Hilary Gerzhoy | Good Lawyers, Bad Outcomes: How Lawyers Can Avoid Ethics Trouble

Elise Holtzman: Hi, everyone. It's Elise Holtzman here, a former practicing lawyer and the host of the Lawyer's Edge Podcast. Welcome back for another episode. Most lawyers work hard to do right by their clients, but even good lawyers can end up in hot water. From bar complaints to malpractice claims, the risks are real, and they're evolving fast with new tech like AI.

Today's guest is one of the legal profession's go-to experts on ethics and discipline, and she's here to pull back the curtain on why lawyers get in trouble, how to avoid it, and what firms should be doing right now to protect themselves. Before we dive in, today's episode is brought to you by the Ignite Women's Business Development Accelerator, a nine-month business development program created by women lawyers for women lawyers. Ignite is a carefully designed business development program containing content, coaching, and a community of like-minded women who are committed to becoming rainmakers and supporting the retention and advancement of other women in the profession. To learn more about Ignite, visit thelawyersedge.com/ignite.

I'm excited to welcome today's guest, Hilary Gerzhoy, who is a partner at HWG LLP in Washington, D.C. She represents lawyers, law firms, legal tech companies, and in-house counsel across the country on legal ethics and professional responsibility matters. Hilary serves as outside general counsel to law firms, advising on everything from risk mitigation, conflicts, and disqualification issues to firm formation and dissolution. She chairs the D.C. Bar's Rules of Professional Conduct Committee, teaches legal ethics at Georgetown Law, and serves on the D.C. Circuit's Advisory Committee on Admissions and Grievances, a committee appointed by the judges of the D.C. Circuit.

A widely published thought leader, Hilary's work has appeared in major legal and mainstream publications, including Bloomberg Law, Law 360, and the National Law Journal. Hilary, welcome to The Lawyer's Edge.

Hilary Gerzhoy: Thank you so much for having me, Elise.

Elise Holtzman: I am delighted that you're here today, and I don't think we can talk enough about the topic that you and I are going to chat about today. I'm really glad to have you because I think there's a lot of scuttlebutt around some of the legal ethics things that we're seeing going on these days. I think that some real talk and some real understanding of the landscape would be really helpful to most lawyers.

So let's start from the very beginning. I know that when, because you and I have had this conversation, sometimes when lawyers run into trouble, they might be facing one of two different things. They might be facing a disciplinary process and/or they might be facing an actual malpractice claim. So I know mostly we have lawyers listening, and we may think we know what the difference between those two things is, but I think we should go back to basics. So would you just share with me what are the differences between those two things? What do they look like?

Hilary Gerzhoy: Absolutely. So in the disciplinary process, anybody can file a bar complaint against a lawyer. For a lawyer to be investigated, there actually doesn't even need to be a bar complaint filed against you. Disciplinary counsel can bring charges based on something it's read in the news, for example. I've had cases where the basis for the disciplinary investigation was a news article or the D.C. Court of Appeals, for example, issues an opinion, and disciplinary counsel reads it and says, "I think that's sanctionable conduct. Independently, I'm going to investigate that lawyer."

Most bar complaints are filed by clients or opposing counsel. Those are the most typical bases for them. The way that a bar complaint process works, and it's slightly different in every jurisdiction, but the overarching pattern is the same, which is a bar complaint is filed and then disciplinary counsel. So there's always disciplinary counsel and then assistant disciplinary counsel, usually anywhere from seven to 15. It operates, it mirrors the criminal justice system, much more than it mirrors any kind of civil claim.

Disciplinary counsel makes a preliminary assessment about whether if the things in the complaint are true, do they amount to a violation of the rules of professional conduct? Because that is the basis for a sanction under the bar of rules is have you violated one of the rules of professional conduct? The sanctions that are available, the penalties, are anything, it can be dismissed, or it can be a private reprimand, which sometimes is called a private admonishment. It can be a slightly different language. But basically, it's disciplinary counsel telling you privately, "Don't do that again. It's not part of your record," to the worst, which is disbarment.

The basis for bar complaints from clients oftentimes is based on money. So, a mishandling of money potentially, or just an allegation that you have mishandled money. The other thing is there could be bar complaints that have been filed against you that you never know about. Because if disciplinary counsel doesn't make that preliminary assessment saying, "If everything is true, you violated one of the rules of professional conduct, they don't notify you that a bar complaint was filed against you unless they docket it.

