Starting the New Year on Sound Footing: Risk Management for the Solo Practice
by Thomas P. Sukowicz
(County Bar Update, February 2005, Vol. 25, No. 2)


Starting the New Year on Sound Footing: Risk Management for the Solo Practice


By Thomas P. Sukowicz, director of Lawyers' Risk Management Services at Hinshaw & Culbertson, LLP. The firm's risk management Web site is located at


Although many risk management issues are common to virtually all law firms, some issues affect solo practitioners differently. Solo lawyers tend to have a high volume caseload. They often act as their own office managers, dealing with the administrative and business issues that lawyers in larger firms are not required to address. In addition, they do not have the "safety net" that lawyers in large firms have, such as a number of lawyers who can act as back up and who can provide some mentoring or help solve problems that arise. They tend to rely heavily on paralegals and secretaries/administrative assistants.


Supervision of Staff


A solo practitioner has to be a businessperson as well as a lawyer. To function effectively in both capacities, the solo lawyer typically delegates tasks to members of the staff. It is crucial to the smooth functioning of the office that the lawyer knows what is going on in the office. The lawyer also has to be available to answer questions and address problems as they arise. To stay aware and available, the lawyer should reserve at least 15 minutes a day to meet with staff so they can report on the progress of legal matters and raise any problems or questions they have. Taking this time each day may be inconvenient, but it is better than leaving a legal matter unattended or allowing a problem to become worse.


Associating with Other Lawyers


Often, a solo practitioner will cut down on the cost of overhead by sharing office facilities with other lawyers. Although there is nothing inherently wrong with this practice, if not done properly, it creates a risk of liability for the malpractice of the other lawyers in the suite. This occurs when the lawyers hold themselves out to the public as partners rather than separate law firms sharing space. When they create the appearance of a partnership, and a client relies on that appearance, any malpractice claim is made not only against the lawyer handling the case but also against all of the lawyers as an apparent partnership.


The appearance of partnership can be created many ways. For example, three solo practitioners may share a suite of offices and a common receptionist. The sign at the door, the office building directory, and the stationery used by the lawyers reads, "Law Offices of Smith, Jones and Brown" rather than identifying each law firm separately. Their billing invoices and business cards also bear that designation. The receptionist and common telephone answering machine greet callers by saying, "Law Offices of Smith, Jones and Brown." The lawyers might even jointly advertise under that designation. Under circumstances such as these, it is easy to see how clients may believe that they are retaining a law firm of three lawyers, not just a single lawyer.


To avoid a claim arising out of an "apparent partnership," make sure that the manner in which you and any other lawyers with whom you share space clearly convey to third persons that you are separate law firms. Be careful about how you are represented in signs, letterhead, business cards, invoices, bank accounts, building directories, and advertisements. Listen to how the receptionist and answering machine greet callers.


Trust Accounts


Solo practitioners are disciplined for trust account violations much more often than lawyers from large firms. Some lawyers simply steal client funds, but often the problem is not intentional theft. For example, lawyers sometimes find themselves short of funds and "borrow" from the money in their client trust accounts. They intend to replace the money when the next retainer or settlement check arrives, but all too often that is too late. Disciplinary authorities consider even the temporary use of funds without authority to be conversion, an offense that is usually dealt with harshly.


Another trust account practice that gets lawyers into trouble is disbursing funds before the settlement check deposited into the trust account clears. If the settlement check does not clear for some reason, then the lawyer has disbursed some other client's funds, which constitutes a conversion of those funds. Unless you know that the funds deposited are immediately available for disbursement, such as when a cashier's check is deposited, wait until the check clears before disbursing the funds.


Many states also have very specific rules about the kinds of records a lawyer must maintain for a client trust account. It is important that the lawyer become familiar with and comply with those rules.


Finally, take the time to personally monitor the activity on both the trust and business accounts to make sure that no one on your staff is mishandling or stealing funds from either account.


Screening New Clients/Cases


One opportune time for effective risk management is when the prospective client is interviewed. It is at this point that the solo lawyer can screen out potentially problematic clients, such as persons who are dishonest, who have unreasonable expectations, or who will not pay your bill.


Dishonest clients who make claims based on false facts may cause you to be sued for participating in the client's fraud or for malicious prosecution, or may cause a motion for sanctions to be filed against you. They may also accept services without intending to pay for them. They may have failed to pay for the services or goods of others. A check of the civil index may reveal a pattern of not paying for things.


Clients who have unreasonable expectations are likely to be dissatisfied and are likely to blame the lawyer for doing an inadequate job. Their expectations may be unrealistic about the outcome of the case, the time it took, or the amount of the fee. Such clients are also likely to file malpractice claims and bar grievances. Try to ascertain during the initial interview what the client expects will happen, how long it will take, and what it will cost. If the client's expectations are not reasonable and cannot be brought into the realm of what is possible, it may be best to decline to represent such clients.


