Category: Insurance and Risk Management

Children Responsible for Parental Debt

I never heard of the “filial responsibility” laws.  Until I read about a PA resident who must pay for Mom’s $93,000 Nursing Home bill.  Now that I’ve read about it, I’m sure glad my sister has the “deep pocket” in our family.

I thought my first post when I returned from TechShow would be about one of the many wonderful lessons learned.  I was in fact going to post diligently from there.  But the Chicago Hilton has about the worst Wi-Fi access I’ve encountered.  It was tough just getting a cell phone signal.  It was fairly humorous to see so many lawyers with cell phones to their ears and bodies literally plastered to the windows like some sort of human antennae.  At night, when I got back to the room after the myriad of social events, I was just too tired to think, let alone write.

Now that I’m back I’m anxious to share, but an article in the Anderson Elder Law Newsletter entitled “Son Liable for Mom’s $93,000 Nursing Home Bill Under ‘Filial Responsibility’ Law” really caught my attention.  How could that be?  Well, it be!  And I am so shocked by this, I feel compelled to share it right now.  The article explains:

Some 29 states currently have laws making adult children responsible for their parents if their parents can’t afford to take care of themselves. These “filial responsibility” laws have rarely been enforced, but six years ago when federal rules made it more difficult to qualify for Medicaid long-term care coverage, some elder law attorneys predicted that nursing homes would start using the laws as a way to get care paid for.

And it was precisely the application of this law which caused the son to be forced to take financial responsibility.  Unbelievably, the law does not require it to consider other sources of income or to wait until a parent’s Medicaid claim is resolved.  Even more pernicious is that the law permits the nursing home to choose which family members to pursue for the money owed.  In this particular case, they ignored a spouse and other siblings, and went after the apparent “deep pocket.”

Linda Anderson notes that after Pennsylvania re-enacted its filial support law in the mid-2000s, Williamsport attorney Jeffrey A. Marshall forecast that the new Medicaid law would trigger a wave of lawsuits involving adult children.  Obviously, he was correct, and this is just the beginning of what may become a tidal wave of lawsuits.  In Marshall’s blog post about this court decision he writes:

Children are often surprised to learn that they can be held responsible for their parent’s unpaid medical and care related expenses. It just doesn’t seem fair. But, whether fair or not, the Pittas case shows that the child’s support obligation to the parent is the law in Pennsylvania.  Children: be warned. If your parent needs long term care and may someday be unable to pay for it, you should find out about your potential financial liability and what to do about it.

So what is the son supposed to do, now that he has lost his appeal?  Is he to sue his father and siblings for their “fair share” of the debt?  Declare bankruptcy?  I’m just thinking out loud on this, while I shake my head in disbelief.  Our lives are already so stressful . . . raising children in a two-income household, trying to care for aging parents, trying to save for retirement in an ever-increasing financially hostile future environment, and to have some quality of life and semblance of balance in the current moment.  Is this the straw which breaks the back of American families?

I am so grateful I “strongly encouraged” my mom to purchase optional Long Term Care Insurance through her employer’s Cafeteria Plan some 30 years ago, so that it’s there if she needs it.   We found out from personal experience about 2 years ago how quickly the bills can mount after my mother suffered a fall at home.  The nursing home costs, followed by rehab at home, and then extended personal care until she was recovered enough to be completely on her own again, added up to a huge amount of money which her Medicare and additional excess policy didn’t cover.   They paid plenty, don’t get me wrong.  But there was a lot of uncovered additional expense, especially the personal in-home care, which cost a fortune.  At least the Long Term Care contributed toward some of that once the elimination period was passed.  (Although I admit I had to really duke it out with them to get her benefit paid, despite her making premium payments like clockwork for 30 years.  But hey, don’t even get me started on the topic of insurance companies!  🙁  )

If you have living parents, this is not something you can afford to ignore.  Make sure they have adequate insurance coverage, and talk to an Elder Care attorney just to see what risks you face, and how you might avoid them.  The investment to protect yourself now is a pittance compared to the potential exposure later.


