How should an attorney should handle a mistake

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Although there are steps that attorneys can take to reduce the likelihood of making an error, mistakes still happen in the course of an attorney-client relationship.

Involve the legal malpractice insurance company.

Many attorneys believe that it is better to wait for the claim (typically defined as a “written demand for money or damages”) or a lawsuit before involving their legal malpractice insurer. In reality, the risks of waiting far exceed any perceived advantages.

Yes, most legal malpractice policies are “claims made” or “claims made and reported” policies. This means that the policy covers claims against lawyers that are made (and if required, reported to the insurance company) during the policy period. The important date is when the claim is made. This is the latest time when a claim must be reported to the insurance company.

On the other hand, most policies also permit a potential claim to be reported as soon as the lawyer learns about any basis upon which a claim could be made, including a simple mistake. In legal malpractice nomenclature, such a report is called a “notice of a circumstance.” By giving notice of a circumstance, a lawyer assures coverage in the event a subsequent claim results, regardless of when the claim is finally made or the lawsuit is filed.

Also, by giving the notice of circumstance, attorneys can avoid some tricky issues in the renewal process for their malpractice insurance. Many applications ask if any attorney applying for insurance is aware of a circumstance that might give rise to a claim. Attorneys who have not already reported the circumstance then face the obligation to do so in response the question. The failure to report a potential claim in an application for coverage or renewal can put coverage for the entire firm at risk.

Once the malpractice insurer is involved, the better approach is to provide the client with the contact information for the professional liability insurance carrier. Basically, get out of the middle.