Recent nationwide legal malpractice claims statistics indicate a noticeable increase in legal malpractice claims arising out of settlement advice. These claims alleging that lawyers provided poor settlement advice may:

• Allege that the lawyer’s conduct reduced the settlement value of the case (a “settle and sue” case).
• Allege that the lawyer improperly recommended that the client accept or reject a settlement offer.

Poor client communication is a significant driver of settlement advice claims, highlighting a growing problem in client communication.  To avoid becoming the target of one of these claims, we offer the following tips:

Manage Expectations

Before you undertake the representation, make sure that the client has reasonable expectations.

• If the matter involves litigation, explain there may be developments that will require both of you to re-evaluate the value of the claim or the viability of legal arguments.
• Help the client appreciate the risks involved in litigation and understand that there are factors beyond the control of both the client and the lawyer.
• Establish a plan for communication to fulfill your ethical obligations and the client’s preferences about the frequency of status updates.
• Explain that the client will have to make the decision to accept or reject any settlement offers.

Document the Representation

Clearly set out in a written fee agreement the scope of the representation, how litigation expenses will be handled, and, if in litigation, whether the representation will extend to include an appeal.  If you decide to enlist co-counsel or outsource any of the work related to the representation, discuss that decision with the client and document the client’s agreement. (See, OBLIC Alert “Hotline Questions- Considerations When Outsourcing“)

Maintain Clear Communication

Poor communication related to these claims often boils down to the client’s complaint that the lawyer did not give the client all of the information necessary to make a good settlement decision. The key here is regular communication throughout the representation.

• Provide regular monthly status updates. If the client asks the lawyer not to send monthly updates to avoid the cost, make sure to document that decision and how often the client wants your report.
• Report in writing on all significant developments whether they are favorable or unfavorable. Do not put off difficult discussions with the client.
• Do not conceal information that impacts the value of the case, even if it reflects poorly on you or your client.
• Help the client understand how developments may impact the outcome of the matter. Immediately alert the client if the client should adjust expectations or consider another course of action.
• Discuss options for testing arguments in advance of trial, including the use of a mock jury or focus group.

Remember the Client Makes the Ultimate Decision

While you may think that a client appreciates the risks of accepting or rejecting a settlement, the perception of the situation can change significantly in retrospect when the client is unhappy with the outcome. When discussing settlement make sure the client has accurate information and understands that the decision is the client’s and not yours.

• Be candid about the impact of bad facts and unfavorable developments.
• Do not exaggerate your trial skills to demonstrate confidence for your client.
• Do not make statements that underestimate the trial skills of opposing counsel or the judge.
• Do not let your personal concerns about going to trial influence your advice.
• Avoid giving your client odds of winning. Instead give your client information. Identify the facts in dispute and the credibility determinations to be made. Provide the results of any jury verdict research or mock jury feedback. Share relevant experience from other jury trials.

For more tips on good client communication, check out these previous OBLIC Alerts:

The Value of Client Communication

Effective Client Communication- During Representation

Best Practices- Dealing With Difficult Clients

As always, if you have any questions, please contact us. We are here to help.