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Managing Risk In The Practice Of Intellectual Property Law

By Pamela Phillips, Esq.

The practice of intellectual property law has sometimes been viewed by attorneys as ” In this article, attorney Pamela Phillips explains why this view prevails and offers law firm risk managers practical tips on how to avoid intellectual law malpractice claims.

There are two primary reasons why the field of intellectual property law is sometimes considered “high risk” by lawyers. First, intellectual property law is fairly complicated. Second, intellectual property laws impose numerous filing deadlines which, if missed, create liability and a possible malpractice claim for the lawyer. Fortunately, our firm’s study of claims filed against intellectual property lawyers over the 2-1/2 year period from June 2000 - December 2002 shows that the field is not particularly “high risk” when compared to other fields of law. Furthermore, with a modicum of care, attorneys can avoid many of the types of malpractice claims that have been filed in the past.

Legal malpractice claims against intellectual property lawyers typically fall into three main categories: (1) claims alleging negligence, (2) claims alleging “failure to advise”, and (3) claims asserting conflicts of interest.

Negligence Claims

Negligence-based claims represent the smallest number of claims filed. As far as filing deadlines are concerned, calendaring those deadlines is obviously critical. To avoid missing a filing date, the calendaring system must be consistent and reliable. Most firms rely on calendaring personnel and the attorney to calendar important dates. However, to better ensure adherence to deadlines, secretarial personnel should also be trained to monitor deadlines.

Another type of negligence claim can arise when both “lead counsel” and “local counsel” are involved in a particular case. Particularly in patent litigation, it is common for a client to use one firm (“lead counsel”) to litigate in various parts of the country. Lead counsel then hires “local counsel” to advise on customs, rules and practices unique to the geographical area where the litigation will occur.

Because lead counsel often wants to keep local counsel in the background in order to protect its own relationship with the client, local counsel often plays a very limited role (e.g., they are not privy to all communications between lead counsel and the client and they do not participate in strategic planning.) It is therefore important for local counsel to explain it’s limited role to the client, preferably in writing. Local counsel’s lawyers should be instructed that their ultimate loyalty is to the client, not the lead counsel; thus, if they spot obvious malpractice by the lead counsel, they should alert the client to that fact. If their limited role will not allow them to monitor lead counsel’s work, then local counsel needs to make that clear to the client. Failure to do so may result in a malpractice claim being filed against the local counsel, even if the basis of the claim is lead counsel’s negligence.

Failure-To-Advise Claims

In the last decade, plaintiffs in legal malpractice cases have been increasingly prone to craft negligence claims as “failure to advise” claims. These claims often take the form of “if only my lawyer had told me [X], I would have...” or “I never would have...” Such claims are often the result of clients having second thoughts about choices they made or using hindsight to “wish away” a bad result of the choices they made.

There are several ways to minimize the risk of “failure-to-advise” claims. First, lawyers need to be educated so they are aware of the danger points — they usually arise when important “crossroads” are reached where a client has to make choices. Second, lawyers can reduce the risk of failure-to-advise lawsuits by creating an ongoing record of the client’s important choices made during the case. The few moments needed to create a record of those decisions as they occur not only can prevent the filing of a claim, but can also help defeat a claim that has been filed. Third, lawyers need to understand that clients often believe (and claim) that the lawyer was responsible for doing something that was outside the lawyer’s scope of responsibility. For this reason, it is important to clarify — and document — the scope of the lawyer’s responsibilities and any limitations on the lawyer’s role.

Attorneys may also find it useful to have checklists of some of the more common risks presented by the intellectual property exposure. For example, key employees of the company might walk away with new product or marketing ideas that could enable other businesses to better compete with the company. Such a checklist is a useful way for an attorney to help the client identify both existing and potential problems.

Conflict-of-Interest Claims

There is a wide variety of conflicts rules that apply to lawyers. Claims alleging conflicts of interest are on the rise, and while many of the claims are unsubstantiated, it is often hard to “disprove” a conflict. It is important that intellectual property law firms be responsible for developing and implementing reliable rules and systems to check for conflicts and to resolve them appropriately.

By being aware of the potential pitfalls in the lawyer-client relationship and by implementing the few simple concepts described above, intellectual property lawyers can protect themselves against unmeritorious malpractice claims. 

ABOUT THE AUTHOR

Pamela Phillips, Esq. is a shareholder and General Counsel of Rogers Joseph O’Donnell & Phillips, where she chairs the Professional Liability Practice Group. She specializes in defending lawyers in legal malpractice cases and also in advising law firms on legal ethics and risk management.

riskVue | The webzine for risk management profesionals
December 2003