Reducing Exposure from a Shared Office Space and Responding to a Suit
Sharing office space with other attorneys can cost you more than you expected. The fact is, it gets complicated … and creates unexpected problems.
Office-sharing opens you to liability. You may find yourself being sued by clients who have never been your clients, and for cases you never worked on. An Alaskan attorney was greeted by a padlocked door one morning. Her officemate hadn’t been paying their payroll tax payments. So, the IRS padlocked the doors.
Obviously, it is common to office-share. And obviously, many attorneys make it work. Here are some tips to reduce your legal exposure.
Infrastructure
Start with signage. Design your signage so it’s unmistakably clear that the attorneys are unique and independent law firms. Use every tool at your disposal to clarify the independence and separation.
A shared mailroom can sprout liability issues much like dark moist logs sprout mushrooms. The rules of professional conduct require you to protect your client’s confidential information. So, what happens when that confidential information is sitting on the fax machine or printer in the mailroom?
Separate and segregate your IT infrastructure. We are not IT experts, so we can’t recommend specific methods. But if you share a network, it’s hard to prove that you’re protecting client confidential information. And it’s hard to appear as anything other than a partnership “in practice". Work with an IT expert to create a Virtual Private Network (VPN) that is firewalled sufficiently to operate as separate businesses.
Speaking of IT … sharing software and other common IT resources is Pandora’s box of complications. Carefully consider this as you create the IT environment for a shared receptionist or legal assistant.
Other Considerations
It goes without saying that your letterhead should not include anyone who isn’t a part of your law firm. Some attorneys fall to the temptation of “appearing bigger” by adding their office mates to their letterhead. Don’t fall into this sticky tarpit of liability.
Go one step further in your engagement letter. Make it clear that your officemates aren’t “of counsel” or partners. Require your officemates to include this language in their engagement letters as well. Make this a non-negotiable requirement in your office-share agreement.
Have an office-share agreement that all officemates are required to sign. This protects you. But it also protects them. It helps build a firewall that can reduce your probability of being wrongfully sued by someone else’s client. It also creates a paper trail to request summary judgement if a suit arises.
Create a conflict-of-interest check system. Avoid disqualification motions by agreeing with your officemates to not represent adverse interest. Treat exceptions the same way you would as a unified practice. Get consent by all parties before offering representation.
Training
Hold periodic training to refresh and sharpen these practices. Carefully document your periodic training. Train receptionists on how to answer the telephone in a way that avoids giving the impression of being a partnership. Train all other shared staff on a periodic basis to maintain these processes.
Responding to a Suit
As you know, you can do all the right things and still get sued. This is not the time to start doing “wrong” things.
Contact your Professional Liability Insurance carrier. Don’t try to represent yourself. Attorneys trying to do their own claim repair management typically make matters worse. You’ve bought Professional Liability Insurance and now is the time to use it. Typically, the sooner your carrier is involved, the better it works out. And your carrier has a lot more experience defending against these types of claims than you do.
Get your ducks in a row for when you renew your policy. Expect your carrier to ask for at least the following:
- The plaintiff.
- The claimant.
- Date the attorney became aware of the matter.
- Copy of lawsuit.
- Liability.
- Damages awarded.
You may want to make a folder of these items while the matter is still fresh. This simplifies your document search when you approach renewal.
Wrapping Up
Obviously, there are many considerations when entering into an office-share arrangement. Plan for success if you choose to go that route. Build safeguards into your setting. It’s best to have them in place before agreeing on an office-share arrangement. Like most matters, focus on reducing risk and exposure.
