Why the Billable Hour Is Here to Stay

While you may grind away on files day in and day out through six-minute intervals, tracking the time can prove distracting and burdensome. The billable hour remains the standard method for billing with lawyers, and this has been the standard for decades. Despite the longevity of the billable hour, plenty of lawyers believe they can find a better way to bill their clients.

The Argument Against the Billable Hour

Lawyers from a variety of fields have raised arguments against billing by the hour. One of those arguments is how you only have so many hours in the day that you can work. In addition, an hourly billing setup fails to acknowledge how different legal services will have differing value. Some have made the claim hourly billing encourages inefficiency and incompetence because the longer it takes a lawyer to finish the job, the more they get paid. This shows a conflict of interest because a lawyer might feel tempted to spend the maximum hours on a file.

Does the Billable Hour Remain the Standard?

Gradually, lawyers have started to charge through alternative methods. Some of those methods include:

  • Flat fees

  • Results-based fees

  • Contingency fees

  • Fees by stages

In today’s world, a client asks more value for his dollar, and plenty of lawyers are happy to accommodate. Still, the billable hour reigns supreme even despite talk of a massive shift. The billable hour hasn’t taken hold as of yet. However, it has been growing. In fact, a recent study found how the alternative fee arrangements were up five percent from several years ago to 22 percent since.

Revolutionizing the Law Industry

Plenty of firms have seen this and started to shift their own law practice out of the curiosity of what a billable-hour free firm might look like. Since the early 1990s, lawyers have predicted the eventual end of the billable hour, but it has never truly ended. Until a more alternate billing comes, it’s unlikely that the billable hour will ever fully go away. In fact, some law firms will always prefer it, and unless the clients demand a change, the billable hour serves both lawyers and clients in a way where an alternative arrangement might prove to be more difficult.

Education of the Client

Bill Rice, a partner at Bennett Jones, says that his national firm offers the alternate billing proposal. Many times clients will ask for the alternate billing, but in the end, they wind up choosing the hourly billing because they don’t know how to judge if the alternate arrangement will be fair. Rice says, “While we’ve moved forward with breaking the billable hour, we still haven’t reached the appropriate level of comfort with alternate billing.” Essentially, clients are unable to find a better way to judge the value or to maintain control over it.

This is where research comes in play. If you decide to want to take an alternative route, education is key. By explaining the process, average cost, and the highest potential cost, your client can decide which avenue he or she may want to take.

Where Alternative Billing Does Best

In some cases, the billable hour continues to be the best fit for the attorney and/or law firm. This includes the markups and discounts and how much time a lawyer puts into the case. Sometimes blended rates come into play due to work getting divided amongst the firm. In these circumstances, you will experience a blend of hourly rates.

Where fixed-fee billing (say that five times fast) works best, might be when an event an activity is scheduled. Some of the possible examples include:

  • Patenting

  • Immigration visa

Fixed-rate billing also allows an attorney to exit a case with less worry. Sometimes with the billable hour, there’s that worry of a possible lawsuits malpractice. When you lay everything on the table, the client knows what he’s getting himself into. As a result, you have a more satisfied group of clients because they feel they got the value out of what they paid for.

The Problem of Efficiency: The Billable Hour

You could spend up to an hour trying to fix a leaky faucet and getting nowhere in the process, even though the problem is fairly simple. The same could be said about the billable hour. You want to provide attorneys with some incentive on why they should work hard to finish the case fast. It’s true that some of the other billing methods might not necessarily be cheaper than the billable hour, but it gives clients a fixed budget to work with and peace of mind knowing it won’t go higher.

The billable hour isn’t likely to go anywhere in the future. New methods of billing will, however, probably come up as lawyers get more creative on how to bill their clients for their legal services. The world today focuses more on value-driven legal services. For that reason, it seems like a good incentive to provide lawyers with a reason to up the quality of their services while giving clients predictable budgets they can count on to stay the same.

