Excerpted from The Biggest Legal Mistakes Physicians Make: And How to Avoid Them
Edited by Steven Babitsky, Esq. and James J. Mangraviti, Esq. (©2005 SEAK, Inc.)
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Executive Summary
Physicians can often be their own worst enemy when it comes to making a decision about retaining legal counsel in a civil matter. The demands of a busy practice, failing to recognize the significance of legal documents when they are received, and a general distaste for lawyers in general all can lead physicians to ignore the need to retain counsel in a timely manner. What’s more, physicians sometimes make inappropriate decisions in selecting the right attorney for their specific legal problem.
Mistake 1 Failing to Retain an Attorney in a Timely Manner
The general legal proposition that the law protects the vigilant may prove to be true when physicians become aware that they may have a legal problem or concern. The first tip-off about the need to confer with an attorney should come when physicians receive a legal document or correspondence (including letters from attorneys raising legal issues about a patient) or service of a summons, complaint, subpoena, or other legal document. Many legal problems can be resolved with a minimum of expense and difficulty when physicians promptly contact competent counsel to deal with a problem when it arises.
Receipt by physicians of certain legal documents (such as a summons or a subpoena) may initiate deadlines for the physicians to meet. By failing to meet these deadlines, physicians could suffer negative consequences thereafter. Physicians should not ignore such documents in the belief that they were improperly served with legal process. Even if this assumption is correct, an unscrupulous process server could still file a verified proof of service attesting to proper service, and such a filing could trigger critical events if not timely responded to.
Action Step Physicians should promptly consult with an attorney whenever they receive notice of documents of some legal claim or proceeding, even if they believe that the matter is without merit or is inconsequential.
Mistake 2 Equating Quality With Price or the Size of a Law Firm
Some people believe the axiom that “you get what you pay for.” When it comes to retaining an attorney, this axiom means to some that the best ones charge the most and have the largest number of attorneys listed on their letterhead. Sometimes, however, the attorneys charging the most do the least because they only have to look at a client’s file to generate an impressive bill. Many attorneys who charge high hourly rates actually do little work on the matter themselves, unless it is a matter destined for a trial. Usually, they hand off the case to associates or paralegals, who charge less but attempt to “chum” the file as much as possible and thereby generate a respectable bill for the law firm and justify their existence to the firm’s general partners.
Action Step Physicians shouldn’t presume that the size of a law firm or the amount of the lead partner’s hourly rate guarantees competent legal representation. Many smaller firms have a greater incentive to do a professional job at a more reasonable price.
Mistake 3 Failing to Understand How Attorney’s Fees Work
As a general rule, attorneys handle legal matters for clients in one of three ways, or sometimes with a combination of the three: the contingency fee, the hourly fee, or the flat fee. Most legal matters involve the incurrence of costs, aside from the fee, for such expenses as postage, photocopying, filing fees, service of process, expert witnesses, court reporters, investigators, or other out-of-pocket charges necessary to handle the matter.
The contingency fee, most commonly used in injury cases or possibly in business collection matters, provides that when a recovery is obtained, the attorney will take an agreed-upon percentage of the recovery. Additionally, the client may be responsible for case costs, whether or not a recovery is made, depending on what is agreed to. The contingency fee may be based on the gross recovery or the net recovery after subtracting the costs, depending on what is agreed to.
In a flat-fee arrangement, all of the work is done for a fixed fee, which may include costs, depending on what is agreed to. In such an arrangement, it is important to define what the work will actually entail (e.g., whether litigation is included and if so whether it covers a trial and an appeal).
In an hourly fee arrangement, the attorney charges an hourly rate, usually in tenths of an hour, for all tasks performed. Most attorneys charge for the time spent on the telephone, preparing letters and documents, reviewing documents, and traveling to and from court and depositions. A lesser hourly rate may be charged for the services of an associate, a junior partner, or a paralegal. It is important that the physician receive a bill from the attorney at least once a month on hourly matters and promptly raise any questions or concerns about the bill.
