What Constitutes Legal Malpractice?
Legal malpractice is legal negligence by an attorney. Legal malpractice is committed when an attorney, "ICC" fails to take certain steps or misses certain time limits (called statutes of limitation) that result in harm to a Client. Legal malpractice may result from: Miscalculation of time limits; Miscommunication with the Client; Mistakes in the handling of evidence or records; Basic errors or missed steps.
A legal Malpractice claim must pass "four tests." If it does not pass the "four tests" it will not even get to a court for review the case. The four tests of a legal malpractice case are: 1) The negligence must occur in the course of an attorney-client relationship; 2) The negligence must fall below the standard set by similar attorneys; 3) The negligence must directly cause damages to you; and , 4) The damages must be quantifiable by money compensation. Typical legal malpractice causes of action are: 1) Trust Account violations which can last from $5,000 to $25,000 or even more. 2) Inheritance Disputes which can sometimes go to $1,000,000. 3) Divorce disputes which some-times reach a $1,000,000 but may vary greatly. 4) Personal injury cases which can reach $100,000 or even more. 5) Commercial cases which can be virtually limitless. 6) Medical Malpractice cases which may be almost limitless. 7) Bankruptcy cases which can be $200,000 in expenses and less than $10,000 in assets reclaimed.
Typical Legal Malpractice Case Examples
One of the most commonly cited cases in discussions of legal malpractice is Bickel v. Preble , 99 Cal.App.4th 1384 (2002). In this case, a couple hired an attorney to represent them in a real estate transaction, and the attorney negligently failed to modify the transaction documents to account for a dispute between the parties over the nature of the property being sold. This failure resulted in the sale going through without the necessary modifications, and put the couple in a position where they could have lost the property to the other party in the dispute. The couple sued the attorney for legal malpractice, and the appellate court affirmed a lower court judgement for the plaintiff for $270,000. This case is frequently cited in legal discussions because of its detailed discussion of the applicable standard for determining the elements of legal malpractice.
Another important case in the field of legal malpractice is Evans v. Odean , 134 Cal.App.4th 426 (2005). The underlying facts of this case involve a dispute over a movie script, which was apparently based off of a book that had been written in the 1970s. The plaintiff originally sued the man who had allegedly plagiarized the book and its author for posting the corresponding movie script online, but the case ended up being dismissed for lack of standing. The plaintiff then retained counsel and filed a new case against the defendants, but subsequently lost when it was found that the statute of limitations had expired. The lower court found that the dismissal of the first case proved that the plaintiff was not able to demonstrate both standing and initiation of the infringement proceedings within the statute of limitations. The plaintiff filed a legal malpractice case against his attorney. However, the appellate court affirmed a lower court ruling finding that the plaintiff failed to demonstrate the element of causation with respect to his legal malpractice claim. This case provides a good outline of the necessary elements needed to prove legal malpractice, especially as it relates to the element of causation.
Pagano v. Kingsbury, Inc. , 68 N.Y.2d 555 (1986) is another classic legal malpractice case. In this case, the plaintiff was a former corporate client of the defendant law firm. There were two transactions in place, one to acquire an existing business and the other to create an entirely new one. The defendant law firm failed to clearly spell out both of these transactions and ultimately lumped them together into one contract. This effectively voided the original plan for the existing business. The plaintiff lost the case due to this failure, and ultimately sued the law firm for legal malpractice, among other claims. The court broke this decision down along the transaction line, and found that the plaintiff did have a viable case with respect to at least the second transaction because the overall business defeat would not have caused a loss to plaintiff had the second transaction gone through.
In Carrion v. Yelich, 199 P.3d 1232 (Colo. 2009), the plaintiff was denied a loan guarantee and was forced to file bankruptcy. The plaintiff then sued the attorney for failure to negotiate a deal with a bank that would have prevented the bankruptcy filing. This case is particularly interesting because the dispute arose out of a government-negotiated deal, which made it outside of the normal realm of private negotiation.
Common Legal Malpractice Allegations
Legal malpractice claims typically fall into three distinct categories: negligence, breach of contract, and conflict of interest. Below are brief explanations of each, along with examples.
Negligence
Simply put, to claim negligence on the part of a lawyer, the client must show that the lawyer failed to exercise the level of care and skill that a reasonably prudent attorney would exercise. A typical example may be the failure to file a case within the statute of limitations, which is an important legal deadline that can prevent a plaintiff from being able to seek damages.
Breach of Contract
A breach of contract claim against a lawyer for legal malpractice in New York may be appropriate only in limited circumstances where there is a clear violation of the terms of the retainer agreement between the lawyer and client.
