Latest / Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love / Episode 304 Risk Management Secrets Every Law Firm Owner Should Know with Mark Bassingthwaighte

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Episode 304 Risk Management Secrets Every Law Firm Owner Should Know with Mark Bassingthwaighte · Wealthy Woman Lawyer Podcast, Helping you create a profitable, sustainable law firm you love

• 0:01
  Intro: Welcome to the wealthy woman lawyer podcast. What
• 0:05
  Davina: if
• 0:05
  Intro: you could hang out with successful women lawyers, ask them about growing their firms, managing resources like time, team, and systems, mastering money issues, and more? Then take an insight or two to help you build a wealth generating law firm. Each week, your host, Devina Frederick, takes an in-depth look at how to think like a CEO, attract clients who you love to serve and will pay you on time, and create a profitable, sustainable firm you love. Devina is founder and CEO of Wealthy Woman Lawyer, and her goal is to give you the information you need to scale your law firm business from 6 to 7 figures in gross annual revenue so you can fully fund and still have time to enjoy the lifestyle of your dreams. Now here's Devina.
• 0:50
  Davina: Hello, and welcome to the Wealthy Woman Lawyer Podcast. I'm your host, Devina Frederick, and my guest today is Marc Bassingthwaite. Marc is an attorney who has worked as a risk manager with Alps since 1998. Alps is the nation's largest direct writer of lawyers' malpractice insurance. In his tenure with the company, Mark has conducted more than 1,200 law firm risk management assessment visits, presented over six fifty continuing legal education seminars throughout The United States, and written extensively on risk management, ethics, and technology.
• 1:22
  He is a member of the State Bar of Montana, as well as the American Bar Association, where he currently sits on the ABA Center for Professional Responsibilities Conference Planning Committee. He received his JD from Drake University Law School. Please join me in welcoming Marc Bassenthwaite to the Wealthy Woman Lawyer podcast. Hi, Marc. Welcome.
• 1:42
  It's good to see you today.
• 1:44
  Mark: Well, thanks for having me. It really is a pleasure to be here.
• 1:47
  Davina: Good. How's the weather in Montana?
• 1:49
  Mark: Well, we just got back from Montana and it's a typical Montana spring. I actually live and work remotely. So I'm down right outside of Orlando, Florida. Nice, so you're in my old stomping grounds. Oh okay,
• 2:06
  Davina: yes. My listeners know that I lived in Orlando for like forty years. I'm a native Floridian, and then I just moved last year to Colorado, twenty twenty four or 2023 rather. So anyway, all right, so we're all over the place. Look at us being in this modern world.
• 2:24
  So tell me a little bit about the company you work for and what it is that you do.
• 2:32
  Mark: Okay. The company is Alps, Alps Insurance. We've gone through various names over the years. We go back to the days of Nabrico. In the early to late 80s, or I should say mid to late 80s, legal malpractice insurance was almost impossible to buy.
• 2:51
  It was an extremely hard market, and several companies were formed under some federal regulations called Nabrico, National Association of Bar Related Insurance Carriers. And from there, we've grown to be now a nationwide carrier. We've left Nabrico years ago, but we do all things for lawyers. It started out being all malpractice and only malpractice. Now we do cyber liability, employment practices liability, bonds, all types of business insurance.
• 3:27
  So that's, you know, but it's all just lawyers, that's all we do. My job, and I've been in, I've had various titles, but it's all been basically the same thing, just as it evolves over the years. I'm a risk manager right now, like sort of refer me as the national risk manager. And what I do, I sort of describe myself at times, I'm a lawyer's lawyer, but I'm on the proactive side. I do a lot of lecturing, a lot of writing.
• 4:00
  Over the years earlier on, I used to do a lot of consulting, have consulted with over 1,200 law firms of all shapes and sizes from many, many solos up to about 120 lawyers. And my visits would take anywhere from half a day to a week depending on the circumstances and the size of the firm. But it's a lot of education. Let's talk about what are your processes and procedures? What are you doing in terms of security, in terms of cybersecurity?
• 4:29
  Doing a lot of wellness education. So it's been a great ride. I never in a million years thought I'd be in a chair like this, but here I Yeah, I'm curious.
• 4:39
  Davina: I'm curious because you are a lawyer. What led you to go into the insurance side of it?
• 4:47
  Mark: Well, it's one of these crazy sort of happenstance things. I truly never even knew that jobs like this existed. After law school, I was really set to go, well, should say doing law school, was really heading toward litigation. But I also had an interest in insurance law and tax. And then after law school, during law school was a little bit of a move from Iowa to Montana, but hung up a shingle and was starting down that path with a partner, a law school partner.
• 5:23
  And somebody was building a house right behind us. We were all in a new development, and this gentleman was the first risk manager at Alps. He was a non lawyer, but truly an insurance guru. And we got to talking. He's telling me about, you know, risk management and what this is all about.
• 5:44
  And I looked at him and I said, you know, Bob, would you ever consider having an attorney join you to do this? And he kind of just jaw dropped. He said, Wait, lawyers would do this? I said, Bob, if you advertise for lawyers, you're going to get a line of people. And about, I would say almost a year later, I got a call for advertising.