So, unless the person who created the bar complaint, who filed the bar complaint simultaneously tells you, "It is possible that there are bar complaints out there against you. The disciplinary counsel has just said there's no merit here," doesn't amount to a violation of the rules.

Disciplinary counsel also has a lot of discretion. So there can be things that are violations of the rules of professional conduct that nonetheless disciplinary counsel chooses not to investigate because it's not sufficiently high priority. So you can see that because they have finite resources. So in D.C., for example, D.C. is the largest unified bar in the country. I think we have 120,000 lawyers in D.C. That's a lot of lawyers and a lot of bar complaints to work through.

Malpractice lawsuits are totally different. They are for civil damages, so there's no money in a bar complaint. The penalty is never that you pay monetary damages. Sometimes you will have to pay a client back if you took money and it was deemed improper, but the penalty is really the impact on your license versus malpractice claim, no impact on your license, impact on perhaps your malpractice insurance policy, but it's just a claim for civil damages.

The standard for a malpractice claim is that you have to breach a fiduciary duty. That breach has to be the direct result of damages to the client that are quantifiable. The challenge in malpractice cases is you have to prove the case within the case. So you have to prove that but for the lawyer's mistake, for example, mistake, negligence, error in judgment, I would have won and I would have gotten X amount of money. That's a very hard standard. So a lot of malpractice cases are not ultimately successful because you have to prove that you would have won the underlying case or won the issue, the matter that's at issue, which is really challenging to do.

So things that tend to end up in successful malpractice cases are where there's an opinion from a judge, for example, that says, "If you had retained an expert in this matter, I could have been persuaded to have cited in your favor. You, lawyer, neglected to call an expert. Therefore," right, those are, as you can imagine, few and far between because judges don't tend to say, "If you had done something differently, I would have made a different decision," but that's how the cases tend to go.

In malpractice cases, so I talk to insurers a lot because I represent lawyers and law firms, and there's a lot of insurance pieces to that, to mitigation of risk generally, in my conversations with malpractice insurers, what you see happen as the basis for malpractice suits are an unhappy client, a series of decisions that have led to an unhappy client and for the claims that actually stick where they don't fall out on a motion to dismiss or that the parties aren't able to negotiate it. It really is an egregious error followed by not being diligent in correcting the error, because lawyers make mistakes and we are human, we are fallible. We all make mistakes. It's the cover-up is worse than the crime. It tends to be where a lot of the malpractice problems arise.

Elise Holtzman: I'm curious how often a finding in a disciplinary action leads to a malpractice case being filed and vice versa.

Hilary Gerzhoy: So, in the direction of a disciplinary case leading to a malpractice action, it happens. The challenge is that to bring a malpractice action is expensive because you have to pay for a lawyer to bring that action. There are very few firms that do plaintiff-side contingency malpractice cases because the standard, as I was describing, is so high. So it's not like a typical contingency case where you really need to have the threshold be like this is so obvious on every level that there was a mistake. It resulted in damages that are many multiples of what your legal fees are going to be.

But it's very hard to find lawyers who do plaintiff-side malpractice [stations] on a contingency basis. So you have to have that money. The client has to have that money initially to take that bet, which is the barrier to entry is very high because litigation is just incredibly expensive.

With respect to malpractice cases turning into bar complaints, you see that quite a bit, not necessarily because disciplinary counsel has watched it play out, but because the client is so mad. If there is a successful malpractice case, often that can inspire the client to then also bring a bar complaint, depending on the level of anger.

Elise Holtzman: I love the word inspire. It's like they just want to stick it to you a little bit more if they can, because it just makes them feel better, I guess. Perhaps looking at them with a little bit more charity, they don't want it to happen to somebody else.

What I'm hearing is, and correct me if I'm wrong, that what this means is because the barriers to entry for malpractice suits are so high, and because it sounds like most of the time, as an attorney, if you do run into this sort of situation, there are ways to mitigate this. If you're paying attention, if you're willing to admit when something really happened and you're willing to try to make the client as whole as possible, there's a way to settle these things. They don't always go to litigation.

Hilary Gerzhoy: Yeah, I think there are. The magnitude of damages tends to be the motivating factor. So, for cases where the damages amount is not astronomical and the parties can settle it, that's often the case. But even way before that, that you've missed a deadline, for example, and then you do things to try to fix that error, that's a lot harder to ultimately get sued and for that lawsuit to have traction in a malpractice manner versus you missed a deadline, you're embarrassed, you don't tell the client about it.

