Reassurances that Lawyer Would Fix Mistake Do Not Toll Legal Malpractice Statute of Limitations in Tennessee

The statute of limitations for legal malpractice claims in Tennessee is one year from the date the action accrues.  Tenn. Code Ann. § 28-3-104(a)(2).  The “discovery rule” determines when the action accrues in most legal malpractice cases.  Tennessee’s discovery rule says that a plaintiff’s time limit to file suit does not start to run until the plaintiff knows or in the exercise of reasonable diligence should know that he or she has an injury as a result of wrongful conduct by a defendant. 

Recently, in Aleo v. Weyant, the Tennessee Court of Appeals examined a case involving a legal malpractice claim against a family law Attorney for failing to include a provision in a marital dissolution agreement and final decree of divorce specifying that the Wife would receive 50% of the Husband’s military pension and that she would be named as beneficiary of the pension.  Attorney raised a statute of limitations defense and the trial court granted summary judgment.

The record showed that Wife went to a Staff Judge Advocate more than a year before she filed suit against Attorney and was advised by the Staff Judge Advocate that she would not get part of Husband’s pension benefits because the divorce decree was silent about that asset.  Since the malpractice lawsuit was not filed within one year of Wife learning that she would not receive pension benefits, the Court of Appeals agreed with the Trial Court and upheld summary judgment.

Wife confronted Attorney after meeting with the Staff Judge Advocate and learning that she would not get the pension benefits and Attorney allegedly reassured her that he would fix the problem and make it right.

Wife attempted to argue that Attorney’s reassurances to her that he would fix things after she discovered the wrong concealed her loss.  She argued that she didn’t actual discover her loss until June 2010 (less than a year before she filed suit) when she learned that the time to file a Rule 60 motion (for relief from judgments or orders) had expired.  The Court of Appeals disagreed with Wife and found that a plaintiff cannot wait until she knows all of the consequences of the defendant’s wrongful conduct before bringing suit.  The date a plaintiff knows there is an injury, the statute begins to run.

Wife also attempted to argue that Attorney should be equitably estopped from raising a statute of limitations defense because, she argued, Attorney misled her and prevented her from recognizing the injury by promising to fix it and make it right.  The Court of Appeals explained that vague statements and ambiguous behavior will not carry the day on an equitable estoppel claim.  Instead, to succeed on an equitable estoppel defense, the plaintiff must show that the defendant misled the plaintiff into failing to file suit by making specific promises and inducements that the defendant knew or should have known would cause the plaintiff to delay filing suit.  The court found that Wife had not provided sufficient evidence to win on equitable estoppel.

The Court of Appeals also briefly addressed Wife’s claim for negligent infliction of emotional distress against Attorney.  The court reminded us of the elements of NIED:

            1.         Defendant owned a duty of care to the plaintiff;

            2.         Defendant breached the duty;

            3.         Plaintiff suffered a loss;

            4.         Causation;

            5.         Plaintiff suffered a serious emotional injury as a result.

            Wife testified that she had not received any treatment from a psychologist or psychiatrist, nor was she taking an medications as a result of her alleged emotional injury.  The trial court and Court of Appeals agreed that Wife had not presented sufficient evidence to sustain a claim for NIED.  The court did not address the issue of whether a duty existed in the context of a lawyer / client relationship.

This result is consistent with the law of statute of limitations applied to other professionals in Tennessee.

 

Lawyers Without Legal Malpractice Insurance

I am fortunate to receive many calls on many types of cases, some of which fall outside of my normal practice area.  i decided I would seek out a lawyer to whom I could associate on a particular type of case - this lawyer enjoyed a good reputation on cases of this type.  I called him and had a general discussion about the type of calls I was getting and inquired whether he was interested in receiving some referrals.

He said he was, and we had a discussion about how we could work together to assist future clients.  I had a good feeling about the potential of working together.

Then, I asked him to confirm that he carried legal malpractice insurance.  He said he did not,  I told him I could not sleep at night if I did not have legal malpractice insurance for our firm.  He said that if he got sued and put in a position of probable financial loss he would  file bankruptcy and avoid the loss.

And that ended that.  This lawyer will receive no referrals from me.

I have two problems with his position on this subject.  First, he did not have legal malpractice insurance.  I cannot understand why any professional would not have professional liability insurance.  I don't care how good you are (or think you are) at your profession, sooner or later you will make an error that can't be fixed that will harm a client.  It will happen.  Or you will be accused of doing so.  In any event, you need professional liability insurance to assist you in hiring a lawyer, providing you with a defense, and paying the claim if it is determined to be valid.  

But even more troubling is the attitude of this lawyer.  By suggesting that he would seek bankruptcy protection in the event that he caused harm to the client, he demonstrated to me that we did not share the same attitude about the relationship between lawyers and clients.

