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Archive for the ‘Professional Liability and MPL’ Category

You, You, and You: Implied Waiver of Attorney-Client Privilege Extends to Attorney and Non-Party Attorneys Sued for Malpractice

Posted on: March 13th, 2020

By: Jake Loken

The Supreme Court of Georgia recently decided in Hill, Kertscher & Wharton, LLC v. Moody, No. S18G1436, that the implied waiver of attorney-client privilege that occurs when an individual sues his former attorney also extends to other attorneys who represented that individual, so long as those other attorneys were representing the individual in the “same underlying transaction or litigation.”

In Hill, Kertscher & Wharton, LLC v. Moody, the plaintiff filed a lawsuit against his former attorneys from Hill, Kertscher & Wharton, LLP who provided legal advice about how to complete a corporate takeover. The former attorneys told plaintiff about what actions would need to be done to complete his goal of a corporate takeover, including the filing of a lawsuit.

The former attorneys filed the lawsuit, but through the course of the litigation, they were forced to withdraw from the suit, and a second suit that had been filed in another state declared all actions taken to complete the corporate takeover to be void. After this, plaintiff filed a lawsuit against his former attorneys alleging malpractice.

During the malpractice suit, the former attorneys raised the defense that non-parties caused some or all of the damages alleged by the plaintiff, including attorneys from the law firm of Holland & Knight LLP. The former attorneys alleged the plaintiff directed his former attorneys to follow the instruction of Holland & Knight over the course of their interactions with plaintiff.

When served with a request for production of documents, Holland & Knight raised attorney-client privilege and work product protection as reasons for not producing documents. Plaintiff then also filed for a protective order on the same grounds as Holland & Knight. The trial court denied the protective order, and the plaintiff appealed. The Court of Appeals reversed, and an appeal was made to the Supreme Court.

The Court was faced with the question of whether the implied waiver of attorney-client privilege “extends to the client’s communications with other attorneys who represented the client with respect to the same underlying matter, but whom the client chose not to sue.”

All the Justices, less one who was not participating and another who was disqualified, held that “when a client sues his former attorney for legal malpractice, the implied waiver of the attorney-client privilege extends to the client’s communications with other attorneys who represented the client with respect to the same underlying transaction or litigation.” The Court also commented on the work product exception, saying that trial courts must still protect the work covered by this exception, even in the face of a malpractice claim, by requiring the parties requesting such work satisfy the required test to obtain such work.

If you have any questions or would like more information, please contact Jake Loken at [email protected] or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

CAUTION! Disciplinary Action Ahead

Posted on: February 27th, 2020

By: Anastasia Osbrink

It has now been over a year since California Evidence Code, section 1129 went into effect, and as such, it is a good time to be reminded that compliance is mandatory and attorneys who fail to comply face possible disciplinary action. Evidence Code, section 1129 requires attorneys to provide the client with a written explanation of mediation confidentiality and obtain a signed acknowledgment from the client on the disclosure document prior to the client agreeing to participate in mediation. (Evid. Code, § 1129.) Mediation confidentiality is codified in Evidence Code, section 1119. If an attorney fails to obtain this signed disclosure, which the attorney must also sign, he or she could face disciplinary action. Moreover, Evidence Code section 1122 was amended as part of this requirement. That Evidence Code section now provides for the admission of evidence of a signed disclosure form, or lack thereof, as part of a disciplinary action against an attorney for failure to obtain it. (Evid. Code, § 1122.)

This change, of which many California attorneys are still unaware, occurred as a result of the holding in Cassel v. Superior Court, where the California Supreme Court ruled that mediation confidentiality prohibited plaintiffs from introducing communications that took place during mediation as evidence of malpractice against their former attorneys. (Cassel v. Superior Court (2011) 51 Cal.4th 113.) After that ruling, the California Law Revision Committee wanted to ensure that clients understood the extent of mediation confidentiality and how it could impact the current or future litigation.