• 6:06
  You've got to go through the process and there are other lawyers in the queue, but I was blessed that it worked out and I've never looked back.
• 6:15
  Davina: Yeah, I think you have to have it's probably very unique to have such an interest in risk management and insurance and all of those kind of things, but it's probably been a really rewarding career as well because you probably learned things that you never even thought about.
• 6:32
  Mark: You are so right. I kid around at times, but there's an element of truth to this. One of the things I'm seriously considering when I retire, and I've still got anywhere from, I don't know, five to eight years left. We'll see how it goes. But I want to write a book, How Not to Practice Law, and just call it Observations of a Risk Manager, know, something like that.
• 6:53
  Davina: Yeah, think that would be Tell
• 6:55
  Mark: some of these stories. Oh my Yeah.
• 6:58
  Davina: Well, I'm going get you to share some of those stories today because I was approached to have you on the show and I thought, that is brilliant. I don't know why I haven't had anybody who talks about insurance and risk management liability for law firms and lawyers before, because this is such a huge part of our business that a lot of us don't think about until suddenly we get into trouble. So I'm going to ask you a lot of questions along the line. Hold on just one second so we can cut this part out. Not if you're my dog.
• 7:34
  So some of the questions I want to ask you, I want to start out talking about some of the most common claims that you see every year in the business and have those changed over time?
• 7:52
  Mark: You would think that they would, and the answer is no. I've been at this for twenty seven years and it's the same old, same old on the malpractice side. Now how some of these arise can differ a little bit. Boy, one of the big ones, I mean, in terms of the frequency piece, you look at the national data, it's going to be a calendaring misstep. They continue to happen over and over and over again.
• 8:22
  And you know, once you blow a statute, which is the ones that really start to worry us because there can be a lot of exposure on those, it's really, every once in a while you can do a little claims repair, but most of the time it's just how much. They get very Can
• 8:39
  Davina: you give me an example of that?
• 8:41
  Mark: Well, let me tell you how one came up. It's an interesting story, and there are a practice risk tip or two here for your listeners. So I'm going to do this in the context of, and again, this is a true story, but I'm going to pretend it's us. So you'll be the lawyer and I'm going to be your paralegal, and we do personal injury plaintiff work. What we do is we have four calendars and we think, you know, we've got these multiple systems and they're going to double check, etc.
• 9:16
  So, you have calendar on your computer. Let's say you're using CLIO or something and it syncs to the cloud. I have a day timers desktop thing that's sort of my master calendar. And maybe we have a digital or a paper tickler system, okay? Now here's our process.
• 9:43
  I do everything. I open the mail, I hit calendar from either court or everything, and I'm putting everything in my book. And then I copy that. I take it to the file room. I sit down at your desk or I enter into your, you know, and put it in Clio.
• 9:59
  So we think we have four calendars, we only have one. And there's just these copies. Now the problem is, what if I make a mistake? Okay. Now lawyers at times will say, okay, I know I should do some double checking.
• 10:16
  So I'm going to watch Mark and double check. And we'll put this second set of eyes. I want to create an independent countering system. And so you say, I'm going to start watching what Mark does. And over the next year, eighteen months, you're double checking.
• 10:31
  You're looking at my calendar entries or you're maintaining your calendar separately. You know, you do the Clio and it backs up, I do my book, and it copies it to the file system or the detector system. We bring these together once a month or whatever and do calendar review, and you never find any mistakes. So you stop. And so now there's no quality control again.
• 10:58
  What happened in this situation, shortly after you stop, that's three to six months something, I got a call from my brother. Mom's just had a stroke. It is not good. You need to get out here quickly. Oh my gosh, life is happening on overdrive.
• 11:16
  It's just, I'm doing as much as I can as quickly as I can to minimize the impact of this unexpected departure. I'm trying to get airplane tickets. Who's going take care of the dog? What about the kids? Life is on high I make a mistake then.
• 11:33
  It just happens. People make mistakes from time to time. So the lesson here is, you know, we need to have independent, and see, then that mistake was not caught until after the statute ran, because it was miscallendered. We need to have independent systems, you know, so you do your piece, I do my piece, or I do it all and you look at original documents and double check my entries, etc, to make sure it's correct. It's not about competency.
• 12:07
  This is about a quality control process to ensure the competent on time delivery of all the services that we are getting involved in and delivering. So independent calendaring is an extremely important useful tool, and there are a hundred ways to do it, but you need to have true independence, and that can prevent these kinds of mistakes. So that's sort of the frequency piece. If you're interested
• 12:36
  Davina: And just to go into that, so what happened is the ball got dropped for the client, statute of limitations ran, and then we're out of luck, and the client's out of luck, and you've really screwed up, even though you didn't mean to, and it was all an innocent mistake. So processes and systems are key with your calendaring and having something that's independent, that's not dependent on sort of this one person without some checks and balances. All right, good, good. Thanks for sharing that. So what other kinds of things?