This post was written by Jaliz Maldonado  of PracticePanther © Copyright 2017
For more legal analysis go to The National Law Review

Attorneys: A Common Interest Agreement May Not Be Worth the Paper It’s Written On

It is a very common practice for counsel to co-defendants or co-plaintiffs to enter into agreements that shield their communications. The agreements are expressions of intent that the communications will be protected by the “common interest doctrine” that extends the attorney-client privilege to discussions with parties that share a common interest. Under the doctrine, the attorney-client privilege is not waived when such communications are made between parties sharing a common legal interest.

In Ambac Assur. Corp. v Countrywide Home Loans, Inc., 27 NY3d 616 (2016), the New York Court of Appeals expressly limited the application of the common interest doctrine to “co-defendants, co-plaintiffs or persons who reasonably anticipate that they will become co-litigants.…” In doing so, the Court of Appeals clarified that the policy underpinning the doctrine was to enable two or more parties to coordinate a common claim or defense without fear that such efforts might later become the subject of disclosure.

Despite the frequent use of common interest agreements, there are limitations that may vitiate the privilege entirely and leave communications unprotected and discoverable to the other side. In applying the holding in Ambac, a New York County Supreme Court judge recently ruled that the common interest doctrine did not apply to communications between counsel where one party assigned claims to the other.

In 59 S. 4th LLC v A-Top Ins. Brokerage, Inc., 2017 N.Y. Slip. Op. 30050[U] (Sup. Ct., N.Y. County, Jan. 10, 2017), an owner of a residential development project initiated a lawsuit against an insurance broker, alleging that the broker had misrepresented the scope of work the general contractor could undertake with its current insurance. In addition, the owner obtained an unconditional assignment of any potential claims the general contractor may have possessed against the broker regarding the procurement of insurance. Subsequent to the assignment and during the litigation, the plaintiff owner and (non-party) general contractor entered into a “common interest agreement” before entering into a series of discussions. That agreement contemplated that certain communications between the owner and the general contractor would be privileged and confidential. When counsel for the broker sought production of those communications, the owner refused to produce them citing the common interest doctrine. The broker then moved to compel.

In granting the broker’s motion, the Court reaffirmed the limited applicability of the common interest doctrine as set forth by the Court of Appeals in Ambac. The Court reasoned that, because the assignment completely divested the general contractor of any interest it may have had in the outcome of the litigation, the general contractor could not – by definition – become a co-plaintiff in the action. As a result, the entirety of verbal and written communications between the owner and general contractor were deemed not privileged and subject to disclosure to the other side.

Following the holdings in Ambac and 59 S. 4th LLC, any lawyer considering entering into a common interest agreement should be mindful that these agreements are not automatically upheld. Instead, careful practitioners must confirm whether their situation meets the requirements set forth in Ambac above, or they, too, may see their private communications deemed unprotected.

© 2017 Wilson Elser

Developing a Positive Attitude about Business Development

Businessmen walking, Business DevelopmentAs a busy lawyer, it’s easy to get caught up in your day-to-day office routine and consequently put attention to business development on the back burner. While this might be something to shrug off as no big deal, for many attorneys, this can lead to big issues down the road when looking to make partner or work with your own clients. In order get yourself in a better position for long-term success, it’s critical to start improving your biz dev behaviors.

There are three internal motivators that drive people to improve their existing situation; behavior, attitude and belief. While all of these are important to accomplish a goal or succeed in an endeavor, the most important for business development is always behaviors. Without executing positive behaviors it’s nearly impossible to accomplish anything, let alone something as challenging as developing new business.

It might seem rudimentary to talk about having good behaviors, as you’re not a child being scolded by your parents.  After all, you wouldn’t be a licensed attorney if you weren’t able to implement good behaviors to study in law school and pass the bar exam. However, in my experience many attorneys overlook the importance of forming good behaviors when it comes to business development. I accept as the standard definition of behavior “a manner of acting or controlling oneself.” Your behavior directly affects everything that happens in your life, including your income, your relationships, and your ultimate destiny. As you know, your actions have the ability to set you on positive paths while negative ones can cause you to veer off course.

