with caution.

Always maintain a good understanding of the FDCPA. The FDCPA identifies no fewer than 16 types of conduct by debt collectors that is prohibited conduct, and since the Act is a strict liability statute, proof of just one violation may be sufficient to support a summary judgment for the plaintiff seeking redress.

The FDCPA notice requirements must be strictly adhered to. Once an attorney takes on a debt collection assignment and begins communicating with the debtor, the attorney must disclose that they are attempting to collect a debt and any information obtained will be used for that purpose. Many FDCPA mistakes occur at the outset of the attorney’s collection activities because the attorney failed to notify the consumer of some basic information required in the statute. The initial collection letter must also disclose:

  1. The amount of the debt;
  2. The name of the creditor;
  3. That the consumer has 30 days to dispute the debt, or else the debt will be assumed to be valid;
  4. That if the consumer does dispute the debt in writing, the debt collector will obtain verification of the debt and provide the consumer with a copy of the verification;
  5. That upon the consumers written request within 30 days, the debt collector will provide the name and address of the original creditor, if it is different from the current creditor. 15 U.S.C. §1692 g(a)

Never threaten to take legal action against someone who may owe a debt unless you follow through on the threat. A threat of a lawsuit can be considered a false representation that is prohibited under the FDCPA if it is not followed up with the commencement of legal action. Therefore, before indicating to the consumer that a legal action is about to commence, make sure that all preconditions for collecting a debt under the FDCPA are satisfied and that you have the authority to proceed with the litigation.

Carefully identify the correct debt amount that is owed by the consumer. You may be liable under the FDCPA if you misrepresent the character, amount, or legal status of the debt. 15 U.S.C.A. §1692e(2)(A) It is a common mistake for a debt collector to pursue the wrong debt amount against a consumer, so it is important to always verify the correct amount of debt that is owed the creditor. Make sure the creditor supplies you with correct information about the debt, and the collection letter that identifies the debt is carefully reviewed for the correct information before the notice is sent to the consumer.

Posted in Case Management, Fee Disputes | Leave a comment

Four Top Ethics Complaints Against Lawyers and Simple Effective Ways to Prevent Them

The purpose of lawyers discipline is to protect the public from lawyer misconduct and to deter other lawyers from similar misconduct. Every jurisdiction has an Office of Disciplinary Counsel to help protect the public, and most lawyers’ think of the Office’s primary duty is to discipline attorneys. However, the Disciplinary Counsel’s office often plays a vital role in preventing client grievances in several ways, including: answering public inquiries, resolving simple disputes such as who gets the attorney file, and encouraging good communication between lawyers and clients.

So it continues to be difficult for those lawyers who handle lawyer discipline matters is to understand why so many ethics complaints against lawyers involve issues that are the most easy to prevent. Specifically, allegations of lawyer incompetence, disorganization, having a conflict of interest or not properly communicating with the client dominate many of the ethics complaints clients make against lawyers when they are unsatisfied with their matter outcome.

Ethics complaints against lawyers come in all varieties, but a few types of complaints dominate the matters that lawyers involved in lawyer discipline work on every day. Below is a look at some of the most common ethics complains asserted by clients against the lawyers they chose to represent them and advice about how to prevent the complaints from happening in your practice.

Competence and Diligence

In the rules of professional conduct, Competence and Diligence are treated separately, but together, they represent so many of the things that clients expect from lawyers. Moreover, they also represent a significant number of client complaints when clients are left feeling the lawyer acted wrongly because they were unorganized or the lawyer’s procrastination lead to client neglect.

ABA Model Rule 1.1 Competence is short, and to the point. But it is the first rule in the book for good reason.  It reads:

“A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”

Many lawyers who read this rule focus on the “legal knowledge” and “skill” requirements, feeling satisfied that they have the capacity of understanding to properly represent a client. However, it is the “thoroughness and preparation” part of the rule that most often is the basis of a dispute between a client and their lawyer when competence has come into question. Clients who feel their lawyer didn’t fully prepare for their legal matter will pounce on a lawyer if the outcome is unsuccessful.

As if Rule 1.1 Competence needed some bolstering on that matter, ABA Model Rule 1.3 Diligence is close behind simply stating:

“A lawyer shall act with reasonable diligence and promptness in representing a client.”

Together, the rules on competence and diligence reinforce the fact that as a profession, lawyers need to always be organized and mindful of their ongoing legal matters. For lawyers who have a good understanding of substantive law and legal procedure, but suffer from lack of organization, good office systems including a well-organized filing system and top legal software is available to keep the lawyers matters organized and on track.

Staying organized is sometimes as simple as having a well organized, consistent filing system for your legal matters. There are multiple ways to organize legal files depending on the practice area, but consistently, those who have good filing systems insist on the same basic things:

  • The filing system should be centralized so that the information is always available to anyone authorized to handle the matter in the firm;
  • The filing system should be consistent so that there is a uniform look to the way the file is organized and firm employees can always know what has been done on the matter by a simple review of the file;
  • The filing system is docketed so that key personnel and the lawyer responsible for handling the matter will always have the matter in rotation, with multiple calendar dates assigned to each file to avoid having the matter “fall through the cracks;”
  • Each file will have a “Notes” section so all aspects of the legal matter will be recorded in chronological order, always preserving for the record the history of the legal representation.

As for top software systems, case management software is in a class of its own for organizing a law office that may otherwise be in disarray.