That has downstream consequences that the client isn't aware of because clients are not monitoring the docket of any given litigation. Then they find out you lost, and then they bring a suit. So that's when I see it happen a lot where there were moments in time where if the lawyer had taken action to mitigate the harm, it probably wouldn't have resulted in a malpractice case.

Elise Holtzman: Right. Lots of missed opportunities to fix it before it gets out of hand. Hilary, what are some of the most common reasons you see lawyers getting sued for malpractice or having a bar complaint filed against them?

Hilary Gerzhoy: So I think bar complaints tend to be disproportionately filed against solos and small firms. You see few and far between bar complaints filed against Biglaw lawyers. It doesn't happen as much. Why doesn't it happen as much? I mean, we all have guesses as to why that is the case.

I think one of the biggest reasons is, particularly in D.C., the rule that governs how lawyers have to manage money is draconian. The penalty for mismanagement of client money, even if it is negligent, it is fixed, and the client ultimately suffers no harm, is a presumptive six-month suspension from the practice of law. Which having a suspension from the practice of law impacts your ability. If you're a litigator, for example, there are courts out there that will not let you pro hoc into the court if you've ever had discipline against you.

Elise Holtzman: If you've ever had it. Not just if you're under it at the moment, but if you've ever had it.

Hilary Gerzhoy: Exactly. So there are huge consequences for that. It's easy to prove. So what disciplinary counsel does when they're investigating the handling of client money is they do a forensic accounting of your records. The numbers don't lie. When did the money enter into your account? When did the money leave your account? So there are instances where lawyers have done bad things. But I see a lot of times where it was a good-faith mistake. "I used the wrong checkbook. I thought there was enough money in there and that I could move it into my operating account. I was wrong." But that presumptive six-month suspension is really, really steep.

Bar complaints more generally, I think, are targeted at that group. Malpractice actions, conversely, I think, are much more targeted towards bigger firms, more money, because you have to have the money at the outset to float the malpractice action. The only reason to go through that civil litigation, which is long, stressful, expensive, is because there's going to be meaningful payout at the end, or you think there's going to be a meaningful payout at the end. Versus in a bar complaint, the best thing that happens from the perspective of a client is the lawyer can't practice law anymore. It is costless for a client to file a bar complaint against a lawyer, but very costly to do a malpractice action.

Elise Holtzman: You pose the idea of why is it solos and small firm lawyers that are more likely to get caught up in this situation. I'll just posit this idea. You can tell me what you think. But I think I might have told you this, that many, many years ago, I created my own CLEs, and I got wise to not doing that after a while. It was a little challenging sometimes. But I was doing this ethics of time management course when I was just starting my business, because I knew that people wanted ethics courses, and I started looking into it.

It seemed to me that there were so many solo and small firm lawyers getting caught up in pure overwhelm. They really were well-meaning, hardworking people. They were often on the plaintiff's side. They often had clients that did not have a lot of resources. So an immigration attorney, for example, or a plaintiff's lawyer representing people from a community in which English wasn't their first language, that kindn of thing. So you have these very decent people trying to do work and saying yes to everybody and simply taking too much on and not having enough people to be looking at things like the checkbook and when the money came in and when the money goes out. Is there enough money in there?

So I'm wondering if you agree with that or you think it's something else. It's just that they're overwhelmed.

Hilary Gerzhoy: I think that's a huge component of it. I think most lawyers who work at a law firm have never seen client money before. I have no idea where the client money, I know it's in a trust account, but I don't monitor that trust account. I don't receive the wiring. I don't send out the instructions. If you work at a firm that has an accounting department, you're so removed from that piece of it.

Then the other piece to address the point that you were making more directly is the resources that you have overall. If you've taken on too much, there are other lawyers at the firm who can help you. If you're a solo or a small firm, scaling is very hard to do in real time. So what lawyers will often do and what I'll often advise smaller firm lawyers is develop ongoing relationships with other small firms so that if you do get a great big case that you want to take on, you can have a co-counsel relationship with other firms so that you can scale.

Because part of it, too, is expanding a business is a hard thing to do. Knowing the point at which now I can take on another full-time associate, now it's worth my while to take on a paralegal, the practice of law can be very spiky. Managing the fact that you might get big cases and then you might have ultimately a lull, I think doing things like having co-counsel, having other people that you can loop in is a big piece of it because also, lawyers have a lot of fear. There's a fear, not just at small firms, at big firms too, that if I say no to this thing, I'm not going to be busy enough.