Why PA Needs CLE Credit for Practice Management Education

I have been asserting that PA should provide full CLE credit for practice management education since I joined the PA Bar Association in 1999.  Here’s just a bit more proof of why.  Take a look at this recent blog post by highly-respected marketing consultant Dustin Cole, entitled “Of the Top 10 Causes of Malpractice & Grievances — 8 Are Sloppy Housekeeping!”  From his post, here are the top 8 of 10 reasons for malpractice / grievance claims in Florida:

1. Failure to manage time/procrastination
2. Failure to docket – identify/document deadlines
3. Failure to manage information
4. Failure to obtain client consent
5. Failure to file documents timely
6. Missed or unresolved Conflict of Interest
7. Poor communications with client
8. Failure to follow client instructions

Any of this look familiar?  Yep, if you look at the top causes of claims in PA, you will see the same causes, perhaps labeled slightly differently, or in different order.  The truth is that most attorneys and law firms get themselves in trouble because of poor business practices, including disorganization, lack of follow-up, absence of codified procedures, inadequate internal training and oversight, and often an absence of any semblance of good customer service practices. 

Really smart and talented lawyers can look like fools to clients, when they lack savvy on the business side of the practice.  Really smart and talented lawyers lose clients when they fail to provide high-quality customer service.  What is that?  Responding to telephone calls and emails promptly.  Keeping the client informed.  Letting the client know what’s happening before they have to pick up the phone and ask.

Right now, most states will provide CLE credit for any education which improves an attorney’s legal skills OR practice management skills.  But in PA, the only way to obtain CLE credit is for substantive practice skill education, or ethical / malpractice avoidance training.  I have managed to create a wealth of seminars over the years which qualify for ethics credit, but I can’t say it’s not difficult and very limiting in terms of the content I can present.  How I long to present a seminar for CLE credit which is about nothing more than nuts and bolts of how to properly manage aspects of ones practice.

I guarantee that lawyers would enjoy their practice more, be more profitable, and most importantly, avoid getting themselves in disciplinary trouble inadvertently.  I know that “some day” the CLE rules in PA will change.  It’s inevitable.  I just had to let off a little steam about this, because I’ve been waiting for 14 years, and there is still no change in sight.  Do you agree with my perspective?

The Run For The Door

We’ve all heard stories, watched it in action, or been in the middle of what I refer to as The Run For The Door — the point at which partners determine their firm no longer has sufficient mass to cover overhead and debt, and the mass exodus begins.  Those who move too slow are left to turn off the lights, and are often left holding the proverbial bag.  It’s an ugly thing to watch.  In some cases it’s led to some undesirable career detours.  In some cases it’s led to the loss of a special culture.

Let’s be frank.  Partners with a good reputation and solid book of business always land on their feet.  In fact, just rumors that a firm may be experiencing difficulty, even if only temporary, is seen as an opportunity by other firms; often leading to a sharp increase in activity by competitors who attempt to lure away some of the best and brightest.  When some of those recruiting efforts result in departures, even if only of a few key rainmakers, it can easily trigger “The Run” as remaining partners, particularly top earners, become concerned about the impact on their future compensation.

Such is the case with Howrey.  It’s partners voted on Wednesday, March 9th, to dissolve effective March 15th.  The vote required a supermajority of 85% of partner shares to carry the vote for dissolution.  The story appeared in AmLaw Daily.

’”Once you lose a certain mass, you just can’t get it back,” one partner says. “It’s just a matter of days right now.” Adds the second partner: “I did it with a heavy heart, but if we don’t vote for formal dissolution, if you think it’s chaos now, it’s just going to turn into a disaster. You don’t want it to be a situation where the last person turns out the lights.”

According to the article, the firm has seen more than 140 partners depart since April 2010.  They were smart enough to recognize the stampede was well underway, and take the vote which would insure the least damage for those still at the firm.  Hopefully, this will not be one of those failures which leaves creditors in hot pursuit, and generates lawsuits from and between former partners.