A profound consequence of having negative behaviors and habits takes place subconsciously. Broken self-promises pile up and directly affect your general attitude and belief in yourself. Consider the behavior of putting off attending networking events using the “I’m too busy” excuse. Despite the best intentions, this behavior can all too easily continue indefinitely. The lack of follow-through can have a dramatic impact on your outlook toward business development. On the other hand, exhibiting positive behaviors creates good feelings and opportunities.

However, researching an upcoming event, registering for the event, and logging it on your calendar are all positive behaviors that will propel you forward to accomplishing your goal. Every time you commit to taking action and then actually follow through on that commitment, you’re positively reinforcing winning behaviors. The positive experience creates momentum to continue these behaviors in the future.

To assist you in forming good biz dev behaviors, here are five things you can do to get on the right path:

#1. Start putting business development at the top of your “to-do” list. Mostly it falls to the bottom. To grow a book of business, move all biz dev activities to the top of your weekly “to-do” list.

#2. Create a positive habit of doing one biz dev activity a day. This could be an email to a client or researching a networking event. If you do one thing a day, these will add up to big numbers for you at the end of the year.

#3.  Get prepared to go to battle on your biz dev work. One of the main reasons lawyers put off biz dev calls is due to lack of preparation. Build a list of clients, friends and strategic partners that you can call on for meetings. This will help get you in the right frame of mind to actually make the calls.

#4.  Schedule 30 minutes a week of uninterrupted biz dev time. Do not pick up the phone and do not respond to emails. Just get a list of solid contacts in front of you and make your calls. This routine should be scheduled early in the day to ensure you’re not interrupted and that the day doesn’t get away from you.

#5. Find a “work-out buddy” for your biz dev activities. This could be your co-worker who is also challenged to focus on biz dev activities or your marketing person at the office. Accountability is key to holding firm on the commitments you make to yourself.

Following good behaviors is the number one reason why some lawyers are more successful in accomplishing their goals than others. Don’t be afraid to start small and build up from there. The small victories add up over time and reinforce the drive to continue good behaviors.

Copyright @ 2016 Sales Results, Inc.

Retaining Millennials at Law Firms Requires Change

Millennials law firmManaging attorney departures at a law firm can be a daunting task, especially if a departing attorney has a book of business and takes clients along when leaving the firm. Although it can be difficult for the firm, a practice area and, often, the attorneys who remain, it has been a fairly rare occurrence in the past, particularly for equity partners.

That rarity is changing at an increasing rate as baby boomers have phased out of the workforce, leaving millennials to become the largest percentage of the U.S. employee pool. In fact, millenials are expected to make up 75 percent of our nation’s workers by 2030. They bring a different attitude regarding their careers and longevity with a particular company than we have become accustomed to, especially in a law firm culture.

As most business professionals are aware, it takes much more money to hire and train a new employee than to simply retain astute professionals. And, with millennials’ perceptions of how office life should be, law firms will need to pay much more attention to those ideals in order to keep excellent talent, which is imperative for a successful firm.

Millennial Expectations

So, what do millennials expect in the way of work life? This is a frequently discussed topic in the media, at companies and within law firms throughout the world. I’ve read several good articles on the subject lately and will share from one in particular written by Jeff Fromm for Forbes magazine.

Fromm, who consults on the “Millennial Generation” or “Gen Y,” often speaks about the attributes these employees want from their companies, and it’s not all about salary and benefits.

Although there is no precisely defined birth date range for this segment of the population, it is often described as people reaching young adulthood around the year 2000. These individuals were raised with technology and gadgets at a time when developing a child’s self esteem and individuality was a predominant theme in educational and behavioral methodologies.

Other attributes discussed include:

    1. Millenials want to be a part of  “the process.” They have strong entrepreneurial tendencies and desire growth. If they do not feel they are growing at a company or firm, they are much more likely to move to another than their older peers.
    2. Millenials prefer to be coached and mentored instead of “bossed” or just told what to do. Interestingly, this does not mean that they want to work independently with little supervision; it’s quite the opposite. They actually prefer more interaction and feedback than the typical baby boomer.

