Hinshaw reports a fairly complicated commercial liquidated damages case arising from a bank loan to individuals which led to a default, which led to a confession of judgment, which led to a settlement, with inadequate documentation of the settlement.  At least one judgment was not marked "satisfied."  After trips up and down to the Appellate Courts there, and after changes in the law of liquidated damages, it all boiled down to a question of when the bank became aware of its attorney’s mistake.

"In September 2005, Wachovia initiated a legal malpractice action in Leigh County against Ferretti, asserting claims of professional negligence and breach of contract. In February 2006, Ferretti filed an answer, asserting, inter alia, that Wachovia’s claims accrued no later than October 1994—that is, when Pisani commenced his action against Meridian—and were thus time-barred by the statute of limitations. The trial court found in favor of Ferretti and dismissed the complaint with prejudice. More specifically, the trial court found that the negligence cause of action, which carried a two-year statute of limitations, accrued in June 2003. The trial court likewise found that the breach of contract cause of action had accrued in October 1994. Thus, the statute of limitations for both claims had run prior to filing of the complaint.

Wachovia appealed, arguing that it had not in fact experienced an actual loss by that time and that a suit against Ferretti before that time would have been premature. The Pennsylvania appellate court disagreed and affirmed the dismissal. "

Clients claim that attorney forged their names on settlement documents, then stole money.  They sue attorney, get judgment, and then lost any ability to collect, when carrier successfully disclaims and wins a collection case brought by the cleints against the carrier. Wiley Rein, LLP reports:

The Supreme Court of Nebraska has held that misappropriation and dishonesty exclusions in a lawyers professional liability policy barred an attorney’s former clients from executing legal malpractice judgments against the insurer that issued the policy. Fokken v. Steichen, 2008 WL 62539 (Neb. Jan. 4, 2008).

Several of the attorney’s former clients accused him of settling their tort claims without their approval by signing their signatures on release agreements and settlement checks without their authorization. The former clients also asserted that they had not received any of the settlement proceeds from the attorney. Furthermore, the former clients alleged that the attorney (1) failed to communicate with them regarding the defendants’ settlement offers; (2) accepted the settlement offers on their behalf without obtaining their consent; (3) allowed their tort claims to be dismissed with prejudice after the statute of limitations had expired; and (4) breached fiduciary duties owed to them. The former clients won malpractice judgments against the attorney and then instituted garnishment proceedings against the attorney’s insurer, and the parties cross-moved for summary judgment.

In granting the insurer’s motion for summary judgment, the court first observed that the former clients’ garnishment claims against the policy proceeds depended on whether the insurer would have been obligated to indemnify the attorney for the malpractice judgments in the first place because "the claim of a judgment creditor garnishor against a garnishee can rise no higher than the claim of the garnishor’s judgment debtor against the garnishee." The court next considered the former clients’ argument that "where an insurance company is notified of a pending suit against an insured and has a full opportunity to defend the action, the judgment against the insured, if obtained without fraud or collusion, will be conclusive against the insurance company." The court rejected this contention, explaining that the insurer was not challenging the malpractice judgments but was instead contending that the judgments were not covered by the policy. "

One of the more ironic but interesting aspects of legal malpractice, like quantum mechanics, is that the very act of measurement [trial] can cause the observed object to change.  Similarly, in the prosecution of a legal malpractice case, there can be legal malpractice .  Here, from the Madison Record there is the potential for a further case:

"Madison County Circuit Judge Daniel Stack had to consider calling a mistrial Tuesday in a professional negligence case against the law firm Thompson Coburn.

Representing Magna Bank (now Regions), plaintiff’s attorney Rex Carr — whose trial skills are legendary — informed Stack that he had been giving daily transcripts to some of his witnesses.

Carr told Stack that he has supplied trial transcripts to his experts, including his star, and protege, Belleville attorney Tom Keefe.

He said the only other time he had to deal with daily trial transcripts was during the historic three-and-a-half year-long dioxin trial he pursued in St. Clair County.

