The Risk Manager, Winter 2014
By Ruth H. Baxter, Crawford & Baxter, P.S.C., Carrollton, Kentucky
President, Lawyers Mutual Insurance Company of Kentucky
The highly emotional nature of family law cases subjects an attorney to increased legal malpractice and bar disciplinary complaints by clients, especially when the results achieved do not meet the client’s expectations. Attorneys can also be the target of complaints by opposing parties who contend the lawyer engaged in economic harassment or vindictive litigation. By recognizing the realities of this type of legal practice, a family law attorney can practice preventatively to risk manage these concerns.
The stress on an individual going through a divorce is ranked at 92 on a scale of 100.1 Only the death of a spouse or a child, ranked at 98 is more severe.2 Mental health experts cite the six stages that a person goes through when faced with a divorce.3 From an initial stage of denial, a client then progresses through shock or panic feeling they are going crazy, to a roller coaster state where emotions run high from being hopeful to utter despair. Some clients hold out hope that a marriage can be fixed if only changes were made, but in time realize that the marriage is over and nothing further can be done to change that fact. It is only when acceptance of the situation comes that the obsessive thoughts will stop and the healing process can begin.4
“When parents go to war over their children, the collateral damage is often devastating. Shattered relationships, consuming rage, and life-long bitterness are commonplace,” explains Dr. M. Gregg Bloche, M.D., J.D.5 Parents are threatened by the potential loss of their children to the other parent. Their new roles in their children’s lives can change dramatically.6
As individuals in conflict in family law cases often cannot resolve their own problems, they turn to lawyers to not only handle their legal case, but also to take on roles as their financial planner, employment coach, marriage counselor, personal therapist, child psychologist, and friend to talk to. Attorneys are ill prepared to wear all of these hats, and have few resources to offer as an alternative, contributing to the client’s desperation. The emotional component of the case clouds the client’s judgment about the attorney’s representation and whether the lawyer did a good job for them. At the same time, the financial burden of attorneys’ fees, expert witness expenses, and court costs throughout the family law case, impacts a client’s view of the result often resulting in criticism that the attorney just wasn’t that good – or worth the money spent.
With the emotional component of family law cases often affecting the client’s perception of the legal work performed by the attorney, lawyers who concentrate in this field should consider the high potential for legal malpractice claims and complaints filed with the Kentucky Bar Association. By taking a proactive approach to these concerns, the family law practitioner can avoid being on the other side of a lawsuit or bar complaint.
Legal Malpractice Claims
A confluence of factors, beginning in 2002 and continuing since that time, increased the malpractice risk to attorneys in family law matters.7 In Kentucky, claims predominate in the area of division of marital property, focusing on the parties’ property settlement agreements and Qualified Domestic Relations Orders (QDRO) for ERISA plans. Additionally, court decisions concern the duties attorneys owe to clients in custody litigation.
The failure to properly evaluate assets subject to division for a divorce property settlement agreement and to inform a client of her right to obtain an independent valuation resulted in a jury verdict against an attorney when it determined the wife should have received $162,100 from her ex-spouse, not the $1,500 she actually received.8 At issue was the value of six of the husband’s businesses he deemed worth $3,000 that the wife’s attorney did not contest. Although the appellate courts reversed the case, determining that the malpractice claim was time-barred as it was not brought within one year of the date of the discovery of the alleged malpractice, the import of the case to practitioners is clear. To avoid an issue about what advice the attorney gave as to a value of the asset, or the right of the client to have an independent valuation, language in the parties’ property settlement agreement should be included to clear up that point. For example, when referring to the value of land, the attorney should state:
“The parties are the owners of real estate located at (address) valued at $ (number) ... The parties have agreed upon the value of the real estate for purposes of division of assets and are not requiring an appraisal of the real estate to be performed despite the fact that they have the right to do so.”
Similarly, in evaluating pension and profit-sharing plans, attorney error in the preparation of a QDRO, the failure of the QDRO to include the proper language, and failure to process the QDRO correctly have been the subject of malpractice claims. If an attorney anticipates a potential claim in this area, there are several options available to the practitioner. First, a company or individual who specializes in the preparation of QDROs can be retained to assume the responsibility for the document. Second, if the client lacks the funds to obtain this service, the attorney can utilize language in the parties’ property settlement agreement to explain who is responsible for preparing the QDRO; what form is to be used for its preparation (i.e., the form provided by the employer or a generic form); what the QDRO is intended to resolve between the parties (an equal division of the benefits between the spouses, etc.); and if the QDRO fails to do so, what relief the other party has. Sample language can include:“The parties agree that the QDRO should direct payments and benefits to the correct spouse as set out in this Agreement. If payments and benefits are incorrectly paid to the wrong party, the party who incorrectly receives the payments or benefits will return them to the Plan Administrator within ten (10) days of their receipt so that the Plan Administrator can pay said payment or benefit to the other party.”
