First in a series of reports on NAELA's Boston Institute
At a session of the National Academy of Elder Law Attorneys' 2011 National Aging & Law Institute, Michigan elder law attorney Robert C. Anderson, CELA, explained why the risk of a malpractice claim is elevated for elder law attorneys and offered a number of ideas for minimizing that risk. "You will be sued by the children of your clients," Anderson told his audience, echoing the title of his article recently published in the November 2011 issue of The ElderLaw Report, copies of which he distributed to attendees.
Anderson noted that the children’s view is often that their parents’ attorney is their attorney and their parents’ money, their money. In addition to these non-client children who think they are clients, elder law involves other factors that increase the risk of being sued, including clients with diminished capacity, the frequent use non-client financial agents to handle client affairs, and the need for major shifts in assets in the context of crisis public benefit planning, often involving the use of irrevocable trusts or other completed transfers.
This is all happening in a judicial climate where the concept of strict privity has been eroding and most states now allow non-client heirs to sue the attorney who prepared the estate plan. Anderson said the "scariest case" for him was when the the Michigan Court of Appeals departed from the "four-corners" rule in Sorkowitz v. Lakritz, 261 Mich. App. 642 (2004), ruling that an attorney could be held liable for malpractice for failing to include Crummey powers in an irrevocable gifting trust, resulting in increased estate taxes. Although Michigan's high court reversed the case on appeal (472 Mich. 898 (2005), the appellate decision demonstrated the risk that lower courts are willing to carve out malpractice exceptions.
"It will only be a matter of time," Anderson wrote in The ElderLaw Report, "until the courts that allow second-guessing on failed tax strategies will allow second-guessing on inadequate Medicaid strategies. . . . [A]n experienced elder law attorney as an expert hired by the children of a deceased client can usually come up with a better way of handling a matter, especially with the benefit of hindsight."
To minimize this risk, Anderson recommended that file memos, correspondence and the will or trust should document that the attorney presented the client with several planning options and discussed the pros and cons of each before the client selected his or her preferred course of action. Anderson said his office uses a checklist of options that the client signs, and that the following statement is discussed and then inserted into the will or trust:
“This is to confirm that my Law Firm presented several optional strategies and that the pros and cons of each strategy were discussed before the strategy I selected was employed.”
Anderson's presentation and article offered other examples of sample language to add to wills, trusts or client waivers in order to minimize the risk of malpractice. In addition, his more general suggestions to avoid trouble include:
- Decline high-conflict and problem clients. High-conflict clients or ones who object to paying a retainer or disagree with your fee are the same ones who will sue you. Just say “no.”
- Control document quality. Reported malpractice case decisions are replete with quality-control errors, such as a secretary failing to sign the client’s will as a second witness, paralegal error, forgetting to include a residuary clause or computer errors in amending a will or trust. A good quality-control plan should minimally include sending drafts to clients and offering a pre-signing conference call with the paralegal.
- Control document execution. In many malpractice trials, the contestant will ask whether the witness can confirm your client’s capacity when he or she signed the will or trust. Because your staff member who served as a witness may not be available to later testify as to competency, if possible ask your client to bring a friend.
- Keep in touch with clients. Regularly reach out to clients to inform them of changes in the law, e.g. through a client newsletter, and offer a maintenance program that will bring them in. A maintenance program can serve two malpractice-prevention purposes: it allow a second look at a plan to correct mistakes, and satisfies the discovery rule as to the malpractice statute of limitations in that your client and/or his beneficiaries will have enough information to be held to know about the alleged malpractice.
- Use special defense measures in high-risk matters. At the top of the list of high-risk matters is estate planning for second marriages and the resulting blended family situations. Close behind are estate plans disinheriting or treating certain children preferentially, plans in which a client makes a major change, and crisis elder law representation that results in quick asset restructuring. Consider using a signed family agreement in these high-risk matters.
(Above list excerpted from Robert C. Anderson, "More Tips for Preventing Malpractice Suits," The ElderLaw Report, Nov. 2011, p. 4)
Anderson said his overall message to elder law attorneys is to keep their malpractice antenna up at all times. "Any time you're dealing with clients and you're looking at their beneficiaries, usually children," he said, "what are the risks of being sued? Get that malpractice antenna up in each and every case."
The session was titled "How to Ethically Prevent Malpractice in the Elder Law Practice" and featured two other presenters. ElderLawAnswers' in-depth coverage of this and other sessions of NAELA's Boston Institute will continue in future articles.
NAELA is offering the 2011 National Aging and Law Institute and the Advanced Elder Law Boot Camp on DVD (including seminar handouts) for a special price until December 31, 2011. The recordings are audio-synced with speaker presentations. The DVDs will ship in early January. Go to www.naela.org/store or contact naela@naela.org for more information.
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