Potential witnesses were allowed to review the transcripts in that case, he said, due to the sheer volume of evidence presented during the record setting civil trial against Monsanto.

After Carr’s surprise announcement that he let witnesses see that transcripts, Carrie Hogan of Jones Day in Chicago wanted Stack to call a mistrial.

Stack, who came in to work on a state holiday for judges (Lincoln’s birthday), called a recess and advised Carr and Hogan to discuss the possibility of a settlement, but those talks stalled after about an hour of discussions.

Afterwards, Carr said he would exclude any witness that saw the transcripts. "

A commonly quoted statistic is that 95% of all cases are resolved prior to trial;  they are resolved through motions to dismiss, motions for summary judgment and settlements.  The few cases that go on to trial generally, they calculate, go 50/50.  Here is a highly reported, big $ legal malpractice case which went to trial, and ended in a verdict for defendant.  Law.Com reports:

"A Philadelphia jury Wednesday cleared Duane Morris of a claim of legal malpractice for its representation of a former client in settlement negotiations, according to attorneys in the case.

The eight-member jury found the firm did not breach the standard of care or breach any fiduciary duty when its client signed a settlement agreement that provided no security, the attorneys said.

The case was held before Philadelphia Common Pleas Judge Howland W. Abramson in the Commerce Court Program.

The eight-member jury began deliberating at about 3 p.m. on Tuesday for 3 1/2 hours and came back to deliberate at 1 p.m. Wednesday, handing down a verdict at 3 p.m. The jury was selected on Feb. 4, and closing arguments were held on Tuesday. "

Legal malpractice is a wholly state cause of action, and might be brought in Federal District Court only if there is a basis for jurisdiction.  Diversity jurisdiction is the one most quickly thought of, but in certain circumstances federal question jurisdiction may also apply.  Questions of legal malpractice in a patent representation is one such example.  Here, the case of  Immunocept v. Fulbright & Jaworsky provides a discussion of why it may [and on removal, must] be brought in Federal District Court.  There they say:

"Because the claim scope determination involved in the malpractice claim presents a substantial question of patent law, we conclude that jurisdiction is proper under section 1338."

In Scher v. Mishkit  [NYLJ exerpt], Supreme Court, Suffolk County refused to allow this attorney to wifhdraw pursuant to CPLR 321.  This situation is more common than one might guess, especially in medical malpractice cases.  The case is brought, and prosecuted, with depositions, and medical record exchanges, and then placed on the calendar, without an expert in place. 

Not unexpectedly, time goes by, and the case starts to be near the top of the list for jury selection, and defendants have not offered to settle.  Plaintiff’s attorney still has no expert, and it starts to look like they may simply have worked this case up on the assumption [hope] that defendants would settle…and now they have a problem.

That’s what this case seems to be about. "PLAINTIFF’S lawyer moved to withdraw as the attorney of record asserting that the attorney-client relationship was at an "impasse." Counsel argued it was unable to find an expert willing to testify for plaintiff at trial in this medical malpractice action. Plaintiff opposed the motion, alleging she cooperated with counsel and through all the years of representation received "constant assurance that this was a valid case."

Result?  Attorney must stay in case.

 

It is an ethical  violation of 22 NYCRR 603.4[e][1][iv]  willfully to fail to satisfy a judgment arising out of one’s professional activities.  For the most part, these judgments arise from legal malpractice. Here  an attorney is suspended because of an unsatisfied judgment:

"Respondent’s failure to cooperate with the Committee’s investigation (22 NYCRR 603.4[e][1][i]) and her willful failure to pay money owed to a former client, which debt is demonstrated by a judgment (22 NYCRR 603.4[e][1][iv]), warrant her immediate suspension (see In re Zimmerman, 45 AD3d 212 [2007]; Matter of McClain-Sewer, 39 AD3d 35 [2007]; In re Singer, 301 AD2d 336 [2002]; In re Adelman, 263 AD2d 160 [1999]). Accordingly, the Committee’s motion should be granted and respondent suspended from the practice of law, effective immediately, until the proceedings pending before the Committee are concluded and until further order of this Court. "

So far the central question in this legal malpractice case is whether it is taking place in a judicial hellhole, and incidently, who gets to make that decision.