Case management programs perform two basic functions for a law office. They organize client information in a data base so any member of the firm can get detailed case information at any time. Also, case management software serves as the company calendar, keeping the attorneys and staff on time for every appointment and due date.

The concept of merging client data with a calendaring system is not unique to case management software. Many generic office products like Microsoft’s Outlook perform that function for general business systems. However, case management software goes beyond basic scheduling software by offering overlapping schedule reminders and other feature that only an attorney could want (like quick conflict checking).

Whereas most generic office products organize data with the assumption that the user has just a few ongoing projects at any one time, case management software recognizes the principle that an attorney may be responsible for hundreds of cases simultaneously, each with its own timeline.

A basic case management system will replace paper calendars, rolodexes, timesheets, notepads, manual tickler systems, and telephone message pads. More ambitious case management products will attempt to replace all other accounting and invoicing systems as well as all the client files.

Most importantly, a case management system will streamline your office automation process so you only have to enter certain client information once. The data will automatically merge with other information systems such as time and billing products, and document assembly programs, so you don’t have to re-enter the client data in any other office system.

When shopping for a case management product that’s right for you, ask yourself:

  • Do I like a lot of client information on the screen, or do I prefer something that is simple and easy-to-learn?
  • Do I plan on merging the client data with other data-intensive programs like time and billing, and document assembly programs?
  • I may like a program that is heavy on features, but will my staff be more inclined to participate in a user-friendly system?
  • Am I committed to finding a whole new way of gathering, storing and accessing basic client information?

Case management software typically ranges from $300 to $500 per user license (which means anyone in the firm who would be viewing the data available in the program).  Online cloud-based case management systems are also available for $30 to $50 per month.  The software is not inexpensive, but it can often be worth the price if it is the tool you need to transform your office into one that is well-organized and serving the customer’s needs.

Conflicts of Interest

The purpose of a conflicts check is to ensure that your commitment to your client’s matter will not be distracted by your commitment to any other person. Many attorneys believe that this commitment can be upheld by a brief moment of thought, comparing their client’s circumstances to that of the firm’s other clients, at the time they are being retained for their services.

The ABA Model Rule 1.7 Conflict of Interest: Current Clients provides the following guidance on identifying a relationship that may pose a conflict of interest for the lawyer:

“(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(1) the representation of one client will be directly adverse to another client; or
(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.”

The exceptions to Model Rule 1.7 are very specific:

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.

On top of the duties requiring lawyers to identify conflicts of interest involving their current clients, the rules also address the conflicts that often arise involving the lawyer’s former clients in ABA Model Rule 1.9 Duties to Former Clients.

Professional liability insurers and risk management professionals continually stress the importance of a conflict-checking system in law firms to help identify potential conflicts at the time the attorney-client relationship is established. Consistently, it has been shown that a check for conflicts-of-interest that does not include the use of a thorough list or database will leave the firm vulnerable to an embarrassing, and potentially negligent conflict-of-interest problem.

Establishing a reliable conflict-checking system in your firm can be a relatively easy thing to do. However, the system is only as good as the information that is put into it. Therefore, creating the conflict-checking system and maintaining it should be viewed as an ongoing and permanent commitment to securing your client’s confidence and your devotion to their best interests will never be questioned.

The elements necessary for conducting an effective conflicts check in your law practice are:

  • Establishing a thorough, well-maintained list of names;
  • Ensuring that the conflict-checking procedure becomes a part of firm’s routine;
  • Everyone in the firm is trained in the procedure and involved in the system.

The best conflict-checking system is one that will work, and that the members of the firm will find easy to use and maintain. There is nothing inherent in a computer-based conflicts program that makes it superior to a well-maintained manual system. However, since a computer-based conflicts system can conduct a thorough check rather quickly, it is more likely to be used routinely by the firm, and it is less likely to overlook a single name buried in a large database.

In a forms-based conflict system, you search for conflicts by checking a list of the firm’s clients (current and former), a list of “other parties,” and a list of lawyers who have represented other parties involved in your client matters. These searches must be conducted prior to the new client signing a retention agreement with your firm.

The primary conflict review occurs when you check the client list. You are looking to see if any person who is an adverse party to a new matter is currently being represented by the firm in another matter, or has been represented by the firm in the past.

If a review of the client list reveals no potential conflicts, you should then review the other parties list and the lawyer list to see if there are any relationships involving the firm’s current or past legal matters that the new client would probably want to know about.

Client Communications

A startling number of malpractice claims and ethics complaints come from matters where the client alleges that the lawyer proceeded to handle a legal matter without fully informing the client about the potential hazardous outcome, or that the lawyer didn’t listen to the client’s concerns before proceeding.

ABA Model Rule 1.4 Communications addresses the lawyer’s fundamental duties when communicating to a client about the progress of their case:

(a) A lawyer shall:

(1) promptly inform the client of any decision or circumstance with respect to which the client’s informed consent, as defined in Rule 1.0(e), is required by these Rules;
(2) reasonably consult with the client about the means by which the client’s objectives are to be accomplished;
(3) keep the client reasonably informed about the status of the matter;
(4) promptly comply with reasonable requests for information; and
(5) consult with the client about any relevant limitation on the lawyer’s conduct when the lawyer knows that the client expects assistance not permitted by the Rules of Professional Conduct or other law.