I purchase professional liability to protect myself, but more importantly I purchase it to protect my clients if I make an error that causes them harm  I could save tens of thousands of dollars a year by not purchasing insurance, hoping that I didn't make a negligent error that hurt a client, and hoping that I could readily afford to pay for the consequences of any such error.  But I don't want my clients to take the risk that I cannot pay,and I don't want them harmed by my error.  Therefore, I purchase insurance to protect them - and me - from financial loss.

I can't imagine not wanting to give that financial protection to a client.  I just cannot imagine it.  I think most lawyers feel the same way.

Coincidentally, I received an email from a well-known Nashville lawyer about the same time as the discussion described above.   It turns out that he investigated a legal malpractice case and neither the potential lawyer defendant or the lawyer's firm had malpractice insurance.  The client was left holding the bag.

What in the heck is going on?  Is the legal economy so bad that lawyers are dropping their malpractice insurance?  Or is it just that there is just some number of lawyers out there who are willing to go bare, risking their own net worth and not having any particular concern for their clients? Or do these lawyers just think that they won't make a mistake?  Really, what is going on?

One last point to ponder.  Tennessee law permits fee splits in referrals of personal injury and wrongful death cases if (a) the fact of the referral fee is disclosed to the client and (b) each lawyer remains jointly and severally liable for the work of the other.   Remember that next time you want to make a referral.

 

 

Causation in Legal Malpractice Cases

Legal malpractice cases against trial lawyers generally require proof of "the case within the case." That is, a legal malpractice plaintiff must prove that the lawyer defendant was negligent and that the negligent acts or omissions caused an injury to the plaintiff.  The "causation" factor gives rise to the proof of the case within the case, i.e. would the plaintiff have prevailed in the first case but for the negligence of the attorney.

This is fair, and is the exact same analysis as we apply to others who are sued for professional negligence.  For example, if a health care provider commits negligence in the care of a patient and a wrongful death suit is filed, the patient's family must prove not only the negligence but also that the negligence caused a death which would not have otherwise occurred.  If the evidence tends to show that death was inevitable regardless of the care given by the health care provider, the provider will not be liable for wrongful death damages regardless of the existence or extent of his or her negligence.

Is expert testimony admissible in a legal malpractice case on the causation issue?  That is, can a plaintiff in a legal malpractice case call an expert to opine what a fact-finder would have done in the underlying case but for the negligence of the defendant lawyer?

The Georgia Supreme Court recently answered this question "no."  In Leibel v.Johnson, S11G0557 (June 18, 2012), the legal malpractice plaintiff called an expert to testify that the plaintiff's evidence was in her favor in the underlying case.  The Georgia High Court said that the evidence should not have been admitted because the issue of what would have happened in the trial but for the negligence of counsel was for the jury in the second trial.  

In reaching this result, the Georgia Court looked to an opinion of the Wisconsin Supreme Court in the case of Cook v. Continental Casualty Co., 180 Wis. 2d 237, 249-250 (509 NW2d 100) (Wis. App. 1993).  Cook said this about the trial of legal malpractice cases:

There must first be a determination that the lawyer was negligent, that is, whether he or she violated the duty to exercise a reasonable degree of professional care, skill, and [diligence]. If the jury determines that the lawyer fulfilled this standard of care, that ends the case. If, however, the jury determines that the lawyer was negligent, the case moves on to the second phase, the so-called "suit within a suit," to determine whether the client was, in fact, damaged by that negligence. Thus, the ultimate goal of the "suit within a suit" is to determine what the outcome should have been if the issue had been properly presented in the first instance. That determination, however, does not require that the jury in the malpractice action
determine what the actual jury in the underlying action would have done; rather, the second jury is to determine what a reasonable jury would have done if the case had been tried differently. Thus, the jury in the malpractice action is permitted to substitute its own judgment for that of the jury in the underlying action.
The logic of this decision compelled the Georgia Court to conclude that "the jury in the malpractice case was not being asked to decide what a prior jury would have done, it was merely being asked to do exactly what any jury in a discrimination lawsuit would do, which is, evaluate the evidence in the case and decide the case on the merits. This is a task that is solely for the jury, and that is not properly the subject of expert testimony."
 
The Georgia and Wisconsin case law makes good sense in legal malpractice cases against trial lawyers where the underlying case was at the trial court level.  However, what happens if the legal malpractice by the trial lawyer involved error on appeal of a case.  For instance, assume that a trial lawyer  tried and lost a case but then missed the deadline for the appeal.  As a result, the case is dismissed and the lawyer is sued for legal malpractice.  There is no allegation that the underlying case was mishandled in any way.  The sole allegation of malpractice is that the appeal deadline was missed.  A jury trial is sought in the legal malpractice case.  Will expert testimony be permitted on what the appellate court would have done had the appeal been timely filed?  Does a jury decide that issue?  Or is that a pure question of law for the trial judge (and any reviewing court)?
 
That topic is for another day.