So either I'm not going to be profitable enough because I'm a solo practitioner and there's nobody else, or—and I see this all the time—I'm a big firm lawyer, there is an expectation that I'd bill a minimum of 2,000 hours a year or 2,200 hours a year. If I say no to this thing now, I'm not sure what next month is going to look like. So I've got to load up on everything and say yes to everything because who knows what the future holds, because lawyers are also very risk-averse.

Elise Holtzman: We've mentioned some of the topics that get people into trouble. So obviously, handling the money is one of them, and maybe taking on too much because it is our responsibility under almost all ethical rules that we have to be responsive to the client, keep them well informed, have open communication with them, respond to them, all of those sorts of things. Are there other sorts of things that you run into? What's the, I don't know, as they used to call it, the parade of horribles in law school? I mean, you see this all the time. So what are some of the other sorts of matters that you see come across your desk?

Hilary Gerzhoy: I think the lack of supervision and oversight, which actually ties into the AI stuff quite a bit, because we see this happening now, and the culprit is AI, whereas before the culprit was an associate or a paralegal. For those who have worked in a larger law firm, there's a hierarchy of how work is often done. Lawyers have an obligation to supervise those who are beneath them who are producing work. You have to make sure that those lawyers are adhering to the rules of professional conduct.

You can get in trouble for their mistakes if you knew or you should have known or you somehow endorsed what they did that was problematic. I think the incentives in law firms are hard. They are hard incentives to create the best results that are client-driven. My view is the incentives in law firms are not client-focused. They are law firm business-focused. Because if you have something, for example, like a billable hour requirement, there is nothing about that that serves the client. What serves the client is doing my work, giving me an A-plus work product with the least amount of time possible. That is what every client wants.

Some clients, in fact, will say, "You know what, if it was slightly less expensive, I'd like the A-minus work product. This doesn't need to be a Supreme Court merits brief. So long as you're making the argument and it's well done, I'd like you to spend less time to make it better." Because of the billable hour model, the incentive is not there for law firms to structure their time that way. You literally get paid based on how much time you spend. The more time you spend, the more money you make. Caveat is only what is the client willing to tolerate.

So you'll see lawyers at firms, for example, and this is where some of the malpractice can come in and disciplinary complaints, associates, for example, billing that, you know, there was some press about a number of high-profile companies where associates who were working on matters that were retained by that company billed 23 hours in a day. Well, how could you bill 23 hours in a day?

There were some instances where there were associates who billed 26 hours in a day. Why does that happen? I think it happens because there's a tremendous amount of pressure on associates to do it. But also, when there isn't oversight by the people above them, they are also on the line. Because that's fraudulent billing.

So I think that's a big piece of it is not sufficiently supervising the people who give you things. There has to be a level of trust in any organization when you're working as a team. You have to trust that the people that you're working with are researching diligently, are giving you good work product, have proofread what they're giving you. But now we introduce AI, which is this whole other beast that none of us are familiar with previously, and it really changes everything.

Elise Holtzman: Well, we're definitely going to talk about that in a minute. The other thing that came up for me when you were speaking is that there's the supervision to make sure that all of the billing is kosher, if you want to call it that. There's also just training your lawyers, and you can't bill clients for training your lawyers.

So, again, that whole concept of the billable hour and only getting paid for what you're billing means that a lot of lawyers, also because they're running around with their hair on fire trying to get things done, and they tend to take the view, "If I want something done right, I do it myself. Or if I've delegated it to them, they should just figure it out and make it happen," they're not really necessarily taking the time to adequately train their people.

Hilary Gerzhoy: Yeah, I think that that's absolutely the case. I think the truth is most of law firm life is learn by doing and sink or swim. There's massive turnover, so much more turnover than you see in Biglaw than you see in any other analogous industry in terms of education level and barriers to entry. There's a huge turnover.

I think part of it is because part of what people will say is "I burn out because I'm working too much and too stressed, and I don't feel like I've been trained or given the resources to know how to do this thing. I'm supposed to just see what somebody else does and then be able to replicate it." For some people, that works. For some people, that really doesn't work.

The other piece that you're seeing now too, with billable rates skyrocketing, now there are rates of people charging above $3,000 an hour. Associate rates, first-year associate rates, over $1,000 in a lot of firms. What clients will say is, "Well, I don't want to pay somebody who's never done this thing before $1,000 to try it first." That also becomes a challenge. It has a lot of different consequences.

