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Page 492 DEFENSE COUNSEL JOURNAL–October 2012Appellate Division found that because theclient had no contact with outsidecounsel, Bailey, and completely relied onher own counsel, DeGraff, to satisfy herjudgment, DeGraff "assumed theresponsibility to [the client] . . . andBailey became [DeGraff's] sub-agent.Therefore [DeGraff] had a duty tosupervise Bailey's actions." 9Negligent ReferralsNegligent referrals can create anotherprofessional liability cause of action.When lawyers arrange for co-counsel torepresent a client, they are serving as theirclient's agent and, accordingly, owe theclient a duty of care in the process. 10 Anagent, here the initial law firm or lawyer,who is authorized to employ other agents,here co-counsel, to handle his client'saffairs, is under a duty to selectcompetent and otherwise proper agents. 11In Rainey v. Davenport, the BankruptcyCourt of the Southern District of Texasfound that "bringing an incompetentattorney on board" would violate alawyer's fiduciary duty to his client. 12 Thelawyer's duty relates to the referral itself,regardless of whether the originalattorney cedes responsibility for thematter after making the referral or retains9 Alice Whalen v. DeGraff, Foy, Conway,Holt-Harris & Mealey, 53 A.D.3d 912, 915(N.Y. App. Div. 2008).10 RONALD E. MALLEN AND JEFFERY M. SMITH,LEGAL MALPRACTICE, § 5:9, at 679-681 (2009ed.).11RESTATEMENT (SECOND) OF AGENCY §405(2).12 Rainey v. Davenport, 353 B.R. 150 (Bankr.S.D. Tex. 2006).some level of responsibility incooperation with referred-to co-counsel.Additionally, collecting a referral feemay cause a problem under local Rules ofProfessional Conduct.Practice TipsHow can you protect you or your lawfirm from being found liable for theactions (or inactions) of another firm withwhom you are working on a case? Thereare ways to protect yourself and yourfirm. First and foremost, avoid the subagencyproblem by having your clientdirectly engage the other law firm. Thatis, the agreement should not be betweenyour law firm and local counsel, butbetween the client and local counsel.Moreover, the engagement letter shouldbe signed by local counsel and the client,and you should verify that such anengagement agreement has beenexecuted. The agreement should includea clear division of labor.Alternatively, if you are local counselserving in a litigation support role withnational counsel assuming fullresponsibility for trial strategy,examination of witnesses, etc., it isimperative that your engagement letterreflect with specificity your role andresponsibilities as local counsel.Do not accept a referral fee.Make sure that referrals are made tocompetent attorneys. Do not rely onsocial acquaintances. Use reputablesources to verify competence. There aremany sources for such confirmation. TheIADC membership list, made up of peerreviewed, vetted members, is a goodplace to start. Additionally, Martindale-Hubble, Lexis-Nexis, Westlaw, or other
Newsletters Page 493peer-reviewed sources can help. Do aninternet search. Seek recommendationsfrom other members of the jurisdiction inquestion's bar, as well as other leaders inthat particular area of law.Include a disclaimer in yourengagement contract.Make sure the referral has legalmalpractice insurance. Ask. You will besurprised how many attorneys are notkeeping up with premiums.While these cases may be showingup more frequently than in the past, thereare ways to protect yourself and yourfirm. Ultimately, choosing the rightattorneys to work with can be the bestway to prevent professional liabilityclaims. As the old saying goes, a goodoffense is the best defense.* * *
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