Plaintiff's Attorney in Wrongful Death Case Owed Duty to Minor Beneficiaries

The defendant and his law firm was hired to bring a wrongful death action for decendent's (Anderson’s) estate and to assert loss of consortium action by Anderson’s wife. The case was dismissed, arguably after the experts in the case were thrown out after a Daubert challenge..  Lawyer did not timely appeal the dismissal of the case. Several years later, Anderson’s two children – one still a minor – sued Atty for malpractice. They asserted the statute of limitations for malpractice was tolled by their infancy. Atty resisted discovery and quickly moved for summary judgment, asserting he had no attorney-client relationship with the children. 

Notably, Pete had not asserted a claim for damages for the children  

The trial judge dismissed the case, saying that   did not have privity with Pete, and thus did not enjoy an attorney-client relationship with Pete and lacked standing to sue for professional negligence.

On appeal, the children argued that

(1) that an attorney-client relationship actually existed and is supported by Elizabeth's [ the decedent's wife] reasonable belief that Pete was representing her children as well as herself and the Estate; (2) that although the wrongful death claim was brought on behalf of the Estate, an estate is only a nominal party in a wrongful death action and the real parties in interest are the beneficiaries under the statute (which included Elizabeth, Malik, and Michael in the present case); and (3) in the alternative, even if privity did not exist, an attorney in this jurisdiction is liable for damage caused by his negligence to any party intended to be benefited by his performance.

The Court found that a factual issue was present on the issue of whether the decedent's wife believed that Pete was representing the children as well as the Estate.  However, the Court went further and ruled as follows:

 if Pete is found not to be in privity with Michael and Malik because discovery reveals that the parties contracted for him to represent Elizabeth solely and not the children, he will still have owed duties to Michael and Malik as intended beneficiaries of the wrongful death action. Thus, the result is inescapable that Pete owed a duty to Michael and Malik — whether as attorney to client or as attorney to intended beneficiary.  [emphasis supplied by the Court]

My belief is that the same result would be reached if this case had arisen under Tennessee law.  Under Tennessee wrongful death law,  certain people have the right to file a wrongful death suit, but they bring the case on behalf of beneficiaries.  Those beneficiaries are usually known before suit is filed.  The beneficiaries have no right to file suit on their own unless they fall within the definition of those authorized to file suit.  Thus, they must depend on the named-plaintiff to protect their interests.  It only makes sense that the lawyer owes a duty to the beneficiaries.

Let me hasten to add that I have no idea whether this claim has any merit.  The question presented was  one of standing to sue, and nothing else.  

The case is Anderson v. Pete,  No. 2010-CA-000472-MR, (KY. Ct. App. Oct. 7, 2011).

Can An Insurance Company Bring a Legal Malpractice Claim Against Defense Counsel It Hired For Its Insured?

I serve on the Standards Committee of the National Board of Trial Advocacy, a division of the National Board of Legal Specialty Certification.  Our members have a duty to report legal malpractice claims that have been filed against them, so from time to time I see claims filed by liability  insurance companies against defense counsel that the companies hired to defend insureds.

So, when I saw this article in the Spring 2011 edition of the Federation of Defense and Insurance Counsel Quarterly, I thought it deserved to be seen by a broader audience. 

The article explains that

When an attorney commits malpractice in defending an insured, the damage is often  shouldered by the insurer rather than the insured.  Even if the insured suffers some of the  damage, the amount may not be sufficient to motivate the individual to pursue a malpractice  claim against her attorney, especially given the fact that she has likely already been involved  in litigation for some time. The insurer, on the other hand, likely suffers the lion’s share  of the damage caused by the malpractice. As one court noted, it is inequitable to require an insurance company to absorb the loss due to negligent defense counsel without a legal remedy.  Accordingly, allowing these claims provides a remedy to the insurer when the insurer has suffered detriment due to the negligence of its hired defense counsel.
 
(Footnotes omitted.)
 
The article then gathers and explains the law on the issue of the right of the insurer to bring a claim and the various theories of recovery.
 
This article will give a jump start to those researching the law on the right of an insurance company to sue a defense lawyer for legal malpractice.

Kentucky Lawyers Sued By Client

A plaintiff in a car accident lawsuit has become a legal malpractice plaintiff.

Sharon Langford has sued a law firm with office in Kentucky and Florida and made some very serious allegations.   Basically, she was alleged to seek health care for her injuries from a specific provider and  that there was a business relationship between the provider and the lawyers.  She also alleges that the provider and the law firm advised her not to submit the bills to her health insurer and that she did not receive documentation of the charges made by the health care provider.

She alleges that the undisclosed relationship between the health care provider and the lawyers resulted in financial and other losses.   Here is a copy of the complaint.

I have no idea whether the allegations of the complaint are true and, quite frankly, I hope they are not.  I believe that there is nothing wrong with a lawyer referring a client to a competent doctor for treatment.  Likewise, there is nothing wrong with a lawyer recognizing a health care provider's lien on a recovery.  But these allegations of misconduct go far beyond that and, if true, are something that should be condemned by all responsible lawyers. 