Many clients are surprised to learn that most often opposing parties are not responsible for their own attorney’s fees if they prevail. In fact, unless specified in a written contract or allowed by statute, most litigants must bear their own attorney’s fees. If a contract or a statute provides that attorney’s fees be charged to the prevailing party in a particular matter, the client needs to clarify with the attorney whether the client must pay fees as they are incurred and will be reimbursed if the client prevails in the action, or whether the attorney will look solely to the opposing party for the fee payment. Most attorneys prefer the former approach, in case the client does not prevail or the losing party is unable or is resistant to paying.
Action Step Curiosity is the physician’s best protection in understanding the fee arrangement. Physicians should not be timid in asking their attorney how the fee agreement will work, for exactly what and how they will be charged, and how it may affect the amount of money actually in dispute.
Mistake 4 Failing to Attempt to Negotiate the Fee
With few exceptions, the overwhelming majority of attorney-client agreements are negotiable. The physician conferring with an attorney about potential representation should not hesitate to suggest a more economical fee arrangement than that suggested by the attorney.
For example, in an hourly fee arrangement, the attorney may agree to handle the matter on a lesser hourly rate, or with a cap on the total amount to be charged. In addition, depending on the nature of the matter, the attorney may be persuaded to handle it on a contingency fee basis instead of an hourly rate, at least if a legal action to recover an amount of money or damages is contemplated.
In a contingency or fixed-fee arrangement, the attorney may agree to handle the matter for a lesser amount, or to include costs within the fee instead of charging separately for costs.
Action Step Physicians should not hesitate to negotiate with their attorney about the proposed fee arrangement. If the attorney refuses to negotiate, the physician can accept the terms as is or consult with another attorney.
Mistake 5 Not Obtaining a Written Fee Agreement
The best safeguard to understanding an attorney fee agreement is to obtain it in writing, signed by both attorney and client. The terms of the written fee agreement are negotiable. Some attorney fee agreements provide for binding arbitration of fee disputes or malpractice claims, which may or may not be enforceable in any given state. Other such agreements may provide for an award of attorney’s fees to the prevailing party in any dispute arising out of the fee agreement. In general, without such language, each party would have to bear his or her own attorney’s fees in any dispute arising out of the agreement.
Action Step Any agreement with an attorney should always be in writing, and the writing should be easy to understand, without small print or “legalese.” At the initial consultation, the physician should not feel pressured to sign the agreement, but rather be able to review it at his or her leisure and then contact the attorney later to firm up the deal.
Mistake 6 Failing to Inquire About the Attorney’s Experience and Plan of Action
Much like physicians, most attorneys tend to specialize in their profession. The area of civil litigation can cover a wide gamut of legal matters, such as personal injury, malpractice, real estate, collections, business disputes, employment claims, bankruptcy, and intellectual property. In general, familiarity with a particular area of law offers some assurance of the attorney’s expertise.
Potential clients should not hesitate to ask attorneys about their years of practice, whether they have tried the relevant type of legal matter before, how many such matters they have handled, how they would propose to handle the matter if retained, and what their prognosis for the outcome is.
Action Step Hiring an attorney should be no different than hiring a receptionist, a physician’s assistant, or a nurse. Physicians want someone who is experienced, qualified, confident, and knows how to put a plan into action. Physicians should ask questions about the attorney’s expertise.
Mistake 7 Being Unaware That Clients Always Have the Right to Discharge Their Attorney
Many clients don’t understand that they have an unqualified right to discharge their attorney, even if the matter is in litigation, and to retain new counsel or to represent themselves in the matter. While clients should avoid representing themselves, especially in litigation, they should not hesitate to retain other legal counsel if they are dissatisfied with their current attorney.
Warning signs of problems or potential problems with an attorney include the failure of the attorney to return the client’s telephone calls, making promises that seem too good to be true, failing to make court or deposition appearances, failing to address questions about the bill, not keeping the client advised about the status or progress of the matter, failing to work on the case, or repeatedly delegating client inquiries or concerns to secretaries or other legal staff.
Especially in litigation, the attorney is considered the agent of the party, such that if the agent takes steps that prejudice the case, the client—and the successor counsel—may be stuck with it.
Action Step It is incumbent on physicians who do not have confidence in their legal counsel to select new counsel promptly.