• 13:08
  I know one thing that I think of when I think of liability is always because we hear this drilled into us from the Bar Association and that is always about things like trust accounts. Is that something that's a big claims issue or what other kinds of things?
• 13:24
  Mark: Well, that raises a really interesting dilemma that a lot of lawyers aren't thinking about. So I'm going to come at this in two ways. Are trust account missteps a significant problem in our profession? And the answer to that would be yes, primarily on the discipline side. We're just too lax.
• 13:49
  Sometimes there's, you know, a bounced check or something in a number of states. Banks are required to automatically report that to the bar, and then there's a little investigations and things. Sometimes there's just random audits. And as a profession, we do not have trust accounting down. There are some firms that do a really, really good job, but, you you can't just close your eyes to this and say, don't need to worry about it.
• 14:13
  I'm just gonna have a bookkeeper or a CPA and let them do it. I mean, there are rules in play, and you must follow them and it's your license on the line if there's a problem. So that's sort of the first half. Where trust accounts and actually goes a little broader. We could talk about the firm's operating account as well, but trust account, there's a lot of time where we are moving money through the trust account, right?
• 14:40
  Whether it's, know, again, a settlement check, lots of times money's moving through here. The real risk on trust account is cybercrime. And here's what a lot of lawyers don't know. I go out and I buy a malpractice policy and it's going to cover me for everything that I do as a lawyer. That is simply not true.
• 15:02
  There are lots of exclusions and lots of situations where it isn't going to cover you. This is one. The vast majority of malpractice policies provide little to no, sometimes there might be a sublimit in play, but little to no coverage for these types of financial losses. So if you're scammed, business email compromise scam, a wire fraud scam, and folks please hear me very clearly. This is not limited to real estate lawyers.
• 15:31
  If you are moving money, I've seen every type of lawyer that moving money get hit. It's now, yes, real estate lawyers are getting hit more often, but I've seen this in multiple practice settings. So the way to think about this is if you are scammed and you've wired some money or something, that is a property loss. It is not negligence. So that's sort of the simple, easy way just to think about it.
• 15:58
  Can you insure for that? Absolutely you can, but it's not malpractice policy. And I have seen lawyers take hits in the half million, million, million plus. Wow. You know, where they, some of these situations Because it's
• 16:17
  Davina: not covered by their malpractice insurance, their general malpractice insurance.
• 16:21
  Mark: But they're liable for the loss.
• 16:23
  Davina: Let's talk some about the cybercrime because I had a I was talking to a client about it, I was concerned about, so a lot of law firms are working remote and they're hiring people and the people are working out of their houses. I was talking about issuing equipment instead of having them use their own equipment as employees, and kind of the dangers of them using their own equipment. It's maybe a family computer that junior gets on and starts playing games, there's a problem. You know, they open it up to, potential, cybercrime hacking or whatever, or just somebody's seeing something. And then also, at kind of her response, I mean, which we were talking about, well, know, I'm uploading, it's all coming up to the cloud, The the case management software is all on the internet.
• 17:17
  It's all uploading to the cloud. The equipment is just like, you know, kind of like we used to have the dummy equipment, and it all went to servers. Right? You know, this sort of idea and and this belief that I'm small fry. Hackers are not gonna be coming for me.
• 17:37
  These ransomware hackers that you hear about, they're not gonna be coming for me. And so really not a lot of concern. And and she's very her statements were very common, what I've heard other people say. So what would you say to that?
• 17:51
  Mark: She's wrong on every one of these points. First off, size has nothing to do with it. Many of these ransomware attacks are sort of software as a service type companies, and they are hitting anybody and everybody. If they hit and because these they're directing it just to whoever falls prey, okay? So if you hit a solo small firm as opposed to, you know, one of the global firms or something, the ransom amount that they're going to demand is going to be different because they understand, you know, this is a solo lawyer, but they'll take whatever they can get in any situation.
• 18:36
  So ransomware is not directed uniquely at large, it's directed at the masses. It's all automated, AI is now getting involved, and it is not good folks. The belief that we're too small to be on anybody's radar is also woefully mistaken. I've shared with ransomware as an example, these are automated attacks, so it doesn't matter. But when it comes to other types of attacks, small businesses and particularly solo small firm lawyers are highly preferred targets for a number of reasons.
• 19:16
  Two are that we have a lot of the same information, valuable information, you know, personally identifiable information. There are different types of secrets and confidences that can be monetized. And two, we don't have the tech savvy and the financial wherewithal to properly secure our systems in the same way that a large corporation could as an example. So high profile targets, this is the low hanging fruit. You know, we sell cyber insurance, and I'm telling you we see a lot of claims, and our market is all solo and small firms.
• 19:54
  You know, we're The large firms insure themselves sort of in slightly different channels in different ways. We see a lot of
• 20:05
  Davina: claims. Are we seeing people hacking in and taking client information that kind of thing is that what we're seeing a lot of or is it?
