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Loss Prevention Tip #46

Four Tips for Curing the Common Claim

1. Document your client’s decision not to pursue viable causes of action for ‘personal’ reasons. What if your client tells you not to name as a defendant the company his wife works for, but then gets a divorce? Will you be able to prove that he instructed you to forego a viable cause of action against the company?

2. Document the scope of your engagement, especially when it is limited. If you don’t get it in writing, it will be your word against the client’s that the contested services were excluded from your scope.

3. Don’t answer questions posed by parties you do not represent. Tell them you do not represent them and advise them to get individual advice. You represent Ms. A on the purchase of a small business. You attend a meeting of all the parties, the other purchaser, unrepresented Mr. B, asks you about the buyout provisions in the agreement. You give him a brief overview of the buyout terms. The deal goes through, and the company is a big success. Unfortunately, when Mr. B decides to retire he finds that the contract requires him to sell his interest to Ms. A for a ‘fire sale’ price. Mr. B sues you for malpractice, alleging that you represented him as well as Ms. A in the transaction and failed to advise him of the potential ramifications of the buyout provisions.

4. Use a detailed disengagement letter to document your withdrawal from a legal matter. When you withdraw from an ongoing matter, give your client written notice stating when and why your representation will cease, summarizing the status of the case, and warning of impending deadlines.

(Excerpt from Issue #30, CLIA Loss Prevention Bulletin)