Thanks to Shannon at The Kentucky Trial Court Review for informing me about this litigation.

Legal Malpractice Case - An Oldie But a Goodie

 Legal Malpractice Law Review brought to my attention an interesting legal malpractice case from 1979 in Pennsylvania, Schenkel v. Monheit, 226 Pa. Super. 396 (Pa. Super. Ct. 1979). 

The plaintiff's lawyer in the underlying case (and now the defendant) failed to sue the original defendant's employer in an auto accident case.  Plaintiff received a jury verdict of $10,000 in the original case, but said he would have received more had the employer, a corporation, been sued.  So, he sued his lawyer seeking the "extra" money.

The appellate court in the malpractice action disagreed, saying that the corporate employer's liability was vicarious only and that joining the employer would have only enhanced collectability of the judgment.  The failure to add the employer did not cause damage to the plaintiff because the original judgment was collected in full.

Do you agree or disagree with this result?  As you evaluate your answer, remember T.P.I - Civil 1.04:

The fact that a corporation is a party must not influence you in your deliberations or in your verdict.  Corporations and persons are equal in the eyes of the law.  Both are entitled to the same fair and impartial treament and to justice under the same legal standards.

Also remember that jurors are presumed to follow the instructions of the trial court.  See, e.g. State v. Williams, 977 S.W. 2d 101 (Tenn. 1998).

Texas Supreme Court Weighs In On Collectability Issue in Legal Malpractice Cases

I have written in the past about whether a plaintiff in a legal malpractice action arising out of the alleged mishandling of the plaintiff's underlying case should have to prove not only that the firm committed malpractice and  that damages would have been awarded if malpractice had not occurred but also that the damages were collectable. This post will link you other posts on this subject.

The Texas Supreme Court has ruled that "(1) the amount of damages that would have been collectible in the prior suit is the greater of the amount of a judgment for damages that would have been either paid or collected from the underlying defendant's net assets; and (2) the time at which collectibility is determined is as of or after the time a judgment was first signed in the underlying case."

The case is AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. v. NATIONAL DEVELOPMENT AND RESEARCH CORPORATION,  No. 07-0818 (Texas Oct. 30, 2009).  Read the opinion here.

Legal Malpractice Avoidance Checklist

I know I did a post on this subject a couple of weeks ago, linking to a site that had some techniques to help lawyers avoid malpractice claims.  But here is another site with yet another handy list of fourteen ways to avoid a claim.

A sample taken directly from the site:   

11. REJECTING CERTAIN CLIENTS AND CASES

As attorneys gain experience, they learn that certain clients and certain cases are better off rejected at the outset. Some red flag warnings follow:

  • Beware of the client who is changing attorneys.
  • Look out for the case that has already been rejected by one or more other firms.
  • Avoid the case that has an element of unavoidable urgency.
  • Beware of the client who has already contacted multiple government representatives to plead his case.
  • Beware of the client who wants to proceed with his case because of principle and regardless of cost.
  • Beware of a client who has done considerable legal research in propria personal on his case.
  • Beware of the client who is obviously recognizable as being impaired by chemical substances, alcohol, drugs, etc.
  • If your first impression of the client or his course of action is unfavorable, think twice before accepting his case.
  • If you and your client cannot easily agree on fee and retainer, you may be dealing with a difficult client.

 

Legal Malpractice Lawsuits On the Upswing?

This post from the New York Attorney Malpractice Blog includes the full text of an article from New York Lawyer titled "Legal Malpractice Cases May Surge as the Economy Tanks."

The article says that " [a] recent American Bar Association (ABA) study that looked at legal malpractice claims filed between 2004 and 2007 found that the total number of claims increased by more than 36% compared to the previous three-year period."  CNA expects a increase in claims this year that are related to the downfall in the economy.

Avoiding Malpractice - Tips for Lawyers

The American Bar Association has a nice paper titled "The Top Ten Malpractice Traps and How to Avoid Them."  The paper is excerpted from  "Desk Guide Legal Malpractice."  Not all of the "traps" are applicable to those who do tort work on a full-time basis, but there is a lot to be learned from this 11-page document.

Here it is.

Ohio Supreme Court Addresses Damages Issue in Legal Malpractice Cases

The Ohio Supreme Court has ruled that a plaintiff in a legal malpractice case must prove the collectibility of damages in "the case within the case" to recover them from a negligent lawyer.  In doing so, it specifically rejected the notion that the defendant lawyer must prove the lack of collectibility as an affirmative defense.

Colorado, Iowa, Massachusetts, Minnesota, Nebraska, and South Dakota have a similar rule.  I think Tennessee does, too, but there is one case that suggests to the contrary.

For my previous posts on this subject go here.

The case is Paterek v. Peterson & Ibold,  No 2006-1811 (Ohio June 18, 2008).  Read it here.

 

Causation in Legal Malpractice Cases

Negligence without causation is like a biscuit without country ham (or blackberry jam). 