(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

For lawyers involved in transactional matters, properly communicating to the client about the potential hazards of a legal strategy sometimes can get fairly complicated. The outcome of the case sometimes leaves the attorneys wondering, are lawyers doing all they can do to ensure that the client has been fully informed about the risks of the transaction?

If the client gets mailed lengthy documents that are single-spaced, small print, with lots of clauses and a note that says, ‘sign here,’ the lawyer is not really doing their job of explaining what the client is getting into. Most not involved in transactional matters wouldn’t fully understand what some typical transactional documents say, so why should lawyers expect the client to have a better understanding?

It is important to educate the clients fully about what the risks are, and to break them down in simple terms. Transactional attorneys recommend that attorneys should sit down with their clients and fully identify the terms of the transaction and the potential hazards associated with it.

If a client has follow-up responsibilities a firm should always send out a letter spelling out exactly what their obligation is. A letter to the client specifically identifying the scope of the attorney’s engagement in the matter is recommended.

Also, an attorney who has not been hired to provide an opinion on the merits of a transaction should state in the letter, “You are NOT expecting me to opine on whether this is a good deal.” Stating those facts in simple terms is necessary to make it perfectly clear to the client that the lawyer is not giving business advice.

Ethics complaints claims involving client relations are among the most preventable of all legal malpractice actions. For non-transactional matters, the claims usually involve a misunderstanding in the expected outcome of a matter, or the client’s lack of understanding regarding the legal process they are involved in.

The key to preventing most such claims is to continually be communicating with the client regarding the status of a matter—even if there are no file activities going on. Nothing frustrates a client more if they have not heard from their attorney for some time regarding the status of their matter. Clients often need to be made aware that the lawyer is still working on their matter, and although there may be a break in the client activities, a communication to the client that the break is an expected step in the legal process reassures the client that the lawyer has not neglected their matter.

Essential steps for ensuring that a client is fully aware of the important provisions of a transaction include:

  • Fully document the key terms of the transaction or agreement that the client is entering into, explaining the risks in simple terms that the client can understand;
  • If possible, sit down with the client and review the writing that identifies the terms of the agreement and the risks associated with the matter.
  • Ask the client what is his or her understanding of the agreement. They may tell you something that is contrary to what is your understanding of the deal, giving you an opportunity to head off any misunderstandings after the transaction is complete.
  • Memorialize for your legal file any discussions you have had with the client about the key provisions of the transaction and the risks associated with entering into the agreement. Such a memo to the file can be crucial if there is ever a dispute between the attorney and the client about the advice that was given.
  • Identify in writing the scope of the lawyer’s involvement in the legal matter to avoid any confusion as to what the lawyer was hired to do. If the lawyer has NOT been hired to provide an assessment of the merits of a transaction, such a statement should be included in the engagement agreement in clearly identifiable terms.
  • •Always stay in communication with a client regarding the status of their matter.  Every means for communicating, whether it is a phone call, an email, or a description on an invoice is essential for the client to understand the ongoing status for their matter.
Posted in Case Management, Client Communication, Law Firm Management | Leave a comment

Recent ABA Study Suggests Emerging New Trends in Legal Malpractice

A new survey by the American Bar Association Standing Committee on Lawyers’ Professional Liability suggests a changing landscape may have emerged in the world of legal malpractice. Most significantly, for the first time since 1985, when the committee first began conducting its four-year study on malpractice claims asserted against lawyers, personal injury attorneys no longer hold the title for the practice area with the highest risk of malpractice. Instead, real estate matters are now the most frequent subject of malpractice claims against lawyers.

Real Estate, Personal Injury-Plaintiff and Family Law are the top three areas in the “Profile of Legal Malpractice Claims: 2008-2011,” released last month. In all five previous versions of the survey dating to 1985, personal injury-plaintiff matters were No. 1 in generating lawyer malpractice claims.

The study, sponsored by the ABA committee, has been conducted every three to four years since 1985 and has served as a snapshot in the legal industry of malpractice claims over the study period. Eleven member insurers of the National Association of Bar-Related Insurance Companies from the United States, including Minnesota Lawyers Mutual Insurance Company, and nine from Canada contributed data to the study, along with eight commercial insurance companies. Insurers provided data on 53,000 claims for the 2011 study, the most ever.

Among the noteworthy trends revealed in the malpractice study:

• 20.3% of reported malpractice claims during the study period involved matters in both residential and commercial real estate transactions;

• Claims against lawyers in Personal Injury-Plaintiff’s practice accounted for 15.6% of the total claim matters—down from 21.6% of all claims in the previous study;

• Claims involving administrative errors and matters involving client relations rose noticeably, accounting for over 40% of all claims asserted against lawyers.

• The most frequently cited error against lawyers continues to be “failure to know/properly apply the law,” amounting to 13.6% of all claims reported in the study.

• Attorney errors labeled “procrastination in performance” (9.7%) and “lost file, document, evidence”(7.1%)—which was almost non-existent in previous studies—rose the most between study periods, creating new concerns for lawyers.

The authors of the study are quick to point out that, although the study provides a tremendous benefit for law firm risk managers, attorneys practicing in the field, and legal malpractice insurers by providing an expansive high-level view of the evolution of legal malpractice claims, readers should use caution and avoid reading too much into the data. Many factors can skew the data including the variation from state to state of the laws governing legal malpractice claims, and the fact that the data does not cover the entirety of the lawyer population. Most significantly, the data presented in the study does not adjust claim numbers to reflect how much of the practice of law is devoted to particular subject matters. For example, there is no way to determine whether the decline in the number of malpractice claims asserted against attorneys conducting Personal Injury-Plaintiff work was the result of a change in the number of lawyers practicing in this field.

