The $50 million judgment that mystery author Patricia Cornwell won against her former wealth managers in federal court this week should serve as a wake-up call to clients and managers alike.

The jury found that Cronwell’s former wealth managers—Evan Snapper and Anchin, Block & Anchin LLP—had breached both the standard of care for members of their profession and their fiduciary duty to their client. 

The case, which was filed in 2009 and tried in early 2013 in federal court in Boston, remains subject to post-trial findings by the court and rights of appeal. But the Boston Globe has reported that a federal judge could triple the Cornwell's award if its ruled that Anchin, Block & Anchin violated consumer protection laws.

 The stories told at trial presented two radically different versions of events. Cornwell contended that she trusted Anchin to manage her affairs and that they abused her trust through negligence and outright dishonesty. Anchin contended that Cornwell made the final decision on all matters, and that her holdings increased, overall, during their tenure as her managers. 

 Such differing views of the client-manager relationship and outcomes achieved are likely to be widespread given the current economic environment. Clients and managers should follow time-tested best practices for avoiding messy and protracted litigation of this sort. 

There are at least five precautions that can be taken:

• Review and update your engagement letters, which should set forth clearly the work to be done, the way in which fees will be charged and earned, and the state law that will govern the parties’ relationship.

• Document all time charges, bills, retainer fees, and expenses. Misunderstandings about how fees will be incurred are much easier to fix if they come to light in the short term, and are not left to fester over longer periods of time.

• Prepare summary reports of the projects your practice is working on for the client and, periodically, on investment results. 

• Send the client underlying financial records, as well as summary reports. Bulky documents that may have been cumbersome to store and exchange in the past can now be transmitted to clients electronically.

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