Tuesday, March 29, 2016

Engagement Letters and Malpractice Risk (and News)

via Karen Rubin comes: "Documenting who you do — and don’t — represent is key to avoiding malpractice trap"--
  • "In Lahn, the lawyer had represented the plaintiff, her brother and another individual as lenders in a series of private loans to a California-based real estate development corporation.  In a 2004 loan-rollover, the lawyer exchanged e-mails with the plaintiff and provided her with an inter-creditor agreement for the proposed transaction."
  • "The lawyer wrote that plaintiff was encouraged 'to seek independent counsel to review these and any documents in connection with this matter. Please remember, as it is expressly stated in the Inter Creditor Agreement, we are representing [your brother] in the transaction.' The inter-creditor agreement likewise reiterated that in this transaction, the lawyer was solely representing the brother as lender."
  • "Even though the lawyer had represented the plaintiff in other matters, the court wrote, 'the uncontested fact remains that he told plaintiff, directly and in writing,' that he solely represented her brother in the transaction, and that she was encouraged to seek independent counsel to review the inter-creditor agreement.  The inter-creditor agreement reiterated the same fact."
  • "Of course, the best way to document the identity of your client is in an engagement letter that leaves no doubt about who you do and do not represent. And here, where an engagement letter was not an option, the savvy lawyer avoided malpractice liability by effectively documenting who his client was not.  Take a lesson from Lahn, and be clear on this point."
And following an earlier update on this matter comes: "Paul Weiss Flirted With Malpractice Risk In Caesars" --
  • "A ballyhooed investigation finding Paul Weiss Rifkind Wharton & Garrison LLP attorneys missed a conflict of interest while representing Caesars Entertainment and its bankrupt operating unit also reveals the firm was at an increased risk of being sued for malpractice because it never obtained a retention letter, experts say."
  • "Sources who spoke with Law360 said Davis' determination that a conflict existed raises a question over how attorneys could have neglected to get in writing the parameters of the firm's representation of CEOC, a major client. CEOC filed for bankruptcy last January carrying $18.05 billion in debt."
  • "Still, experts said the lack of a retention letter is unusual, especially for a firm as large as Paul Weiss and for a client as large as CEOC. BigLaw firms routinely have risk management processes in place requiring engagement letters that outline the scope of the legal work."
  • " A New York rule that went into effect in 2002 requires attorneys who charge clients fees of at least $3,000 to provide a written letter of engagement. Firms are also usually required by malpractice insurance carriers to obtain retention letters, experts said."

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