But one of the consequences it can have is that then work is pushed to the more senior people. Then that reinforces that the junior people don't learn how to do it if you're not going to actually have robust training programs, which law firms have not as hard a tolerance for.

Elise Holtzman: Right. That's a whole other podcast episode. I mean, there are so many things where the motivations send us off in the wrong direction. So let's talk about the AI for a minute. Obviously, we've all heard the crazy stories in the news about the lawyers who wind up getting themselves in trouble because they "cite cases" in briefs and the cases don't exist or they exist, but they don't say what AI said they say, etc. What are the other things when it comes to AI that are risks for law firms?

Hilary Gerzhoy: Yeah, so I think false comfort, getting false comfort, is the big one. I think in the stories that you're referencing, where lawyers have relied on a citation and the case doesn't exist, that's taking it to the extreme. But there are a lot of stages before that that are also problematic. I think it happens for a variety of reasons.

But one of the things that I think is particularly interesting is when I saw in 2022, that first SCNY case where the lawyer cited fake case law and the sanction was $5,000, they said, "I just didn't understand how ChatGPT worked," I would have never predicted that I would read Law 360 every single day and every single day there would be a case about a lawyer doing it.

I thought it was okay. We're everybody figuring out how to use this. As you had mentioned in one of our previous conversations, ChatGPT has sycophantic tendencies. It's complimenting you. It's telling you you're great. It's giving you confidence in its answer. It's citing things. So people are figuring it out, and they made mistakes. They relied on it. They didn't check it.

Elise Holtzman: And they're never going to do it again. Right.

Hilary Gerzhoy: That's going to end, right? It's not ending. What you're seeing, actually, is more and more prestigious law firms having this happen. Big name, everybody knows law firms, expert reports, AI expert. I mean, the irony in some of these cases, having an AI expert rely on AI-generated material for an expert report that ultimately included information that was inaccurate.

So I think what that tells us is that the temptation is so huge. I think why that temptation is so huge is in large part what you were saying before, that lawyers are so busy. Because of the stress levels and how much they have to do, anything that can make the job easier or faster is deeply appealing.

So in terms of false comfort at the not extreme end, at the earlier stages, like you've just done research that's circulated internally, a partner asks you to write a memo on a case, do we have a good cause of action here? You use AI, and I'm not talking about ChatGPT at this point. There's enterprise ChatGPT, which is different. That's not like a public open system. But Lexis, Westlaw, vLex, companies that are pulling from the federal register, they still hallucinate, and they are still not perfect.

I test them all the time. I've tested a lot of these products because I work with all of my firm clients who are interested in what is on the market and what they are doing. I test them with respect to the legal ethics things because I know the answer. So I'll ask it a legal ethics question, and I'd say 70% of the time it's right. But unless you really know the answer, which, for purposes of research, what's the purpose of a research question if you know the answer, detecting where that 30% is really hard to do. Because there's so much of it that is responding to you that is right and accurate, and on point.

So I think comfort in earlier stages. The other thing too, is the client confidentiality piece of it as well, which I think a lot of lawyers don't appreciate. Your Rule 1.6 client confidentiality obligation is much, much broader than attorney-client privilege. Often, lawyers will think, "I can't put it into ChatGPT because it waives privilege." The bigger risk is that you're putting in confidential information.

What constitutes confidential information is any information in the course of the representation that you have learned, no matter its source, that the client doesn't want you to tell people. So the fact that you even represent the client could be 1.6 confidential information. It's incredibly broad. I think lawyers are so tempted by this technology that oftentimes they will use it and be putting in information that they shouldn't be.

The other piece I think that's happening too is that there are strings with respect to AI use. There are lawyers and firms that are saying, "We are not using it at all. We're not touching it. We don't trust it." And then, "This is the new wave. This is how everything has to be done." But it's company-driven. In outside counsel guidelines, there'll be major companies that will say, "We don't want our law firms using AI."

At this point, that's impossible because AI is built into basically everything. If any lawyer does a Google search, at the top of their Google search, they're getting an AI-generated answer. Microsoft Word uses AI. Every time, management system uses AI.

But if they're saying no AI or no AI with respect to legal research, I think the reality is that lawyers, particularly younger lawyers, are using it. So then it becomes, if everybody is going to be using this thing, how do we ensure that people are using it in a way that is not going to put them and their clients at risk?