Conforming to the Millennial Way of Life

So, what does this mean for law firms and particularly law firm management, practice area leaders and the like? It means an almost 180-degree change in the way associates have been managed in the past.

Millennial attorneys will want to be part of the process from the beginning. They are not content to receive a directive such as, “Research a particular point of law and prepare an annotated brief on the subject.” Instead, they want to know about the case, why the research is important for the case and how it will be used to benefit the case.

Likewise, instead of just receiving a red-lined document back with few instructions regarding how to improve the work, millennials will prefer to discuss how the work product was perceived, why changes were made and how the changes make the information better in relation to the case. They want to learn and grow from the process; i.e., from performing their work.

These types of processes will, indeed, make for a better learning experience for associates, enhance their skills and grow more capable team members. However, this approach will also take more time and patience on the leader’s behalf. Just a “do as I say” directive, without an explanation of why to do it, doesn’t sit well with a millennial. Over time, such treatment will erode the associate’s desire to stay at the firm.

Millennial Mentoring

Remember, these younger attorneys need to feel included and that they are growing and making a difference to be motivated and engaged. Just receiving a good paycheck and the chance at equity ownership isn’t a long-term motivator for them. That really is a cultural change in how many, if not most, young associates used to be trained to be the future leaders of a law firm.

Also, consider that dramatic change in a firm’s processes can’t happen all at once, or else the culture will implode. Instead of instituting entirely new training and evaluation programs, try adding in or updating your firm’s processes. As a start, adding a strong associate mentoring program with real checks and balances will go a long way toward including associates in the process. And know that opening up the lines of communications top-down and bottom-up at any organization also will result in better operations and more-satisfied employees. If good communication isn’t standard at your firm, offer training across the board.

The impact the changing workforce has had on law firms isn’t just beginning … it is happening and must be addressed now to avoid major business operational issues for law firms. Take note of this growing trend and make the necessary changes to ensure your firm has the best talent today and in the future.

ARTICLE BY Sue Remley of Jaffe
© Copyright 2008-2016, Jaffe Associates

Rainmaker 101: 3 Tips from a Top Producer at a Law Firm [VIDEO]

One of the most interesting elements of my job as a business development coach for attorneys is interviewing top rainmakers to better understand “How they did it.” While every attorney knows a rainmaker or high-level business developer, you might never get the chance to hear how they actually accomplished their goals, what it really took to do so and how to avoid the pitfalls they’ve encountered. One of my first interviews occurred with the Managing Partner and co-founder of Stahl Cowen, Jeff Stahl. He put everything on the line when he went out on his own.  As he stated in our interview, it was “a combination of need and fear,” to begin developing his book of business. Here are Jeff’s top three tips for success in building his legal practice, followed by some of my own thoughts on the subject.  Jump to the end for the full interview. Enjoy!

Jeff’s Tip #1: Helping versus Selling

Jeff’s first and most important revelation as a business developer was to really want to help people, not to sell them legal services.  He says quite empathetically that it’s imperative to, “Recognize when someone is in need of service and then be there, and be creative to help them. Then it isn’t perceived as a sale, but as assistance that usually has greater receptivity than somebody who is hard selling.”

From my point of view, he is touching on one of the critical turning points for attorneys as it relates to sales and being viewed as a “salesman.” I don’t know too many lawyers who like or want to be seen as a salesman. What Jeff explains so clearly in his interview is that you need to switch off that mindset and turn on the idea that you are in the unique position to help people with real problems. The key here is to try not pitching and selling, but rather try asking and listening.

One of my favorite mantras is, “Prescription before diagnosis is malpractice.” Think about that. If you walked into a doctor’s office with a migraine and he suggested amputating your head, I’m sure you’d move pretty quickly to the nearest exit. The same rule should apply to prescribing legal services in the form of a pitch meeting. Just don’t do it! At least not until you’ve fully diagnosed the issues, needs and pains the prospective client is dealing with.