• 20:13
  Mark: Yeah, yeah, ransomware and wire fraud are very very common, but we do see and here's something else I want you folks to understand. We talk about in the security space, professionals don't hack computers, they log in, okay, because the scams are so sophisticated, these phishing scams, and they'll get in and, you know, they can do all kinds of things. And we'll think for instance, ransomware. We still believe that ransomware is all about encrypting the data and we have to pay ransom to get it back. They're holding our data ransom.
• 21:07
  And now that's still very common, but that's not the end game anymore. What they're doing is they're holding, they go in and take all your data out, have copies of it in other words, and then they encrypt, and then they come back and say, well, we want money to decrypt. You pay the money and you may or may not get your data back, but let's say you do. Then a little bit later, you're going to get another ransom. Oh, we have all your data and we're going to sell it on the deep web or the dark web, whatever you want to call Unless you pay us another ransom and you pay that and then they still don't delete.
• 21:43
  I mean, these are bad people, you know, so there's lots and lots of stuff going on there.
• 21:50
  Davina: Never ending. My husband, for about twenty five years, worked doing IT tech for insurance defense firms all throughout the Southeast and he had some all over the country. One of the things he said was a vulnerability, was a big vulnerability people didn't realize would be the, at the time, secretaries, assistants, paralegals, who wanted to have the butterfly screensaver or the Jesus screensaver on her computer and didn't realize that that created a vulnerability for people to access the computers that weren't at the law firm. And so many things like that, I think that a lot of people don't think of is that your employees are often pass into your system because they fall, like you say, they fall prey to these sort of phishing scams. They're clicking on links in emails, and there's a lot of that sort of in policy that we need to be addressing saying this is what we do, is what we don't do.
• 22:59
  Go
• 22:59
  Mark: ahead. So let me circle back to an earlier comment you talked about, know, there's also this belief that, you know, it's phone computers and where everything's in the cloud and there's a Folks, what you need to hear clearly and I, you know, I my cell phone. This is my personal phone, but it's also used for work. I've been working remotely for over fifteen years now and all of this equip, almost all of it, is all mine. Now I have a lot of things that I need to do to keep this very secure because we're a regulated company, but that's also, I'm just a little paranoid and so I do a lot of things that other people don't But this is the weak stuff folks, this is what you need to hear.
• 23:44
  You know, the modern day threat back in the day and I get it, know, the butterfly screensavers were risky certain Now it's the personal smartphone that's used for work. It's the same thing. And any individual at your firm, even if it's just two people, so you and a secretary, You know, the person that is not fully secure both on social engineering awareness training, understanding what the current phishing attacks look like, understanding what attacks look like on the smartphones. And hear me clearly folks, smartphones are a high profile target. More and more attacks are going to the mobile space than just about anything else because this is, we all treat this stuff in a different way.
• 24:34
  We don't think a text message would, you know, can be used to fish us out of some information, and absolutely it can. Identity theft is very easy to occur. Bank account access, very easy to occur,
• 24:48
  Davina: using these media apps you're signing up for, you're giving permission to access everything on your phone, from your microphone to your bank accounts that you have attached to an app phone. Highly vulnerable places. If your paralegal has an app on her phone to access a case management system and she also has TikTok or some other social media. It could be meta for all I know, right? Meta certainly gets access to everything, It's just not the Chinese government.
• 25:28
  But that there's a vulnerability in that. Who's accessing this? Who's who's able to get this information? It could be some employee that works for one of these companies that so they or games are a huge thing. How many people let their kids use their phones to play games?
• 25:47
  And if they're doing business and personal on that phone, that's a problem.
• 25:50
  Mark: It is. It's a huge problem. Here's what people don't think about. You know, in my mind, nothing in life is free. I used to, when our kids were still young, I'd say, I'd try to teach them, you get what you pay for.
• 26:04
  Well, whether it's gaming apps, all kinds of apps that we put on our devices, our mobile devices, and you think, well, why is it free? I assure you it's very costly to develop these apps and these games. There's a lot of money here, but they're giving it away. Well, why? Because when you get it for free, the one thing they ask is we have access to everything going on on your phone and we are going to monetize that.
• 26:38
  And the information that they are pulling off these phones and laptops and tablets and all the, you know, is extremely valuable. They are making gobs of money at this. You know, again, think about Facebook, how much money they make. Did you pay for that app? No, no, no.
• 27:00
  Right? Just saying. And
• 27:02
  Davina: so as law firm owners, what I think we're talking about, I mean, there's obviously your personal vulnerability, as law firm owners, you have an obligation to your clients to keep their information confidential. And so if Betty Sue, who works in your office, has an app on her phone, and the company who makes the app may say that's a very secure app, but you wonder if she's got that and also some games on it and some social media on it. Are you exposing your clients to being hacked? And we see it all the time with large companies. I mean, why do we think we're an exception to that rule?
• 27:48
  And lawyers, I think are particularly targeted, even though we don't realize it, because we, small firms are going to be a little more uneducated about those types of things. We're busy trying to just run a business. We're not thinking about this. And then we hold such powerful confidential information all the way from social security numbers to birth dates and all the ages of their kids. Mean, like everything right out there.