This is a legal malpractice case taking place in Madison County, Illinois.  Here is the story from the Madison St. Claire Record:

"Relics of Madison County’s past are scheduled to reappear for a legal malpractice trial that will open old, painful wounds and be as dramatic as anything ever seen in an Edwardsville courtroom.

The heart of the matter is about the area’s most notorious swindler James Gibson who stole millions from children and widows by making off with their structured settlement funds.

But legendary plaintiff’s attorney Rex Carr — who plans to call former Madison County judges Gordon Maag and Randall Bono and prolific personal injury attorney Thomas Q. Keefe as witnesses — is trying to convince the jury to take pity on another victim in the "debacle," his client, Magna Bank (now Regions Bank).

 

Indiana Legal Blog reports on the Transcontinental legal malpractice case.  We reported on it earlier, but there seems to be a new twist:

"On appeal, the Indiana Court of Appeals did not accept the excess insurer’s argument that they should be allowed to bring a legal malpractice claim against the client’s attorneys under the doctrine of equitable subrogation. The Indiana Court of Appeals found no material issue of fact in finding that limited correspondence between the excess insurer and the client’s attorneys fell significantly short of constituting an attorney/client relationship. Id. at 724. Furthermore, the Indiana Court of Appeals held that allowing the legal malpractice suit under the doctrine of equitable subrogation would essentially be the same as allowing an assignment of the cause of action from one party to another, which it will not do. Id. at 723. In support of the holding, the Indiana Court of Appeals explained it will not allow legal malpractice actions in these situations for the reason that allowing them would divide the loyalty of the attorneys. If allowed, attorneys will be tempted in not vigorously representing their clients in order to protect themselves against third parties such as the excess insurer in this case. Id.

The Indiana Supreme Court granted a petition to transfer and the Indiana Court of Appeals opinion has been vacated. "

Here is a commentary from Larry Upshaw  on the pro/con arguments for a law firm putting an arbitration clause in the retainer agreement.  From plaintiff’s prospective, it can be a costly problem.  Take a commercial legal malpractice in which there are potential $ 1 million damages.

A trial can be had for the cost of an index number.  The arbitrator’s fees can be as high as $ 50,000.

From the blog: "It’s curious that many lawyers routinely put arbitration clauses in their engagement letters with clients. Here you have quite literally the foot soldiers in the third branch of government, charged by our professional oath to be officers of the court. And yet, in contracts with clients, these attorneys opt out of the court system by obligating clients to take any dispute to arbitration.

The subtext of that conduct seems clear: these lawyers don’t trust the court system to treat them fairly and prefer the private dispute resolution process of arbitration to court. Call me crazy, but that certainly sounds out of whack. It’s kind of like a doctor saying, “If I get sick, whatever you do, do not take me to a hospital.”

While it may seem ironic that lawyers are running for protection to arbitration clauses, there is an even bigger ironic surprise waiting for these lawyers who opt out of the court system. Keep in mind that the arbitration clause in your engagement letter obligates your client to pursue his or her malpractice claim against you in arbitration instead of in court. And it therefore obligates your insurance carrier to have its liability for your malpractice determined in arbitration instead of in court. It turns out that insurance companies actually like jury trials and are not always all that fond of arbitration. Lawyers who force their clients into arbitration and then get an arbitration case for malpractice are now routinely receiving a “Reservation of Rights” letter from their insurance carrier, threatening to deny insurance coverage because the lawyer deprived the insurance company of its right to a jury trial.

Next time you are tempted to show your distrust for the court system by including an arbitration clause in your fee contracts, keep in mind that you may have just cancelled your malpractice insurance policy. "