Now, I'm not so sure that juries pay as much attention to the concept as lawyers and judges, but causation is an element of every cause of action in the tort world.

This decision out of Michigan reminds us that causation must be proved in a legal malpractice case.  The lawyer blew the deadline for filing a notice of appeal - clearly negligence - but was not found liable as a matter of law because the appeal was denied on the merits.  Read the decision in McCabe vs. Miller & Associates, LLP,  No. 275498 (MI. Ct. App. October 9, 2007) here.

Settlement Doesn't Bar Malpractice Claim

Rudolf fired his lawyers after a jury trial that resulted in a 50% finding of comparative fault and a total verdict of $250,000.  He then hired a new lawyer, got a new trial, and then settled his case for $750,000. 

Next, he sued his original lawyers for malpractice, saying that he failed to submit an appropriate jury instruction in the first trial and failed to object to the charge as given.  "In his damages claim, plaintiff sought payment of the legal fees associated with the motion to set aside the verdict and the appeal, as well as the expert witness fees and expenses incurred for the second trial. Plaintiff also requested approximately $190,000 in interest that would have accrued at nine percent per annum on the $750,000 had that sum been awarded at the conclusion of the first trial in January 2002."

The Defendants admitted negligence, but denied that Plaintiffs were damaged by it.  The New York court disagreed, saying that "plaintiff incurred litigation expenses to correct defendants' error and paid a second time for expert fees for the retrial. These expenditures were readily ascertainable and calculated at $28,703.27 by Supreme Court. Although plaintiff achieved a $750,000 settlement as a result of the second trial, that sum represented compensatory damages in the underlying personal injury action and was not designed to reimburse plaintiff for the fees and expenses caused by
defendants' negligence. We therefore agree with Supreme Court that plaintiff is entitled to consequential damages of $28,703.27."

The court rejected the claim for interest.

The case is Rudolf v. Shayne Dachs et al,   N.Y. Ct. App. No 52 ( May 2007)    Read it here.

Litigation Privilege Bars Claim Against Lawyers

The Hawaii Supreme Court has ruled that two law firms who represented a party in a business dispute cannot be sued by the adversary party for intentional interference with contractual relations.

Plaintiff had a dispute with a business partner - the two were general partners of a partnership that ran a hotel.  The defendant law firms represented the non-plaintiff partner.  The dispute ended up in arbitration, and Plaintiff demanded to see certain books and records of the hotel partnership.  The law firms took possession of those documents, and Plaintiff sued them for interfering with its right to access to the books and records.  The law firms said, inter alia, that the suit was barred by the litigation privilege.

The Court did a nice review of the history of the litigation privilege and ruled that the lawyer's conduct was protected by the privilege.  The Court explained that the fact that the arbitration process was temporarily stayed at the time the dispute arose  was immaterial.

The case is Kahala Royal Corporation v. Goodsill, Anderson, Quinn and Stiffil,  Nos. 26669 and 26670  (Jan. 7, 2007).  Read it here.

Like you, I have read a lot of appellate court opinions over the years but this one has a feature I have never seen before.  Not only did each of the justices sign the opinion, but each of them signed it without the presence of the traditional signature line for each of the justices.  I assume that is some sort of tradition of the Hawaii Supreme Court.  I like it.

Update on Legal Malpractice Issue

Last Fall I wrote several posts ( here and here) on a one portion of the causation issue in legal malpractice cases.

A summary of my view:  I believe that a plaintiff in a legal malpractice case arising out of a claim that a personal injury case was mis-handled must prove that amount of damages that would have been collectible in the underlying tort case. First, the plaintiff would ordinarily prove the amount of liability insurance, if any, available to the original defendant. Second, if the plaintiff wants to collect a judgment more than the amount of the liability insurance originally available, he or she should have to prove that it was more likely than not that the plaintiff could have collected more than that amount from the tortfeasor. This will require proof of the income, assets and liabilities of the original defendant. In appropriate cases, the lawyer defendant will want to demonstrate that the income, etc. of the original defendant is such that the plaintiff cannot prove that the judgment would not have been collectible above the amount of liability coverage or that the evidence offered is insufficient to prove that any monies could have been obtained over and above the insurance monies.

I think the burden of proving collectibility should be on the plaintiff because it should be deemed part of the causation argument. More specifically, the plaintiff has to prove damages by reason of the alleged malpractice of the lawyer. (The lawyer failed to have process re-issued in a timely fashion, and the case was dismissed with prejudice). That means plaintiff must prove that what damages, if any, he would have been able to collect in the underlying tort action against the original defendant. The plaintiff should not be able to collect more damages from the lawyer defendant that he would have been able to collect against the original defendant. What the plaintiff lost was the right to proceed to trial against the original defendant, and therefore what he should be able to collect from the lawyer is what he could have collected from the original defendant.