Providing a written explanation of mediation confidentiality that is signed by the client is not only good practice, it is the law. Moreover, compliance with Evidence Code, section 1129 is especially simple because there is form language within this code section that an attorney can use to ensure compliance. There are a few additional points to remember. First, the document must be a separate, stand-alone document that is not attached to any other document. Also, it must be obtained prior to the client agreeing to mediation. That often means before the Case Management Conference, California lawyers. The simplest means of compliance is to provide this document to the client at the same time as an engagement agreement and any conflict waivers, but separately from those documents. Additionally, the document must be provided in the client’s preferred language, so make sure to find this out from the client ahead of time. Finally, attorneys must make sure that they sign the document as well and provide a fully executed copy to the client. These are steps an attorney must take to make sure they do not face later disciplinary action.

If you have questions or would like more information, please contact Anastasia Osbrink at [email protected].

The “Two Hats” Rule for California Lawyer-Mediators

Posted on: February 27th, 2020

By: Greg Fayard

For decades now, many practicing attorneys also mediate or arbitrate cases. Gone are the days where only retired judges mediate or arbitrate. California’s Rules of Professional Conduct for lawyers recognize that some neutrals also practice law.

That is, these are lawyers who wear “two hats”—the mediator hat and the lawyer hat.

Under Rule 1.12, a neutral in a case, cannot represent a party from a past mediation or arbitration as a client in a NEW matter without the informed written consent of all the parties in the NEW matter. This means, for example, that mediators need to keep track of all the parties in their mediations and if the mediator takes on a case as a lawyer involving a former mediation party, INFORMED WRITTEN CONSENT OF ALL PARTIES IN THAT NEW MATTER IS NEEDED.

But some lawyers work with mediators/arbitrators. That situation is also addressed by Rule 1.12. Just because a mediator-lawyer handled a case for a current client in the past, should not automatically bar another lawyer in the mediator’s office from representing that client in a NEW case. Rule 1.12 permits the otherwise conflicted lawyer to take the new case so long as screening and written notice is provided.

Here’s the bottom line: Per Rule 1.12, California lawyers who also mediate need to now have a robust conflict check system. Sometimes informed written consent for all parties in a new matter is needed. Other times, only screening and written notice (not consent) is needed.

If you have any questions or would like more information, please contact Greg Fayard at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

What Should an Attorney Do If Attorney Has Mistakenly Produced a Privileged Document Under Massachusetts Law?

Posted on: February 14th, 2020

By: Adrianna Michalska

In the event that an attorney has mistakenly produced a privileged document in discovery, Massachusetts Rule of Civil Procedure 26(b)(5)(B) requires that he give prompt notice to the party receiving the document and takes reasonable steps to rectify the error.

The same Rule also prescribes conduct for the party receiving the mistakenly produced privileged document. After being notified of the inadvertent disclosure, the receiving party shall:

  1. Promptly return, sequester, or destroy the specified information and any copies of it;
  2. Refrain from using or disclosing the information until the claim is resolved; and
  3. Take reasonable steps to retrieve the information if the party disclosed it before being notified.

If the receiving party first discovers that a privileged document has been mistakenly produced, Massachusetts Rule 4.4(b) of the Rules of Professional Conduct requires that the party who receives information relating to the representation of the attorney’s client and knows or reasonably should know that the information was inadvertently send, shall promptly notify the sender.

Additionally, the receiving party may choose to present the disclosed privileged information to the court for a determination of the claim. Massachusetts Supreme Court has held that as long as “reasonable precautions against disclosure were taken,” inadvertent disclosure does not impair the privilege. In the Matter of the Reorganization of Electric Mutual Liability Ins. Co. Ltd. (Bermuda), 425 Mass. 419, 422 (1997). Even if the disclosure could be preventable with more careful attention, the court may find it to be nonetheless inadvertent. Vigor Works, LLC v. Skanska (Mass. Super. Ct. Feb. 12, 2019), 35 Mass. L. Rep. 425, 2019 Mass. Super. LEXIS 15, at *9. Thus, the court will not deem the privilege waived, unless it can determine that: (1) the disclosure was not inadvertent, (2) the holder of the privilege did not take reasonable steps to prevent the disclosure, and (3) the holder of the privilege did not take reasonable steps to promptly rectify the error.

