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Posts Tagged ‘malpractice’

Attorneys, Beware Of The “Settle & Sue” Maneuver!

Posted on: July 6th, 2020

By: Elizabeth Lowery

Malpractice lawsuits against attorneys are often referred to as a “case within a case” because they must delve deep into the underlying lawsuit in order to determine whether an attorney’s representation fell below the standard of care, and if so, what damages, if any, resulted. There is a common misconception that an attorney is always insulated from a malpractice action if the client consents to a settlement. However, many jurisdictions, including California, permit a client to “settle and sue.”

Last month in Maselllis v. Law Office of Leslie F. Jenson, California’s Appellate Court upheld a lower court’s $300,000 judgment against a divorce attorney whose client, the Wife, consented to a $1.2 million settlement. In that case the value of marital estate, which included several businesses, was hotly contested. In addition, Wife was suspicious that Husband had been hiding assets. A few days before the trial, Wife’s attorney pressured Wife to accept an $800,000 settlement; when she refused, Attorney said “I’m done,” and left. Panicked and without counsel, Wife accepted Husband’s last minute $1.2 million offer. She then sued Attorney for malpractice. 

During the 11-day malpractice trial, one report from Wife’s expert valued her half of the marital estate at $1.62 million, and another at $1.49 million. Wife prevailed and obtained a $300,000 judgment against Attorney. During the appeal, Attorney did not directly challenge the jury’s finding that her representation of Wife was negligent. Instead, Attorney argued that the standard of proof for “settle and sue” cases was, or should be, higher than the “preponderance of the evidence” burden of proof typical applied in attorney malpractice lawsuits, and that Wife hadn’t satisfied this higher standard. Wife’s counsel argued that Wife did not need to show that Husband was going to reach a settlement higher than $1.2 million; it was sufficient to show that it was “more likely than not” that she would have received a better result at trial. The Appellate Court confirmed that the lower burden of proof, i.e. the preponderance /”more likely than not” standard was correctly applied in the underlying trial, and that Wife had satisfied this burden. As a result, Wife’s victory was upheld. 

The foregoing illustrates that attorney malpractice lawsuits present special challenges, especially in jurisdictions which allow a client to “settle and sue.”  If you have any questions or would like more information, please contact Elizabeth Lowery 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.

A Slow Moving Storm is Brewing: Attorneys Should Expect an Uptick in Malpractice Claims, Just Not Right Away

Posted on: May 22nd, 2020

By: Anastasia Osbrink

Many attorneys are wondering whether to expect an increase in legal malpractice claims when courts – and society at large – begin to reopen. Such an increase would follow the pattern seen with previous economic declines. For instance, after the 2008 Great Recession, there was a significant increase in legal malpractice claims. However, it took a year for those claims to reach their peak in 2009. That is because the claims against attorneys followed an initial increase in other insurance claims. The number of claims in the five most likely areas for legal malpractice suits – personal injury, real estate, family, bankruptcy and estate law – nearly doubled between 2005 and 2009. Of course, such an increase can be expected during an economic downturn.

In the case of attorneys, following the initial wave of legal filings, the number of legal malpractice claims jumped as well in 2009. A similar increase in malpractice claims occurred in 2012 following the downturn caused by the European debt crisis and the downgrading of America’s credit rating in 2011. Again, the increase in malpractice claims occurred approximately one year after the peak of other types of filings had taken place.

This time, the increase in lawsuits in general likely will take even longer. Courts are reopening slowly, deadlines have been and likely will continue to be extended, statutes of limitations are being tolled, and there will be a significant backlog for the courts. Additionally, the disease itself likely has discouraged many people from going out and finding an attorney. Eventually, though, as people feel the devastating economic effects of the largest unemployment rate since the Great Depression, they will turn to litigation and the hope of a settlement or a large verdict to ease their financial pain. When this happens, legal malpractice suits may follow, as they did in 2009 and 2012.

Yet another factor likely will lead to an increase in malpractice suits that is unique to the pandemic. Even though courts are closed and many jurisdictions have been extending filing deadlines and tolling statutes of limitations, attorneys cannot simply assume that all cases are on hold. Indeed, as is typical, how and when a case is litigated must be evaluated on a jurisdiction by jurisdiction and case by case basis. An attorney’s failure to do his or her due diligence easily could lead to one or more claims of legal malpractice (though it remains to be seen how lenient courts will be to parties that missed deadlines during the pandemic).