I am defending a lawyer in such a case right now and we are going to trial in less than two weeks.  The trial judge has ruled that the plaintiff has the burden of proving collectibility, and the judge has decided that the issue will be handled this way a trial:  We will try the case and ask the jury to determine the amount of damages, if any, that the plaintiff in the automobile wreck (my client had admitted he made an error).  Then, if the jury finds that the damages exceed the liability insurance limits available to the original tortfeasor, the same jury will hear additional  evidence on the collectibility issue.  The burden of proof will be on the plaintiff to show how much of the judgment would have been collectible.

As I have said before, I have absolutely no problem with holding lawyers accountable for their negligence. My point is that the standard of liability, causation, and damages should be the same as it is for everyone else. No better, no worse. 

Failing to Warn of Risk of Loss

The Court of Appeal of California has ruled that a lawyer may be sued for failure to warn a client that the failure to settle a claim against the client  would put the client at risk for paying the adversary's attorneys fees.  The Court held that it was not appropriate to dismiss the client's claim against the attorney on that issue, and remanded the case to the trial court for consideration of the merits.

There is no need to state all of the facts here, but suffice it to say that the plaintff was upset about having the pay their original adversary's attorney's fees of over $600,000 (and their own attorney over $350,000) in a dispute that originally involved less than $20,000.

The case is Charney v. Cobert, B188087 (Cal. Ct. App. Div. 7 11/28/06); read it here.

Legal Malpractice Lawyer Interviewed

Here is an interesting article on a lawyer who sues lawyers.

No Locality Rule for Lawyers

The Tennessee Supreme Court has rejected the notion of a locality rule for lawyers in legal malpractice cases.

In Chapman v. Bearfield, No. E2004-02596-SC-R11-CV  (Tenn. S. C., November 6, 2006), the Court said that "a single, statewide professional standard of care exists for attorneys practicing in Tennessee and that expert witnesses testifying in legal malpractice cases must be familiar with the statewide professional standard of care." 

Stated differently, "[a]n attorney practicing in Tennessee, then, must exercise the ordinary care, skill, and diligence commonly possessed and practiced by attorneys throughout the state. Indeed, while there may be local rules of practice within the various judicial districts of our State, there are no local standards of care. There is only one standard of care for attorneys practicing in Tennessee: a  statewide standard."  (Emphasis supplied by the Court.)

The Court noted that the locality rule applicable to health care providers was a creature of statute, not common law.  The Court rejected the argument that a locality rule should be applicable to lawyers, giving three public policy reasons for its decision:

"First, if a local professional standard of care prevailed, plaintiffs might have difficulty proving their legal malpractice cases because local attorneys might not be willing to speak against their colleagues.  Second, local variations in the standard of care could create an inefficient and inequitable morass of professional standards of care, reducing the likelihood that some attorneys would face malpractice claims while increasing the likelihood for others. Finally, the emergence of the internet as a primary tool for legal research undercuts historical transportation and communications arguments favoring local variations in the standard of care."  (Citations omitted.)

Read the opinion here.

Yesterday's Post

Believe it or not yesterday's post brought in more comments than any other post in a 24-hour period.  I have published some of the comments; other comments seemed to address personal situations so I thought it best to pass on those.

Let me respond to several  of the comments.  Bill said "a judgment that is seemingly noncollectible today may be collectible tomorrow. Have you given any thought to this argument? In other words, what kind of proof should a victim of malpractice be required to produce?" 

First, the plaintiff should have to prove the amount of liability insurance, if any, available to the original defendant.  Second, if the plaintiff wants to collect a judgment more than the amount of the liability insurance originally available, he or she should have to prove that it was more likely than not that the plaintiff could have collected more than that amount from the tortfeasor.  This will require proof of the income, assets and liabilities of the original defendant.  In appropriate cases, the lawyer defendant will want to demonstrate that the income, etc of the original defendant is such that the plaintiff cannot prove that the judgment would not have been collectible.

At the end of the day the jury will decide whether it is more likely than not whether any judgment over and above the amount of the liability insurance available to the original defendant would have been collectible or not.  Each of one us settles cases every week (maybe every day, if we are fortunate) for the available policy limits because we understand the difficulties in collecting judgments in excess of that amount.  That does not mean that the plaintiff  in a legal malpractice case should be limited to collecting from the lawyer defendant only the amount of the original defendant's liability insurance, but we all know that in high percentage of cases that is all of the monies that are available and most plaintiffs will accept a "policy limits" settlement upon reasonable proof that no other monies are readily available.

For instance, take a PI case that 10 reasonable lawyers would agree is worth $50,000.  The defendant in the case has only $10,000 in liability coverage.  The defendant has a minimum wage job and lives in an apartment.  Virtually every plaintiff's lawyer, and virtually every plaintiff. would settle that case for $10,000.  There is no reason to force the defendant into bankruptcy or otherwise attempt to collect the balance of the value of the case.