• 28:16
  So, all right. So, is there another area that you really want to tell us about that is something that we really need to be paying attention to in terms of the most claims that you're seeing?
• 28:31
  Mark: Well, I would say what we could talk about, conflicts of interest. You know, I shared at the beginning calendaring is the severity piece, or I'm sorry, the frequency piece. Conflicts of interest claims are the severity piece. And these things just always boil down to greedy attorney putting his or her financial interests about the interest of somebody else. Juries have field days when it comes to this, in terms of punitives, discordion of fees is often on the table, and coverage can be a real problem because conflict claims don't arise overnight.
• 29:08
  And if you are reporting, you know, every year that we're not aware of anything, not aware of anything, but there's been a conflict problem kind of hanging through here. I've seen carriers completely outright deny coverage because it wasn't reported when a reasonable lawyer would have known that this could potentially result in a claim. Now, one of the things that I would share other than to just say you really need folks to take conflict problems very, very seriously. But let me talk about, you know, a common approach to try to deal with this is just informed consent, you know, just have a waiver signed. I don't have a problem with that, but I do want to underscore really what a waiver is about.
• 29:54
  We will see at times disclosure statements. I have been disclosed to the joint clients or whatever, however this is playing out, you know, the existence of a conflict and they agree to move forward. That's not informed consent. You really need to set forth, and I would do this in writing every time, the pros and the cons of moving forward with the conflict in play. How will this impact these various parties?
• 30:24
  What are the legal ramifications of perhaps going into joint representation? You know, if a conflict evolves down the road in joint representation, illegal ramification is going to be at times you're out for all and they're going to have to all go get individual attorneys. They need to be aware of that. They need to be aware that there's no privilege between joint clients. That's another example.
• 30:54
  So there's lots of stuff there, but that is a huge concern. And I will tell you, I've got to kind of jump to what I think is the biggest malpractice risk of all. The ABA has a standing committee on lawyers professional liability insurance, and every four years, and they've been doing this side, I don't know, since the early nineties, mid nineties, somewhere in there, they issue this report. And insurance companies, both The United States and Canada, and a number of insurance carriers of all shapes and sizes participate in just supplying data. And it gives you a national picture of what's happening and you can look at what is frequent, what is, you know, and all this stuff.
• 31:41
  That's not telling you what the true cause of malpractice is. That's telling you what the misstep is. The true cause is something different. And you're not going to find this in any of the data. And really, you have to start to ask yourself, well, why is the matter being neglected?
• 32:00
  Why do some of these dates get blown? And why do conflicts get ignored? And on and on. And I'm telling you, in my mind, and there's some, there are a lot of people that agree with me, 50 to even as high as seventy percent of claims have an impairment issue in play. It could be, and I'm going to broadly define that, it's obvious things like burnout, stress, drug addiction, any kind of, yeah, all types of addictions.
• 32:35
  And I've worked with numbers of lawyers with all kinds of addiction. Mental illness is another problem. What is a serious issue more and more we're seeing in recent years, and it's growing incredibly fast, is dementia. In our profession, this is a serious problem. Depression is a very serious problem in our profession.
• 32:58
  So that is the reason why that's the true cause of malpractice. And the number one thing that you can do is simply prioritize wellness. You know, take care of yourself, nurture your support systems, get out of the office now and again, if you're, if I get that sometimes you have to burn the candle at both ends and there's an eighty, a hundred hour work week and sometimes, you know, a big trial, you know, it can get wild, but you can't keep that up year after year. You have to have vacations. You have to have a life outside of this.
• 33:35
  Otherwise, you will at some point be a statistic. You also have to recognize when it's time to quit. We have seen multiple claims, you know, with dementia and depression where it's ten, fifteen, twenty. The highest I've seen is sixty six claims with one person that had a breakdown during COVID. Wow.
• 33:57
  And just neglected all kinds of matters.
• 34:00
  Davina: So I think, so it's interesting that you bring up dementia because, so one of the things I'm big on is really encouraging solo attorneys to grow their firms. That because when it's a solo, it is you and you're but when you have a firm, have a team, you have other lawyers, you're spreading some of this out. You are not you and your team are able to help each other and it's not gonna be such an overwhelming, we're taking on way more than we can handle, right?
• 34:30
  Mark: Yes.
• 34:31
  Davina: But it's interesting you bring up dementia because the other thing I see is I talk to a lot of lawyers and they're not even thinking about retiring. There's that joke, oh, lawyers don't retire. They just die at their desk.
• 34:43
  Mark: I've seen that too many times and it's a mess.
• 34:46
  Davina: Right. I'm just like, why in the world do you not have some point where you say, you know, I'm not going to be an active lawyer doing this. I can still have my law license. I can still see a buddy every now and then and help him out. But I'm gonna have other interests and other things I do.
• 35:06
  And if people think, I mean, I'm I'm about to turn 60 and my parents are in their mid eighties. And I think to myself, people think, oh, I'm just gonna work until I just die. And then you're like, I look at my parents and I go, they're they couldn't do any of the things that I do in my day to day life because you lose capability as you get older. You lose awareness of your capability as you get older. So you really need to have a plan to develop your financial future so you have some security for the future.
