Communicating About Mistakes

• We encourage you to speak with a Lawyers Mutual claims attorney before contacting your client about an error.  We can help you evaluate the issues below and develop a plan for communicating accurately and ethically.  A material error should be disclosed to the client as soon as possible (N.C. Rules of Professional Conduct Rule 1.4(a)(1)), so contact Lawyers Mutual right away for guidance.

•  Mishandling a material mistake may subject an attorney to significant consequences such as:

1. disciplinary proceedings at the State Bar;
2. additional causes of action (beyond mere negligence) and damages in a legal malpractice claim; 
3. fee disgorgement; and
4. potential loss of coverage under your malpractice policy

•  After becoming aware of a mistake that may prejudice your client’s interests, you should first remember your ethical obligation to keep the client apprised of information that is material to the representation.  Rule 1.4(a)(3) of the N.C. Rules of Professional Conduct.

• Attorneys must always remember that their clients’ interest is paramount to their own interest.  A lawyer should not withhold information from a client to serve the lawyer’s own interest (N.C. Rules of Professional Conduct Rule 1.4, Comment [7]), and the lawyer must avoid impermissible conflicts of interest.

• If you know that you have made a material mistake that cannot be fixed, you should promptly inform the client of the mistake and tell them that due to a conflict of interest you may no longer advise him on the subject of your representation. 

• If you have made a material mistake but believe the error can be repaired or mitigated, contact Lawyers Mutual as soon as possible to take advantage of our claims repair program.  Before undertaking a repair, you must make sure that the conditions of Rule 1.7(b) of the N.C. Rules of Professional Conduct are met and you must obtain the informed consent of the client to continue the representation.  Informed consent requires:

1. disclosing the material facts surrounding the error;
2. informing the client that the client has the right to terminate the representation; and
3. informing the client that the client has the right to seek other counsel.

• When informing your client that you may have made a mistake, keep in mind that the ethics rules prohibit a lawyer from settling a legal malpractice claim “with an unrepresented client or former client unless that person is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent counsel in connection therewith.”  N.C. Rules of Professional Conduct Rule 1.8(h)(2).

• There may be severe disciplinary consequences to an attorney who mishandles a mistake in violation of the ethics rules.  Attorneys have been disciplined for hiding their mistakes from clients, lying about the mistakes to clients, and misappropriating funds to cover their mistakes. 

• Equally serious may be the increased damages and theories of liability that are opened up where an attorney mishandles his duties after making a mistake.  Mere negligence may turn into claims for double damages for breach of fiduciary duty and punitive damages where such claims would not otherwise exist except for the attorney’s post-mistake conduct.

• Hiding a mistake from your client may extend the statute of limitations applicable to a legal malpractice case against you under N.C. Gen. Stat. §1-15(c). 

• Your duties to your malpractice insurer make you responsible to report any potential claim of which you are aware every year when you apply for a re-issue of your professional malpractice policy.  Failure to do so may result in loss of coverage for a claim that is first presented to the insurance company after the effective date of the new policy year if that claim should have been reported on the application or during the prior policy year.

• Promptly reporting mistakes to your professional liability insurer will avoid any uncertainty about timeliness of the claim under your policy.  Prompt reporting to Lawyers Mutual may also result in a claims repair opportunity that remedies the situation before a malpractice claim by the client. 

For more information about ethical and practical considerations when communicating with a client about errors, please see our risk management guide “I Made a Mistake.  What Now?  Don’t Make it Worse!”