Sometimes, clients don't pay bills because they can't. To avoid working for a client for free, first ascertain the client's ability to pay the anticipated fee, and do not accept those who indicate they cannot afford your services.


Lawyers also should be wary of taking a case that is outside of their practice areas. Dabbling in such matters is very likely to result in an error being made or a deadline being missed. Some reports have indicated that as many as 50% of malpractice claims are the result of dabbling.


Use of Engagement and Non-Engagement Letters


Lawyers' written communications with their clients and prospective clients are important pieces of evidence in legal malpractice claims. They also can serve to give clear notice regarding who the lawyer represents, the scope of the engagement, and other issues. A good engagement letter will help create client expectations about the handling of the case that are realistic.


Many claims can be prevented by using engagement letters addressing the following matters:


1.   who the lawyer is representing;


2.  the scope of the representation including, when appropriate, what the lawyer is not undertaking;


3.  the fee to be charged and the manner in which it is to be paid;


4.  the consequences of non-payment, including the lawyer's right to withdraw;


5.  staffing;


6.  communications;


7.  the client's duties;


8.  dispute resolution; and


9.  any ethical issues, such as conflicts of interest.


The engagement letter should be signed by the client as evidence that the client accepts the terms contained in the letter.


Similarly, when a lawyer declines to take a prospective client, it is best to communicate that declination to the declined client in writing by a non-engagement letter to avoid any misunderstanding about whether the firm will represent the prospective client. Such "non-engagement" letters also should be sent when a lawyer represents a client in a matter in which there are unrepresented parties who might later claim that the lawyer was representing them as well.


Client Communications


Many legal malpractice claims and bar grievances can be traced to a lack of communication, resulting in client perceptions that the matter is being neglected or that the lawyer does not care. To avoid such perceptions, the lawyer should have a policy requiring certain oral and written communications with clients and should make sure the staff knows of the policy and adheres to it.


The policy should require that the following kinds of information be sent to clients:


1.  copies of significant correspondence and pleadings;


2.  all settlement proposals and monetary demands;


3.  material developments in the case;


4.  matters for client decision and counsel's evaluation of those matters; and


5.  periodic status reports.


It also should require the prompt return of client telephone calls (by staff if the lawyer is unavailable), usually within 24 hours.


Docket/Calendar and File Handling


To avoid missing deadlines, it is important to have a docket/calendar system. Good case management software will greatly assist in keeping track of important deadlines. Do not rely on memory or on handwritten pocket diaries. Make sure that one person does all of the docket entry; the person doing that work should review all mail, faxes, and deliveries, and should check them for important dates that need to be recorded in the system.


Make sure that every file always has a future diary date. Touch every file at least every month. Maybe set aside a specific time on the same day each week or month to review pending files.


Solo practitioners frequently have large caseloads. They tend to accept legal matters for family, neighbors, and friends, and agree to handle them for no fee. When the lawyer is busy, these matters are sometimes placed at the bottom of the pile and are left unattended for months at a time. This is a good way to miss a deadline and invite a claim or bar grievance. Avoid taking more cases than you can reasonably handle, and avoid accepting too many cases for free.




Good billing practices can be crucial to the financial success of the firm. They help foster good communication with clients and increase the likelihood of being paid. Clients who are satisfied that they are being treated appropriately in the billing process are also good sources of new business. Conversely, billing problems can result in unhappy clients, and unhappy clients are more likely to dispute bills, file bar grievances, and sue for malpractice.


Invoices for legal services are more than a request for payment. They are evidence of what happened in the representation and may be relied upon by experts to formulate opinions as to conformance with the standard of care and the reasonableness/necessity of fees sought or already received. They are the lawyer's justification for being paid.


Make sure bills are accurate. Any large discrepancy between the wording of the invoice and what has transpired, no matter how innocent, is likely to be interpreted as outright fraud. In addition, make them look good and read well. The invoice should be worded to demonstrate progress on the case using simple, straightforward language.


One final word — Be reluctant to sue a client for fees; that is a sure way to draw a counterclaim for legal malpractice or a bar grievance.


This article is intended to inform the reader of potential liability exposures for attorneys. This article reflects general principles only and does not render legal advice. Readers should consult legal, financial, insurance, and other advisors if they have specific concerns. Neither the Los Angeles County Bar Association, Aon and its affiliates, nor the author assumes any responsibility for how the information in this article is applied in practice or for the accuracy and completeness of the information. Reproduction without written permission is prohibited. This article is made available by Aon Direct Insurance Administrators, administrators of the LACBA Sponsored Aon Insurance Solutions Program, to the LACBA members.


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