• 35:42
  How many solos have you met who just don't really have an investment for the future? They don't have an asset they could sell. They just keep working, money comes in, they pay the bills, and then the mental health suffers because they don't have any other, that is their wife, that's their identity.
• 36:00
  Mark: This underscores in my mind to kind of add on to what you're saying, you know, get a successor, name a successor. And this could also be a backup attorney for you. So you can have an opportunity to get out of the office and take the occasional staycation or, you know, long weekend down at the beach or whatever, Climb the mountain in Denver, outside Denver, some beautiful country out there. So get a backup, name a successor. And that I would argue, and if you read the rules, you know, 1.3, the commentary to 1.3 diligence, a number of jurisdictions really say, and it's really not optional for a solo, you really need to, you know, because dementia, age, and we could even add in work from home, there are no exceptions to the rules for these circumstances.
• 36:55
  Know, no work from home exception to confidentiality or competency. There is no I'm getting older exception to this. Know, you just move You've got to do this. It's just not optional.
• 37:07
  Davina: Well, and the mental health piece, I think a lot of We have a younger generation that's talking a lot about mental health now, and they're saying, want work life balance and mental health, And it's a struggle for those of us who sort of own a little older and own law firms and go like, What are you talking about? I've been grinding since I was 16, you're coming in here fresh out of law school telling me you need this work life balance. But to their credit, that is something that we all need to do a little bit better on. I think a lot of way to do that is having, like you said, other support. Developing a team, having other people to help us.
• 37:44
  Give me an idea of, I would say three preventative measures. I know we've talked about some in our conversations, but if you said, you know, here are three preventative measures that I would recommend for most solos out there, what kinds of things would they be?
• 38:00
  Mark: I need to underscore yet again the number one thing that I would say to prevent malpractice claims and disciplinary problems are prioritizing wellness, taking care of yourself. That's absolutely going to be number one. Two, I would really focus on documentation, file documentation. You know, there's no perfect file out there, but we see a lot of files that are just a complete mess, missing all kinds of things because they don't really understand, well, what should we be documenting? What is the And here's the easiest way I can explain this is the goal is to create a record of the advice being given and the decision making process.
• 38:55
  If you capture that, you're going to have a pretty thorough file, But now start to think about how do we capture all of this, you know, substantive emails, substantive text messages, you know, all of this stuff needs to be preserved. And it can all be digital, I don't care,
• 39:15
  Davina: but
• 39:14
  Mark: really But
• 39:15
  Davina: we need a way to get it in the client file so it just doesn't live on your or live in your email. Yes,
• 39:20
  Mark: because what we see a lot are word against word. It could even be as simple as scope, or did the representation end and when did it end? In terms of a closure letter. If you don't have a closure letter or an engagement document that pins down scope, we're going to have this argument. You're still my lawyer or I didn't agree to do that.
• 39:41
  Know, lawyers are always saying it's very limited scope and the clients are always saying, no, no, no, it's way If you don't have a writing, assume you're going to lose. Okay. It is your responsibility to document. So wellness file documentation. Beyond that, you know, we could go in all kinds of directions.
• 40:04
  You know, I think one of the things that I would add is be very careful about just casual advice. And that can come up in all kinds of situations, whether it's casual advice with, you know, somebody attending a social function and, you know, talking a little law, helping a family friend out, you know, and it's kind of like a favor. And lawyers can get very casual about this, and sometimes deadlines blow and sometimes, you know, they just forget about it. A lot of times they're not asking all the questions, they're just, because this isn't real legal work, you know, this is casual, and there's no fee agreement, there's no money being exchanged. So really what we're talking about here is the accidental client problem.
• 40:57
  All I can say is they are very, very real. So be careful about the accidental client. Maybe a final one might be don't dabble, don't shoot from the hip, know, don't let, and you'll see this more and more as you get older because we have these long term clients. And oh Mark, I just need you to do, I know this isn't the type of law you've been practicing, but I don't want to lose this good client and I'm going to try to figure it out and you know you don't know what you don't know better to associate
• 41:32
  Davina: with another attorney with us. I had a mentor when I was starting who told me that he was really good at saying, Contact me at the office. I can't answer that. It's too vast. It's too detailed.
• 41:50
  Contact me in the office. And people then knew we have to make an appointment. Have go through
• 41:55
  Mark: the
• 41:55
  Davina: routine of our process. I think processes are so important to protect us for sure. And go ahead.
• 42:06
  Mark: I have a little story on one of these accidental clients if you'd like to hear it.
• 42:09
  Davina: Yeah, I'd love to. And I was going to ask you if you'd share something you and I talked before about some things where people have lost their law firms. And I think as a cautionary tale, I'd love for you to share a story about that too. But tell me about this situation with accidental Here's
• 42:23
  Mark: the accidental client, and this is just a classic example, and it's a cocktail party claim. And this truly is real. There was a lawyer at a social function and she does not do personal injury work. Her firm does not do personal injury work, but another guest learned that there was a lawyer here and they just started chatting, you know, sipping on the wine and those kinds of things. And that's fine.
