The Malpractice Risk of Being Local Counsel

When that out-of-state lawyer calls and wants you to be local counsel in her multi-million dollar case, curb your enthusiasm.  You should work out a few details first. Typically, the out-of-state lead counsel will not want you to have any contact with her client. She will make decisions and deal with the client; she will answer the discovery and take depositions. You are on the case simply because the court requires the out-of –state lead counsel to have local counsel.  Sounds like an easy gig, doesn’t it? Well, it may not be so easy.

Lead counsel’s malpractice may lead to a claim against you.

What happens if the lead counsel is dilatory, perhaps event negligent, in representing the client? Over the years, we at Lawyers Mutual have had a number of insureds face legal malpractice claims from a disgruntled client whose case has been lost due to the negligence of lead counsel. A common scenario is lead counsel repeatedly fails to respond to discovery and the court sanctions the plaintiff by striking the plaintiff’s expert witnesses.  In most instances, local counsel is unable to get lead counsel to respond to the discovery and local counsel cannot answer the discovery because he does not have a relationship with the client and has been instructed by lead counsel not to have any contact with the client.

Unfortunately, the Rules of Professional Conduct make no distinction between the obligations to the client of “local counsel” versus “lead counsel.” If you are an attorney of record for the client, you have all of the obligations set forth in the Rules of Professional Conduct, including the duty of Competence (Rule 1.1), Diligence (Rule 1.3) and Communication (Rule 1.4). Unless you have taken the proper steps beforehand, you may not be able to avoid responsibility by claiming that as local counsel you are not responsible for lead counsel’s negligence that prejudicially affected the client’s case. 

Have the client agree in writing to the scope of your duties in the case.

Rule 1.2(c) of the North Carolina Rules of Professional Conduct states that a lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances.  If lead counsel insists, she will make decisions and deal with the client and she will answer the discovery and take depositions, then you should insist that the client agree to that in writing.  
Rule 1.2(c) presumes the agreement to limit the scope of the representation will be between the lawyer and the client, not between the lawyer and the client’s out-of-state lead counsel who probably has not informed the client about your limited representation.  Only be getting the client’s written agreement to limit the scope of your duties in the case, can you successfully protect yourself in the event lead counsel does not do her job to the prejudice of the client’s case.  

If lead counsel is neglecting the case, you should withdraw from the case.

Don’t hang in there thinking things will get better. They probably won’t. Eventually lead counsel’s inattention to the case will come back to haunt you. We handled a case a few years ago in which our insured lawyer was local counsel in a federal court case. Out-of-state lead counsel was not responding to discovery, including producing his client for deposition. Our insured had tried everything he knew to do to impress upon lead counsel how his failure to comply with the discovery rules was going to lead to disaster.  At the hearing on defendant’s motion for sanctions, the court granted summary judgment for the defendant, sanctioned the out-of-state lead counsel and severely criticized our insured for not either carrying out the obligations of a competent and diligent lawyer or if that could not be accomplished, withdrawing from the case.

So when that out-of-state lawyer calls, have the foresight to get a written limited scope engagement agreement directly with the client. And if lead counsel does not represent the client diligently and competently, withdraw from the case without delay.

Mark Scruggs is a claims attorney with Lawyers Mutual specializing in litigation, workers compensation and family law matters. You can reach Mark at 800.662.8843 or at mscruggs@lawyersmutualnc.com.

(Originally printed on the NC Law Blog.)