To ensure that you are taking reasonable steps to protect the privilege, especially when working with voluminous document production, consider taking additional precautions, such as “creat[ing] a detailed privilege log, engag[ing] a litigation support company . . . , and numbering [and indexing] . . . documents . . . in a manner consistent with a detailed privilege log.” Commerce & Indus. Ins. Co. v. E.I. du Pont de Nemours & Co. (Mass. Sup. Ct. Dec. 11, 2000), 12 Mass. L. Rep. 574, 2000 Mass. Super. LEXIS 680, at *11.

About half of the states have imposed similar obligations on litigating lawyers in their jurisdictions. Some states that do not follow similar language to Massachusetts Rule of Civil Procedure 26(b)(5)(B) are New York (not prescribing any conduct on the receiving party, beyond notifying the sender) and Virginia (a receiving party is obligated to immediately terminate review or use of the inadvertently produced document, promptly notify the sender, and abide by the sender’s further instructions).

If you have any questions or would like more information, please contact Adrianna Michalska at [email protected], or any other member of our Lawyers Professional Liability Practice Group, a list of which can be found at www.fmglaw.com.

Consent-To-Settle Clauses Upheld by Massachusetts’ Highest Court

Posted on: February 13th, 2020

By: Zinnia Khan

The Supreme Judicial Court of Massachusetts (“SJC”) recently issued its highly anticipated decision in Rawan v. Continental Casualty Co. regarding the enforceability of consent-to-settle clauses.  The SJC held that consent-to-settle clauses do not violate G.L. c. 176D, § 3(9)(f), the Massachusetts statute which regulates the insurance business and defines unfair claim settlement practices.

Many professional liability insurance policies include “consent-to-settle” clauses, which require an insurer to seek its insured’s consent prior to settling a covered claim.  The consent-to-settle clause at issue in Rawan stated only that the insurer “will not settle any claim without the informed consent of [the insured].”  After the insured, an engineering firm, refused to authorize any reasonable settlement toward the plaintiff homeowners’ claims, as recommended by the insurer, a jury found the insured liable for $400,000 in compensatory damages, and an additional $40,000 in punitive damages.  The insurer paid the homeowners $141,435,98 of that figure, which was the amount within its policy limit after paying defense costs.

The homeowners then sued the insurer on the basis that the consent-to-settle clause it relied upon to refuse settlement in the initial lawsuit violated Chapter 176D.  In its decision, SJC addressed both the legislative intent of Chapter 176D and the public interests affected by consent-to-settle clauses.  First addressing the statute, the court held that Chapter 176D’s silence on consent to settle clauses was sufficient to indicate that the legislature did not intend to invalidate consent-to-settle clauses.  With respect to public interest considerations, the court noted the insurer’s duty to third parties to effectuate settlement was still subject to the insurer’s contractual and statutory duty to its insured.

Although the court concluded that consent-to-settle clauses are enforceable, the Rawan decision has important implications for insurers, insureds, and third-party claimants.  Indeed, the court made a point to emphasize that its opinion does not mean that insurers owe no duty to third parties in cases involving consent-to-settle clauses.  The insurer must still abide by its obligation to effectuate settlement, which includes “a thorough investigation of the facts, a careful attempt to determine the value of the claim, good faith efforts to convince the insured to settle for such an amount, and the absence of misleading, improper, or ‘extortionate’ conduct.”  If these measures are not taken, insurers could be held liable under Chapter176D (and potentially under Chapter 93A, Massachusetts’ consumer protection law), even where the insured ultimately refuses to provide its consent to settle.

For businesses and professionals, the fact that consent-to-settle clauses remain enforceable in Massachusetts is encouraging.  However, because the court cautioned that the duty to effectuate reasonable settlement remains, insureds should seek the advice of their trusted insurance advisors on whether efforts toward resolution are warranted.

Insurers should pay careful attention to the court’s decision in Rawan.  An insurer’s good faith duty to reasonably investigate claims and to effectuate prompt, fair, and equitable settlement of claims remains in place – particularly in cases which liability is reasonably clear.

If you have any questions or would like more information, please contact Zinnia Khan at [email protected].