• 42:47
  If you enjoy a glass of wine, God bless. And it turned out it was a personal injury situation and the lawyer said, we don't do personal injury work. It sounds to me like you've got a good case here and I certainly would, you know, refer a few names, hear some lawyers or hear some firms in town that do this kind of work and I'd encourage you to speak with them. Now just be aware here in this state the statute of limitations is two years. Good luck with that.
• 43:17
  So you got to get going on it. Well, she didn't ask all the questions and she didn't know what she didn't know. It turned out this individual did shortly thereafter go out and try to find somebody and by the time it all happened it was a little over six months and the statute was six months. There was an exception in play and so there was a lawsuit out of that and the lawyer and the firm said, Woah, woah, woah, woah, there's no fee agreement. We didn't intend to form an attorney client relationship.
• 43:50
  You know, shhh. Nope. It's all about if a reasonable person is responding to the exchange as if they're receiving some legal advice about their issue and it's reasonably foreseeable that they're going to act or rely on this advice in some fashion, you've created an attorney client relationship and you're going to be held to the accuracy of that and there was a loss paid. So that's just an example of That's
• 44:16
  Davina: huge, that's huge. One of the things that I see happen a lot, and I don't know if you've read any of these groups, but on Facebook is an example. A lot of lawyer groups on Facebook, A lot of lawyers go in. I remember mentors, just older people very strongly, saying to me, we go to a bar and sit and talk about our client's case, even if we don't share names. Cause you never know who's listening, you never know.
• 44:46
  Mark: And
• 44:49
  Davina: law school, drilled it in our heads. And I see so many people go on social media in groups with ten, twelve thousand lawyers from all over the country, all over the world, they don't know them, and they're sharing a client's confidences because they're mad about how somebody talked to them or what they said, or can you believe this? And they think they're talking you know, with colleagues about it, but they're sharing it without sharing names, but they don't know who else is in that group who could take that information. Have you ever had any claims or issues around social media and things that come arise out of that?
• 45:27
  Mark: We have. I'm having trouble thinking of one immediately where somebody was sharing something without names. Where we have seen claims and large losses and loss of license over it, is telling clients to make something go away on social media. Getting really uh-huh.
• 45:58
  Davina: Uh-huh. That's so interesting because I think that's very common for a family law attorneys to say, go take this down or personal injury attorneys say, Take down that picture of you dancing.
• 46:11
  Mark: Be very careful folks and make sure, you know, I've seen lawyers disbarred for that, and we have paid, our company has paid in losses some significant dollars for that misstep. You know, it was done. They were really trying to hide information and it, no.
• 46:34
  Davina: Did not go well. Not
• 46:36
  Mark: go well. You had asked though about, and if you want a story about a firm going We could talk about different stories here. I'll tell you the first one that comes to mind. A lawyer was at a firm, and this is, I don't know, maybe eight to 10 lawyers, and he knew that the firm's antivirus security software suite said it was Norton. Okay?
• 47:11
  So he's at the office one afternoon and a pop up comes up on the screen that says this is Norton antivirus, Your system is infected. Please click here to initiate a scan and that's, you know, solve the problem. He immediately clicks on that and then gets up and goes down the hall trying to find the IT guy. Now they have outside IT. Person wasn't there.
• 47:41
  Tried to get him on the phone and, you know, and it took like half an hour, forty five minutes or something to finally get in touch with this person. And the person said, are the computers still working? And they said, well, oddly enough, no, everything's down. So you were hit with ransomware, you know, and they, this was bad, everything, including their backups, because they kept their backups connected to the system. You know, they were using the external drives that just, you know, USBs and that kind of thing.
• 48:15
  So everything was infected and gone. And they had no idea how to fix this and repair, and they were playing around. The security guy, I should say the IT guys tried to help, okay, but they are not forensic experts, and they were
• 48:35
  Davina: trying Not cyber security experts.
• 48:36
  Mark: They are not cyber security people, and you know, they are not trained to deal with ransomware and all. These are just sort of local guys. Sure they're good people, they were way in over the head. The long story short is the time period to come up with the cryptocurrency and pay the ransom, it all expired. They lost everything.
• 48:58
  They could get nothing back. As a result of this attack, the firm did dissolve and break up because they couldn't afford the losses and they could, I mean, it just blew up.
• 49:12
  Davina: The clients affected by this, oh my goodness. I can't even imagine how.
• 49:18
  Mark: They lost everything.
• 49:19
  Davina: Well, how stressful that must have been for everybody involved.
• 49:26
  Mark: Hear me clearly again, folks. It was all for just clicking on a pop up. He thought he was doing the right thing. Okay. What you need to understand is security systems work by them selves.
• 49:39
  You don't need to click on anything to do it. Was the same.
• 49:44
  Davina: Shouldn't be well, one of the things I we're always getting, spam email. I mean, it's spammed all day long with all kinds of things. And it's amazing how much something looks like Capital One now or something looks
• 49:59
  Mark: like Oh yeah.
