An effective lawyer is a thorough lawyer. But what happens when an attorney, or an entire law firm, becomes careless in their work? Simply overlooking typographical errors can result in a lawsuit. While such cases may seem rare, one law firm faced a $636 million-dollar lawsuit just last year in a case of not reading the fine print.
George Adelman sued New York law firm Proskauer Rose in March of 2020 for including a provision in a hedge fund partnership agreement that allowed the manager to oust him from the entire operation, according to Reuters. Adelman claimed a “botched cut-and-paste” job was conducted by his attorneys, citing handwritten notes from a Proskauer partner that included expletives indicating a mistake. Last year, a Massachusetts judge ruled against summary judgement, sending the case to be tried before a jury. The case has since been settled but the lesson is the case, and its financial fallout, could have been avoided completely.
Standardizing documentation
Administrative and clerical errors, like typos or incorrect language being included in an agreement, can cost a law firm more than money. Firms depend on a strong reputation for thoroughness and attention to detail. If even the simplest tasks are overlooked, how might that be viewed in the eyes of current and former clients, stakeholders and potential employees? As such, law firms must prioritize risk mitigation related to their work product. Some strategies might include:
- Approaching copy & paste with caution: Using language from previous contracts or agreements is commonplace in law, but like Proskauer learned in the abovementioned article, using the copy & paste function can place unnecessary risk on law firms. To avoid a similar scenario, law firms should ensure any language used from previous agreements is adjusted for the current agreement before it is placed in the document. This way, attorneys can identify any irrelevant or potentially harmful language before it is placed in a draft.
- Thorough approval processes: Law firms should have procedures in place for proofreading and editing documents before they go to clients. While this may seem rudimentary, many law firms assume people know how to proofread thoroughly. The reality is, most people miss something, especially when they are in a rush. Without procedures for attorneys to follow, they may opt to skip the second proof-read or bypass a step of the process.
- Staying organized: All documents, including notes and previous drafts, should be approached as if a client will see them. Documents should be consistently and clearly labeled to avoid sharing documents with incorrect language or errors in versioning. In terms of notes, attorneys should avoid including anything that might be inappropriate. Notes should also be saved for reference when doing a final edit on a document to ensure all provisions are made. Doing so could offer a key line of defense in a potential malpractice scenario.
When the avoidable is unavoidable Attorneys are often expected to be perfect, but as Proskauer’s case clearly proves, attorneys are human, and humans sometimes error. While not all cases will put a law firm on the hook for $636 million, a clerical or administrative error can be costly. Attorneys should review their professional liability insurance to ensure any costs related to fighting a malpractice claim are financially covered and any income lost because of the claim is paid back. Attorneys should consult an insurance professional who specializes in the legal space to ensure adequate coverage at the correct limits. To avoid a mistake altogether, consider speaking with a specialty insurance professional about risk mitigation strategies that strengthen your law firm’s defenses.