Concept

Handling a Discovered Error

Settling a malpractice claim with an unrepresented client or former client

Handling a Discovered Error

A lawyer who finds her own mistake faces a chain of decisions, and Model Rule 1.8(h)(2) comes last. Before she may settle anything, she must decide whether the error requires disclosure, what the disclosure should say, whether she may keep working on the matter, and whether she must withdraw. The rule itself bars a lawyer from settling a claim or potential claim for her malpractice liability with an unrepresented client or former client unless that person is advised in writing of the desirability of seeking independent legal counsel and is given a reasonable opportunity to seek it.¹ The disclosure duties that come before settlement vary by jurisdiction, because ethics opinions differ on what a lawyer must tell the client.² This section follows the decisions in the order they arise.

The first decision turns on where the error falls on a spectrum of seriousness. At the harmless end are errors and possible errors that may never injure the client, because any resulting harm is not reasonably foreseeable, the client's right or claim suffers no prejudice, or the lawyer takes corrective measures reasonably likely to prevent prejudice. A missed nonjurisdictional deadline, an overlooked area of discovery, or an unraised theory of liability or defense may cost a lawyer sleep without creating an ethical duty to disclose. Unless some step can still be taken to avoid future harm, there is probably no immediate duty to disclose the mere possibility of error, and the lawyer should have the chance to remedy the error before she discloses it to the client.³ At the opposite end sit errors that foreseeably prejudice the client's right or claim and that no corrective step is likely to cure, such as a limitations period that has run on the client's claim. Those errors call for the disclosure and conflict decisions that follow.

Two points discipline this first decision. A duty to disclose depends on the facts and circumstances the lawyer knew once she realized the error, not on what appears through the prism of hindsight, and a later malpractice claim neither shows that she breached a duty to disclose nor supports a separate claim for the failure to disclose.⁴ Second, when remedial action is required or advisable, the lawyer should consult the client before taking it, because failing to do so could toll limitations and be treated as a desperate effort to conceal the malpractice.⁵

Once a lawyer decides to disclose, she must decide what to say, and ethics opinions answer that question in three ways.⁶

The majority approach, followed in Minnesota, New Jersey, New York, and Wisconsin, requires prompt notice to the client of both the failure to act and the possible malpractice claim against the lawyer.⁷
A minority approach, reflected in a Pennsylvania ethics opinion, requires disclosure only of material developments in the case, such as its dismissal on a statute-of-limitations ground.⁸
A hybrid approach, reflected in a Colorado ethics opinion, has the lawyer disclose the facts surrounding the error and tell the client that consulting an independent lawyer may be advisable, without advising whether a malpractice claim exists and without simply admitting liability. The lawyer should also consider how disclosure affects her malpractice insurance coverage.⁹

The approaches differ in how much the lawyer must volunteer. On a question that names a jurisdiction, apply that jurisdiction's approach; on one that names none, state the majority rule of prompt notice of both the failure and the possible claim. Because the disclosure is sensitive and carries insurance consequences, a lawyer may seek guidance from counsel and from her insurer on its manner and content before she approaches the client. She should remember, however, that the interests of both she and the insurer may seriously conflict with the client's, and that until the relationship ends she owes the client demanding fiduciary duties, under which the client's interests come first.¹⁰

Disclosure leads to the second question, whether the lawyer may keep representing the client. Depending on the nature and status of the representation, the conflict her error creates may be nonconsentable, and she must then withdraw. At withdrawal she can tell the client that consulting independent counsel is advisable.¹¹ She should also protect the client's interests and ease the transition, including by cooperating with new counsel to the extent possible.¹²

If the lawyer believes the circumstances allow her to continue with the client's informed consent, the safest course is to require the client to consult independent counsel about that consent. At a minimum, she should communicate in writing the advisability of consulting independent legal counsel.¹³ Written advice to seek counsel therefore recurs at every stage: in the Colorado approach to disclosure, at withdrawal, as the floor for continued representation, and finally as a condition of settlement.¹⁴

Rule 1.8(h)(2) governs the final step. Its text requires that the unrepresented client or former client be advised in writing of the desirability of independent counsel in connection with the settlement and be given a reasonable opportunity to seek that advice.¹⁵ A written recommendation sent earlier, at disclosure, does the same kind of work but was not written for the settlement, so the safer practice is to renew the advice when the lawyer makes her offer. The rule protects only an unrepresented person, so a client who has already hired independent counsel falls outside its text.

Hypothetical Illustration

Okonkwo, a litigator, realizes that the limitations period on a client's injury claim expired last month and that nothing can revive the claim. She can cure nothing, so she cannot treat the matter as a private slip. Under the majority approach she promptly tells the client both that the deadline was missed and that the client may have a claim against her.¹⁶ Her interest in limiting her own exposure now diverges from the client's, so she considers whether the client can give informed consent to her continuing. The conflict proves too serious, and she withdraws, telling the client in writing that independent counsel would be desirable. Months later she offers the former client, who still has no other lawyer, a payment in return for a release. Before the release is signed she must again give written advice that independent counsel is desirable and allow a reasonable opportunity to seek it.¹⁷

Hartley, in a different matter, realizes that he overlooked a promising area of discovery. The discovery period is still open, and he pursues the topic in time, so the client's case suffers no prejudice. The error sits at the harmless end of the spectrum and creates no ethical duty to disclose, so no settlement question ever arises.¹⁸

Exam Analysis Steps

Each decision in this sequence depends on the one before it, so an exam answer can run them as a checklist:

Place the error on the spectrum by asking whether harm to the client's right or claim is reasonably foreseeable and whether the lawyer's corrective steps are likely to prevent prejudice, judging from the facts known when the error was recognized.
If the error threatens harm, decide what to tell the client under the jurisdiction's approach; under the majority position, that means prompt notice of both the failure to act and the possible malpractice claim.
Decide whether the conflict the error creates allows continued representation with the client's informed consent or requires the lawyer to withdraw.
Communicate to the client in writing the advisability of consulting independent legal counsel, which is the minimum the lawyer should do.
If the lawyer later proposes to settle with a client or former client who has no independent counsel, give written advice of the desirability of such counsel and a reasonable opportunity to seek it before the release is signed.

The first step controls everything after it. A stem describing a curable slip tests whether you will overread the duty to disclose, and a stem describing a lapsed limitations period tests whether you will stop at disclosure and miss the conflict that follows. The settlement rule is the last item on the list, and it applies only when a claim or potential claim exists and the person across the table has no independent counsel.

Handling a Discovered Error

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