Peer review partners regularly or risk professional liability claims

By Thomas Berman, Principal, Berman & Associates

Gandhi, when (reputedly) asked by a western reporter what he thought of western civilisation, is said to have replied: “I think it would be a good idea”. The same might be said of peer review of law firm partners: it would be a good idea if it were to happen.

The reality is that, in most firms, it is difficult if not impossible to get partners to address issues involving other partners’ shortcomings.

Time and again, law firms that have suffered professional liability claims try to extricate themselves from their predicaments by utilising a ‘due diligence’ process (euphemistically called a ‘risk review’). The review is designed to ferret out difficulties in the firm’s practice, to make an assessment of those difficulties (including their origination) and then to opine as to how the circumstances may be controlled in such a manner as to preclude further difficulties.

Most of the time, a single partner is involved in more than one – if not many – of the professional liability claims. How can a law firm focus its attention upon a single partner who is undeniably responsible for most – if not all – of the claims difficulties? The answer of course is to develop a means by which to test the abilities of the firm’s lawyers in an objective and neutral environment. In other words, to create an environment of transparency and objective discernment of lawyers’ abilities.

Transparency is almost a watchword nowadays, involving '¨a discussion of professional liability claims circumstances. '¨The reason for this is simply the fact that, even in the smallest '¨of law firms, there is every reason to believe that lawyers share very little of the circumstances surrounding what may be their own shortcomings.

When a partner is asked how the firm ensures that partners know of each others’ activities such as casework, the answers are universally related back to social gatherings such as having lunch, dinner or similar activities.

Lawyers would like to believe (and many of them do) that their counterparts would make public any transgressions. But, as Aristotle might suggest, that would be the last thing that would happen. No one wishes to recount their losses – only their victories – so it is unwise to follow a precept which is counter to human nature.

There is therefore a need for due diligence in the evaluation of all of the firm’s lawyers, including the most senior partners.

If the firm can come to grips with the acceptance of the need for peer review, there are a number of methods by which it can be achieved. In a larger firm context, it may be easier simply because of the number of lawyers who may be neutral to the practice of the lawyer who is the focus of the review.

Nevertheless, law firms of all sizes can make this a reality if there is a dedication to the principles involved. Below are some suggestions for mid-sized firms with 20 or more lawyers.

1. Create a review committee. This should consist of three partners and two substitutes selected by the management committee and approved by the partnership. Two members of the committee would change each '¨calendar year. Both equity and non-equity partners would qualify to serve on the committee and in turn be reviewed '¨by the committee.

2. '¨Hold regular meetings. The committee should meet each month in the review of a selected partner. At each meeting, the committee would review five different client matter files for the partner, along with a client questionnaire for each matter file. The files would be selected and reviewed beforehand by the reviewers.

3. '¨Set file selection criteria. The selected partner should be the responsible partner on the matter and the files should have been opened between one and three years before the review. The matters should be chosen at random and each should be a representative sampling from the partner’s billing clients. If the partner has been involved in a professional liability incident, the files chosen should be similar in nature to the matters which engendered the claim.

4. '¨Review files and client questionnaires. The review of files should not necessarily be limited to answering specific questions on the peer review outline. An accompanying questionnaire should be sent to each client whose file is being reviewed. The committee would then discuss the response to the questionnaires at the meeting. The questionnaires would be given to the partner whose files were reviewed, signed by him as having been reviewed and be retained in a peer review file.

The second part of this article will address the issues involved with the substance of the reviews themselves and '¨some samples of client questionnaires.

tberman@bermanassociates.net