Malpractice Claims by Area of Law

The “Claims by Practice Area – 2012″  chart presents the percentage of claims reported in the top areas of law. As stated previously, the significant change from previous studies is the drop for Personal Injury-Plaintiff to second place behind Real Estate. Interestingly, as the study points out, “This is not due to a significant increase in Real Estate… rather, it is the relatively large decrease in Personal Injury — Plaintiff claims of 5.97%.”

Claims by Practice Area – 2012

The practice areas that actually increased the most in claim frequency between studies were Collection and Bankruptcy  (9.2%), Corporate/Business Organization (6.8%), and Family Law (12.1%)—each increasing by an average of 1.85%. Minnesota Lawyers Mutual also likes to remind attorneys that the claims data represented here reflects the frequency of malpractice claims—referring to the actual number of claims reported in each practice area. If the chart were to present information showing practice areas with high severity rates (the claims that are the most expensive to resolve) some of the practice areas such as Intellectual Property and Securities that have much less frequent claim activity are among the costliest to resolve, posing great risk for practitioners.

Number of Claims by Alleged Attorney Error

Historically, the creators of the study have organized the errors reported against lawyers into four groups: Substantive, Administrative, Client Relations, and Intentional Wrongs.  Nearly half of the errors alleged against attorneys are Substantive Errors (45%) and the category is relatively unchanged from previous studies. Client Relations and Administrative Errors both saw increases since the previous study, totaling 4.8%.

Most Common Alleged Errors – 2012

Of the top five most frequent errors leading to malpractice claims cited in the study, two of the errors are new to the chart. [See Figure 3.] “Procrastination” increased from 4.2% to 9.7% and “Lost File, Document, Evidence” increased significantly from .6% to 7%. It is difficult to speculate as to the cause for the increase in errors involving procrastination and lost files; however, the error types are both categorized as administrative errors, causing lawyers to consider the effect of changes to law office administrative systems between 2008 and 2012, the two most recent study periods.

Errors in the category “Intentional Wrongs” have always been among the most disturbing for those who track malpractice claims against lawyers. They represent errors where the lawyer knew the difference between right and wrong, yet the lawyer chose to do wrong. Often the errors listed in this category—such as fraud claims—are excluded from coverage since insuring these claims would run contrary to public policy and represent a moral hazard. One of the bright spots in the latest study is that errors in the category of Intentional Wrongs represent only 10% of all errors reported—a decline of 3.3% from the previous study. It is important that lawyers continue to properly safeguard their client funds to see a further decline in claims involving intentional wrongs by an attorney or an employee of the firm.


For further information on the study by the ABA Standing Committee on Lawyers’ Professional Liability, or to order a complete copy of the publication, “Profile of Legal Malpractice Claims 2008 – 2011,” go to abastore/ or call 800-285-2221.

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Implementing an Electronic Use Policy – Part 3

What to Include in the Electronic Use Policy

In a survey conducted in 2007 by the American Management Association (AMA) and the ePolicy Institute, 84 percent of responding organizations revealed they let employees know that the company is monitoring their computer activity. Previous surveys by AMA have revealed that only 31 percent of employers have a policy regarding instant messaging (IM) in the workplace, 27 percent have a policy involving personal cell phone use at the office, and only 9 percent have a policy regarding the operation of personal blogs on company time.

Although many employers have acted upon and established policies addressing their concerns regarding e-mail and Internet usage, many other common forms of electronic usage that can disrupt employee workflow or corrupt company data are often ignored or forgotten.

Also, because technology innovations change so rapidly, what may have been a good and thorough electronic use policy two years ago is likely to be stale and out-of-date today. The sheer speed of change in communications and e-tools, including social networking formats, smart phones, and personal blogging sites, may be one major reason why so many employers that have electronic use policies don’t address common technology matters found in the workplace today.

A good electronic use policy should address the acceptable use (and prohibitions) of all electronic tools, devices, and formats accessible to employees in the ordinary course of their workday. This is not easy to do, and the ever-changing nature of technology is one important reason why the policy should be reexamined every 12 to 24 months.

When writing an electronic use policy today, employers should consider including the following topics: business e-mail decorum, personal use of business e-mail, personal e-mail accounts, instant messaging, text messaging, business phone etiquette, personal use of business phones, personal use of business cell phones, use of personal cell phones, appropriate use of Internet, web posting, personal websites, blogging, mass storage devices (such as flash drives and iPods), portable computer equipment, adding and deleting software, security and password maintenance, and file sharing.

The policy should also clearly provide employee notice that the employer intends to review any and all traffic in the system including messages, attachments, websites visited, files downloaded, and cell phone records including text messages, and that such monitoring can occur at any time without prior notice.

Any specific technology that is prohibited by the company policy should also be listed in the document. For example, a common practice for organizations concerned with the unauthorized transfer of company information is to prohibit access to private e-mail servers such as AOL and Hotmail and to restrict the use of mass storage devices such as flash drives and portable transfer devices, including iPods.

It is important to craft an electronic use policy that is right for the firm. Many small law firm practitioners confess to never having an electronic use policy in place
because the need for it never seemed apparent. Perhaps excessive personal use of the firm technology is something more likely to happen in a large firm environment where employee anonymity can sometimes exist.

