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Inside Attorney Errors and Omissions Claims


Conflict of Interest and Attorney E&O LawsuitsConflict of Interest and Attorney E&O Lawsuits 

Errors and Omissions (E&O) insurance policies are designed to respond to claims alleging that a professional has caused damage to a client by providing or failing to provide professional services in accordance with applicable laws and regulations, or by delivering a service that fell below the standard care of their profession. For lawyers, typical legal malpractice claims involve failure to file within statute of limitation, poor advice, failure to follow a client’s instructions, and conflict of interest, among others. Moreover, when it comes to conflict of interest claims, it’s not as cut and dry as you may think.

Most attorneys follow the ethic rules that prohibit impermissible conflicts of interest. The potential for problems come from unexpected circumstances, according to an article in the Daily Report by legal experts at international law firm McKenna Long & Aldridge. One potential area where a conflict of interest can arise is in the establishment of the attorney-client relationship. This relationship doesn’t necessarily only begin when a prospect calls or walks in the firm’s door looking for legal services, or through an engagement letter or fee agreement. Requests for legal services and responses can take place through a casual, social interaction, or even on-line. According to the article, “if the inquiry involves the seeking and rendition of legal advice, it can be the basis of an attorney-client relationship – at least for purposes of the attorney-client privilege.” This alone protects the nature of confidential information received by the potential client and can be the basis of a conflict of interest.

For example, the article cites a situation wherein a former college roommate had asked an associate at a law firm for advice about getting a security deposit back from a landlord. The associate emailed the regulations and the associated language regarding the inquiry to his former college roommate. This email was then forwarded to the landlord, which coincidentally happened to be the law firm’s client. If proper protocols were followed to identify potential clients before any legal advice was given, the potential for conflict would have been eliminated.

Another area of concern involves unwaivable conflicts. An attorney or law firm can, of course, represent multiple clients in multiple capacities. What’s important here is to ensure that all applicable rules are met, including full disclosure and consent. However, law firms shouldn’t mistakenly believe that because all the clients in a specific legal matter consent that the representation is permissible. There are some conflicts that are not waivable even if the clients are willing to consent to do so, according to the Daily Report article. An attorney cannot represent both a buyer and a seller in the same transaction, for example.

Following the rules regarding the potential for conflict of interest are not complicated, however the risks are great if the rules are not adhered to. Equally important is having a comprehensive Legal Malpractice policy or Errors and Omissions insurance in place to protect you and your firm in the event of a lawsuit. We can provide you with a customized policy that will respond in the event of a claim. Call our professionals at Axis Insurance Services at (877) 787-5258.

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Blogged on: July 10, 2014 by Mike Smith
Error Omissions
Error Omissions
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