Elise Holtzman: I want to get into that because I know that you write AI policies for law firms. One of the things I heard recently from somebody who is not a lawyer, but is an AI expert for law firms, was something along the lines of—and it gave me nightmares—that your employees, even your partners, your people are bringing their own AI to work. They're not even really thinking about it. They're using it. So they might not even be using, they might be using ChatGPT on their phone or on their laptop. You may not be able to control, especially without a policy, but even with a policy, what people are doing that are kind of under the auspices of your law firm. So that's pretty scary stuff.

Hilary Gerzhoy: Well, I think that's absolutely right, which I think is why policies matter. But I think policies matter for a couple of reasons. One, they matter just so everybody's informed. This is the policy. This is what you do. But the truth is, people break policies. They don't adhere to the policy.

I view it from a malpractice and a bar complaint risk, which is what is your defense if you are sued for filing something that had a citation that's improper, or your use of AI in any way, you use it as a document management, a document review tool, and you missed a key document because you used it to review documents and it missed something. What is your defense? Your defense is that I had a lawyer generate an AI policy to mitigate risk. Because in the absence of that, what do you say? You say, "Sorry, I missed it. I didn't understand."

Versus, "No, I took action to avoid this risk, to mitigate this risk. The policy has protocols when the risk comes to light or a mistake has been made," and you've done those things, that is a defense.

Elise Holtzman: Yeah. The analogy to me is employment policies, right? Employee handbooks and things like that. If you don't have any of those things and then you get hit with some kind of employee complaint or a lawsuit or something like that, you're in big trouble. So that's just sort of the price of entry, and I presume the foundation.

Hilary Gerzhoy: I think absolutely that's the case because I always think about it. If something did go wrong, because that's the world I live in, is trying to mitigate against that or how do we respond if it does, what can you say that you did to avoid it and to fix it? So I think everybody needs an answer to that question. What did I do to avoid it, and what do I do to fix it once it's happened? Understanding that policies get broken.

Elise Holtzman: What advice do you give to law firms when they say, "Well, we're just not ready to roll out this huge policy yet? We've got to figure it all out before we put something in place."?

Hilary Gerzhoy: So I think that there are different kinds of policies out there. I have created policies that are extremely detailed and really robust, depending on what the firm is doing. But then there's also just high-level policies. I sit on the ABA ethics committee with this committee that writes opinions about the rules of professional conduct. We wrote an opinion about AI use.

So one type of policy that I create is "Here are the key ethics issues that will get you into trouble in AI use. Here's what the policy needs to include." So here's the bare minimum to get started, because if you operate with nothing, you truly have no defense.

Teaching at Georgetown, every single student in that class is using AI. They're all starting their positions at law firms going in with AI because it's an incredibly powerful tool. You can't really tell people, "There's this incredibly powerful tool, but you're not going to touch it."

So knowing that that's the reality, you can have a policy. It doesn't have to be a 50-page policy. We can talk about a four-page, very simple policy, but they can provide you protection against the major risks.

Elise Holtzman: Yeah, I mean, this is to me the perfect example of done is better than perfect. Get something. Then, yes, if you want a more robust one, then work on that, but at least have something in place so that you can protect yourself.

Hilary Gerzhoy: Yeah. I think the other thing is that we as a firm, because we have our ethics practice in conjunction with we have an AI practice together, we track everything that's going on in the AI space with respect to discipline and new regulations, new court orders. So we update those policies too, because the thing is this stuff is changing every day.

Even if you have something in place now, understanding when you need to change it and update it is—Because we do it at scale, we do it for so many firms. It makes sense for us to know changes in real time. But that's another feature of it, that every day the technology is changing, and the use of the technology is changing.

Elise Holtzman: I'm glad you mentioned that, Hilary. I think that's a really important point. This is definitely not one of those things where you can set it and forget it. While I know that you won't toot your own horn, I think people should be paying attention and knowing that you're out there and that you are going to be reminding your clients that, hey, guys, it's time to update this because this thing just happened or we never knew this could come up and it did or the DC Circuit or some other circuit said this.

So that's a great point. This is not like you create it and now you can wipe the sweat off your brow and go back to work. Let's go back to some basics here. When a lawyer gets a letter, you get that angry letter from a client, you get a bar complaint after you have a mini heart attack. What should you do first to keep things from escalating and increase the odds for a favorable outcome?

