Avoiding a State Bar Grievance: Managing Client Expectations in PI Cases

March 17, 2014

Every year, the State Bar receives thousands of complaints about lawyers and opens approximately 1500 grievance files a year.  A personal injury practice can be challenging, but attorneys practicing in this area can avoid the errors and pitfalls that often create grievances.

I recently interviewed Drew Haywood, a personal injury attorney in Durham, about his practice.  Drew was adamant that setting and managing client expectations throughout the representation is the key to avoiding grievances and gaining satisfied clients. From my interview with Drew and from representing attorneys who have had grievances filed against them, I assembled a list of best practices for managing client expectations in a personal injury practice:

  1. Communication. The first step in managing expectations is communication. There will likely be aspects of the case that create challenges. If the client knows about these issues and is prepared at the outset, it is easier to deal with them down the road. A substantial portion of grievances come not from incompetent representation but from lack of communication with clients. So keep in touch with the client whether there is good news, bad news, or no news. The number one complaint by clients to the State Bar?  My attorney does not return my calls, e-mails, letters, etc.
  2. Written and Detailed Fee Agreements. Fee disputes can lead to a lawsuit or a grievance filed with the Bar, so fee agreements are critically important and are required if the fee is contingent on the outcome of the matter.  The contingent fee agreement should explain the scope of the representation and how fees are calculated. The agreement should also state whether expenses will be deducted before or after the attorney fee is calculated. Do you intend to seek reimbursement from the client for advanced costs in the event of no recovery?  If so, put it in there.  If you charge the client for advanced costs, keep the client informed of the costs as they occur.
  3. Settlement Statements. Provide disbursement settlement statements to clients when the case concludes showing where all the funds came from and where they are going including costs, liens, payments outstanding, attorney fees, and the net amount the client will receive.  It is a good idea to include a copy of the fee agreement, liens, the release, and receipts for all payments made on behalf of the client as part of the settlement packet. The settlement statement may also serve as the final accounting if you include enough information and can show that the net balance, after disbursing all funds, is zero. If there is no recovery, a statement should be provided noting any costs to be reimbursed.
  4. Medical Lien Resolution. Lien resolution is a complex area and can be time consuming in a personal injury practice.  Drew advised that the key is to know, understand, and follow the guidelines.  Creating a chart of providers, the amount charged by each, the amount paid, amounts outstanding, and any possible lien claims will benefit both you and the client. At the outset of the representation, ask the client to sign a disclosure statement which identifies any benefits they receive that may result in a lien. Likewise, prior to settlement, give notice of liens if possible to the client and explain which funds may be withheld or may cause a delayed disbursement

Drew pointed out attorneys are often afraid to set client expectations on the front end because they are afraid of losing the client.  However, managing client expectations can go a long way to establish your credibility, keep your clients happy, and avoid a grievance.

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