Jeff’s Tip #2: Market Yourself When You’re Busiest

If I’ve heard it once, I’ve heard it 1000 times, “I’m too busy to market myself.” One of the best take-aways from Jeff’s interview was his statement, “Too many people go out and market when they’re slow. You need to market when you are busy, because when you market when you’re slow, you often appear desperate. That comes across and people realize that.” Even when you’re working 60 hours a week, it’s imperative to find ways to market. If nothing comes in right away from the effort, at least you’re building your pipeline which will pay off when things do slow down.

In my experience, the key to success here is to find the time to market by getting organized with your day and opening up gaps of time for business development. A few suggestions I typically offer include:

  • Time blocking- Get into the office at 6:30 am once a week and spend an uninterrupted hour emailing clients, strategic partners and new people you’ve met to schedule a coffee or lunch sometime in the next few weeks. This one hour block of time each week will help ensure that you get meetings set every week without fail.
  • Delegating more- Do everything in your power to delegate administrative tasks to others at a lower billable rate. If you are billing $300-600 an hour, why are you making copies or doing filing? Try making a list of every administrative task that you do and add up the hours in a week. You might be shocked at how much time you’re wasting on activities that can be done for under $50 an hour by someone else. This “found time” can be better used for business development activities or even going home for supper with your family once in a while.
  • Never eat lunch alone- It’s the title of a great networking book for a reason. Schedule lunch at your office and invite someone to join you. Utilize a conference room so that it’s quiet and you can focus the conversation on your guest. If you did this with two of your existing clients or strategic partners every week, you will be delighted to the results you might see. Working during lunch might be helpful to get things done, however it doesn’t have to be your routine every day.

Jeff’s Tip #3: Be Impressive!

“When a client tells you what their issue is, it isn’t always their issue. Through effective listening you may recognize things that they may not even realize themselves.” Effective questioning and listening is not only important as a way to best service the client, but also as a way of differentiating yourself from other attorneys who aren’t focused on the clients story, needs and issues. From Jeff’s perspective it’s more important to be perceived as impressive and knowledgeable, than to beat your chest regarding your prowess as a successful attorney.

Jeff’s  hit on something really critical here. Perception is reality and belief stronger than fact. The concept is simple if you think about it. By asking relevant, probing and open ended questions, the prospective client will perceive that you are an expert based on the way you are managing the conversation and your bedside manner. A great example here would be observing two psychologists. The first spouts off about why she is so good at what she does and her advanced degrees. The other, warmly welcomes her patient onto the couch and begins building rapport. Then the second psychologist begins asking questions about the patients reason for being here today. The patient’s response is followed up with additional questions which open up the dialogue to reveal the actual issues being faced.

If you are working diligently to find new business opportunities, and a prospective client finally agrees to meet with you, try to act like the second therapist by asking questions and being an expert listener. You will not only build greater credibility as a lawyer, but also uncover issues that your new client didn’t even know he had. A win-win outcome is inevitable.

I’d like to thank Jeff Stahl for his rainmaking insights. The reality is that there is always a way to find balance in work and in life. For many of you, it’s a matter of having the proper mindset. For others it’s obtaining new strategies and tactics to accomplish the goals you’ve set. Check in monthly for a new installment of Rainmaker 101 for more tips from the business development superstars I’ve interviewed.

Article By Steve Fretzin of Sales Results, Inc.
Copyright @ 2015 Sales Results, Inc.