Should that case be worth any more if the plaintiff's lawyer blows a statute and the plaintiff cannot sue the original defendant?  I don't think so.  The plaintiff should be in the position he or she should have been in but for the malpractice.  And that is a judgment against the plaintiff's lawyer for $10,000.

Next, take the same case and assume that the defendant owns a home with little equity in it, makes $25,000 per year, and has car payments and credit card debt.  Once again, virtually all plaintiff's lawyers and virtually all plaintiffs settle that case for $10,000.  Should the value of that case be increased because the "new" defendant is a lawyer?

Now, assume the same case and assume that the defendant owns his own home, has an 80% mortgage against it, and makes $100,000 per year.  In that case, most plaintiff's lawyers and most plaintiffs would not compromise a $50,000 case for $10,000 in coverage.  In such a case, either an excess judgment is obtained, a settlement is reached with the original defendant picking up some portion of the excess, etc.  If the plaintiff's lawyer blows a statute under those facts, the jury should decide the collectibility of the excess judgment, and the burden should be on the plaintiff to prove it.  Will the jury be able to determine to a moral certainty whether the original judgment would have been fully collectible?  No.  Juries are not called upon to do so.  Juries determine facts under a "more likely than not" standard and apply those facts to the law.  They will do the best they can given the facts they are presented and the arguments of able counsel.  But, in my opinion, the burden of collectibility must be on the plaintiff because, as I explained in my earlier post, in my opinion it is part of the causation requirement ("my lawyer's malpractice more likely than not caused me this financial loss").

True, a judgment that may not be collectible today may be collectible tomorrow.  The original defendant may win the lottery.  Or may win a bet that Vanderbilt will win the NCAA football championship.  Anything could happen (well, maybe not Vanderbilt winning the NCAA, but you get my point).  But what is likely to happen?  What is likely to happen is what happens every day - and that is that "excess" cases are settled for policy limits (sometimes less!) to avoid the cost and emotional turmoil of litigation.  And while a plaintiff should be permitted to argue to the jury that he or she would not have accepted a settlement of "policy limits" from the original tortfeasor and would have gone to trial and obtained a judgment, he or she should also have to convince a jury that the "excess judgment" was something other than a piece of paper.

James said "what about the client's inconvenience, attorneys' fees, loss of use of the money, etc. It is the price we attorneys must pay for screwing up...a penalty for abusing our clients' trust. "  Sorry, James, but I disagree.  No other defendant has to pay damages for a litigant's inconvenience, fees, loss of use of money, etc.  Why should a lawyer defendant? 

Believe me, I have absolutely no problem with holding lawyers accountable for their negligence.  My point is that the standard of liability, causation, and damages should be the same as it is for everyone else.  No better, no worse. 

"It is the price we attorneys must pay for screwing up...a penalty for abusing our clients' trust."  James, that position does not make any sense to me.  Blowing a statute is not a breach a trust, it is an error.  It is an error that is extremely difficult to defend, and indeed most attorneys readily admit legal responsibility for it, but it is not a "breach of trust."  No other defendant pays "a penalty" for making a simple error.  Instead, they are held liable for the damages they cause.  Why should lawyer defendants be held to a different standard?

True, if a lawyer commits acts that are reckless, intentional, etc. that would give rise to a claim for punitive damages the plaintiff should be able to seek them.  But the vast majority of legal malpractice claims, like the vast majority of other negligence actions, are simple acts of negligence.  And in such cases the only "penalty" should be the accountability for compensatory damages. 

Perhaps what James is arguing that lawyers should accept a higher level of financial responsibility of harm than any other defendant.  I disagree.  Lawyers already do a better job than many professionals of accepting responsibility for their errors.  I have seen hundreds - hundreds - of letters from lawyers to clients admitting that they have made a mistake and encouraging their client to seek the advice of a lawyer.  (Indeed, in Tennessee, lawyers opposed a statute of repose that would have limited their responsibility for harm.  Can you imagine a doctor doing that?)  But, at the end of the day, lawyers should be subjected to the same standard as anyone else if they find themselves on the wrong end of the "v" in a malpractice suit.

Thanks for your comments.

 

Collectibility and the Burden of Proof

I am currently defending a legal malpractice case for a friend of mine and have insisted that the plaintiff prove that amount of damages that would have been collectible in the underlying tort case.  I have a hearing on this issue coming up shortly; the trial is this Winter.

I think the burden of proving collectibility should be on the plaintiff because it should be deemed part of the causation argument.  More specifically, the plaintiff has to prove damages by reason of the alleged malpractice of the lawyer.   (The lawyer failed to have process re-issued in a timely fashion, and the case was dismissed with prejudice).  That means plaintiff must prove that what damages, if any, he would have been able to collect in the underlying tort action against the original defendant.  The plaintiff should not be able to collect more damages from the lawyer defendant that he would have been able to collect against the original defendant.  What the plaintiff lost was the right to proceed to trial against the original defendant, and therefore what he should be able to collect from the lawyer is what he could have collected from the original defendant. 