Mistake 8 Failing to Know What the State Bar Can Or Cannot Do If a Problem Develops
If a fee or competence problem develops with an attorney, many clients do not know what the bar association can or cannot do for them. Every attorney admitted to practice law in a particular state is subject to the regulations of the state bar for that state.
State bars address problems of attorney regulation and discipline. In general, they do not get involved in fee disputes between clients and attorneys. They do, however, address situations in which attorneys abandon clients, fail to maintain trust funds, commit crimes, or otherwise breach certain fiduciary duties.
Unless intentional misconduct or gross negligence is involved, most state bar associations do not get involved in malpractice claims against an attorney, since the client’s remedy is a civil action for malpractice, and the state bar’s resources are limited. A client who reports a potential malpractice claim to the state bar and then waits for the bar to act may find the statute of limitations running out while the bar association addresses a backload of other complaints.
Many state bars do, however, require mandatory arbitration over fee disputes if the client so requests, but the fee arbitration program is usually administered by a local or county bar association, as opposed to the state bar.
While all attorneys admitted to practice within a given state must belong to a state bar, membership in local, county, and specialty bars is purely voluntary, and is undertaken for reasons of education, networking, or legal fraternity. Other than the state bar, such voluntary bar associations have no disciplinary power over attorneys.
Action Step Before filing a complaint with a bar association over a fee or competency dispute with an attorney, physicians should consult with another attorney to consider the options that may be available regarding fee arbitration, malpractice claims, or complaints to the state bar.
Mistake 9 Not Insisting on Receiving Copies of Correspondence and Documents
Physicians should insist that they be copied on every letter exchanged between parties and counsel on the case (including any documents that are filed or exchanged in litigation), which is something that many responsible attorneys do as a matter of course. This practice keeps physicians advised about the progress of their matter and, for hourly fee cases, allows them to see what they are being billed for and to raise appropriate questions if a concern arises.
Action Step Physicians should advise the attorney they retain on the front end that they expect to be copied on all correspondence and legal documents that are exchanged and filed in the course of the matter.
Mistake 10 Not Inquiring If Insurance Will Cover a Claim
Most physicians have several types of insurance: malpractice insurance, business insurance for the office, motor vehicle insurance, workers’ compensation insurance for employees, and homeowners’ insurance on their residence. If a legal claim is made against physicians in either their private or their professional capacity, one of these insurance policies may cover the claim and the expense of retaining an attorney to defend the claim as well. While the most obvious example is a claim for professional malpractice, employee claims for work injuries, discrimination, or harassment; injuries incurred at the physician’s office or at home; and tort-related claims for defamation or invasion of privacy may also be covered in an existing insurance policy.
Not all attorneys are especially conversant with coverage law, and some may prefer that physicians pay them to handle the matter rather than make a demand on behalf of the physician for an insurer to provide a legal defense.
Most insurance policies provide that notice of a claim be promptly communicated to the insurer in order to invoke coverage. If the insurance company wrongfully declines to provide a defense or an indemnification on a claim, then that may be the basis for a legal action for bad faith or breach of the insurance contract by the insured.
Insurance is supposed to provide two different components of value: to pay the claim if the claim has merit, and to pay for attorney’s fees and other legal expenses incurred in defending the claim regardless of whether payment is made. Physicians shouldn’t hesitate to get their insurer involved if the subject of dispute involves a covered claim.
Action Step Physicians should ask their attorney about the potential for insurance coverage on the claim, as well as the attorney’s familiarity with coverage issues. If physicians or their attorney suspect the claim will be covered, physicians should provide their attorney with the insurance policy. If necessary, physicians should not hesitate to obtain an opinion from another attorney who specializes in insurance coverage law.
Conclusion
When selecting an attorney, it is best to understand how attorneys charge for their services and to ask the appropriate questions at the initial client interview. Physicians should not be intimidated by legal issues. It is the attorney’s task to make legal issues understandable; if the attorney cannot do so, the physician should get another attorney.
Written by:
Lawrence A. Strid, Esq.
Peer reviewed by:
Harland L. Burge, Esq.
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