Hilary Gerzhoy: The way that I would answer those questions, I would answer them differently for those different circumstances. I think both of the circumstances is if anybody is threatening your license or threatening to bring a complaint against you in a civil action, or there are criminal charges, those are all three instances in which you need a lawyer because the risk is so high. It is not a go-it-alone category.

If there's a bar complaint, we have had tremendous success with getting bar complaints dismissed at the initial stage. Because if you hire somebody who knows what constitutes an actual violation, we can expedite that process if you, in fact, have not done anything wrong, or it is a mistake that has been rectified. Figuring out what the mistake was and how you can rectify it.

Because oftentimes, there are things you can do even after the fact in the bar complaint context to rectify it. For example, the client thinks that you didn't pay an expert witness, for example, and you can show the client, here's the invoices. Nothing prevents you from doing that. I paid the expert witness. Or the client thinks that they are owed money. Sometimes the answer is, even if you don't believe that they're owed money, just give them that money back because it can make it go away. It's like a few thousand dollars can solve the whole problem. That's honestly sometimes really worth it.

So that's in the bar complaint context. You can't negotiate your way out. If bar counsel is going to continue down its path, there's no negotiation of discipline at the end of it, but there's no "I can convince them that there's no there, there" when they actually did in fact violate a rule that bar counsel views as sufficiently egregious that it warrants an investigation.

In the malpractice context, it's about money. Understanding what the damages realistically are, understanding what the client's expectations are, and lawyer-to-lawyer conversations can be very fruitful on that. Because you take out the emotion, because a malpractice action can be very emotional. The clients can be very, very upset.

If you have two lawyers speaking about this in non-emotional terms, oftentimes you can come to a resolution much more quickly. But I also have seen tons of malpractice actions that are resolved via mediation. A great mediator is able to make a realistic assessment about what is at stake. Then it's about having both parties come to the realization about what's at stake, with the client realizing that the claim is worth less than he thinks it is, and the lawyer realizing that actually his mistake is worth more than he thought it was, and coming to some resolution that's shy of litigation.

Elise Holtzman: You talked about hiring a lawyer. That's got to be good advice, right? Because it's not only emotional for the plaintiff or the person bringing the—well, it's not emotional for the disciplinary committee, but it's emotional for the person that feels aggrieved in some way. I think it's also emotional for the attorney because to be accused like that can be very upsetting. So we know that it's a good idea.

If you are in a particular jurisdiction, are you only hiring counsel in your jurisdiction? Because I think if I recall correctly, you and your colleagues represent people in a variety of jurisdictions. So how does that work?

Hilary Gerzhoy: So in a malpractice action, malpractice is litigation. It's just litigation about lawyers. At our firm, we have a lot of litigators, ethics lawyers, and litigators. All of our ethics lawyers are litigators as well, who are licensed in a bunch of jurisdictions. So we will handle malpractice litigation across the country. You can often get pro-hoc'd into cases.

So if you don't have somebody licensed, you can be admitted for the purpose of that case. But we, with the number of lawyers we have, will really cover for any major jurisdiction where there is malpractice litigation. With respect to a bar complaint, it is very important that you hire a lawyer.

Well, one, you have to hire a lawyer that's licensed in that jurisdiction to handle that matter, but also that has expertise within the jurisdiction. So I do malpractice cases in Virginia, Maryland, D.C., and New York. All four of those places are very different. The bar complaint process is different. Disciplinary counsel is different. So you need to hire somebody who operates within that jurisdiction and understands how the bar complaint process and bar counsel operates. But lawyers can be licensed in multiple places and will handle matters there.

With respect to the outside counsel and outside counsel work that I do, like representing firms, because we have lawyers in so many jurisdictions and firms are really located in a finite number of cities, the vast majority, as a law firm, we are licensed in all of those major places. So we serve as outside general counsel to firms across the country who largely face similar issues in terms of risk mitigation. Like what are firms doing to reduce their potential risk? Those issues get mirrored across the country.

It tends to be much more practice-specific. Like a personal injury lawyer is facing different risks than a firm that's doing exclusively M&A transactions. So there's subject matter, but then there's also just general, you are operating a law firm. You take money from clients. There are risks associated with that. How do we reduce your risk?

Elise Holtzman: You kind of answered my question before I asked it, because I was going to ask you what are some of the steps that firms can take to avoid some of these risks and claims? It sounds like you're putting them into two categories. There are the risks of running a business and a business that is very highly regulated and that takes in people's money as expected to deliver a certain result to them. Then practice specific risks. Am I missing anything?