Nevertheless, even the most basic electronic use policy that outlines prohibited activities is a good reminder to the staff that the firm’s electronics belong to the firm. Moreover, it may prevent a difficult and painful experience if ever the firm is involved in employment litigation. Such a policy would be paramount to helping guide the firm through a difficult time.

Sample Language for Electronic Use Policies

Purpose To establish a policy for use of the Internet and the firm’s electronic communication system. This policy establishes minimum standards. Firm supervisors and IT personnel may supplement this policy as they need and desire.
Business Use XYZ Firm’s computer system that allows use of the Internet and electronic communication systems are the property of XYZ and are provided to facilitate the effective and efficient conduct of XYZ’s business. Users are permitted access to the Internet and electronic communication systems to assist in the performance of their jobs.
Personal Use Incidental and occasional personal use of XYZ’s Internet access or electronic communication system is permitted; however, personal use is prohibited if it:

  • Interferes with the user’s productivity or work performance, or with any other employee’s productivity or work performance;
  • Adversely affects the efficient operation of the computer system;
  • Violates any provision of this policy, regulation, or law or guideline set forth by local, state, or federal law.
No Expectation of Privacy No user should have any expectation of privacy in any message, file, image, or data sent, retrieved, or received by use of XYZ’s equipment and/or access. XYZ has a right to monitor any and all aspects of its computer systems including, but not limited to, sites, instant messaging systems, chat groups, or news groups visited by firm users, material downloaded or uploaded by firm users, and e-mail sent or received by firm users. Such monitoring may occur at any time, without notice, and without the user’s permission.
Company Property The Internet and electronic communication systems and hardware are the property of XYZ. Additionally, all documents composed and messages and attachments composed, sent, received, or stored on the Internet and communications storage systems are and remain the property of XYZ.
Non-Removal Employees may not remove from the premises any hardware, software, sensitive files, or data without prior authorization by the firm administrator.
Prohibited Activities Certain activities are prohibited when using the Internet or electronic communications. These include but are not limited to:

  • Accessing, downloading, printing, or storing information with sexually explicit content;
  • Downloading or transmitting fraudulent, threatening, obscene, intimidating, defamatory, harassing, discriminatory, or otherwise unlawful messages or images;
  • Installing or downloading computer software, programs, or executable files contrary to policy;
  • Uploading or downloading copyrighted materials or proprietary firm information contrary to policy;
  •  Uploading or downloading access-restricted firm information contrary to policy;
  • Sending e-mail using another’s identity, an assumed name, or anonymously;
  • Uploading or downloading applications such as peer-to-peer file-swapping tools and unauthorized enhancements and plug-ins.
User Responsibility The conduct of the computer users who access the Internet or send e-mail containing the firm’s domain address may be perceived as reflecting on the character and professionalism of the firm. When engaging in such conduct, whether for personal use or official purposes, employees are expected to do so in a responsible and professional manner.

All users are responsible for exercising appropriate care to protect the firm’s computer systems against the introduction of viruses. When using the firm’s Internet access or electronic communications, equipment, and capability, individuals must:

  • Use the Internet or electronic communications systems only in accordance with firm policy;
  • Maintain the conditions of security (including safeguarding passwords) under which they are granted access to such systems;
  • Check with the appropriate firm staff member prior to downloading or accessing a file or document if the source of the file or other circumstances raises doubts about its safety.
Violations Violations of this policy will be addressed under appropriate disciplinary policy procedures for employees. The appropriate level of disciplinary action will be determined on a case-by-case basis by the firm administrator, with sanctions up to or including termination depending on the severity of the offense.
Todd C. Scott is Vice President, Member Services, of Minnesota Lawyers Mutual. He may be reached at
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Implementing an Electronic Use Policy – Part 2

Concerns about employee use of firm-owned electronics are often apparent, but creating a policy to alleviate the concerns is usually a more difficult task.

Employers who take up the task of creating a permissible electronic use policy are often surprised to find that a typical employee has an expectation of privacy when using the firm’s equipment for personal matters. Despite the complexity and expense of computers, PDAs, and other technology devices, employees will sometimes assume a degree of ownership of firm-owned equipment that is often used for personal activities.

To alleviate any confusion, many employers initially created electronic use policies that banned all personal use, and many of these policies are still in place today. Experts often warn employers who design bright-line rules that prohibit all personal use that they will be frustrated with an unworkable policy. “Many companies have ‘no personal use’ policies,” says Nichols, “And virtually everyone violates it.”

Instead, Nichols recommends employers implement a realistic electronic use policy allowing incidental and occasional personal use that does not interfere with the employee’s work performance or adversely affect the operation of the computer system. “The Internet is an extremely valuable resource for any business, and you can’t clamp it down,” says Nichols. “If [the Internet] is too restricted, you wind up not using the filtering system and leaving it wide open.”

When creating an electronic use policy, the firm should deal head-on with the issue of acceptable personal use and declare that employee activities are not private. By stating explicitly that no user should have any expectation of privacy in any file, image, or data created, sent, or retrieved, the policy sends a clear message that, although the firm might allow limited personal use in the work environment, monitoring by the firm may occur at any time and without notice.

Outlining acceptable personal use is largely a matter of defining what is not acceptable. For example, personal use of the firm’s electronic equipment should not be excessive or interfere with the normal operations of the information system. A statement that the firm’s information system should not be used to distribute offensive and disruptive information should be followed by examples of content that the firm considers to be offensive or disruptive, including content about sexual matters, racial slurs, sexual orientation, ancestry, and disability.

