A federal court has ruled that a law firm and two lawyers that represented a firm partner in an adverse action against a former firm client may have committed legal malpractice and breached their duty of loyalty to that client. In considering a motion for summary judgment, the court concluded that genuine issues of material fact were presented as to whether the firm’s representation of the partner and former client were “substantially related.” ABA Litigation Section leaders conclude that Smith v. Glover & Davis, et al. should remind law firms of the importance of clarifying the scope of client representation and avoiding representing clients with interests adverse to former clients.
March 01, 2023 Top Story
Firm Representing Partner Against Former Client May Be Liable
Legal malpractice and breach of fiduciary duty claims survive summary judgment
By Kelso L. Anderson
A Motion to Disqualify
In Smith, the defendant law firm represented the plaintiff in personal and business matters for over 40 years. In 2013, the plaintiff had a property dispute with her neighbor, who was also a partner at the defendant law firm. The parties reached an agreement to settle their dispute—which concerned the plaintiff’s construction of a driveway across the partner’s property. Prior to settling the dispute in 2013, the plaintiff had a conversation with a different partner at the defendant law firm, ostensibly concerning the property dispute.
In 2017, the plaintiff sued her neighbor (the law firm’s partner) alleging various state law claims, which the opinion refers to as the “driveway litigation,” including promissory estoppel, fraud, and bad faith. The law firm represented the neighbor in the driveway litigation. The plaintiff moved to disqualify the firm and its attorneys in the driveway litigation on three grounds.
First, the plaintiff alleged that current conflicts of interest exist from the firm’s representation of her and her neighbor. Second, the plaintiff argued that she was a former client and the current dispute with the neighbor was “substantially related” to the firm’s prior representation of her. Third, the plaintiff claimed that the law firm used confidential information gained from their past representation of her in the driveway litigation. The state court denied the plaintiff’s motion to disqualify.
Fact Issues Preclude Summary Judgment in Subsequent Case
In a subsequent suit in the U.S. District Court for the Northern District of Georgia, the plaintiff alleged breach of fiduciary duty and legal malpractice by the law firm and the two law partners that represented the plaintiff’s neighbor in the state court driveway litigation. The defendants moved for summary judgment.
The court concluded that genuine issues of fact existed as to whether the defendants breached their fiduciary duty of loyalty to the plaintiff based on the defendants’ prior representation of the plaintiff being “substantially related” to the driveway litigation. Specifically, the court identified two prior property disputes in which the firm had represented the plaintiff—one involving a driveway dispute on the same parcel of land that was at issue in the driveway litigation. The court held that the two prior disputes may be “substantially related” for purposes of Georgia Rule of Professional Conduct 1.9. The court also held that issues of fact remained as to whether the defendants improperly used confidential information learned in the scope of their representation of the plaintiff.
The district court also denied summary judgment on the legal malpractice claim. The court made favorable inferences for the plaintiff on the fact that the plaintiff’s affidavit noted that she “consulted” a partner at the defendant law firm prior to signing the 2013 agreement with her neighbor. Quoting Georgia law, the court noted that an “attorney-client relationship . . . may be implied from the conduct of the parties.” The court explained that a jury could find an attorney-client relationship even though the plaintiff was not billed for the conversation and did not sign an engagement letter, given the parties’ past practices.
Lessons Learned
Litigation Section leaders observe several key takeaways from the case. “The main lesson is to avoid becoming involved in outside disputes involving one of the firm’s lawyers, especially in a matter in which the adversary is a present or former client,” advises Alan R. Jampol, Los Angeles, CA, cochair of the Attorneys’ Liability Subcommittee of the Section’s Professional Liability Litigation Committee. “A legal malpractice claim is something no firm wants to deal with,” adds Tiffany A. Rowe, Washington, D.C., cochair of the Section’s Professional Liability Litigation Committee. “Without knowing the value of plaintiff’s claims, it would have served the firm well to try and settle the matter out of court. Sometimes standing on principle—for a few yards of grass—does not lead to the most favorable outcome,” she continues.
“The facts certainly suggest that the client believed she had an ongoing engagement with the firm and that the firm possessed confidential information related to the property dispute,” observes John S. Austin, Raleigh, NC, cochair of the Section’s Ethics & Professionalism Committee. “If the same evidence had been presented in the [state court] action, I believe the court should have disqualified the firm and its attorneys,” Austin concludes.
Hashtags: #conflictsofinterest #legalmalpractice #formerclient #practiceoflaw #currentclient
Resources
- Smith v. Glover Davis, P.A., et al., 3:22-cv-00015-LMM, (N.D. Ga. Nov. 15, 2022).
- Tante v. Herring, 453 S.E.2d 686 (Ga. 1994).
- Both v. Frantz, 629 S.E.2d 427 (Ga. Ct. App. 2006).
- Tilley v. King, 9 S.E.2d 670 (Ga. 1940).
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