To Specialize or Not to Specialize, That is the Question for Attorneys

As the number of attorneys in the marketplace continues to grow, it is becoming more important to differentiate yourself.  One of the best ways to do this is through specialization.  Becoming a “specialist” can be a scary proposition as your messaging and marketing efforts change to accommodate this new direction. The obvious fear is giving up some potential business by speaking and marketing openly about your new focus. While most of these fears are not grounded in reality, most generalists are worried about the possible loss that may occur when making the transition.  In working with hundreds of attorneys, we regularly discuss the ups and downs to becoming a specialist. If the timing is right and you are well prepared, it might be the best way for you to stay relevant, while also growing your practice and obtaining additional financial security. That being said, it’s one thing to be “known” as a specialist versus “identifying oneself” as a specialist. It’s always better to be considered an industry specialist and leader rather than having to advertise that information. In some states, calling yourself a “specialist” is not allowed. Be sure to stay in compliance within your states’ guidelines.

Take a moment and think about two of the most successful attorneys you know.  Really, close your eyes for five seconds and get their names in your head.  I would bet dollars to donuts that at least one of the names you thought of was someone who is a specialist. It should come as no surprise that an attorney who builds a reputation around being great at one thing is memorable to you. The reality is that when you build a reputation in one industry, market or vertical, your practice can grow more quickly than you ever thought possible. Of course, a number of elements need to be in place before taking this leap. Here are a few things to think about before making the switch to becoming a specialist:

#1. You need to be the best at what you do.

Whether you are a litigator or an estate-planning attorney, nothing is more important than being skilled at your craft. When thinking about specializing, be sure you have the baseline skills and experience to succeed in one particular area of the law. It might make sense to get at least 2-3 clients under your belt in a particular area to test it out and see if specializing in one area makes sense for you. Achieving notoriety as a specialist may take months or many years to achieve. The important thing is that you eat, sleep and breathe within the space that you’ve chosen.

A good example of this occurred when I was badly injured in a plane crash back in 1996. That’s right, I survived a plane crash.  During my recovery from looking like a human pretzel, my father, a now retired attorney, put me on the phone with Bob Clifford of Clifford Law Offices. He chose Bob Clifford because he is well branded as the leader in aviation and personal injury litigation. We didn’t speak to any other law firms because who could possibly be better?

Being the best at what you do and building a strong reputation around that specialty can make obtaining new clients very easy. However, as you probably know, it takes real effort and conviction to build a specialized practice.

#2. Choose the right industry or vertical that’s a fit for you.

The easiest and most time effective way to develop a niche’ is to leverage the work you’ve already done in one particular area. It may make sense to target specific people, companies or issues that will allow you to draw out more work.  For example, if you’ve worked with textile manufacturers and enjoy the work, be sure to target other textile companies in your area. You can do a search on google or LinkedIn to identify the people and companies to call on. Try to leverage your existing clients and strategic relationships to obtain introductions to these business owners if possible.

As an example, you could call up your client in the industry and say, “I know you’ve been happy with the work I’ve done for you over the past few years. I am looking to help others in the same area. Who are you friendly with in the textile industry that I should be speaking with as well?” The key here is to develop a great relationship with your client to ensure that he/she is open to making these types of strategic introductions. Think about it this way. If you had the best dermatologist and someone had a nasty rash, wouldn’t you feel great making the introduction?

Another easy way to find the right specialty for you is by asking yourself, “What am I truly passionate about?”  If you care about something, it drives you to become more involved. For example, one of my clients is very passionate about animals and is now focusing on working with dog shelters and veterinarians.  She joined the shelter’s board and is routinely interacting with prospective clients for her practice. She is wowing them with her ability to solve problems and is routinely asked legal questions from the board members. These inquiries turn into business meetings and eventually new business.  She’s doing all of this without working harder than before as the new originations roll in. Finding a niche’ that you are passionate about can make your legal career much more meaningful and enjoyable. You will also have a greater chance of meeting prospective clients, as you will be interacting with them on a more regular basis.

#3. Find a space, where there is space.

Be aware of your market and niche’ and who else may already be there before committing to a specific specialty.  While you may have vast experience in commercial real estate for example, there may already be too many lawyers in that area to easily separate yourself from the pack. Do your research and try to find a segment of real estate that isn’t as fully saturated. It might also make sense to branch off into other areas of law to ensure you have your eggs in a few different baskets.

