Please, can we just acknowledge that lawyers as a group are terrible when it comes to properly and thoroughly documenting their files? Of course, not you, but all the other lawyers out there sure are. You wouldn’t believe how bad it can get. I say this because with almost every claim we handle we have to deal with the lack of documentation of something. And I can assure you that at times a poorly documented file can become a very serious problem. Think about it. The fallout is, now we may be forced to live with the reality that a word-against-word dispute between a lawyer and his or her client is in play, and that rarely ends well for the lawyer. Here’s just one story that highlights the problem.
Lawyer was retained by a client for the purpose of defending him in a contract dispute. No fee agreement or engagement letter was ever drafted. Lawyer prepared and filed an answer to the complaint that simply denied the allegations. There were no paragraphs specifically identified as affirmative defenses or a counterclaim, in part due to the fact there was no copy of the subject contract in the lawyer’s possession. The matter eventually ended up in early mediation. Lawyer failed to draft and submit a mediation statement based upon a belief that the issues were simple and doing so would not have been cost effective. The matter was settled at mediation. The agreement provided client would sign a promissory note secured with a confession of judgment. Lawyer recalls telling client that this was not a favorable settlement for him but client decided to agree to it anyway due to the potential costs of going to trial coupled with the risk of an adverse verdict. In other words, client just wanted to put it all behind him. Lawyer drafted and sent to the client the final documents for signature. There was no cover letter explaining the documents or setting forth the client’s obligations under them. Client never signed the documents. Instead client hired another lawyer who renegotiated the settlement for slightly better terms. Client refused to pay the bill and lawyer turned the bill over to a collection agency. Client sued for malpractice.
There are all kinds of documentation missteps in the above example but there’s an even bigger problem. In this situation there were no notes of any kind in the lawyer’s file. There was nothing documenting the lawyer’s thinking, no record of what was communicated, and no record of the decision-making process. Apparently the staff person responsible for scanning closed files and shredding the original file once scanning was complete was never instructed to scan and preserve all attorney notes. Now that’s the real problem.
Here at ALPS, we hear all the excuses when it comes to the reason why a firm’s documentation policies are not as thorough as they perhaps should be. “That step isn’t necessary,” “It takes too much time away from important work,” “We didn’t think keeping that was necessary”, “There are too many others things we have to do,” “The client would be offended if we did that,” and “We were trying to keep the costs down” are commonly shared. That’s all well and good until someone questions what you did or why you did it. Memories are short, yours included. Never forget the following. If you didn’t document it, it wasn’t said or it didn’t happen. That’s how it’s going to play out in our world.
While the basics such as documenting scope of representation, who and who isn’t a client, and that representation has ended are vitally important, my desire with this post is to identify a few documentation traps that, if not properly handled, could place you in a situation not unlike the one set forth above. Here’s the ultimate goal. There should be a thorough written record of the advice given and the decision-making process in every file and this record must be preserved for the life of the file.
The first trap involves the client who wants to save a little green. It’s a trap because there may be unintended consequences that the client hasn’t thought through. If a client is cost conscious to such a degree that limitations are being placed on your scope of representation (e.g. taking shortcuts such as having you rely on documents prepared by others, severely limiting the amount of authorized research or discovery, not wanting to pay to have assets valued, not wanting to hire an expert, etc.), you must document that this client has been informed of the legal ramifications of the limitations being placed on your representation as well as the reasons why this client is making such a decision. Here’s why. If this client is eventually harmed by his desire to save a little money he will turn to you and say, “Why didn’t you tell me that could happen? If I had only known I would have ponied up.”
In a similar vein, if your client refuses to follow your legal advice, it is essential that you document the client has been informed of why you made your recommendation, the benefits of proceeding according to your advice, and the potential legal ramifications that might occur by not following your advice. Of course, don’t forget to also document the client’s stated reasons for making the decision to ignore your advice.
The next trap underscores one of the learnings from the story above. When closing a file, make certain that items like attorney notes, drafts of documents, memos, billing statements, and all substantive email exchanged are preserved because they serve as documentation of the work done, advice given, and the decision-making process. Again, these documents should be maintained for the life of the closed file. Pay particular attention to email. All substantive email should be captured and preserved with the relevant file. I have visited too many firms where this isn’t the case, and frankly, that’s asking for trouble.
Finally, don’t get caught in the comfort trap. Many attorneys thoroughly document the files of “problem clients” yet remain slack in the documentation of files with their longstanding “good clients.” More often than not, this is due to a level of comfort that has developed with longstanding clients. Be careful because too much comfort can cloud one’s perception of what needs to be documented. Understand that problem clients are not the only clients who sue. Take whatever time is necessary to thoroughly document all files throughout the course of representation. The peace of mind that follows will be much better than the feeling of regret for not having done so should a claim ever arise, particularly one brought by a long-term good client.
This comfort trap also arises in another situation you should keep in mind. Never forget that you don’t get a pass when doing a legal favor for a friend or family member. Treat this matter the same as you would if you were going to charge a paying client for the same work. Deadlines need to be calendared, conflict checks need to occur, phone calls need to be documented, etc. Friends and family do sue when things don’t turn out the way they expected; and when they do, without having documentation of the advice given and the decision-making process, you’re about to learn a hard lesson just like the lawyer in our story above.