Hilary Gerzhoy: I think those are really the two categories. The business piece of it is, and I think a lot of lawyers don't think of themselves as business people. They think of themselves as lawyers. But what you are doing, if you exist in the private practice of law, is you are either running a business or you are a part of a business.

So what the people who you, things like training, onboarding, you have staff, you have lawyer staff, you have non-lawyer staff. How do you manage all of that? How does that all work? Where do clients get upset where there are mistakes in the process? What can you do to run your business in a way that is, as you said, it's a highly regulated business? It operates in a sphere where there's a lot of scrutiny and the stakes can be incredibly high.

For clients who have retained a lawyer, the stakes can be as high as they come. So I think there's that piece. Then there's just if you're operating in a practice, as you were mentioning, where it's a volume practice, personal injury, immigration, there are risks associated with that that are pretty unique. If you're operating in the world of smaller clients, bigger cases, large transactions, risk associated with that.

So I think understanding where you sit in the world of that and then making sure that you have thought about how to effectively manage against that. Because the other piece of this is general counsels at law firms are often full-time practicing lawyers themselves. And their job, the job of the general counsel, is to protect the firm. It's to protect the firm from risk, reduce risk, respond to situations as they arise that put the firm in jeopardy.

But doing that and having a full-time practice is incredibly hard because what you have to be is you have to be an expert in the rules of professional conduct. You have to be able to see where mistakes or where problems could arise before they have arisen and then manage them. So a lot of the work that I do, the outside general counsel work, is actually working with general counsels to offload some of that from them because they are also expected or want to have full-time practices themselves that have nothing to do with that general counsel work.

Elise Holtzman: Yeah, I think this is just another great example of why, as we move into the future, law firms of every size need to recognize that there are so many professionals out there that they can hire or they can have fractional CFOs or COOs or GCs or whatever it may be. Things have gotten so complicated. Lawyers are simply not in a position, from a time perspective or from a knowledge perspective, to manage all of these risks. So it's a good thing to be thinking about.

Hilary, as we wrap up our time here together today, I'm going to ask you a question that I ask all of my guests at the end of the show. There's a phenomenon called the curse of knowledge, where experts sometimes forget that what is so obvious and natural to them is not at all obvious to others. When it comes to avoiding the risk of malpractice claims or disciplinary action, especially in a world of rapidly evolving AI and other technologies, what's a principle or piece of advice that may seem obvious to you, but you think is important for lawyers, even the best and most ethical lawyers, to hear?

Hilary Gerzhoy: Most mistakes can be fixed. The feeling that lawyers get when they make a mistake is the instinct is, "I want to fix it right away, but I don't want to broadcast it to the world." Resist that instinct as much as humanly possible. Because the truth is that everyone makes mistakes, and most mistakes, if acknowledged and addressed in real time, can be fixed.

Maybe it's not perfect, but it is much, much better than avoiding it, burying it, trying to do something to make it look like it wasn't a problem at all, or what you actually intended to do this thing. None of that ends up working, but the consequences of doing it, as tempting as it can be, can really be calamitous to your career, and it can result in a massive claim.

So I think that's the biggest thing is knowing that everybody makes mistakes and that most of the mistakes can be fixed to some extent in real time. I think for those who run law firms, doing the best that you can to create a culture where people feel like they can report a mistake, because every associate will make mistakes. So if you've created a culture of fear where everyone is terrified that if they do something wrong, it is going to mean that they're fired or there's some massive consequence, that becomes really problematic and really dangerous to run an organization that way.

You know, if a lawyer has intentionally done something that is harmful to the firm or to a client, of course. But for a true mistake, you need to create an environment where lawyers feel like they can say that they did it because otherwise it can't be fixed at the point at which it really could have a meaningful consequence in terms of reducing damage.

Elise Holtzman: Yeah, fantastic advice. It's really important. There's so much conversation the last few years about law firm culture, and that's one of them. If people are motivated by fear, they're going to sweep everything under the rug, and you're going to find out about it the hard way.

So yeah. All right. Well, thank you so much for being here, Hilary. This was really, really interesting. You know, a little scary, which I guess is okay, because maybe that'll motivate some of us. So thank you for sharing all of your wisdom on this topic.

Thank you to our listeners for tuning in. If you've enjoyed today's show, please subscribe, rate, and review us at Apple Podcasts, Spotify, or your favorite podcast app. In the meantime, be bold, take action, and make things happen. We'll see you next time.