When the recession hit in 2008, many real estate lawyers were hit pretty hard. One of my clients saw this as an opportunity to study estate planning as a backup plan to real estate law. This ended up being a great fit as he was able to leverage his real estate clients and personal contacts to help set up estate plans for everyone he could.  Now that real estate is back, he has doubled his book by focusing on both specialties.

By studying the competition, understanding the marketplace and the amount of business generated in a particular area or niche’, you can better hedge your bets when selecting a specialty.

#4. Look to the future.

Earlier this year, I had the great pleasure of interviewing Jerry Maatman of Seyfarth Shaw to learn a little more about his successful practice. One of the key elements to his amazing achievements as an attorney came from his thirst for knowledge within his area of Labor and Employment. He voraciously read everything he could to better understand what was coming down the pipe to see how he could leverage it to build his practice. He describes in his interview, the 1992 legislation for the Americans with Disabilities Act and how he got ahead of the law to be seen as the premier expert on the subject. He effectively packaged a “Survival Guide” for companies to better deal with the changing laws and regularly spoke on the subject before anyone else. By being a forward thinker, he locked-in his success and was repeatedly hired as the expert on ADA law by some of the largest companies in America.

Developing a niche’ can be a game changer for you as a practicing attorney. For those who are worried about missing other business opportunities because of specializing, who’s to say you can’t take on new business in other areas? However, by focusing your outbound marketing on one thing, you’ll have the opportunity to build your brand name much more quickly than staying a generalist.  You need to have the experience, the passion, the space or the forward thinking that will allow you to become successful in specializing.

Copyright @ 2015 Sales Results, Inc.

Ex Parte Communications between Treating Physician and Attorneys in Tennessee

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Under HIPAA, physicians are permitted to disclose “protected health information” to their attorneys for purposes of their own healthcare operations. This allows physicians sued by patients for malpractice to provide their attorneys with the information needed to prepare and present a defense. Ordinarily, subpoenas or orders are a part of a court ordered deposition or trial at which the patients or their attorneys are present, so the need to protect health information is lessened.

HIPAA does not allow treating physicians in one practice to disclose “protected health information” to attorneys for a treating physician in another practice unless a subpoena or an order of a court permits that disclosure. Instead, HIPAA allows members of a group practice to transmit protected health information concerning a patient to business associates of that practice. This means that attorneys representing the other physicians in the group practice can receive information related to the practice’s healthcare operations, including information relating to representing the practice in malpractice lawsuits. A subpoena or court order is not required for this disclosure. Thus, when a physician is being sued for malpractice, HIPAA permits the practice’s attorney to meet with other physicians in that same practice and obtain protected health information related to the plaintiff.

While HIPAA may permit the disclosure of protected health information in this circumstance, state law is another matter altogether. For example, the Tennessee Supreme Court found that an implied covenant of confidentiality exists between the treating physician and his or her patient. Like HIPAA, this implied covenant of confidentiality absolutely prohibits an attorney for a treating physician from meeting with another treating physician unless the patient or the patient’s attorney is present. Like HIPAA, the court assumes that the patient’s interests are protected when the patient is present.

This in turn begs the question – does the implied covenant of confidentiality prohibit a physician employed in a group practice from meeting with the attorneys representing another employee of the practice who has been sued for malpractice without the patient being present? In Tennessee, this issue was recently addressed in Hall v. Crenshaw, W2013-00662-COA-R9-CV (Tenn. Ct. App. July 18, 2014). The court of appeals in Hall held that the implied covenant of confidentiality does not prohibit a physician in a group practice from meeting with attorneys representing another employee physician of the practice. The court of appeals reasoned that a corporation can only function through its agents and employees. Under state law, all knowledge of the corporation’s employees is imputed to the corporation. As a result, the court held that the corporation already possessed this information, meaning the corporation, through its employees, is able to discuss a patient’s medical record and history with the attorneys representing the corporation and its employees.

© Copyright 2014 Dickinson Wright PLLC