From time to time I advise firms about to draft partnership or shareholder agreements.  There are a number of the subjects I always have to put squarely on the table for discussion, and it always makes the principals squirm.  I do it because I know it’s necessary.  What are those subjects?

  1. Termination of partners.  Exactly what can trigger involuntary termination?  Arrest?  Conviction?  Public embarrassment to the firm?  Damage to the firm’s reputation?  Lapse in fiduciary responsibility?  If termination is to be considered, how realistic is a 100% vote to get the job done?  What is more realistic?  What is a terminated partner entitled to, and should it be different from a partner who leaves voluntarily?
  2. Firm dissolution.  The obvious question regards the vote required to evoke dissolution.  But beyond that, there are a whole host of issues which should be addressed.  For example, I believe that purchase of an unlimited-duration Extended Reporting Period Endorsement (“the tail”) on the firm’s professional liability insurance policy should be required in the event of dissolution, and that all stakeholders who were part of the firm in the fiscal year of dissolution should be required to pay their prorata share of the cost.Records retention and management issues also come into play big time.  There will be enormous number of files which are closed, many of which will belong to clients no longer with the firm, and developed by lawyers long gone as well.  They cannot just be thrown in the trash. (Although there have been some pretty awesome stories from time to time about the frustrated few partners left to turn off the lights who, in frustration caused by former partners who wouldn’t help and didn’t care, actually did throw files in the trash.  Sanctions were always harsh.)   Someone has to remain the custodian of the files, oversee destruction when the proper retention period has tolled, ensure proper authorization has been received beforehand if any original or valuable client property remains in the file, and pay for storage until all files have been properly returned to clients or destroyed in accordance with ethical requirements and Rule 1.15 [Safekeeping Property].

These are but two areas of concern which can cause a great deal of  acrimony, and even disciplinary action, if not taken into consideration beforehand.  And there are many more.

My point?  No matter how large or small, any firm, except for a solo firm, can experience a “run for the door”.  Be prepared for that eventuality, as awful and remote a possibility as it may seem.  Otherwise, precisely at a time when you may be trying to start anew, your past may be holding you back by distracting you and consuming your valuable time with squabbles and lawsuits.


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More on Bad Check Frauds

I read a blog post today written by one of my peers.  Sheila M. Blackford, the author,  is an attorney and Practice Management Advisor for the Oregon State Bar Professional Liability FundSo here I come to post a link to it, and find that the last thing I wrote about on this blog was exactly the same topic.   Yes, it’s that important, or we wouldn’t keep repeating it.

I’ve been absent from the blog for a while.  A sudden need to provide care for a loved family member, on top of everything else, changed a few priorities in the interim.  Sadly, this blog had to wait for some semblance of normalcy to return; achieved by hiring 24-hour at-home caregiver service.  I make no apologies — I did what I had to do.

I will be blogging more about contingency plans, disaster prevention and recovery, and overload issues in upcoming posts.  The recent experiences have reminded me that there are certain areas which need to be talked about repeatedly, in order not to lose our vigilance and preparedness.  (And that means having “Plan B” is not optional!)

Returning to the topic of this post, I suggest you take a moment to read Sheila Scanlon’s post entitled “Bad Check Frauds: ‘Tis the Season for Lawyers to Be Wary” because it’s loaded with very practical information and suggestions on protecting your practice.


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Lawyers Have No Sympathy For Scammed Peers

It’s hard to believe that lawyers are still falling victim to internet scams after so much light has been shed by Practice Management Advisors at U.S. state bar associations, Canadian provinces, as well as by most local bar associations and the American Bar Association.   I blogged about it  in “Internet Scams on Lawyers” on October 14, 2010, in “SC Law Firm Loses $390k in Bogus Check Scam” on September 9, 2010, in “More on Lawyers as Fraud Victims . . . With a Twist” on March 20, 2010, and in “Do You Know the Difference Between AVAILABLE and CLEARED Funds?” on September 25, 2008, and so forth and so on.  Yet, despite all the warnings from a myriad of sources, The ABA Journal Law News Now released a story on November 22, 2010 entitled “Six Indicted in $32M Internet Collection Scam That Snagged 80 Lawyers”  with victims found in  Pennsylvania, Massachusetts, Alabama and Georgia.  Sheesh!

