Law Firm Loss Prevention Systems and Procedure
The process of loss prevention is the ability to identify or minimize the liability and professional risks threatening a law firm. Loss prevention is critical to law firms and although allegations are made against a law firm and found groundless, a firm’s reputation may be compromised. In the past few years there have been numerous publicly-reported settlements by, and verdicts against, law firms in the $3-19 million range. Developing a procedure or implementing the following tools may prove to be beneficial for your firm.
Docket and Calendar Control
Some form of calendaring systems is standard for law firms of all sizes. Recent American Bar Association statistics indicate that more than 26% of all claims made against lawyers are administrative in nature. Of the administrative errors, 19% are directly related to calendaring mistakes and 11% are the result of the failure to make a docket control of calendaring entry.
There are a variety of docket and calendaring systems available but the most utilized today are the computerized systems. Software companies are marketing dozens of automated docket and calendaring systems and are typically centralized with data entry performed by a designated staff member. The central system is then able to issue a series of reminder to lawyers and staff as the important dates approach. The best approach for this system is to have more than one person in control of this system and have an adequate backup plan in the event of computer failure.
Mail handling
As mundane as the subject of mail handling is, a surprising number of law firms have no policy or procedure for the routine of distribution, opening, date stamping and delivery of mail. Your firm should adopt a policy requiring mail to be sorted and delivered within a specified time period after its arrival.
Additionally, mail should be opened and date stamped before being delivered to the individual lawyer. When necessary, docket and calendar entries should be performed prior to delivery of the mail. To ensure entries are not duplicated the use of a computerized system will show if and when the deadline was entered.
Conflict of Interest Avoidance
A law firm should be sensitive to potential conflict situations. This is one of an increasingly and complex concern. The three systems used are: Oral/memory, Single Index system and Multiple index system.
For the obvious reasons, oral/memory system is the least reliable. Single index systems simply refers to file cards describing the client, subject matter or both with no built in capability to cross-reference within the system. Multiple indexes provide users with the capability to cross-reference clients based on various menu items. These systems may or may not be computerized. Obviously, even for the most sophisticated system it is only as good as the information that is entered.
File Opening Procedure
The file opening procedure is not only the signal between the beginning of the lawyer/client relationship, it is also the point at which most law firm’s loss prevention techniques are coordinated. The file opening procedure should include the following:
- Client or case acceptance designation.
- Conflict of interest check.
- Initial docket or calendar entry.
- A fee approval designation (engagement letter).
- Accurate contact information for the client.
Your firm’s policy and guidelines on opening a file should be in writing and made available to all employees to ensure consistency.
Fees and Bill Procedures
The use of engagement letters or retainer letters for all new clients and for new matters for existing clients is essential to ensure both parties are on the same page with regards to the matter at hand and the billing.
These letters serve to cover many topics:
- Confirm the existence of the lawyer/client relationship.
- Confirm and outline the agreed upon course of action.
- Confirm and outline fee arrangement.
- Identify the issues or obligations the lawyer will not be responsible.
The use of non-engagement letters for all representation that has been declined by the firm is an effective way to ensure there is no confusion on who is representing whom.
Billing frequently and on a consistent basis can be done with the use of the variety of software systems on the market. The systems designed specifically for law firms and size of firms are effective and can eliminate duplicative information and saves time.
Working with an expert in the area of attorney professional liability coverage can help you to evaluate all of your potential options and to come up with the best plan for ensuring that you and your firm are protected going forward.
