Articles Posted in Legal Malpractice

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This is another decision affirming, as time-barred, a legal malpractice case. Plaintiffs alleged that they hired Vedder Price to represent them in a commercial real estate transaction in 2003. Plaintiffs signed personal guarantees. The plaintiffs alleged that the lawyer defendants failed to advise them that one of other parties to the venture had signed a limited version of the personal guarantee. Plaintiffs claimed that had they known of the limited version of the guarantee they would not have signed the loan documents. Plaintiffs also alleged that the lawyer defendants failed to notify them that a transfer of a 10% interest in the project to Benjamin Nummy triggered a default under the loan documents.

It was undisputed that the lawyers gave the plaintiffs a complete copy of all the documents signed by all parties in 2003. In 2012, the bank notified the bank that the 2003 transfer to Nummy violated the loan documents and declared a default and sued for foreclosure.

Plaintiffs sued Vedder Price in 2014. The case was dismissed on statute of repose grounds (the alleged negligent act occurred more than 6 years before the lawsuit was filed). Plaintiffs alleged fraudulent concealment but this claim was rejected because the alleged fraudulent concealment consisted of the same allegations that supported the negligence claim. In other words there were no allegations that the lawyers took any action after the transaction to cover up their alleged mistake.

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Proximate causation is often the issue that defeats a legal malpractice case. In this case, even though a law firm failed to timely appeal an interlocutory ruling, there was no malpractice because the ruling was correct. Thus, even if the appeal had been filed on time, the plaintiff would have lost the case anyway.

The underlying case was litigated in the courts of the State of Oregon. Here, the plaintiff hired a law firm to give an opinion on whether an adverse ruling in a case could be appealed. The law firm essentially said that the ruling was interlocutory and that no appeal could be taken until the entire case was completed. To complete the case the plaintiff dismissed its remaining claims and appealed. The appeal was, however, dismissed because it was not timely.

Plaintiff then sued the law firm alleging that the law firm gave incorrect advice on the appeal deadline. The trial court granted summary judgment for the law firm. It held that plaintiff could not establish proximate causation, that is, but for the negligence, plaintiff would have obtained a better result in the underlying lawsuit.

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This is an important issue in legal malpractice cases. A lawyer represents a client in litigation. If the lawyer is granted leave to withdraw from that matter by the court, does that decision bar a legal malpractice claim by the client? The Washington Court of Appeals held that the withdrawal, even where approved by a court, does not collaterally estop a legal malpractice claim.

Generally, a litigant must establish four things to collaterally estop the other party from litigating an issue: (1) the identical issue was decided, (2) there was a final judgment on the merits, (3) the party against whom the doctrine is asserted must have been a party to the earlier proceeding, and (4) application of collateral estoppel will not work an injustice against the estopped party.

The court explained that two of the four factors required to establish collateral estoppel were not present:

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This is an opinion affirming the dismissal of a legal malpractice claim against divorce attorneys. Plaintiff alleged that her former attorneys did not “ascertain the full extent of her former husband’s income, and failed to make an adequate record before the matrimonial court regarding her former husband’s level of adherence to the tenets of Orthodox Judaism and the needs of their children not to have visitation with the former husband on the Jewish Sabbath and holidays.” The lawyers moved for summary judgment and the plaintiff, also a lawyer, filed a response in opposition to that motion. The court held that the client’s affidavit was insufficient to rebut the lawyer’s prima facie showing of entitlement to judgment as a matter of law. The court does not state why the affidavit was deficient but one may guess that the affidavit by the former client did not explain how the work done by the lawyers failed to meet the standard of care for a divorce lawyer involved in the divorce of an Orthodox couple.

Plaintiff may have been able to avoid this problem by hiring a divorce lawyer to act as her expert witness. She apparently chose not to go down that path and the result was unfavorable to her.

Edward X. Clinton, Jr.

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This is a decision of the Nebraska Court of Appeals reinstating a legal malpractice claim against a personal injury attorney even though the underlying case was settled.