What is really amazing isn’t just that somehow these attorneys seem to have missed all the warnings from reliable news sources.  And it isn’t amazing just because they missed the obvious telltale signs that these schemes, though sophisticated, were just that — schemes!  No, what’s really amazing are the totally unsympathetic comments added to the story by the attorneys who read it. 

Some commentators seem to believe that there is no sophistication to these schemes.  But as I highlighted in a previous blog post, even banking personnel have been totally fooled by the quality of the fraudulent bank checks.  In one case, a bank actually reassured a law firm that the check was legitimate and the funds were available.  When the check eventually got returned as fraudulent (over a month later) the bank refused to take responsibility, citing the fine print in their account agreement with the firm.   Of course the law firm had already transferred the “balance” from their trust account to an overseas account.   A law suit will eventually determine whether the bank shares culpability given that it provided assurances regarding the veracity of the check.

Bottom line?  Be extremely careful when someone tries to engage you via email, or a combination of email and telephone.  These schemes are so complex, that they are using the identity of real attorneys, creating fraudulent law firm web sites, and phony  “debtor” company web sites, all of which serve to make the engagement look totally legitimate.  What ultimately makes it all “work” is  the prospect of earning a huge fee with virtually no work — which seems like a wonderful stroke of good luck — overcomes many an attorney’s inner warning voice from being heard.  The “mark” becomes a willing participant in the scheme.

Despite the additional warnings from a variety of sources, it’s likely lawyers will continue to fall victim to new iterations of these schemes.  If you read my blog, you won’t be one of them.  Chances are if you know someone who does fall victim, you won’t offer much sympathy.  Because nowadays you can’t afford to practice in a vacuum.


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Does Your Social Media Policy Violate the NLRA?

First, do you even have a social media policy?  Chances are, you don’t.  Let’s step back further.  Do you have a computer use policy?  If you can’t answer that question affirmatively, you’ve got some work to do.  Without such a policy your firm can be exposed to nasty surprises on many levels.  At it’s basic level, a computer use policy should address and protect the firm from the following scenarios:

  • Use of  (and liability for) the firm’s resources to illegally copy software
  • Use of (and liability for) the firm’s resources to download or view pornography
  • Introduction of viruses and spyware to the firm’s network operating system
  • Use of  (and liability for) the firm’s resources to transmit or store data in such a way as to violate Client Confidentiality rules of ethics
  • Use of  (and liability for) the firm’s resources to disparage, defame, or slander
  • Use of  (and liability for) the firm’s resources to store or perform personal documents and work
  • Loss of work time due to internet personal shopping, surfing, visit to inappropriate sites, text messaging and so forth

Firms which have computer use policies have hopefully kept them up to date to include a wider range of concerns, such as including language which specifically prohibits cell phone use or text messaging while driving on behalf of the firm — and designating such use clearly outside of the scope of employment.  For staff members, use of cell phones while in the office, during business hours, are often prohibited as well. 

With the explosion of a whole new form of communication — social media — another potential set of problems hit our radar screens.  Right now we are experiencing a tension between protected activity (under the National Labor Relations Act) and an employer’s desire to limit exposure to a whole host of possible nasty activities.   No one would hesitate to feel justified in prohibiting employees from announcing confidential information about the firm (for example, a proposed merger) on a public medium such as Facebook, even though it is “their” profile and not the firm’s.  But, if you criticize your associate for failure to find that rare case on a research assignment, should the associate be able to call you a jerk (or worse) on their Facebook page?  No doubt you do not hesitate to say no.  But NLRB may feel otherwise,  particularly if others join in on the discussion about your relative shortcomings.  It might be deemed protected speech.

