Certainly, in this day and age you cannot ignore the necessity for building your practice. Be wary, however, of “friends” who want to spread your good name far and wide. We are seeing an increasing risk for lawyers participating in the marketing programs of those selling advice on investments, estate planning, retirement programs, insurance products, and a variety of business ventures. These marketers are glad to have your participation as a student or teacher at a seminar touting their product. You are glad to be there because you will meet people that may decide to retain you to advise them on the legal aspects of whatever is being sold.
Be careful of providing opinion letters to the sponsor of a marketing program. If you are not, you may find yourself litigating in California, Texas, New York, Florida, or any other place where you have never had a client, never practiced, and don’t know anybody. There have been several instances when opinion letters, thought to be between the attorney and a sponsor, were included in marketing materials distributed nationwide. Later the attorneys found that persons they never saw or talked to have taken their “advice.” If the product does not then perform as expected, the attorneys inevitably will be joined in the resulting lawsuit. Even if the attorney is ultimately extricated with no indemnity payment, the cost in legal fees, harassment, time, and travel are often heavy.
A request for your participation may be couched in terms such as “Well, we have our own corporate lawyers but I always like to get second opinions. Would you mind doing a little research and dropping me a line giving me your opinion as to whether the way we are approaching these tax matters is OK.” Such invitations should be approached with caution. If you decide to do the research and send the opinion letter, remember that when you provide information and opinion letters to clients that you know will be passed on to nonclients you are at risk that the nonclient may rely on that information. This exposes you to liability for erroneous or misleading representations. To avoid any misunderstandings carefully prepare and control opinion letters by following these risk management suggestions found in the Fall 1995 KBA Bench & Bar article “Negligence Liability To Nonclients” (available at www.lmick.com).
Two attorneys practiced law in the same building, though not in the same law office. They were acquainted and on friendly terms. The first lawyer, who had successfully settled a case for his client, approached the second lawyer and asked him for the accommodation of depositing the settlement check in the second lawyer’s trust account so that everything could be finished that day. The second lawyer’s self-protection antennae should have tingled, but did not. The second lawyer had a good relationship with his bank and knew they would immediately credit his account with the deposited funds. He accepted the endorsed check and deposited it into his trust account. That same day he wrote a check to the first lawyer noting on it that it was for the first lawyer’s benefit and the benefit of his client.
No one reading this will be surprised to learn that the first lawyer cashed the check, did not take care of his client’s medical bills, did not give any money to his client, and was disbarred. The sad ending to this story is that the second lawyer was also sued, also had a bar complaint filed, and although “all he did was try to do a favor for a friend,” he lost that suit and was also disbarred (Hetzel v. Parks, 971 P. 2d 115 (Wash. App. 1999)). The moral is that even the most innocent appearing accommodation of another lawyer, party, or nonclient can carry huge liability and disciplinary exposure. Sort of like buying Yahoo stock at $240 hoping it will go up to $250, but it is now at $15. The potential benefit just didn’t justify the risk of that much capital.
Risk Management Lesson: Specifically identify in the settlement agreement all financial assets to be divided or retained by the parties. Urge clients to promptly change beneficiaries of pension plans, insurance policies, and other financial assets upon divorce and document that this advice was given.
Risk Management Lesson: Cover all significant financial issues, current and contingent, in the divorce settlement agreement.
Risk Management Lesson: Lawyers must determine whether a divorce client has an ERISA plan with a designated beneficiary and advise accordingly. In a divorce action it is best to get a QDRO covering all pension plans approved before the divorce is complete. Document the file!