The defendant attorney urged the client to accept a $45,000 settlement of a personal injury claim arising out of an auto accident. The plaintiff agreed to the proposed settlement, but then sued the lawyer for legal malpractice. The basis of her claim was essentially that the settlement was inadequate because she had suffered serious permanent injuries requiring medical expenses far exceeding the amount of the settlement.

The court explained:

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The plaintiff sued a lawyer for legal malpractice. The lawyer failed to timely report the legal malpractice claim to his carrier and the claim was denied. The plaintiff then sued the insurer directly with no success for the same reason. Because the lawyer failed to report the claim to the insurer, the claim for coverage was denied.

Do not ever retain an attorney who does not have insurance.

Source: McCarty v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Dist. Court, SD Ohio 2016 – Google Scholar

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It is very common that someone will come into my office and explain that he is a victim of legal malpractice. Often, for reasons I don’t understand, the person waits more than two years after the underlying judgment before they contact me. By waiting this long, the statute of limitations has run and there is absolutely nothing we can do to help the plaintiff.

In Illinois the plaintiff has two years to file suit from whenever the plaintiff discovers the injury. Where there is litigation, discovery occurs when the underlying case reaches judgment.

In Belden v. Emmerman, the Illinois Appellate Court held that the statute of limitations begins to run when there is an adverse judgment against the injured party. The defendant moved to dismiss and the plaintiff argued that, because he filed an appeal of the adverse judgment, the statute of limitations did not start to run until the appeal was decided.

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The plaintiff, Cynthia O’Neal, brought a legal malpractice claim against her former lawyers. O’Neal, an owner of a restaurant chain that fell on hard times, alleged that her former lawyers had a conflict of interest when the represented her company and the opposing party in an assumption of a lease. The court rejected her claim on the grounds that she was unable to establish proximate causation.

In my experience, proximate causation can be difficult to prove. Lawyers make mistakes. Sometimes those mistakes breach the duty of care. The plaintiff must tie the negligent act to the damages suffered by plaintiff and come up with a plausible theory as to how the lawyers made things worse and caused the damage.

One area where it is very difficult to prove proximate causation is a legal malpractice claim in the foreclosure setting. The lawyer who defends the foreclosure may miss a deadline or make a legal error. However, that lawyer did not cause the default and did not proximately cause any damages.

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It is always a risk to talk to the media. Here, in a pithy opinion, The New York Appellate Division, First Department upheld a legal malpractice claim against a law firm. “Plaintiff alleges that he would not have lost his contractual right to certain deferred compensation if his attorneys had not acted negligently in speaking to the Wall Street Journal, in violation of the non-disparagement provision of the contract.” The court further commented that “neither the arbitration award nor the subsequent opinions submitted by defendants unequivocally contract plaintiff’s claim…”

Source: Barr v. LIDDLE & ROBINSON, LLP, 2016 NY Slip Op 744 – NY: Appellate Div., 1st Dept. 2016 – Google Scholar

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This is a legal malpractice case from Mississippi where the plaintiff hired an attorney, Omar Nelson, to bring a wrongful death action against the makers of Plavix. The plaintiff alleged that she asked Nelson to handle the case when he was an associate with the law firm, Sweet and Freese. Nelson declined and recommended other counsel. Later, when Nelson left Sweet and Freese, he began working on the case again. Eventually, Nelson obtained a settlement of $280,000 for the plaintiff. The settlement was approved by the court.

Plaintiff’s legal malpractice theory was that Nelson had not obtained a sufficient settlement for the case and that other lawyers would have obtained more. This theory, without further evidence of negligence such as a failure to take discovery or obtain evidence, is very weak. It is almost entirely speculative. How are we to know why a different attorney would have obtained more money than the attorney who actually handled the case?

Plaintiff’s expert was Freese who testified that had he handled the case he would have obtained more money for the plaintiff.

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