This article originally appeared in the Vol. 15 No. 2 issue of CQ - Claims Section Quarterly, and is reprinted with permission of the CPCU Society.

Legal Malpractice: Risk Reduction that Makes Sense
by Howard Yellen, J.D.

Imagine an insurance company offering 5 to 25 percent discounts to drivers who claim to be good drivers--no DMV record check required. Absurd? Perhaps in auto insurance. But this is precisely the way business is done in the legal malpractice arena.

More than half of the carriers who write legal malpractice policies give 5 to 25 percent discounts to lawyers and law firms that use computerized systems to schedule their calendars. Carriers justify such discounts because more than half of all legal malpractice claims arise out of missed court dates and deadlines. Presumably with computerized calendars such blatant mistakes, which make malpractice cases particularly easy to prove, are less likely to occur.

The problem is that there is an enormous difference among calendaring programs. Some provide great protection against missed dates and deadlines. Others are no more efficacious than paper calendars or date books. But legal malpractice carriers tend to give discounts based entirely on a firm's affirmation that it has a computerized calendaring program, regardless of whether it provides any real protection against malpractice.

My premise is that carriers can significantly reduce their exposure to legal malpractice claims if they provide discounts only to firms that use effective legal calendaring programs that automatically schedule lawyers' calendars in accordance with court rules. In this article, I describe the various types of calendaring software and the essential features a program must possess to provide serious protection against malpractice claims.

My hope is that malpractice carriers will use these features in a checklist to determine how well a law firm's calendaring system protects against missed dates and deadlines, and that carriers will base their discounts on the level of real malpractice protection the software provides. By doing this, carriers will reduce malpractice claims by giving law firms an economic incentive for using effective calendaring programs.

Lawyers and law firms formerly kept their calendars manually. In litigation, this is a complex process because certain key dates, such as the trial date, prompt a series of other related dates and deadlines. Consider the implications of a trial date being set, which can then trigger other dates being set. For instance, in California Superior Courts, the last day to exchange the identity of expert witnesses is 70 days before the trial date or 10 days after the trial setting conference, whichever is later.

To calculate these dates manually, people used paper calendars, calculators, or their fingers to count backwards and mark the associated deadlines. This process was time-consuming, error prone, and unpleasant. Moreover, any given case might produce scores of related dates, each of which had to be manually calculated--and recalculated--as the dates for motion hearings, trials, and the like changed. This process was so complex, important, and rife with potential malpractice that many large firms created in-house docket departments to calculate these dates and deadlines.

It also became clear that this process could benefit greatly from automation. As law firms computerized, two kinds of calendar programs emerged that often prompt discounts from legal malpractice carriers.

They are:

• Static calendar programs, sometimes associated with word processing programs such as WordPerfect and Microsoft Word. These digital calendars let lawyers enter appointments, dates and deadlines into their computers but all dates and deadlines continue to be calculated manually. It is akin to having a Daytimer on your computer.
• Calendar programs that automatically schedule lawyers' calendars in accordance with court rules. With these powerful programs, users simply enter a key date like when the case was filed, and all the related dates are automatically calculated and scheduled. These programs provide the most accurate calculation of dates, repeatedly warn users of upcoming deadlines, and provide by far the best protection available against missing important events. The best of these programs also provides extensive libraries of preprogrammed court rules, which help reduce the amount of preliminary data entry necessary to make the systems fully operational.

In my view, the first type of calendar software provides no significant malpractice protection and only firms using the second type of program should be given discounts in malpractice premiums.

Historically, only a handful of software publishers provided calendar programs with scheduling engines that automatically schedule lawyers' calendars based on a database of court rules. Even fewer provided preprogrammed court rules; most relied on law firms themselves to enter the rules into the database.

Recently, however, CompuLaw Ltd., a Los Angeles-based publisher that dominates the legal calendaring software market, began licensing its highly reputed scheduling engine and library of preprogrammed court rules, the nation's largest, to case management software publishers. Without question, this means that the use of sophisticated calendaring programs will become even more commonplace.

Thus, this would be a particularly appropriate time for the insurance industry to become more discriminating--offering premium discounts to firms that actually use programs that automatically schedule lawyers' calendars rather than just any system that calls itself a calendar program. Here are the features calendaring programs should possess to warrant premium discounts:

• Automatic Date Scheduling. This is critical. Can users enter a key event date and have the software instantaneously schedule all the related dates? Can the system handle complex, real-life calculations, such as due dates based on two key dates, secondary formulas, earlier or later decisions, deadlines limited to specific days of the week, or other such methodologies? If not, users are still technically "hand-calculating" the deadlines, which can lead to errors and missed critical dates.
• Preprogrammed Court Rules. Can preprogrammed court rules be used with the program and are they available for the state in which the users work? Are the rules specific to that jurisdiction--rather than being generic--and were they edited or written by attorneys?
• Automatic Reminders. Does the program automatically remind the user that an important date or deadline is upcoming? Can the reminders be set at increasing levels of frequency so that they come more often as the date or deadline nears?
• Data Validation. Does the program automatically validate names of clients and master numbers to ensure that scheduling changes are applied only to the right case? If you enter the client name as ABC, for instance, will it refuse to let you schedule anything on that case unless you enter the right name, American Bread Company?
• Holiday Scheduling. Does the program let you create a holiday list by jurisdiction? Without this capability, the program will schedule the wrong dates because holidays differ by jurisdiction even in the same country. If a program only has one holiday list, calculations will be off.
• Audit Trails. Does the software provide detailed audit trails of activities and deletions that can be used to defend a firm should malpractice claims arise?

With these features, a legal calendaring program can significantly reduce the likelihood of malpractice claims. Programs without these features offer no such prospective liability reductions. It makes sense that legal malpractice carriers begin recognizing the difference in their pricing.