For Nichols, one of the top reasons a law firm should implement an electronic use policy is to guard against the trail of junk left in the wake of a rogue employee that can haunt the firm involved in an employment dispute. With information systems being what they are, employment litigators can pour over massive amounts of data showing e-mails and Internet activity detailing not only what the employee was looking at and the actions that they took, but the precise times that they were involved in the questionable conduct.

“The thought process is almost discoverable,” says Nichols, who recently handled a case involving allegations of male-on-male sexual harassment. The case investigation of the employee’s computer activity, Internet page history, and “cookies” revealed the employee spent much time observing web pages with sexually graphic depictions similar to those involved in the case allegations. Such an intimate look into the depth of an employee’s online activities causes Nichols to observe, “You can almost figure out what a person is thinking. The days of ‘he-said/she-said’ are over.”

The discovery process for an employer involved in a workplace dispute can be a painful ordeal that leaves the organization feeling exposed, embarrassed, and frustrated. Discovery requests under Federal Rules of Civil Procedure 26(b) and 34(b) involving electronic data are commonplace, often producing enormous amounts of e-mail data spread wide and deep over an entire organization. Adding to that, the firm may be named as a deponent under a Rule 30(b)(6) subpoena, subjecting a firm representative to account for knowledge the firm may have had about an employee’s behavior revealed in old e-mails, text messages, web postings, and Internet activities. Such a process of suing an organization is aptly described as “taking the bark off the tree.”

Implementing an electronic use policy creates its own set of duties that the employer must adhere to. Those employers who take the policy a step further by actively and routinely monitoring employee Internet and web activity must be prepared to follow through on knowledge of objectionable behavior. For example, if in the course of IT activities it is revealed that an employee’s e-mail activity violates a prohibition on harassing and intimidating e-mails, anything less than prompt and effective remedial action leaves the employer exposed to allegations that, when made aware of a hostile work environment, the employer did nothing.

Moreover, if Internet and e-mail monitoring is inconsistent and focused on just a few employees, such a sporadic method of monitoring can be alleged to be a discriminatory practice of invasion of privacy. To protect against the claim of discrimination, it is necessary for a firm to be consistent in its use of electronic monitoring.

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Implementing an Electronic Use Policy – Part 1

A small St. Paul, Minnesota, law firm had a tough decision to make. A promising, young associate had downloaded pornographic images on his office computer, and others working in the firm had seen him do so. The firm shareholders were angry at the young attorney’s carelessness, as well as the difficult situation he had put them in. In the end, they knew he had to go.

As difficult as it was, the firm’s process might have been made easier had a formal electronic use policy been in place. Electronic use policies serve the vital purpose of protecting the integrity of a firm’s network storage and information systems, as well as sheltering a firm from potential liability resulting from misuse of its electronics and the release of private information. Such policies also put employees on notice that the firm may, at any time, monitor employee use of its technology tools.

In the case of the St. Paul firm, an electronic use policy that unambiguously prohibits downloading sexually explicit content would make it clear to employees that this conduct is prohibited and provide the firm with parameters regarding acceptable use of its electronic equipment. Such a policy wouldn’t make the consequential decision for the firm, but it would sure help those responsible for the final outcome.

“The advantage of a really good policy is that you can fire someone for violating it,” says Don Nichols, managing partner of the employment practices firm Nichols Kaster and Anderson, PLLP, of Minneapolis, Minnesota. “Otherwise, the employee can allege that the firing was for some other reason.”

For years, businesses and large organizations have turned to electronic use policies to define what is acceptable use of electronic equipment for employees, students, and other individuals with access rights. A good electronic use policy can prevent employee misconduct as well as thwart behavior that would typically corrupt a database.

Employers have found value in an electronic use policy to address several common concerns:

Acceptable use of e-mail. E-mail messages designed to threaten, intimidate, or harass the recipient with racial slurs or sexual implications, or to forward information that is derogatory, defamatory, or obscene are disruptive to the workplace and may subject the employer to workplace liability.

Transporting confidential data off-site. Data involving confidential client information and proprietary information essential to the organization’s success can get into the wrong hands if it is transported off-site through the use of laptops, PDAs, and flash drives.

Password accountability. Most hacking is done through the keyboard, and a simple but strong password can easily thwart it.

Adding or removing software. The indiscriminate addition or removal of software increases the network’s vulnerability to viruses, Trojan horses, worms, and spyware, and also exposes the organization to potential licensing violations.

Limitations on the Internet. Sexually explicit and offensive websites may also subject the employer to liability concerns, and excessive personal use of the Internet generally affects overall employee productivity.

Copyright infringement. File sharing or the unauthorized transfer of copyrighted materials such as movies, music, and games violates federal anti-piracy laws and exposes the computer owner to confiscation and seizure of the hardware.

Control of company property. By engaging in private consulting and outside work, employees assigned electronic equipment may be engaging in personal use activities to an extent where the use comes in conflict with the organization.

Protecting the company image. Employees accessing the Internet or sending e-mails containing the organization’s domain address (e.g., may be perceived as reflecting on the character and professionalism of the organization.

Accessing external e-mail accounts. Websites hosting private e-mail accounts open a doorway through an otherwise secure firewall by allowing potentially damaging e-mail attachments into a firm’s network or facilitating the unauthorized transfer of company data.

