Five Ways To Avoid A Five Ways To Avoid A Legal Malpractice Legal Malpractice

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Janet L. Everson, Esq.Murphy Pearson Bradley & Feeney

88 Kearny Street, 10th FloorSan Francisco, CA 94108

(415) 788-1900(415) 393-8087 faxjeverson@mpbf.com

I.

DEFINE YOUR ROLE

• National statistics show that legal malpractice claims arise out of every area of the practice of law.

• Many claims arise from matters involving conflicting interests among jointly represented clients or between client and counsel.

National statistics show that legal malpractice claims arise out of every area of the practice of law. Many claims arise from matters involving conflicting interests among jointly represented clients or between client and counsel. Misunderstandings between client and counsel can be limited simply by identifying who is the client and by defining the lawyer’s role at the outset of the representation.

 

• Misunderstandings between client and counsel can be limited simply by identifying who is the client and by defining the lawyer’s role at the outset of the representation.

A. Avoid Conflicts of Interest

• Two parties on opposite sides of one transaction want one lawyer to represent them both.

 

• One partner to a partnership wants to have actions performed on behalf of the partnership without the involvement of the other partner.

 

• Two parties to a proposed agreement want the lawyer to act as a scrivener only.

 

• Multiple individuals want one lawyer to represent them jointly.

As a matter of law, the attorney-client relationship is a fiduciary relationship which makes it improper for an attorney to act contrary to, or to assume a position inconsistent with, the interests of his present or former client.

A lawyer may represent two or more clients with potential conflicts of interest only after the lawyer has fully disclosed the potential conflicts to the clients and has obtained the informed, written consent of the clients to the joint representation.

See Cal. Rules of Prof. Conduct, 3-300 and 3-310; Model Rule 1.7

Comment to Rule 1.7:

“[W]hen a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved cannot properly ask for such an agreement or provide representation on the basis of the client’s consent.”

Always advise the client to seek an independent review of the conflict before they agree to the joint representation.

B.Create A Written

Legal Services Agreement

The existence of an attorney-client relationship which gives rise to a duty of care to a client is created by an agreement or contract.

Budd v. Nixon (1971) 6 Cal.3d 195, 200.

• Identify your client

• Specify the services to be performed

• Limit your exposure

Cal. Rules Prof. Conduct, Rule 3-400A member shall not:

(A)Contract with a client prospectively limiting the member's liability to the client for the member’s professional malpractice; or

(B) Settle a claim or potential claim for the member’s liability to the client for the member’s professional malpractice, unless the client is informed in writing that the client may seek the advice of an independent lawyer of the client’s choice regarding the settlement and is given a reasonable opportunity to seek that advice.

It is not unethical for an attorney to limit his or her potential liability for legal malpractice by contractually limiting the scope of the representation or the duration of the representation.

Cal. Rules of Prof. Conduct, Rule 3-400 A, Nichols v. Keller (supra) at 1684.

Cal. Bus. & Prof. Code Sec. 6148(a)In any case . . . which it is reasonably

foreseeable that total expense . . . will exceed one thousand dollars ($1,000), the contract for services in the case shall be in writing . . .

The written contract shall contain all of the following:

Cal. Bus. & Prof. Code Sec. 6148 (cont.)

The written contract shall contain all of the following:

(1) Any basis of compensation . . .

(2) The general nature of the legal services to be provided

(3) The respective responsibilities of the attorney and the client . . .

(c) Failure to comply with any provision of this section renders the agreement voidable at the option of the client, and the attorney shall, upon the agreement being voided, be entitled to collect a reasonable fee . . .

Section 6148 does not apply to corporate clients.

There is no statutory authority in California requiring attorneys to create written fee agreements when they are employed by a corporation.

Put All Fee Agreements

In Writing

ABA Model Rule 1.8

In jurisdictions that have adopted the Model Rules, a lawyer is required to use a written agreement when representing clients on a contingent fee basis.

United States v. 36.06 Acres of Land, (D.N.M. 1999) 70 F.Supp. 2d 1272.

Model Rule 1.8 requires inclusion of an explanation of the client’s responsibility for court costs and litigation expenses.

Varner v. Eves (Or. Ct. App. 1999) 990 P.2d 357

Foodtown Inc of Jacksonville v. Argonaut Insurance Co, 102 F.3d 483 (11 Cir. 1996) 

Alholm v. O’Bryan Law Center, P.C. (D.Minn.) 2000 WL 1196202

II.

MAKE A GOOD RECORD

• Communicating with the client

• Confirming what the client does want

• Confirming what the client does not want

. . . is not just good business practice, it is required under some jurisdiction’s rules of professional conduct.

Cal. Bus. Prof. Code §6068m

“[R]espond promptly to reasonable status inquiries of clients and keep clients reasonably informed of significant developments in matters with regard to which the attorney has agreed to provide legal services.”

A client directive to not do something that the lawyer has suggested certainly is a significant development in the case.

Settlement Offers

and

Settlement Negotiations

California Rules of Professional Conduct, Rule 3-500, requires that the client be reasonably informed about significant developments and significant documents.

Rule 3-510 requires communications with the client of all terms and conditions of any settlement offer.

 

Other jurisdictions have similar requirements.

