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One defense to a legal malpractice case is that the plaintiff could never have collected any money from the defendant in the underlying case. This defense is rarely asserted, but it can be very effective. In a malpractice case, you must prove what the outcome of the underlying case would have been absent negligence. This type of proof is imperfect because some speculation is involved.

For example, client sues an entity that is insolvent. Client’s lawyer makes an error that causes the client to lose the case (such as missing the statute of limitations). Client sues his former lawyer. Under the insolvency defense, client loses the case because he could not have collected anyway and thus the lawyer did not “cause” the loss of his recovery.

In Ewing v. Westport Insurance Company, CA – 19-551, the court rejected the insolvency defense. The opinion explains that the defense of insolvency was not proven:

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The case is captioned In re Gary K. Davidson, 2017 PR 00099. There were two charges of misconduct: (a) failing to disclose a fee arrangement with a land surveyor; and (b) falsely certifying compliance with MCLE requirements. The first charge was not proven but the second charge was proven and a three-month suspension was recommended. The take-away from this is that Illinois will punish a false MCLE certification. The Panel noted that few reports by lawyers are audited so, therefore, there should be punishment if the lawyer makes a false representation.

 

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The case is Iliescu v. Hale Lane Peek Dennison and Howard, No 76146, Supreme Court of Nevada.This is a complicated case and factual scenario that does often come up in legal malpractice cases. It goes like this:

A. Your client loses a ruling in a trial court in the underlying case.

B. Your client fires you.  (Next, they sue you for malpractice).

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In Sherman v. Ellis, K18CC-006-009, the Superior Court of Delaware considered a legal malpractice action filed by a former client against the attorney who had drafted his prenuptial agreement. The case is unusual because the divorce court ruled in Sherman’s favor and held that the prenuptial agreement was valid and binding. Despite having won the underlying litigation, Sherman sued his lawyer and alleged that the lawyer should have included an additional provision in the prenuptial agreement. Had the lawyer included this provision, according to Sherman, his ex-wife would not have challenged the prenuptial agreement in the divorce case and he would have not had to incur legal fees defending the prenup.

Comment: once you read those facts, you should realize that this was a very unsympathetic case for the plaintiff. He received good legal work from his lawyer and won his case and he still sued.

The Delaware court in a well-considered published opinion dismissed the legal malpractice case beause there was no evidence that the ex-wife would have agreed to the so-called Silver Bullet provision.

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In Herren v. Armenta, 1-CA-CV-18-0381, the plaintiff sued her former lawyers alleging that they committed legal malpractice when the represented her in another case (the underlying case). In the underlying case, Tonto Supply, Inc., sued Herren for breach of contract and other torts. Herren alleged that her lawyers were negligent because they failed to timely respond to requests to admit and to several motions for summary judgment, resulting in a judgment against her.

This case presented a common problem with legal malpractice actions – would Herren have won the underlying case if the lawyers had responded in timely fashion?

In the malpractice case, Herren had the burden to prove that the lawyer’s negligence was the cause of her loss.  She was unable to meet that standard, despite the fact that she hired an expert. The court explains its decision to affirm the dismissal of the malpractice case:

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Sammet v. Helline is an unpublished decision of the Court of Appeals of Kentucky. The case number is 2018-CA-1033. The story is familiar: a divorce lawyer sued for unpaid legal fees and received a legal malpractice counterclaim in return.

Here, the lawyer prevailed as the former client was unable to introduce any evidence of economic damages. Summary judgment for the lawyer was affirmed. The explanation:

We further note that Denise’s deposition and additional answers and responses to written discovery requests are largely irrelevant to Beth’s counterclaims, even though she claims denial of access to these precludes a grant of summary judgment. The standard to prove legal malpractice is well-settled.

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Zander v. Carlson and the Illinois Fraternal Order of Police, 2019 IL App (1st) 181868, is a legal malpractice opinion which holds that a union member who retains a union appointed attorney to represent him in challenging an employment action, cannot file a malpractice claim because filing such a claim would circumvent the collective bargaining agreement.

The facts and procedural history are set forth as follows:

¶ 4 Under the Illinois Municipal Code, a police officer facing discharge is entitled to a hearing before the local Board of Fire and Police Commissioners (police board), unless a collective bargaining agreement between the municipality and the officer’s union provides for arbitration of such disputes. See 65 ILCS 5/10-2.1-17 (West 2018). The collective bargaining agreement between the Village and the FOP provides that an officer may elect to challenge his discharge either before the police board or through the agreement’s ordinary grievance-arbitration procedure. On Carlson’s advice, Zander elected to proceed via arbitration. After a two-day hearing, the arbitrator upheld the decision to terminate Zander’s employment.

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The case, Nancy Setterquist v. Law Offices of Ted D. Billbe, P.C., N0. 18-35880, is an unpublished decision of the Ninth Circuit that raises important issues. The case is a divorce malpractice case. Setterquist alleged that her lawyer allowed the court to enter an erroneous order. Based on the text of that order, her ex-husband filed a post-decree claim against her for maintenance and was able to recover. The facts are not summarized well in the opinion, unfortunately, leaving me with questions about what happened and why it happened.

The defense strategy was to move to dismiss on the basis that Setterquist engaged a new lawyer post-decree. The defense argued in a motion to dismiss that successor counsel could have corrected the error made by Billbe and defeated ex-husband’s claims.

The district court dismissed the case on the basis that Setterquist could not allege proximate causation because she employed successor counsel.

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Over the years, I have thought about this a bit. My current answer to this question is to be mindful of your own emotions when dealing with clients.

If a client criticizes you unfairly or makes you angry, stop writing that letter or email and let things cool off. You have may have to write to the client to correct the record, but do not do so when you are angry. Angry lawyers do dumb things like (a) disclose a client confidence to a third party; (b) threaten to file an ARDC grievance against another lawyer; or (c) file an angry motion with a judge.

When you are angry, you are not thinking correctly. Take time and cool off. Discuss the matter with a colleague or an experienced ethics lawyer. Then it may be necessary to write back to the client and inform that person or corporation of your opinion. Managing your own emotions is the most difficult challenge you will face in dealing with an unhappy client. Remember that the client may be dissatisfied with the result of the matter and that he has emotions as well.

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Illinois does not require a lawyer to have insurance. However, the ARDC requests that you inform it each year whether or not you have insurance.

My advice to the public is that you should never hire a lawyer who is uninsured. First, if something goes wrong, you have little chance of any recovery. Second, the insurance process forces lawyers to look at their own conduct and consider whether certain practices are appropriate. Third, most policies have coverage for any grievance that someone may file with the bar association or attorney regulator. Having insurance gives you access to free CLE and you can usually call your insurer and ask questions about some practices. (Not every policy has all of these benefits, but your policy might have them.)

Most important of all, having insurance will discourage you from filing a lawsuit for legal fees against a former client.

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