What Do You Do When You Think You Messed Up?

Lawyers are humans.  They make mistakes like everyone else does.  While all of us have a goal of practicing law perfectly, mistakes happen.  But how lawyers react to their mistakes is critically important.

On April 17, 2018, the ABA released Formal Opinion 481, construing Model Rule 1.4.  It provides guidance as to what a lawyer should do in response to a mistake. ABA opinions frequently are used to interpret corresponding Texas rules, so these opinions are important.

The corresponding Texas rule is Disciplinary Rule of Professional Conduct 1.03, which requires a lawyer to keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information.  A lawyer also is required to explain a matter to a client to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

The ABA opinion requires a lawyer to inform a current client if the lawyer believes he or she may have materially erred in the client’s representation.  The big question from this standard is what does it mean to materially err?  The opinion discusses errors being committed on a continuum ranging from blowing the statute of limitations to errors that are minor or easily correctable with no risk of harm to the client.  Serious errors like blowing the statute of limitations also create a conflict of interest with the client under Texas Rule 1.06.  A conflict can be created even if the error does not rise to the level of legal malpractice.

Errors that fall between the two extremes must be analyzed in the context of keeping the client informed.  An error is material if: 1) it is reasonably likely to harm or prejudice a client; or 2) the error would reasonably cause a client to consider terminating the representation even in the absence of harm or prejudice.  While this standard is helpful, it still has shades of gray.  As I will discuss later, I recommend over—rather than under—reporting to the client.

The opinion states that a lawyer may consult with the firm’s general counsel, another lawyer, or the firm’s professional liability insurer before informing the client of the material error.  But this consultation must be done promptly.  When it is reasonable to do so, the lawyer may attempt to correct the error before informing the client while considering the time needed to correct the error and the lawyer’s obligation to keep the client reasonably informed.

Interestingly, the opinion does not impose a duty on a lawyer to inform a former client about a mistake.  The example given is when a lawyer uses an old form as a template for an agreement with a current client and discovers a material mistake.  The opinion says there is no duty of disclosure in this scenario.  The issue then becomes: Who is a current client?  There may often be disclosure obligations to clients that lawyers are not currently representing, including in the estate planning area and with ongoing business clients.

Here is some practical advice for handling mistakes:

  1. Take a deep breath and don’t do anything until you have gotten past the “Oh __________” moment of discovery. To make the right decision about what to do, you need to be thinking clearly.
  2. Consult with a partner, senior attorney, or a mentor. But remember, these attorneys may have reporting requirements if an ethical issue is involved. Still, getting advice is almost always the right thing to do.
  3. Report the mistake to your insurance carrier. We hear from lawyers all the time who refuse to turn claims over to their carrier, because they think they are bogus.  That is not smart!  You pay premiums for a reason; use your insurance when it is needed.
  4. Err on the side of over-reporting. Send a letter to the client describing the problem and how you intend to fix it.  It is also a good idea to meet with the client in person.

Everyone makes mistakes.  Remember though, it is rarely the mistake that sinks someone—it is the cover—up.   If you handle your mistakes properly, you not only have a good chance of maintaining a good client relationship but you should become a better lawyer too.