Miller v. Byrne (Colo. Ct. App. 1995) 916 P.2d 566

Rizzo v. Haines (Pa. 1989) 555 A.2d 58

Aller v. Law Office of Carole E. Schiefer (Colo 2006) 140 P.3d 23

The following scenarios provide examples of situations requiring a written record of what has transpired between lawyer and client:

Scenario A

During settlement negotiations, the client insists that the value of the case is exactly what it would be if he or she won at trial.

A client’s consent to a settlement provides no

guarantee that a malpractice suit will not

later be filed

Scenario B

A defiant defendant refuses to consider that the case has any potential exposure to him or her

Keeping a client advised, in writing of significant developments, particularly settlement negotiations, will reduce the chance that you will successfully be sued for malpractice.

Sauer v. Flanagan and Maniotis, P.A. (FL 2000) 748 So.2d 1079

Glenna v Sullivan (1976 Minn) 245 NW2d 869

Nause v Goldman (1975, Miss) 321 So 2d 304

Gibson v. Herman, Herman, Katz & Cotlar, LLP, (La. Ct. App. 4th Cir. 2006) 927 So. 2d 1178

Popescu v. McCarthy, (2000) 706 N.Y.S.2d 98

III.

MAKE A CLEAN,

AND CLEAR, BREAK

A. Send A Termination Letter And Withdraw From The Representation

Sending the client a letter terminating the representation acts to:

•Stop a claim that you have continued to represent the client

•Triggers the accrual of the statute of limitations in (most situations).

Unfortunately, courts have been pretty clear that termination is not really termination until and unless it is terminated by operation of law, withdrawal, discharge, or the mutual consent and agreement of the parties.  

Hensley v. Caietti (1983) 13 Cal.App.4th 1165, 1170.

If in litigation, move to withdraw from the representation as well.

Rules of Professional Conduct at 3700(a)(2), preclude an attorney from withdrawing until the attorney has taken “reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client, including giving due notice to the client, allowing time for employment of other counsel, and complying with applicable laws and rules.”

Other jurisdictions impose a similar duty to act with reasonable care and in full consideration of the rights of the client.

Sanders, Bruin, Coll & Worley P.A. v. McKay Oil Corp (N.M. 1997) 943 P.2d 104; Bell v. Clark (Ind. Ct. App. 1995) 653 N.E. 2d 483; Delesdernier v. Porterie (5th Cir. 1982) 666 F.2d 116.

The attorney is responsible for providing the client all original files connected with the client’s case upon reasonable request . . . even if the client owes you money.

Cal. Rules Prof. Conduct, Rule 3-700(d)(1)

Once the attorney-client relationship has been terminated, the attorney does not have a duty to represent the client in any other matter.

Branlin v. Belcher (1977) 67 Cal. App. 3d 997.

In the situation where a lawyer refers a client to a different attorney, it is imperative to confirm in writing that the attorney no longer represents the client in that specific subject matter.

B. Send A Disengagement Letter

The attorney-client relationship can terminate when the task the lawyer was hired to perform has been completed.

Panattoni v. Superior Court (1989) 203 Cal.App.3d 1092.

C. Send A Non-Engagement Letter

Failure to send a non-engagement letter may give rise to a claim that an attorney client relationship was created.

Fox v. Pollack (1986) 181 Cal.App.3d 954, 959; Morris v. Margulis (Ill. App. Ct. 1999) 718 N.E.2d 709.

IV.

ENFORCE THE TERMS OF YOUR LEGAL SERVICES AGREEMENT

WITH CAUTION

Know you jurisdiction’s statute of limitations on malpractice actions.

 

In California, the statute of limitations for filing an action against an attorney is one year under most circumstances.

 

The statute of limitations to sue a client for breach of the legal services contract is longer.

WAIT TO SUE

FOR YOUR FEES!!

If the lawyer does not wait, in most circumstances the lawyer will draw a cross-complaint for malpractice as soon as the suit for fees is filed.

Several courts have held that a tort action stemming out of the same transaction as a breach of contract claim is a compulsory counterclaim to the contract action.

Crutcher v. Aetna Life Insurance Co., (5th Cir. 1984) 746 F.2d 1076, 1080 (suit for breach of fiduciary duty and tortious interference is compulsory counterclaim to action to recover on guaranty)

 

Cleckner v. Republic Van & Storage Co., (5th Cir. 1977) 556 F.2d 766 (negligence claim for damage to goods is compulsory counterclaim to suit by movers for failure to pay)

In re McCoy, (D.Tex. 1974) 373 F.Supp. 870, 873 (medical malpractice claim is compulsory counterclaim to suit for unpaid doctor's fees)

 

Black v. Dillon, (1963) 213 Cal.App.2d 295; Law Offices of Jerris Leonard, P.C. v. Mideast Systems, Ltd. (D.D.C. 1986) 111 F.R.D. 359, 360 (legal malpractice)

Once the statue of limitations has run for malpractice, the only relief available to a former client for alleged malpractice is an offset to the fee claim.

V.

COMMUNICATE

COMMUNICATE

COMMUNICATE

More than half of all claims arise from the lawyer’s failure to communicate with the client, whether it is risk assessment or informed consent.

Assurance Co. of America v. Haven (1995) 38 Cal. Rptr. 2d 25

Metcalfe v. Waters (Tenn. 1998) 970 S.W.2d 448.

More often than not . . .

Happy clients

do not sue for malpractice.