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December 13, 2016 Articles

Disengagement Letter Essential to Dismissal of Legal Malpractice Case

Disengagement letters should be part of an attorney’s standard operating procedure.

By Carey L. Menasco and Tyler D. Trew

A letter to a recently retained client terminating a representation, also known as a disengagement letter, can result in the dismissal of a legal malpractice case at the earliest stages, as opposed to prolonged litigation that ultimately results in a judgment or a costly settlement. When disengaging from the representation of an existing client, an attorney should notify the client by email or by certified mail, return receipt requested, that the attorney has terminated the attorney-client representation and therefore owes no further duty to the former client. The attorney may have an obligation to advise the nonclient of impending statute of limitations periods.

Louisiana Case Study
A recent decision from a Louisiana appellate court demonstrates these principles. In Watson v. Franklin, 198 So. 3d 177 (La. App. 2d Cir.2016), the plaintiff, Watson, slipped and fell down a flight of stairs. She consulted with an attorney, Franklin, who entered into a contingency fee agreement to prosecute her claims. The retainer agreement, however, expressly reserved Franklin’s right to terminate the representation at any time after investigation, discovery, and research. After he investigated Watson’s claim, Franklin allegedly sent Watson a letter describing many issues with her case and notifying Watson of his decision to terminate the attorney retainer agreement. In that letter, Franklin recommended that Watson seek the advice of another attorney and advised Watson of the date by which her claim would be barred by the applicable statute of limitations. Watson claimed that she did not receive the letter, and she did not retain new counsel to file her lawsuit before the expiration of the limitations period. She then filed a legal malpractice claim against Franklin.

In the trial court, Franklin filed an exception of no right of action on the grounds that Watson had no attorney-client relationship with him on the date that her cause of action was barred by the statute of limitations. Under Louisiana’s procedural rules, the trial court was allowed to hear evidence on the exception. Franklin testified that he mailed the disengagement letter and that it was not returned to him as undeliverable. Watson did not testify but instead submitted an affidavit denying that she received the letter. The trial court concluded that Watson’s affidavit was insufficient to rebut Franklin’s evidence, and it dismissed her case. The appellate court affirmed, finding that the trial court’s factual finding that Franklin terminated the attorney-client relationship was not manifestly erroneous.

Importance of Delivery Confirmation
It is not difficult to imagine a court in another jurisdiction deciding Watson differently, finding that disputed issues of material fact concerning whether Franklin sent the disengagement letter precluded dismissal of the plaintiff’s claims. For example, in Allyn v. McDonald, 112 Nev. 68, 910 P.2d 263 (Nev. 1996), the plaintiff brought a legal malpractice action against an attorney for failing to file a personal injury claim on her behalf. In Allyn, the Nevada Supreme Court reversed the trial court’s summary judgment in favor of the attorney, finding issues of fact concerning the existence of an attorney-client relationship. While the attorney claimed that she told the putative client she would not file the personal injury action, she had no documentary evidence of having made or delivered such a communication, and the putative client’s statements contradicted the attorney’s assertions. To avoid such an outcome, attorneys sending disengagement letters should request and receive a delivery confirmation, such as a certified mail receipt.

Importance of Advising about Statute of Limitations
In addition to declining or terminating the representation, it is advisable to inform the nonclient that the passage of time may bar pursuit of the matter. Jurisdictions are split regarding whether such a duty is owed. For example, in Burras v. Marx, No. 04-0802 (La. App. 5th Cir. 2004), 892 So. 2d 83, writ denied, 896 So. 2d 70 (La. 2005), a Louisiana appellate court found that an attorney who declined to handle a legal malpractice claim did not have a duty to advise the client of the statute of limitations applicable to the claim even though the attorney agreed to represent the client on a closely related claim arising from the same transaction. The court explained that the plaintiff failed to point to any Model Rule of Professional Conduct or jurisprudence that would require an attorney to advise declined clients of a limitations period. However, other jurisdictions have found that a duty is owed. In Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686 (Minn. 1980), the Minnesota Supreme Court held attorneys liable for failure to advise a putative client of the statute of limitations where the “client” timely failed to pursue a claim because she relied on the attorneys’ statement, in declining representation, that she had no cause of action.

Generally, attorneys should avoid providing specific deadlines due to risk of error. If an attorney does provide advice concerning the limitations period, the attorney must give correct advice. Incorrect advice can form the basis for liability. If the deadline is quickly approaching, a stronger admonition may be necessary advising the nonclient to seek immediate competent legal counsel. For example, in Hansell, Post, Brandon & Dorsey v. Fowler, 288 S.E.2d 227 (Ga. Ct. App. 1981), a Georgia appellate court found attorneys not liable for legal malpractice where they wrote a letter declining representation, informed a nonclient in the letter of the impending limitations period, and subsequently informed the plaintiff to get a new lawyer. The letter specifically stated that “time is of the essence in any action you may take.” The Georgia court considered both the letter and the fact that the plaintiff consulted with another lawyer prior to the expiration of any period of limitation applicable to the claim.

Importance of Retaining Copies
Finally, after taking the time to draft and send a disengagement letter, attorneys should be particularly mindful of retaining copies for their records in case a future dispute arises where an individual claims that an attorney-client relationship was indeed formed. In many cases where the disengagement occurs in the investigative stages, prior to suit being filed, the attorney may not have a physical file for the particular matter. Attorneys should create a general file where all disengagement letters are stored together.

Conclusion
For these reasons, disengagement letters should be part of an attorney’s standard operating procedure. Use them.

 

Keywords: professional services liability litigation, disengagement letter, legal malpractice, retainer agreement

 

Carey L. Menasco is a shareholder of Liskow & Lewis, APLC, in New Orleans, Louisiana, and it a cochair of the Professional Services Liability Litigation Committee. Tyler D. Trew is an associate with the firm.


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