Avoiding the Curse of Continuous Representation

The statute of limitations on legal malpractice starts running when you finish working on a case.

But what if you never finish? What if your representation of a given client keeps going and going like the energizer bunny?

Well, your malpractice exposure might just keep going as well.

The idea of continuous representation gives liability insurance companies nightmares. In most cases, the statute of limitations (usually three or four years) begins when the case is concluded and the attorney-client relationship comes to end.

But in some situations, the professional relationship continues. Perhaps differently than before, but it continues nonetheless. As a result, since the relationship does not come to a clear and definable end, the statute of limitations is tolled.

Case Study: Amherst NY

Consider this recent example from New York. The town of Amherst retained outside counsel to handle the termination of a town employee. The matter involved a series of proceedings, each separated by an interval of time.

The town won the first hearing. But a judge ordered a do-over because the lawyer had made a procedural misstep before the hearing had commenced. This necessitated a second hearing, which ended in the same result. The employee challenged that outcome, which initiated round three. Ultimately the employee lost on appeal, and the case mercifully ground to a halt.

Except that it didn’t.

The town sued its former lawyer for malpractice, claiming his ineptitude had caused the whole mess. Counsel raised the statute of limitations – which in New York is three years – as a defense. The trial court dismissed the complaint, finding that the malpractice had occurred more than three years before the suit was filed.

The ruling was reversed on appeal:

“The Appellate Division ultimately reversed the trial court and held that a triable issue of fact existed as to whether the continuous representation doctrine applied to toll the statute,” writes Professional Liability Matters. “In its holding, the court noted that the two hearings occurred after the alleged malpractice, but the hearings were the result of counsel’s original negligence.”

Engagement Letter Alone Not Enough

There was an interesting twist in the Amherst case. The lawyer and client executed separate engagement letters for each of three phases of the case. But that wasn’t enough to save the lawyer.

That was because the appeals court “could not determine as a matter of law whether counsel’s acts were sufficiently interrelated so that representation was part of a continuing, interconnected representation. Notwithstanding the fact that counsel correctly noted that the continuous representation doctrine requires that there be ‘continuing trust and confidence in the relationship between the parties,’ the court concluded that there were triable issues of fact with regard to whether that trust was lost.”

Tips for Escaping the Continuous Representation Trap

• Use engagement letters.  Document exactly what you have been hired to do. Be specific. It will help clarify when the agreed-upon service has been performed and representation has ended.

• Use disengagement letters. As the Amherst case illustrates, an engagement letter alone might not cut it. Place protective brackets around your representation by confirming in writing when it begins (engagement letter) and when it ends (disengagement letter).

• Make it clear that your representation has ended. Say it in unambiguous language. “State the reason for termination and that no further action will be taken,” advises Lawyers Mutual. “Alert the client to unresolved issues or possible time limitations. Return client property with the disengagement letter. Thank the client for the opportunity to serve them.”

• Open a new file when you begin a fresh matter for a former or current client. Use a different file/billing number. Send a new engagement letter. State that this representation involves a new case and subject matter. “This practice is even more crucial in a general retention, when you represent a client in a range of matters over a lengthy period,” says Professional Liability Matters.

• Keep a copy of the disengagement letter in the file. If the end-date of your representation is vague, courts will be inclined to side with the client in the event a dispute arises. A well-worded disengagement letter will remove doubt and eliminate misinterpretation. Lawyers Mutual recommends that you include your final bill (marked “Final”) with the disengagement letter, even if the balance is zero.

• Call Lawyers Mutual for help. Their Client Services team can provide you with sample disengagement letters and other risk management resources.

Has the doctrine of continuous representation caused complications for you? Do you use disengagement letters? Send us your comments.

Sources:

• Lawyers Mutual http://www.lawyersmutualnc.com/risk-management-resources/articles-2/confirming-client-relationships-through-letters
• Professional Liability Matters http://professionalliabilitymatters.com/2014/11/12/s-o-l-the-continuous-representation-doctrine/

Jay Reeves a/k/a The Risk Man has practiced law in North Carolina and South Carolina. Formerly he was Legal Editor at Lawyers Weekly and Risk Manager at Lawyers Mutual. Contact him at 919-619-2441 or jay.reeves@ymail.com.