Given this potential paradigm, it is essential that attorneys keep track of the rules and approaches by all courts in all jurisdictions in which they practice. Nevertheless, history suggests that we can expect an increase in the number of legal malpractice claims filed, even if it takes a year or two to get there.

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

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.

When is Enough Enough? A Claim of Legal Malpractice in the Course of Settlement Negotiations

Posted on: November 15th, 2019

By: Jake Loken

The Georgia Court of Appeals confirmed in Smiley v. Blasingame, Burch, Garrard & Ashley, P.C., decided on October 30, 2019, that when a claim of malpractice occurs regarding settlement negotiations, an alleged breach is immaterial if a plaintiff cannot prove that the breach resulted in damages to the plaintiff. Said another way, even if a breach can be proven, a plaintiff must still prove that the plaintiff could have received a greater settlement but for the breach.

The Smiley plaintiffs claimed their attorneys committed legal malpractice in the course of settling the plaintiffs’ underlying lawsuit which involved claims related to an implanted medical device. In negotiating potential settlements, the attorneys allegedly settled with the medical device manufacturer on terms different than those posed to plaintiffs.

At the trial court level, the court noted that although the plaintiffs “‘presented enough evidence for a question of fact as to whether the actions of [the attorneys], if taken as true, violated a legal standard of care,’ their claim still did not survive . . . because the plaintiffs have not shown any damages proximately caused by the breach.”

In discussing this point further, the Court of Appeals found that the plaintiffs had “not cited to any issue of fact indicating that they would have received a larger settlement if their attorneys had not breached their duty towards them. Further, the [plaintiffs’] assertions that they should have received additional compensation are merely speculative.” And, as we know, “[a] legal malpractice claim cannot be based upon speculation and conjecture.”

Notably, the Court of Appeals found that “damages cannot be proven by comparing the [plaintiffs] settlement with the settlement received by the other . . . plaintiffs [also allegedly injured by the same medical device].” In reaching this conclusion, the Court of Appeals used the words of the plaintiffs’ expert to state that in the case of multiple settlements regarding the same underlying medical device, “every case has its own facts . . . [and] that other considerations played into each plaintiff’s settlement, including venue, judgment collectability, and potential appeal rounds.”

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

Law Firms Under Increased Pressure, Increased Costs for Malpractice Claims

Posted on: October 31st, 2019

By: Gregory L. Blueford

Per a survey conducted by insurance broker Ames & Gough earlier this year, professional liability is becoming more and more expensive with big money payouts. In its 9th annual survey of top 11 professional liability insurance companies, Ames & Gough found that the number of claims resulting in multimillion dollar payouts increased from 2017 to 2018, with the majority stating that they had at least one claim payout of over $150 million and two had settlements which exceed $250 million.

The average cost to defend a malpractice claim, while varied amongst those insurance companies surveyed, increased from 2017 to 2018 for 10 of the 11 insurers surveyed. Two indicated the average cost to defend a claim exceeded $500,000; three stated their average defense costs were between $100,000 and $500,000, and the remaining six insurers all had an average cost between $50,000 – $100,000. 7 of 11 insurers said that the rates they are paying defense counsel to handle professional liability claims have risen from anywhere from 2 – 5%.

Further, conflicts of interest, including perceived conflicts, remain the most common alleged legal malpractice error, with 7 of the 11 insurers surveyed stating conflicts as one of their top two leading causes of legal malpractice claims. The largest number of claims stem from the following four practice areas: Business Transactions (cited by 63 percent of insurers surveyed), Trust and Estates (55 percent), Corporate & Securities (45 percent), and Real Estate (45 percent).

This survey demonstrates the importance of law firms ensuring that their conflict check system is functional and, most of all, practical in identifying potential conflicts, especially for large firms operating with multiple offices. Further, as stated in the survey, many attorneys handling business transaction matters often wander outside their area of expertise, as certain elements may appear quite different as the matter progresses. Thus, it is important for attorneys to make sure they are staying within their defined role for the particular matter they are working on and, if the issues stray outside that role, work with the client to bring in another attorney who has the necessary expertise.

The insurers participating in the Ames & Gough survey were: AXA XL, AXIS, Brit, CNA, Crum & Forster, Huntersure, Liberty, Markel, Sompo, Swiss Re, and Travelers.

You can read more about this survey or request a copy of the survey here.

If you have any questions or would like more information, please contact Greg Blueford 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.