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Seven Simple Rules for Managing Paper Files and Digital Information

As more firms adopt document scanning procedures for their filing systems, it’s time for lawyers to rethink a few things about file organization.

Chances are you’ve had to modify your client filing system in the past few years as you take on the challenges of organizing both paper and electronic information vital to the client’s file. For some lawyers, the change was sudden, following the adoption of new procedures for scanning  documents. But for others, the change may have come gradually, when trying to tackle problems like how to get e-mails in a file for example.

Improving the way your files are created and managed is a necessary undertaking if you plan to keep up with changing times. As more information flows into the firm in both paper and electronic formats, finding ways to keep all the information together in the file is vital so it is always available to whoever is working on the file.

But if your filing system is one that was created by default, your system for organizing client files might have creeped to where it has become a medley of client information in both paper and electronic files. You want to avoid the information mish-mash of saving some client documents in the file, some documents as scanned files, and having some electronic files in the computer that never made it to paper at all. The new filing system is no system at all if it doesn’t pull together all the client information in one place for the purposes of streamlining your workflow and preserving the entire legal matter.

Although client information now comes to the firm in many forms, the basic principles of file maintenance haven’t changed. High on the list of file fundamentals:

• All information relating to the client matter is added to one, centrally stored client file — whether the file is paper or electronic.

• The file is organized in defined sections that are standard to all the files within the firm.

• The file is assigned a number or naming code that can always be tracked or traced by the firm and saved according to a pre-defined file retention policy established by the firm.

• Determining the lifespan of the file, and particularly the decision to destroy old files, is a job that always belongs to the attorney and should never be delegated to staff.

Assuming your filing system was already in good shape before the introduction of electronic information such as e-mails, text messages, and PDF attachments, what modifications should you make to the system to avoid a firm-wide information disconnect? The following is a list of seven suggestions you may want to consider for organizing electronic client information within a traditional file system.

1. Your filing system is not paper or paperless. It’s both, and that’s okay.
In truth, very few law firms, even those with the capacity to scan a large quantity of documents daily, are paperless in the sense that they work exclusively with electronic files. Regardless of the firm’s ability to scan paper, most lawyers maintain a paper file during the duration of the legal matter, while saving some or all of the file information concurrently in electronic format. The purpose of the mixed-file system is to have a paper file that serves as a storage home for documents while at the same time, making digital copies of everything in anticipation of the eventual destruction of the file soon after the conclusion of the legal matter. It may help for lawyers to start thinking of the paper file as a temporary file that is handy to use while the legal matter is ongoing, while the real, long-term file is the one that is being accumulated digitally for eventual long-term storage.

2. All incoming documents get scanned the day they arrive at the firm.
You can be sure that all your documents have successfully been converted to PDF format if the scanning is done as soon as the document arrives at the firm. Generally, this means that the scanning function is performed daily when the mail is opened and sorted. You can find a device that scans the mail quickly and efficiently at any computer electronics store (the best being those from manufacturers making document printers such as Hewlett-Packard, Cannon, Epson, and Ricoh). A good scanner may only be as far away from you as the distance to your photocopier since many copiers now have features that will allow them to scan documents as quickly as they copy them. Fujitsu scanners are popular devices for firms since they scan documents quickly and can come bundled with Adobe Acrobat software for PDF creation (a $200 value).

3. Time for the firm to have good document naming procedures.
File naming conventions and organized computer directories are more important than ever for a firm that scans and saves document images. Because the system often requires that you save multiple copies of certain documents (in both Word and PDF format), you need a file naming system that will allow you to save documents in a way that the document can be easily identified in a list. A typical firm set-up is to organize file directories in a common database by client name or file number and incorporate into the document name the date and type of document that was created. So files for the fictional client Bruce Wayne might be named as: 




4. Your document is finalized when it becomes a PDF. The Word file is just a working copy.
It is important to remember that not only are incoming documents converted to PDF format, but all documents produced by the firm should be converted to PDF also. Saving all files to the PDF is important because it is a stable, secure format that can be stored and delivered electronically with little chance that it will be corrupted or lose its file formatting. That means the document will look the same every time it is opened up using any software tool that can read the widely-popular PDF format. Also, since it is a legal document, it is important to use a file format where someone may have a chance of opening up and reading the document on a computer 50 years from now. Because PDFs can be created and read using low cost and abundant tools with open source coding, the odds of that happening increase greatly.

5. Backing up your data is more important than ever.
By keeping digital copies of all documents you provide yourself with more options for getting rid of unnecessary paper, while significantly reducing the chances of a long-term, firm shut down in the wake of a paper file nightmare (a flood or fire for example). The tradeoff for the extra savings and sense of security is a greatly enhanced responsibility for ensuring that the digital files are backed up safely and often. Backing up your computer data, whether by disk, tape, or secure cloud-based storage, has always been the hallmark of a well-organized law office computer network. For the firm whose primary method of preserving files long-term is scanning and saving documents electronically, making sure the firm’s data is backed up and safely secured should be a top-level concern. To put it bluntly, the firm’s survival depends on how safely the data is backed up and stored. Redundancy is the key to good backup systems and the backed-up data should always be up-to-date and offsite.

6. Don’t sweat the small stuff. E-mails, text files, hand written notes all stay with the file.
Documents like e-mails and text messages are an important part of the file so they should be printed and saved with the file if the firm only uses a paper system. For firms saving files digitally, you can save the e-mails in file directories just like Word and PDF documents. Text messages can be saved using an SMS backup application on your smart phone that will forward the messages to an e-mail account. Handwritten notes leftover at the conclusion of a legal matter can be scanned and saved as one PDF file.