A November 10th Alert from the Labor and Employment group of Ballard Spahr puts this issue squarely in our sights by informing us of a complaint filed last week by the NLRB against American Medical Response of Connecticut, in which an employee posted negative comments about her supervisor on her Facebook page.  She was subsequently fired.  As the Ballard Spahr Alert points out, it’s less than a year since the NLRB issued what appeared to be a pro-employer advice memorandum regarding social media policy language.  This new case seems to find NLRB taking a much different stance from it’s memo.

These are confusing times.  To do nothing, however, is probably the worst approach you can take.  At the least you want to make sure you have a policy in place regarding personal Facebook pages which prohibits use of the firm name, logo, or other firm information without the firm’s advance written permission, and further prohibits discussion about clients, matters, or anything else which may be prohibited under the Rules.  Contact someone who is more knowledgeable than you to get assistance in formulating a reasonable policy.


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When Partners Depart – Another Potential Gap in Malpractice Insurance Coverage

I have written and lectured extensively regarding issues which arise when attorneys depart firms, both from the perspective of the firm, as well as from the perspective of the departing lawyer(s).  There are lots of considerations from ethical and statutory perspectives.  There is often a tension which is not easily resolved between the interests of the departing lawyer(s), the firm, and the client.  Here is yet another consideration.

Many people are quick to compliment me by stating that they read The Pennsylvania Bar News  just for my articles.  I readily admit that my first go-to are the tremendously helpful “Avoiding Liability” columns by Jeffrey P. Lewis of Eckert Seamans Cherin & Mellott LLC.   In his column of October 18, 2010, he writes about the implications of Berry & Murphy, P.C. v. Carolina Casualty Insurance Company, 586 F.3d 803 (10th Cir. 2009).  In this case,  a shareholder unknowingly committed malpractice in the representation of plaintiffs in a personal injury action while he was with the insured firm.  A year later this attorney left the firm and joined another firm, taking the client with him.  Shortly after that, he petitioned the court to withdraw his appearance.  Replacement counsel subsequently wrote to him to place him on notice of a legal malpractice claim.

The problem arises in that the attorney reported the claim to his malpractice carrier at his current firm.  However, he failed to report the action to his former firm, where he was employed when the alleged malpractice had occurred.  Should the replacement counsel have also notified the former firm?  The former firm did not find out about the malpractice action until it was commenced in federal court more than a year later, after it had transitioned to a new insurance policy period.  Not according to the 2-1 decision of the 10th Circuit panel, which affirmed that replacement counsel’s notice to the former shareholder constitutes notice to the former law firm.  As a result, the former law firm was denied coverage for its failure to report the claim in a timely manner.

Lewis notes in his column the irony and injustice to the former law firm which results from the court’s opinion.  Policy language played a key determining factor in the ultimate outcome.  Even more ironic, when one considers that when law firms “compare” policies, they compare provisions, like the presence or absence of “the hammer” but ignore seemingly innocuous variations in policy language.  Often these minor points become big arrows in the back.

One important point to learn from this, is that this is yet one more area of concern which must be addressed by attorneys who have transitioned to another firm, as well as by the firms from which they departed.  When a law firm is going through its application process for malpractice insurance, whether a first time or a routine renewal, it should require each attorney to respond in writing to the question “Do you know of any act, error, or omission which might reasonably give rise to a claim?”  Any affirmative answer on the application will trigger an exclusion from coverage under the new policy.  That means that anything unearthed during this query process should be promptly disclosed to the current carrier, e.g. put them on notice.  That is the only way to ensure that if an eventual claim is made, all will be covered under the applicable policy.

We now realize that the definition of “attorney” in this case should include any attorneys who were with the firm during the current soon-to-expire  policy term.  The need for this information is just another reason why both departing attorneys and former firms should do all within their power to remain civil and professional in dealing with departures.   And I’ve got many, many more reasons. 


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Internet Scams on Lawyers

It’s hard to believe that lawyers are still falling prey to internet scams.  But they are, all across the U.S.  These scams have become much more sophisticated over time.  A law firm can do what it believes is adequate due diligence by verifying  the legitimacy of the supposed client and debtor via the internet, and even get an assurance from their local bank that the bank check they have or are about to deposit into their trust account is legitimate.  All for naught, and to be left holding the bag.

