What Does it Mean to Keep Good Records?

We live in a litigious society. It’s not unusual for lawyers to find themselves the target of a lawsuit. The frightening thing is that, even if you provide high quality legal services, you’re not immune from lawsuits. In fact, your odds of being sued are more closely related to the way you practice law than to the quality of the legal services you provide.

At the Academy’s recent Summit in New Orleans, I offered some strategies for avoiding an estate planning malpractice suit. One of the most basic strategies you can employ to avoid malpractice litigation is to keep good records. And, in the context of estate planning law, good record keeping takes on a whole new meaning.

Consider this: when you draft an estate plan for a client, the possibility of litigation often doesn’t even enter the picture until after your client is disabled or deceased. What this means for you is that the client for whom you drafted the plan in the first place, often your most helpful and effective witness, is not available. This leaves you in a situation where it’s your word against that of your client’s disgruntled family members.

The best way to protect yourself is to take the following proactive steps: Take notes contemporaneously with your meetings and conversations with your client, especially when there are “red flags.” Your notes should include:
- What was discussed with the client
- What decisions the client made
- The client’s reasons for those decisions
- Recommendations you made, but the client rejected

When you’re dealing with a case that raises a red flag, such as a plan in which the client places non-tax considerations above tax concerns or where there’s an uneven distribution of assets among children, you should have the client sign an acknowledgement of your recommendations.

For a complex plan, you’ll want to send a letter to your client outlining the plan, the recommendations you made, and the clients reasoning for rejecting any recommendations.

After you’ve taken these steps to maintain well-documented files, how long do you need to keep those files? The answer is until your client and your client’s heirs and beneficiaries have died. Don’t worry about finding storage for innumerable paper files; an electronic copy should be sufficient for purposes of defending a potential malpractice claim.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd Ste 240
San Diego, CA 92124
(800) 846-1555
www.aaepa.com