7. Save the paper file until the matter is closed, then consider shredding it.
If you have a complete digital copy of the file, and the paper file was merely a document holder during the life of the legal matter, how long should you keep the paper file? The key phrase here is, “You have a complete digital copy of the file.” If that’s the case, and your backup systems are working well, then it should be okay to destroy the paper file (excluding all original documents) in a secure, confidential manner. Some firms offer the file to the client at the close of the matter. Always remember that the file is created by you on behalf of the client, so if it is the firm’s policy to destroy it at the conclusion of the legal matter, you may want to inform the client of your policy up front in the firm’s engagement agreement.

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Immigration law malpractice claims: infrequent but devastating

A legal malpractice case against a Des Moines, IA lawyer offers a glimpse into the devastating effects that a malpractice matter involving immigration law can have on a family. A jury has already ordered Des Moines attorney Michael Said to refund the family’s legal fees of $12,500, but a new trial should determine whether he should be required to pay damages for emotional distress and punitive damages for his legal malpractice, the Iowa Court of Appeals ruled.  At issue is the faulty advice that Said gave a husband and wife from Ecuador, Klever Miranda and Nancy Campoverde, that has caused the couple to be separated for a minimum of 10 years from their young son, a U.S. citizen who is now a teenager; two adult children; and several grandchildren. Said advised the couple they should return to Ecuador and ask immigration officials for waivers allowing them to re-enter the U.S. by listing Cesar Miranda as a “qualifying relative.” He told them they had a 99 percent chance of succeeding, and they followed his advice, according to the appeals court ruling. But after returning to Ecuador in 2007, they learned during an interview with immigration officials at the consulate that their son was not a qualifying relative and they could not return. And because they had been in the U.S. illegally, they were subjected to a 10-year ban from re-entering the country. 

Malpractice actions against attorneys practicing immigration law are often less frequent than other practice areas, but the Des Moines case highlights the difficult, and sometime heartbreaking circumstances that are created for the client when an attorney giving advice on immigration law misinforms the clients.

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Seven Vows Lawyers Make While Dealing With a Bad Attorney-Client Relationship

Bloomberg BNA has published a dead-on piece by California attorneys Timothy Halloran and Karen Stromeyer about the regrets lawyers consistently express after the fallout of a bad attorney-client relationship. The article, “Seven Vows Lawyers Make While Dealing With the Fallout of a Bad Attorney-Client Relationship,” covers top lawyer regrets such as: representing a friend or family member, vague invoices, dealing with clients who won’t pay, and entering into a business venture or transaction with a client who hasn’t obtained independent counsel.   The authors cite California statutes but the advice is all good no matter where you practice law. Be aware though, that one bit of advice about holding off on fee lawsuits until after the statute of limitations for legal malpractice has run may be impractical in jurisdictions where a client may have up to six years to bring a malpractice claim. From our point of view as a malpractice insurance provider, we can safely say that all the situations addressed in the BNA article are often the begining of a long and difficult malpractce claim. Good advice from Halloran and Stromeyer.

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Cloud Computing: Avoiding Signs of Trouble in the Cloud

We receive a lot of questions from lawyers seeking advice on cloud computing and whether any special considerations ought to be taken into account when contracting with a web-based service service provider. Here are some important things to consider:

  • Encryption – The data that is being stored in the cloud-based environment should be adequately encrypted (256 bit) to protect the data from dissemination if the vender’s server is ever hacked into or the data is ever accidentally distributed to an unsecure source while it is in the vender’s hands. By having the data encrypted, you can be assured that if the data ever gets into the wrong hands it will be unusable, unreadable information to the hacker. Any good cloud-based vender will make sure that your data is encrypted while it is on their computer server.
  • Geographic distribution of web servers – Your data can become vulnerable to permanent loss if the vender stores the data on a single server or multiple servers in a single location. For example, if the data is stored in a single location in Utah and the location experiences a significant disruption due to an earthquake, your data could be disrupted or permanently lost. Therefore, it is important to make sure that your off-site vender is storing your data in multiple geographic locations, so any disruption in one area may not affect the servers that are storing your data in other areas of the country. Software companies like Clio (  that store legal data understand this issue and have their client’s data mirrored on multiple servers throughout North America.   
  • Promise of confidentiality – Just as paper and file storage companies will provide you with assurances that they will maintain the confidentiality of your client’s information and instruct their employees about the importance of maintaining strict confidentiality, a good web-based data storage company will do the same. You should seek that assurance in writing from the cloud-based company whenever you contract with them to store your client’s information.
  • If possible, request a back-up copy of your stored client information – Some companies will provide the firm with an opportunity to also have a backup (on DVD disk or flash drive) of the client data that they are storing for you on your behalf.  The purpose of the back-up is to have a full-copy of your client information on hand if ever the company that you are contracting with should unexpectedly go out of business leaving you with no opportunity to have access to your stored client data. These situations rarely, if ever, happen when you are contracting with a reputable web-based company that has been in business for some time, however it is understandable that attorneys would want to make sure that the data is always available – even in the extreme situation where the company they are working with has gone out of business.  Not all web-based companies will offer you the opportunity to make your own back-ups of the data they are storing for you, but if the service is available it is recommended that you take advantage of it.  
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