Managing a good relationship with your third-party contractors starts with proactively establishing clear expectations. Making sure that they have their own liability insurance can protect you and your clients in the event of an error. A consistent process when working with third-party professionals will help ensure a smoother relationship and compliance with Professional Conduct Rule 5.3.  (See also our prior guidance on lawyers’ responsibilities in supervising non-lawyer assistants.) 

Proactive risk management can protect you and your client if a third-party professional’s report contains incorrect information that you later rely on to generate an opinion or advice.  If you are relying on a report by an independent professional who you have hired or retained, you may want to consider verifying that the independent professional has errors and omissions (“E&O”) or professional liability insurance coverage.   

One recurring scenario involves attorneys preparing title reports who rely on exams or research prepared by third-party non-attorney title examiners.  If the title examiner produces a faulty title examination (such as missing a lien or mortgage), the attorney issuing the title report may ultimately be held responsible.  OBLIC recommends that attorneys relying on third-party title examiners verify the title examiner’s E&O insurance coverage and obtain a copy of their declarations page prior to contracting with the title examiner.  Further, if reliance on the title examiner’s services continues past the effective date of his or her E&O policy, it is good practice to obtain proof of the renewal of said policy.  Obtaining proof of coverage after an error can be more difficult, so it may be best to verify coverage prior to engaging the title examiner’s services.   

Beyond verifying the third-party’s insurance coverage, OBLIC encourages attorneys to consider creating a process to ensure comprehensive risk management and oversight of third-party relationships.  Some of these steps might include: 

• Due diligence in selecting a third-party professional such as searching the BBB or other online sources, reviewing litigation involving that professional (whether as a litigant or as an expert witness), and verifying certificates or licenses with appropriate licensing boards; 
• Written contracts between the firm/attorney and the third-party professional that include clarity on the scope of services and the process for terminating the relationship; 
• Establishing a clear and mutual understanding of what information or documentation is needed;   
• On-going or periodic check-ins of the third-party’s activity or progress; 
• Clarity on dates when reports or other deliverables are due, and a process for changing or extending those dates; 
• Verification of cybersecurity measures (including cybersecurity insurance) in place by the third-party, where applicable.  

If your client has obtained the report directly, it may still be best to consider reasonably vetting the report and the professional. Ask questions such as, Was the professional who prepared the report licensed or appropriately certified? Was sufficient information provided to and reviewed by the professional to adequately inform the opinion in the report? Is the report still relevant and timely?  

Please consider these risk management pointers to ensure that your legal advice is based on sound information, and if there was an error committed, the third-party professional has appropriate coverage to protect your client. 

As always, OBLIC is here to help!  Please tell us how we may help further. 

This information is made available solely for loss prevention purposes, which may include claim prevention techniques designed to minimize the likelihood of incurring a claim for legal malpractice. This information does not establish, report, or create the standard of care for attorneys. The material is not a complete analysis of the topic and should not be construed as providing legal advice. Please conduct your own appropriate legal research in this area. If you have questions about this email’s content and are an OBLIC policyholder, please contact us using the information above.