What do you do when you get these email soliciations from a foreign company for help?  Are you tempted by the seemingly easy fee?  Do you just hit the delete key?  How about a third option?  Report the scammers to the correct agency for appropriate investigation and action.  That’s really the only way we can bring these frauds to an end.  And wouldn’t you feel good to know you helped put a nail in their coffin?

The Internet Crime Complaint Center (IC3) is a partnership between the Federal Bureau of Investigation (FBI), the National White Collar Crime Center (NW3C), and the Bureau of Justice Assistance (BJA).

IC3’s mission is to serve as a vehicle to receive, develop, and refer criminal complaints regarding the rapidly expanding arena of cyber crime. The IC3 gives the victims of cyber crime a convenient and easy-to-use reporting mechanism that alerts authorities of suspected criminal or civil violations. For law enforcement and regulatory agencies at the federal, state, local and international level, IC3 provides a central referral mechanism for complaints involving Internet related crimes.

Let’s strike back.  And meanwhile, use particular caution and conduct as much due diligence as possible before engaging in transactions with parties who are handling their business solely via e-mail, particularly those parties claiming to reside overseas.  Better yet, just don’t waste your time deciding whether to take on the representation, and report the contact to IC3.


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Your Confidential Data and U.S. Border Crossings

This post is about an issue that wasn’t even on my radar screen until yesterday.  My colleague, Reid F. Trautz, director of the American Immigration Lawyers Association in Washington, D.C., sent a link to an article on Yahoo News entitled “NY Lawsuit Seeks to Halt Suspicionless Searches.”  The article relates that the American Civil Liberties Union, the New York Civil Liberties Union and the National Association of Criminal Defense Lawyers have filed the lawsuit on behalf of the National Press Photographers Association, criminal defense lawyers and a student: Pascal Abidor, a 26-year-old French-American citizen whose laptop computer was confiscated at the Canadian border.

The lawsuit is designed to change policies adopted by U.S. government agencies which permit the search of all electronic devices that “contain information,” including laptops, cameras, mobile phones, `smart’ phones and data storage devices.  It seems that the current policies, as written, do not require any probable cause at all before the data can be seized and searched.  Although the article provides a link which purports to take the reader to the location on the U.S. Department of Homeland Security web site which sets forth the policy, it doesn’t in fact take you anywhere useful.  I spent well over an hour searching and going through menus until I finally came across the actual web page where the relevant Directives on Border Searches of Electronic Media can be found.  They are found in two PDF documents.

The whole point is that lawyers, among others, carry a tremendous amount of confidential information on smartphones, laptops, and other devices.  You may not be aware that this information can be accessed at any U.S. border without reasonable cause, or for no cause at all.  Until the above-referenced lawsuit winds its way through the courts, you may want to rethink what you store on your media if you are crossing a U.S. border.

By the way, as I was wandering around the cyber-halls of the government site, I stumbled across a chilling document entitled “International Terrorism and Transnational Crime: Security Threats, U.S. Policy, and Considerations for Congress” which was published by the Congressional Research Service on March 10, 2010.  If you’re interested in this stuff, or just don’t want to sleep well for a few nights, give it a read.


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SC Law Firm Loses $390k in Bogus Check Scam

Lawyers continue to fall victim to check fraud.  Smart lawyers.  Don’t be one of them.   My peers from various U.S. state bars and Canadian provinces are reporting that their members are regularly receiving invitations to become the next victim.  Right now collaborative law attorneys are targeted.  But that can change in a heartbeat to virtually any practice area.  These are well-designed socially engineered schemes with fake bank cashier checks which are of very high quality.  Read more about it in a recent post on the “Avoid a Claim” Blog of PracticePro, the professional liability insurer for  Ontario Canada.

Remember, if the deal seems too good to be true, e.g. you’re about to earn a huge fee for virtually no work from an unknown client, step back, take a deep breath, and check very carefully before disbursing any money from your trust account. 


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