"Mistakes Were Made."

What is Your Duty to Disclose?


 

Joel Neckers | Partner
Biography

We’ve all been there. A young associate explains that documents that should not have been disclosed were produced in response to discovery. A paralegal reports that a deadline was missed due to improper calendaring. A client calls late Friday with a question that you hurriedly answer, only to discover Monday your advice was incorrect.

Lawyers are human. They make mistakes. And when mistakes happen, ethical and practical questions arise regarding how we handle them. What must we disclose to our clients? What can we handle without causing the client unnecessary worry?

Communication is Required—and Carries Consequences

It may seem beyond obvious that lawyers must communicate to be effective with clients. Yet ABA Model Rule 1.4, adopted in most jurisdictions, goes so far as to establish that lawyers have a duty to communicate with their clients. This duty includes:

  1. sharing such information that a client may make informed decisions—even if the information shared may lead a client to retain new counsel;
  2. informing the client of the status of the representation; and
  3. consulting with the client on matters requiring the client’s informed consent.

Consider the example of the associate and the inadvertent disclosure. Once the opposing party has this information, the settlement discussion and dynamics have changed. The opposing party has a new leverage point. You know that settling is now the client’s best option, but settlement is a client’s decision. What if the client digs in, or rejects your advice to settle? Must you disclose that you now recommend settlement because of a mistake made on your watch? If so, after the client settles, will you be served with a malpractice lawsuit the next week?

The answer is a definite “maybe.” And that’s the obligation, and the risk, that comes with carrying a law license.

What about the missed deadline? If the court grants an extension, can you file the appropriate document and move on without informing your client of the mistake? Are you obligated to share the mistake with the client? That depends—read on for ABA guidance on this question. Will it harm the attorney-client relationship to disclose the mistake, because the client’s faith in you as a representative might be undermined, even though everything worked out?

The answer is, “it could.” And that’s the obligation, and the risk, that comes with carrying a law license.

So What Does the ABA Say?

ABA Formal Ethics Opinion 481 (April 2018) offers guidance on how to handle the above scenarios—and concludes that lawyers must affirmatively disclose a “material” error. An error is “material” if:

a disinterested lawyer would conclude that it is (a) reasonably likely to harm or prejudice a client; or (b) of such a nature that it would reasonably cause a client to consider terminating the representation even in the absence of harm or prejudice.

The ABA opinion puts the burden to assess whether disclosure is warranted on the lawyer or the law firm that made the mistake. Courts in numerous states around the country have reached the same conclusion.

A client will always have the option of stating, “Had I known ‘X,’ I would have fired my lawyer.”

But, although lawyers may be able to determine the likelihood of harm or prejudice to a client—or the lack thereof, as in the example of the missed deadline that was easily corrected—the determination as to whether a client would consider terminating the relationship is another story altogether, particularly in the case of a disgruntled client.

True or not, in the context of a malpractice claim or disciplinary action, a client will always have the option of stating, “Had I known ‘X’, I would have fired my lawyer.” That statement is difficult to challenge. How a client may have behaved differently under different circumstances is a largely speculative, subjective analysis, making the defense to the claim that much more difficult.   

For this reason, lawyers must carefully analyze whether a mistake is material or whether disclosure to the client should be made. Consider whether contemporaneous, internal documentation of whether the error is material is prudent and will be helpful to a later defense of why the mistake was not disclosed. Consider consulting an attorney outside the client team to assess what a “disinterested lawyer” thinks. This could be a simple, and wise, course of action, keeping in mind the preservation of client confidences.

Non-Disclosure is a Choice—and Carries Consequences

Attorneys around the country have suffered discipline merely for failing to disclose mistakes. (Misrepresentations are an entirely different animal and will lead to even larger consequences.) Consider again the missed deadline example—only this is no hypothetical. In a disciplinary action in Iowa, the attorney involved in the underlying case believed that the deadline to file a notice of appeal was 30 days after a ruling, when in fact it was 15. She filed on the 30th day. The appeal was dismissed as untimely. That was bad enough. What happened next was entirely avoidable.

Even absent an affirmative misrepresentation, the lawyer’s omission was misleading.

According to court documents, the lawyer was unsure how to handle the situation and did not immediately inform her client. The client emailed twice over the next month requesting a copy of the appellate brief. The lawyer did not convey the dismissal and instead sent the brief, as requested. A few days later, the lawyer finally notified the client of the dismissal and admitted her calendaring error.

The client filed a grievance. Predictably, the disciplinary board found that the lawyer violated her duties of communication by failing to timely notify the client of the dismissal. Worse, the disciplinary board found that by sending the appellate brief to the client without explaining the dismissal, the lawyer misrepresented that the appeal was still pending and therefore violated her duty of candor.

In that circumstance, even absent an affirmative misrepresentation, the lawyer’s omission was misleading. She received a public reprimand for her violations. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Taylor, 814 N.W.2d 259 (Iowa 2012).

The Iowa example is, by no means, an isolated incident:

  • A Minnesota lawyer received a public reprimand for, in part, failing to notify his client that he failed to timely file her action. In re Disciplinary Action Against Letourneau, 712 N.W.2d 183 (Minn. 2006).
  • A Colorado attorney received a public censure after failing to timely respond to a motion for summary judgment, thereby resulting in dismissal of the case, and failing to notify his client of the development for nearly six months. People v. Kram, 966 P.2d 1065 (Colo. 1998).

In sum, lawyers are human and make mistakes. When you or a lawyer under your supervision discover a mistake—and you will—do not delay. Evaluate whether it is material, and, if so, exercise candor with your client. While uncomfortable, this may ultimately be the best course to mitigate potential problems down the road.

Defending Lawyers & Law Firms When it Matters Most

Wheeler Trigg O'Donnell defends lawyers and law firms against high-stakes professional liability claims. Our team has successfully represented lawyers and law firms in at least 12 states.

In the past three years alone, WTO has won for lawyers and law firms in the Colorado Supreme Court, the Tenth Circuit Court of Appeals, and numerous state district and appellate courts.

Recent victories include:

  • Won a landmark federal case in Illinois defining the obligations of lead and liaison counsel in multidistrict litigation.
  • Obtained summary judgment for a national legal malpractice carrier in an attorney-lien enforcement action in Wyoming district court. In this matter of first impression, the Court held that the plain language of the statute precluded the plaintiff law firm's attorney-lien and constructive fraud claims. As the prevailing party under the statute, WTO obtained a significant award of attorneys' fees and costs for its client.
  • Won a complete defense verdict for a lawyer and law firm accused of malpractice in the handling of a sale of interests in the plaintiff's company.
  • Obtained Rule 12 dismissal for an AmLaw 200 firm facing claims exceeding $500 million in state court in Kentucky.
  • Won a complete defense verdict in a professional liability claim against a law firm and lawyer. The plaintiff alleged that WTO's client was negligent, yet the jury found that not only was our client not negligent, but that the alleged negligence didn't cause the claimed damages.

We understand how personal these claims can be. We also appreciate that staying out of court may be a client’s ultimate goal. Whether you wish to resolve claims creatively and discreetly or defend them vigorously before judge and jury, WTO will help.

About Wheeler Trigg O'Donnell

Wheeler Trigg O’Donnell lawyers have taken more than 1,100 trials, arbitrations, and appeals to verdict, award, or opinion all across the nation, with exceptional results for our clients.

Established in 1998, WTO numbers more than 100 lawyers in three offices. The firm represents sophisticated clients in high-stakes civil trials, appeals, and related litigation ranging from complex commercial to class actions to multidistrict litigation.

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