General Practice, Solo & Small Firm DivisionBest of ABA Sections
SPRING 1998 - VOLUME 2, NUMBER 1
Tort and Insurance Practice
Attorney Malpractice: What It Is and How Not to Do It
By Judith F. Goodman and Sue C. Jacobs
Every lawyer knows that the specter of a malpractice action is more real than it was twenty years ago. It is now even more crucial to do everything in your power to supply excellent, ethical, and dedicated service to your clients.
If there is a secret to avoiding or minimizing your risk of being sued, it is to provide the most careful service imaginable, to document everything and to apprise your client in advance, and in writing, of the limitations of the law and of the lawyer. Your retention letter, signed by the client, must explain what you will and will not do. Should you determine not to represent the client, you must send a nonretention letter and, if necessary, advise of the appropriate statute of limitations deadlines. While doing all of those things will not guarantee that you will never be sued, it will increase the likelihood of a successful defense, and will make you an unattractive target of a malpractice action.
To establish a valid malpractice claim, the plaintiff typically has to prove that: (1) the statute of limitations has not expired; (2) the attorney owed the plaintiff the duty of professional care and breached that duty; and (3) the breach proximately resulted in quantifiable damage.
The statute of limitations is one of the most common affirmative defenses. To be upheld, the court first has to determine which statute applies, when the claim accrued, and that the statute bars the claim. Until the early 1960s, courts held that the cause of action accrued when the attorney performed his or her work. However, the judiciary discovered more recently that this "occurrence rule" barred many legal malpractice claims before the plaintiff had even discovered that he or she had a claim. The rule now is the "damage rule," also called the "discovery rule." Under the "damage rule," the plaintiff must actually be injured before the statute of limitations begins to run. The same is virtually true of the "discovery rule," which tolls the statute of limitations until the malpractice plaintiff discovers, or reasonably should have discovered, that the attorney was negligent. At least ten states have enacted statutes that apply the discovery rule. However, these states added a fixed cutoff date, after which time a claim cannot be made. Other states have statutorily extinguished the discovery rule.
While the question of to whom the attorney owes a duty of care used to be easy to answer, that is no longer the case. Certainly we owe the duty of care to our clients. In recent years, however, courts have expanded the duty of care to an enlarging group of third persons. Recognizing that the older privity rule barred claims by, for instance, intended known beneficiaries, the courts began increasing the pool of potential legal malpractice plaintiffs to include those persons who suffered a loss as a result of the attorney’s negligence. The rules involving privity vary from state to state, so it is crucial to ascertain the standards of the particular state where the action is brought.
The first step towards eliminating the privity requirement can be traced to a line of California cases. These courts held that an attorney may be liable to third parties who are harmed by foreseeable reliance on the attorney’s actions, and they fashioned a balancing of factors test to determine whether a third party should be entitled to sue the attorney. The factors considered were: (1) the extent to which the services were intended to affect the plaintiff; (2) the foreseeability of harm to the plaintiff; (3) the certainty that the plaintiff was injured; (4) the connection between the attorney’s negligence and the injury; (5) the public policy of preventing future harm; and (6) the extent to which allowing such an action would impose an undue burden on the legal profession. In applying these factors, California courts have imposed liability for the tax consequences of estate planning and in securities cases. Other courts across the country have also relaxed the privity requirements.
Because jurors are not generally familiar with the requirements of proper legal representation, expert witnesses must be presented to advise the jury of the standard of care. Since 1960, virtually every state has held that expert testimony is admissible to advise jurors as to the standard of care. Likewise, whereas many states previously followed what was known as "the locality rule," judging an attorney’s practice on a local city, town, or regional basis, most states now have statewide uniform standards of care. This development may make plaintiffs’ cases easier because attorneys are generally loathe to testify against their neighbors, but will testify against attorneys practicing in a different area of the state.
The plaintiff has the burden of proving the connection between the attorney’s wrongful conduct and the resulting injury. Causation is a question normally left for the fact finder. Most jurisdictions require a plaintiff to show "but for" the attorney’s alleged negligence, the plaintiff would have obtained the desired result in the action in which the attorney represented the plaintiff.
The successful plaintiff in a malpractice case is usually entitled to economic losses that are the direct result of the attorney’s malpractice. While it is hard to generalize as to the extent of consequential damages permitted by the courts, most courts uphold recovery for foreseeable injuries.
Violation of the professional code is not malpractice per se. Since the Model Code of Professional Responsibility does not provide for a direct malpractice action, the breach of an ethics rule provides only a public, i.e., disciplinary remedy, and not a private remedy.
How to Avoid Malpractice. The following is a list of one noted commentator’s "do’s and don’ts":
• Do not promise a specific outcome.
• Advise your client regarding fees.
• Do not ignore your client.
• Do not prejudice your client.
• Do not represent adverse interests unless disclosed to the client in writing.
• Keep a calendar.
• Obtain your client’s prior consent to associate with another attorney.
• Get help if you are out of your field of regular practice.
• Do not criticize prior lawyers without all the facts.
• Do not reveal that you have malpractice insurance.
• Do not defend your own legal malpractice claim.
• Maintain complete and detailed time records.
• Advise the client of any problems.
• Confirm all instructions or conversations by letter.
• Do not talk down to your client.
Not surprisingly, court decisions involving legal malpractice claims demonstrate that scholarship helps achieve a greater degree of professionalism. Heightened consciousness of and focus on what triggers liability result in practice methods that include as essentials: clarity and fairness in retention; due diligence in factual and legal research; adherence to time requirements; and punctuality and integrity in billing practices. Certainly, avoidance of professional liability is better than an effective malpractice defense.
Judith F. Goodman and Sue C. Jacobs are partners in the firm of Goodman & Jacobs, New York, New York.
This article is an abridged and edited version of one that originally appeared on page 30 in The Brief, Winter 1998 issue (27:2).