This sentence provides an avenue for relief in the event the QDRO does not operate as envisioned, the document is not properly filed with the employer’s Plan Administrator, or not followed by the Administrator as written.
The courts have attempted to allow the parties to value their respective assets by requiring the filing of Preliminary Verified Disclosure Statements9 and Final Verified Disclosure Statements.10 However, not all parties or courts utilize these forms, especially in those cases in which the parties have reached an agreement. To avoid a trap in not requiring a client to complete this form, or to incur liability for a client not understanding the values placed on the assets, attorneys should include the following language in the parties’ property settlement agreement:
“The parties have based this Agreement upon the information provided in their respective Preliminary Verified Disclosure Statements - AOC 238, exchanged between the parties during this divorce action.”
And, to further avoid future problems about items not disclosed by the other spouse, the following statement should be added if a disclosure was not filed:
“Each party waives the requirement that the other party file a Preliminary/Final Verified Disclosure Statement.”
Documenting adverse rulings in family law cases, and properly disengaging as attorney for a party in child custody litigation, is proactive in avoiding legal malpractice claims. Correspondence with a client by certified mail notifying her that a petition for custody had been dismissed and advising her of her right to appeal and the deadlines for the appeal11 should be used to establish the time period for a statute of limitations to run. Similarly, utilizing closing letters when the divorce is over, with a checklist of items for the now- divorced client to complete, such as notifying employer of change of marital status, changing beneficiaries on life insurance policies and retirement benefits, etc.,12 can limit the risk of potential claims from clients, or their heirs, who contend the former clients were not made aware of these requirements.
Family law practitioners can take further solace that, while they can be sued by an opposing party for being successful for their own client while undermining the opposition, there is no legal duty owed by an attorney to the opposing party. Thus no actionable claim can be stated.13 Similarly, when a former client is found in contempt of court for not following a court’s order, her trial attorney cannot be held negligent for damages when the former client is incarcerated.14
Referring clients to other professionals for assistance is also proactive when assisting the client in dealing with the stressors of a family law matter. Most health/hospitalization insurance plans include an employee assistance program (EAP) that covers the employee, spouse and family members for counseling. A client’s family physician can be asked for referrals for mental health- related problems. The county property valuation administrator can assist with the valuation of real property if funds are not available to retain certified appraisers. Certified public accountants and tax preparers can assist with tax considerations, while human resources personnel and their company pension plan administrators can advise regarding pension and retirement benefit plans. Local bankers can assist with financial planning matters such as refinancing the marital residence, purchasing equity interests, and dividing Individual Retirement Accounts. Utilizing persons in their respective areas of expertise can shift responsibilities for non-legal matters to allow the attorney to deal with the legal issues of the case.
Ethical Considerations Uniquely Applicable To Family Law Cases
As with any area of the practice of law, the “ ... (f)ailure to comply with an obligation or prohibition imposed by a Rule (of Professional Conduct) is a basis for invoking the disciplinary process.”15 Violations of a Rule does not in and of itself give rise to legal action against an attorney, nor does it create a presumption in such a case that a legal duty has been breached.16 As the Supreme Court notes, the Rules of Professional Conduct were not designed to be a basis for civil liability, and they can be subverted when they are utilized by opposing parties as a procedural weapon in litigation.17 However, while the Rules do not establish a standard of conduct by a lawyer, the lawyer’s violation of a Rule nevertheless may be considered evidence of a breach of the applicable standard of conduct.18
Ethical requirements that an attorney be competent19 and diligent20 in family law matters are no different than other aspects of practice. Some attorneys, however, are of the mistaken impression that family law cases do not require any level of expertise. Before taking the occasional family law case, an attorney should ask herself if she possesses the legal knowledge and skill required, and is willing to be thorough and prepare at the level necessary for the proposed representation.21
The scope of representation in a family law case should be discussed thoroughly with a client and documented either in a letter of engagement or written fee agreement so there is no misunderstanding as to the duties and responsibilities of the attorney.22 For example, is the attorney negotiating a property settlement agreement, or only drafting a document evidencing what the parties have already agreed should be the division of marital assets? Is the attorney advising on tax consequences of the terms of the parties’ property settlement agreement as they relate to child exemptions or head of household designations? Is the attorney assuming the responsibility for preparation of the documents needed for the transfer of a marital interest in real estate, the refinancing of the mortgage loan against the marital property, or the preparation of the QDRO? Care should be taken so that the client understands what legal work the attorney is actually providing.
Communication with a client is mandatory for all areas of the legal practice but because of the highly-sensitive area of family law, an attorney must make a conscious effort to promptly consult with a client on pending matters; inform a client of any activities affecting their case as soon as developments occur, and reply thoroughly when information is requested by the client.23 Explaining issues in a manner “to the extent reasonably necessary to permit the client to make informed decisions”24 requires the attorney to communicate at a level the client understands. Again, because of the emotional nature of family law cases, face-to-face meetings may be required to confirm the client understands the options available and the consequences of each choice. For some clients, communications by telephone or email may suffice, but the attorney will have to gauge the level of contact needed to meet the ethical duty owed to the client on a client-by- client basis. Copying clients on all correspondence with opposing attorneys, expert witnesses, and court personnel is always necessary, as well as furnishing the client with copies of all pleadings filed with the court. It can never be alleged that a client was not adequately informed when an attorney provides copies of all statutes cited in court pleadings, as well as copies of any legal authority on the issues at hand.
