Try thinking like a juror: Put on a defensive mindset
By Wes Marston, J.D., LL.M.
What is the proper mindset to adopt to minimize malpractice exposure?
One logical answer might be to determine the applicable standards for a particular engagement and adhere to those standards.
That may be fine for a professional standard, but it may not be sufficient to create the appropriate thought processes to avoid a claim.
Practitioners are aware of the importance of documentation as a means of claim avoidance. The more difficult task is determining when such documentation – or other steps – is required to avoid a claim.
To properly address potential claim situations, you must enter any engagement with the proper mindset.
The following tax claim serves as an example of how taking a somewhat narrow view of one’s duty may lead to unnecessary exposure.
A group of investors decided to develop a golf course. The investment group was formed primarily through the efforts of a lawyer named Sigsbee Bigfee.
Bigfee was an investor in the venture and served as both project manager and general counsel. Over a 10-year period, the group invested $20 million in the project. Bigfee received approximately $10 million for legal services and project management fees.
Bigfee engaged Adele Accountant to prepare the corporate tax returns. Adele properly prepared the returns based on the information provided, but she and another accountant at her firm noted that the fees appeared to be very high.
Had she considered the possibility that claims might result from her actions, she might have taken steps to limit her exposure.
The other accountant asked Adele if they had a duty to question the fees. Adele quickly responded that they were engaged only to prepare the returns so did not have a duty to go beyond the information provided by the taxpayer’s representative.
The fees were disclosed in returns provided to the board of directors. However, because of the way they were categorized, it may not have been obvious that some entries referred to fees paid to Bigfee.
Bigfee became insolvent, and the investors sued Adele’s firm for $6 million. The plaintiffs claimed that Adele should have questioned the reasonableness of the fees and confirmed the executive committee’s knowledge and approval of the fees.
Experts confirmed that Adele did not deviate from the standard of care. But, did she take the best course of action to avoid a claim?
It was not Adele’s practice of accountancy that led to the claims, but arguably her mindset contributed to the situation. Had she considered the possibility that claims might result from her actions, she might have taken steps to limit her exposure.
Adele’s clients knew the relevant facts that led to their losses and could have limited their damages. Adele’s narrow view prevented her from writing letters and taking other steps that would have left no doubt in a juror’s mind as to the plaintiff’s knowledge of the facts.
Adele’s mindset was that she did not owe the clients any further duty and had fulfilled her obligations for the engagement. She knew the facts, and she knew that the clients were likewise aware of those facts. The end result was that attorneys profited from what was an otherwise frivolous claim.
I suggest that an alternate mindset is more appropriate for claims prevention. I suggest you consider trying to think like a juror.
Is this an unacceptably high professional standard?
Yes. But, here we are not talking about professional standards. We are suggesting you adopt a mindset when approaching engagements that may prevent claims and minimize exposure.
Try to step back and look at the facts from the perspective of a layperson sitting on a jury. Although most cases never reach a jury, the question of what a jury is likely to decide often determines the settlement value.
When one takes such an approach, facts are created and documents are written, not just for the client but also for the jury.
Do you want to read more articles like this? We have an archive of Brainstorming, Humbling Moments and other articles that might interest you.