Conflict of Interest
Conflict of interest legal cases are varied and complex, but generally arise when a lawyer has prior or ongoing relationships with adversaries or witnesses or if the lawyer has a concurrent representation with another party. A conflict of interest case may also arise when a lawyer switches firms and discloses information contained in a former client’s file. In a 2013 case, a New York law firm was forced to return $2.6 million after it was found that its representation of multiple buyers in a $620 million business deal created a conflict of interest.
Legal Malpractice Proof
In all of these cases, the Plaintiff must prove that the Defendant breached some standard of care, and that in doing so, caused damages. In the legal context, a legal malpractice plaintiff must prove that the attorney committed some or several of the mistakes highlighted above. It may not be enough to say that the client would have been better off had the attorney done something different. That would make all attorneys the "wrong" attorney.
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A few examples from cases in point:
In PJI-3d 1:13, the standard of care is described at length by the court.
In the case of Leibowitz v McMorris, 2007 NY Slip Op 33034(U)(Nassau Sup. Ct. 2007), Nassau County Judge Timothy G. Mazur wrote:
"The two elements of a legal malpractice claim are negligence (breach of the attorney’s duty) and damages (by reason of such negligence). An attorney’s negligence in conducting discovery can form the basis of a legal malpractice claim. "
In a more recent case, McCoy v. Feinman, 2015 NY Slip Op 32135(U)(Sup . Ct. 2015), Kings County Justice Carolyn E. Wade, writing for an Appellate Division remand, reiterated the standard as to proximate cause in attorneys’ fees claims, and you will see how problematic that is.
"Proof of proximate cause requires that it be shown that the alleged errant conduct of the defendants was the ‘but for’ cause of the loss of the settlement, without which plaintiff would not have suffered damages".
Nonetheless, "the mere fact that a strategy or tactic fails does not of itself constitute malpractice … plaintiff cannot prevail merely because a strategy or tactic did not work or because hindsight dictates a different course".
The intertwined issues of attorneys fees, lost opportunities and settlement values mean that this will never be an easy argument. The Case example shows that there can be no higher damage value if the underlying case would have been a contingency fee. So that puts NY on the low scale, and perhaps NY is right.
Legal Malpractice Cases Everyone Knows About
Over the years, several high-profile legal malpractice cases have been reported in the media or won significant awards. These cases are significant because they are instructive for attorneys regarding the risks of legal malpractice and why they should take care to avoid it by following proper procedures and communicating with their clients. For example, in a famous case in 1991, a California judge missed a deadline to keep a hearing date on a criminal case open and deemed that an error of constitutional dimension, awarding plaintiffs $6.9 million. The case found that due process rights outweigh the interests of finality. (170 Cal.App.3d 970, 215 Cal.Rptr. 415). In another high-profile legal malpractice case, a former office manager of O’Donnell & Associates filed for legal malpractice and fraud. According to the complaint, she was unlawfully fired after she attempted to report the firm’s misconduct to the California State Bar, and her previous lawyers refused to represent compliance filings requested by the bar, negligent performance of represented clients, and fraudulent cases were added to the lawsuit. (B257269 (Cal.App. 2 Dist. Feb. 26, 2015)). Some other examples of high-profile legal malpractice cases include: B261227 (Cal.App. 2nd Dist. January 21, 2016): Attorney suing for breach of fiduciary duties regarding property Friedman, Sloan & Ross v. George S. May International Company, 2014 IL 1173565 Hendi v. Tehrani, 394 Ill.App.3d 945 (2009) Adverse attorney actions after an opinion letter Anderson Kill & Olick et al. v. E*Trade Securities, 2014 Cachet Merger.com, Inc 2013 WL 5202759 (Cal. App. 4th District, October 16, 2013). Summary judgment in legal ethics malpractice case, allegations of negligence and breach of contract for a non-compete agreement and failed merger (Blank Rome).
Avoiding Legal Malpractice
Law firm professional liability claims are at an all time high, but there are ways for the specialist individual or small law firm to avoid them. The American Bar Association and New York State Bar Association/CLE have both published risk management guidelines and best practices.
Chief among these is a system to detect deadline problems and provide adequate buffers for the service of that demand. Auto calendaring is almost standard, and so is the double check system. (Of course, this places an extra burden on the attorney because it requires yet another person to consult about deadlines.)
Other best practices include maintaining client files and careful record keeping. Much to an attorney’s amazement , courts will require that they scour their paper files for metadata and recreate documentation that they no longer have in order to defend or pursue a case. Using these documents also requires that an attorney maintain an up to date computer system and computer savvy associates or clerks.
A good document management or e-filing system is invaluable and well worth the cost. (We have attended seminars where the cost of such a system is referred to as "insignificant, compared to the cost of a legal malpractice defense!")
Maintaining conflict free professional relationships with litigation opponents and even former law partners is priceless, helps avoid legal malpractice, and reflates valuable relationships.