Ethical duties are also owed to opposing counsel in family law cases.25 While the stress and strain between the parties in these types of cases can increase the volatility of the situation, attorneys must work to take all steps necessary not to increase the emotional level in family law matters by being respectful to opposing attorneys. Returning phone calls to opposing attorneys promptly, and not making personal attacks on opposing attorneys or derogatory statements about the parties is encouraged. Harassing opposing counsel by filing frivolous motions, misusing or overusing emails or facsimiles, and withholding expert reports or exhibits to gain a strategic advantage is not warranted.
At the same time, an attorney’s ethical responsibilities to the court cannot be overlooked. Utilizing an ex parte proceeding to gain a preliminary order of custody, for example, when a noticed motion and hearing will suffice should be avoided.26 Making false statements to the court about the facts of the matter is just as serious as failing to correct false statements made before the court by a client or third party.27 Monopolizing the family court docket with multiple motions on repeated occasions does not meet the attorney’s responsibility to use reasonable efforts to expedite litigation.28 Instead, the attorney should make a good faith effort to seek an agreed order to resolve disputes, reserving to the court those matters about which the parties have been unable, in good faith, to agree.
Risk Management Guidelines for Family Law Practice
What follows is a recap of the points made in this article to prevent legal malpractice and bar complaints in family law matters:
- Make referrals to other professionals for your clients as appropriate:
- If client/spouse is insured, refer to family doctor for counseling and referrals for mental health- related problems.
- Appraisers for valuations (real estate, businesses, etc.).
- Tax Preparers/CPAs for tax considerations with assets.
- Bankers (financial matters such as refinancing; purchasing equity).
- Certified Divorce Planners.
- Employers’ Human Resources Office (retirement issues).
- Make Property Settlement Agreement SPECIFIC as to who is doing what and why, and set deadlines for steps to be taken.
- Shift responsibility onto client to obtain documents such as:
- Copies of deeds, mortgages, notes, etc.;
- Financial records from lending institution (applications; appraisals);
- Pension plan documents;
- Life insurance policies; and
- Copies of all financial records, etc.
- Send a closing letter with checklist of items for the client to do after the representation is terminated so that client cannot claim she was not told.
- Follow these “Guidelines for Professionalism” uniquely applicable to family law practitioners:
- Do not churn a case.
- Do not engage in economic harassment.
- Do not participate in vindictive litigation.
- Do not do ANYTHING to unnecessarily increase the emotional level of a family law dispute.
- Prepare the client to participate in mediation as a meaningful process.
- Do not make personal attacks on opposing attorneys and avoid making derogatory comments about the other party.
- Use the ex parte process sparingly and only in emergencies.
- Do not harass opposing attorneys via misuse or overuse of faxes or emails.
- Return phone calls to opposing attorneys within a reasonable time period.
- Do not withhold or delay exchanging expert reports or exhibits in order to gain a strategic advantage.
A legal practice concentrating in family law cases can be a challenging, yet rewarding experience, for a practitioner. However, because of the emotional roller coaster nature of such cases, and the varying reactions each client will have depending upon the case’s outcome, attorneys should be mindful that they are more likely than most practitioners to be a target for a legal malpractice or bar association disciplinary complaint.
1 United States Mental Health Association, “Divorce Support” by Cathy Meyer, Editor
5 M. Gregg Bloche, M.D., J.D., “Child Custody: When Parents Go To War” in The Hippocratic Myth (March 2011)
6 Id. at 5.
7 See, Lawyers Mutual Insurance Company Risk Manager, Winter 2003
8 Faris vs. Stone, 103 S.W.3d 1 (Ky. 2003)
9 AOC Form 238; See, FCRPP 2
10 AOC Form 239; FCRPP 2
11 See, Marshall vs. Samuel, 2003-CA-001412- MR (Ky. App. 2004)
12 For a suggested list of these items, refer to LMICK’s Risk Manager, Spring 2005
13 See, Collins vs. Brown, et al., 2007-CA-00847-MR (Ky. App. 2010)
14 Benton vs. Boyd & Boyd, et al., 2010-CA-002058-MR (Ky. App. 2012)
15 SCR 3.130 at Preamble XX
16 Id. At XXI
19 SCR 3.130(1.1)
20 SCR 3.130(1.3)
21 Id. at 1.1
22 Id. at 1.2
23 Id. at 1.4
25 See, SCR 3.130(3.3) and (3.4)
26 See, SCR 3.130(3.3)
28 SCR 3.130(3.2)