Illinois Legal Malpractice Blog has a post that highlights a recent case taking the opposite view but goes on to cite cases that set forth the majority (and better reasoned) view.

There is one, unreported opinion from a Tennessee appellate court that discusses the issue and, in dicta, it says the collectibility is a non-issue.  In other words, if this case is given any weight, a plaintiff in a legal malpractice case can collect more against the lawyer defendant than he or she ever could have collected against the original tortfeasor.  That is simply ridiculous.

 

When Can A Guardian's Lawyer Be Held Liable to the Gaurdian's Ward?

In Pederson v. Barnes the Alaska Supreme Court was faced with the issue of the circumstances under which a guardian's lawyer is liable to the ward for  the guardian's wrongdoing.

Aiken became Barnes' guardian after Barnes' parents died.  (Barnes was a minor at that the time of their death.) Pederson represented Aiken in the proceedings to become Barnes guardian.   In about two years the $111,000 estate was almost entirely dissipated.

Barnes sued Aiken and Pederson and another lawyer working with Pederson.  The lawyers moved for summary judgment, arguing that they did not have any actual knowledge of wrongdoing by Aiken.  The motion was denied, and the jury returned a verdict against Pederson for compensatory and punitive damages.

The Alaska Supreme Court ruled that "Section 51 of the  Restatement (Third) of the Law Governing Lawyers articulates the  correct standard for determining the circumstances in which a  guardian's lawyer owes a duty to the guardians ward.  Section 51  explains that


a lawyer owes a duty to use care . . . .

(4) to a nonclient when and to the extent  that:

(a) the lawyer's client is a . . . guardian[;]

(b) the lawyer knows that appropriate action by the lawyer is necessary with respect to a matter
within the scope of the representation to prevent or rectify the breach of a fiduciary duty owed by the client to the nonclient, where (i) the breach is a crime or fraud or (ii) the lawyer has assisted or is assisting the breach;

(c) the nonclient is not reasonably able to protect its rights; and

(d) such a duty would not significantly impair the performance of the lawyer's obligations to
the client."

Remember, however, how the Restatement defines actual knowledge.  "The Restatement defines know as having actual  knowledge or, alternatively, reason to know, which is further  defined as having information from which a person of reasonable  intelligence or of the superior intelligence of the actor would  infer that the fact in question exists."  (Restatement (Third) of the Law Governing Lawyers 51 cmt. h.)(emphasis added).

The Court held that there was sufficient evidence from which the jury could find that Pederson had "several warning signs of Aiken's misconduct" and therefore  "had  enough information from which to infer, and thus had reason to  know, that Aiken was defrauding [Barnes]." 

However, the Court reversed the verdict on compensatory damages because, under Alaska law, liability was "several" rather than "joint and several."  The Court also reversed and dismissed the punitive damage claim.

 

Once again, the case is Pederson v. Barnes, Supreme Court No. S- 11621 ( Alaska S. Ct. July 21, 2006).  Read it here.

 

 

 

 

 We adopt the Restatement standard and
conclude that liability exists only if the lawyer knew or had
reason to know of the wrongdoing.

Failure to Appeal Cases

When a lawyer is sued for negligence in conjunction with the appellate process who decides whether or not the appeal would have been successful, judge or jury?

The judge makes the decision, according to the Illinois Supreme Court.  The Court said that "the issue of proximate cause in an appellate legal malpractice action is  inherently a question of law for the court and not a question of fact for the jury."

The case is Governmental Insurance Exchange v. Judge, Docket No. 100668 (Ill. S.Ct. May 18, 2006).  Read it here.

Court Allows Executors to Sue Attorneys Who Drafted Will

The Texas Supreme Court has ruled that executors of an estate can sue the decedent's attorney for malpractice for negligently providing estate planning advice.

In Belt v. Openheimer, Blend, Harrison & Tate, Inc., No. 04-0681 (May 5, 2005), the executors claimed that poor estate planning cost the estate $1.5M that could have been avoided by competent estate planning. The defendants argued that they owed no duty of care to anyone outside the attorney-client relationship, relying on a prior Texas decision which did not permit trust iciaries to sue a lawyer who drafted a trust which was set aside as invalid. (Noe: Texas is in the minority in this position. "In the majority of states, a beneficiary harmed by a lawyer's negligence in draftting a will or trust may bring a malpractice claim againt the attorney, even though the beneficiary was not the attorney's client."

Under these facts, however, the Texas Supreme Court found that a duty existed. Noting that Ohio, Virginia, Oregon, and Illinois permit such actions, the Court said "estate-planning malpractice claims seeking recovery for pure economic loss are limited to recovery for property damage. ... Therefore, in accordance with the long-standing, common-law principle that actions for damage to property survive the death of the injured party, we hold that legal malpractice claims alleging pure economic loss survive in favor of a deceased client's estate, because such claims are necessarily limited to recovery for property damage."

Read the opinion here.