• 49:59
  Davina: Something looks like Bank of America. It all looks so authentic. I've gotten some of those Norton ones. I always go to the email and I look and see. I hover over that and I see what the email is.
• 50:11
  Mark: Yep.
• 50:12
  Davina: That's a little tip. You can just see the email is, you know, Sally's, you know, house or whatever, it's got some sort of weird.net. It's like, no, that's not the company. Also just leaving the email and going yourself and logging into something to see if it's really sending you an alert or if that's scam. And most of our scams, let's just put it that way.
• 50:38
  So that is terrifying. That is terrifying. And that happens probably way more often than we
• 50:44
  Mark: think. Oh, does.
• 50:46
  Davina: Yeah. So what we talked about you have, I was very surprised when I went on your website and I was looking, I'm like, oh my gosh, they've got like nine to 12 different coverages here. And your main clients are solos and small firms. So we're not talking big firms. So what do we need?
• 51:09
  I mean, obviously, I think you've got solo and small firm owners who are like, well, I can't afford. I mean, I'm already paying high health insurance and high. Can't afford everything that you offer. So like, what are some things that we really should think about that we might need?
• 51:26
  Mark: Well, in my mind, you know, we've been talking about two of the biggest. You know, I would not feel comfortable practicing without a malpractice insurance policy, you know, and you know, maybe your exposure's 2 or 3,000,000 and you can't afford that coverage. Okay, buy, you know, $25,500 or something. Some coverage is better than no coverage, you know. And so I always would agree, you know, just buy what you can afford and start there.
• 51:56
  And then we'll see as the practice evolves and hopefully it becomes more and more successful, you can adjust accordingly. I would also never practice without cybersecurity, cyber liability, I should say, cyber liability It's just absolutely not. When I first started out in this industry, you know, was all about malpractice. Now, it's more likely you're gonna be hit with a cyber event. It's not if, it's when.
• 52:23
  And the question is how bad when that happens.
• 52:26
  Davina: That's not true with
• 52:28
  Intro: my
• 52:28
  practice.
• 52:27
  Davina: Me sick and sick in my stomach, because it's already, we already are personally vulnerable, but when you think about the responsibility for all these other people, you also, tell me about business owners because I think this is something when we're dealing with solo and small firms often this, I mean, the solo is the only lawyer and they're the business owner and then something happens to them. Is this something that you guys offer or recommend? Well,
• 52:56
  Mark: owners, you know, are commercial liability. Know, that's, we're really talking about slip, trip, and fall, fire, that kind of thing for physical space. What I heard you saying, this is more, well, what if I'm not here and what happens? I would, you know, I think there's value in having a key person life insurance or something like that to protect. Because if you die at your desk and there's no successor, there's a mess, and trust me, I've been on the phone with the spouse, he or she is livid, absolutely livid, and also just mourning and grieving, and it just, know, how, why did they not, I don't know what to do with all this stuff.
• 53:42
  I have built that, you know, and it can be expensive. So, you know, key man or key person insurance is a good If you have physical space, I absolutely think, you know, an office by commercial package business owners, a BOP business owners policy. If it's, you know, if it's all virtual, I don't know that that's absolutely necessary. That wouldn't be my top priority, but. Yeah, yeah.
• 54:10
  You know, another thing to think about as you grow wealth, make sure you have an umbrella on your personal side because, you know, you have a JD after your name, you have some money, if somebody slips on the ice out in your home in Colorado or trips on a court or something in here down in Florida, they're gonna come after you. And you know, the homeowners is not typically enough. So put an umbrella of a couple million over, but that's later on. Malpractice, cyber.
• 54:41
  Davina: Need to end this conversation because, I'm learning so much and I think this is such an important topic. I may be bringing you back for more, but I want to know particularly, we're gonna put a link in the show notes with your, information. But I want to know particularly how people can find your CLEs or find more education and information.
• 55:06
  Mark: All of that would be on the corporate website, www.alpsinsurance.com. A final thing that I can add, and my email will be there. Let me just underscore folks very quickly. I'm not a traditional risk manager. I'm not hired to manage the risk of a corporation.
• 55:23
  I'm not a CRO. I'm hired by Alps to be a risk manager at the bar at large. There's no fee to visit with me. You don't need to be an Alps insurer to visit with me. If there's something I can do to help you stay out of trouble or just do a little education, ethics, insurance, cybersecurity, malpractice appointments, whatever, feel free to reach out.
• 55:44
  Happy to help any of your listeners, Davina. Happy to Thank
• 55:47
  Davina: you. Tell them you heard about him on Wealthy Moment Lawyer. All right, Mark, thanks so much for being here. I've really enjoyed our conversation.
• 55:54
  Mark: You're most welcome. Thanks for having me.
• 55:57
  Intro: If you're ready to create more of what you truly desire in your business and your life, then you'll want to visit us at wealthywomanlawyer.com to learn more about how we help our clients create wealth generating law firms with ease.