CLE: 2009: Legal Malpractice Law in a Nutshell

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CLE: 2009: Legal Malpractice Law in a Nutshell


Susan Saab Fortney, Vincent R. Johnson


St. Mary's University School of Law San Antonio Texas Alumni Homecoming, St. Mary's University School of Law Alumni Homecoming




St. Mary's University School of Law Alumni Homecoming




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Susan Saab Fortney
Paul Whitfield Horn Professor of Law
Texas Tech University



Vincent R. Johnson
Professor of Law
St. Mary's University

This material is a rough first draft of the first four
chapters of the Nutshell that will be published by West
in early 2010. Please do not cite or quote without
VRJ, February 5, 2009
vj ohnson@stmarytx.ed u
©Vincent R. Johnson

Summary of Contents

Chapter 1. Introduction to Legal Malpractice
Chapter 2. Overview of Theories of Liability
Chapter 3. Negligence
Chapter 4. Breach of Fiduciary Duty



Chapter 5. Duties to Nonclients
Historical Development
Fraud on Nonclients
Deceptive Trade Practices Acts
Negligent Misrepresentation
Claims Based on Representation of Fiduciaries
Funds and Property of Nonclients
Intended Beneficiaries
Duties to Other Lawyers
I. Duties to Litigation Adversaries
Chapter 6. Remedies for Legal Malpractice
Compensatory Damages
Punitive Damages
Chapter 7. Defenses and Obstacles to Recovery
Contributory Negligence, Comparative Negligence, and
Comparative Fault
Unlawful Conduct
Malpractice Statutes of Limitations
Non-Assignability of Legal Malpractice Claims
Joint Liability and Reimbursement


Releases and Covenants Not to Sue
Immunities and Privileges
Arbitration Agreements

Chapter 8. Vicarious Liability
Firms, Employers, and Partners
Limited Liability Law Firms
Other Associations that Expose Lawyers to Liability
for the Conduct of Other Lawyers
Chapter 9. Important Malpractice Traps
Client Relations Errors
Conflicts of Interest
Litigation Errors
Business Transactions with Clients
Breach of Confidentiality
Representing Entities


Chapter 10. Preventing Legal Malpractice
What is Law Practice Risk Management?
Client Management Procedures
Administrative and Work Control Systems
Human Resources Management





Chapter 11. Legal Malpractice Insurance
Why Study Legal Malpractice Insurance?
What Type of Coverage is Available
The Anatomy of a Policy
Recognizing How Firm Changes Mfect Coverage
Obtaining Insurance
Handling Claims
Informing Clients When Lawyers Discover Their Own


Page 1
Chapter One
Introduction to Legal Malpractice
0 1 Nutshell Rev 12 VRJ. wpd
Thursday, March 19,2009


No End in Sight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 3


Practicing Law Defensively ................. . ........... . . . ........... Page 4


The Costs of Legal Malpractice .......... . ........... . ................. Page 4


Legal Malpractice Law as a Specialty ................ . ...... . ........... Page 5



The Rise of Legal Malpractice Law ............................ . . . ...... Page 1



Responsibility to Clients and Nonclients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1

Responsibility to Cli ents and Nonclients

Legal malpractice law is the body of legal principles that governs the civil liability of
lawyers for losses incidental to the practice of law. In some cases, these rules work to hold
lawyers accountable for harm resulting from their errant practices. However, in other cases, the
relevant principles insulate lawyers from damage awards when it would be unfair to impose legal
Claims against lawyers may be asserted by either clients or nonclients. Broadly
conceived, legal malpractice law encompasses both categories of potential liability. While much
of this book is concerned with lawyers' obligations to clients or former clients, Chapter 5 focuses
particularly on duties to nonclients.


The Rise of Legal Malpractice Law

Prior to the 1970s, there were relatively few reported cases holding lawyers accountable
for legal malpractice. For a variety of reasons, it was hard for a client (let alone a nonclient) to
mount a successful lawsuit. On the one hand, it was sometimes difficult to secure legal
representation. In a day when the legal profession was much smaller and more homogeneous
than it is today, lawyers were reluctant to represent persons suing other lawyers. On the other
hand, the judiciary was not yet very receptive to legal malpractice claims. Professional liability
was something of a novelty, and the malpractice principles applicable to lawyers were simply

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Today, everything is different. The legal profession has grown immensely and so have
concerns about consumer protection. For many reasons, legal malpractice is now a subject of
abundant litigation. The contours and nuances of the law governing lawyer liability are matters
of great and ever-increasing importance. This is true both for those engaged in the practice of
law, as well as for consumers of legal services and others affected by the work that lawyers do.
What are at stake in legal malpractice lawsuits are matters of real consequence. Whether
and to what extent liability is imposed directly affects how law is practiced. The rulings of courts
on liability claims have an important impact on how much care lawyers exercise with respect to
such matters as communicating information to clients, following clients' instructions, avoiding
conflicts of interest, and safeguarding client information and property. The imposition of
liability has great deterrent force, not only on lawyers who are held liable, but on other members
of the profession who become aware of malpractice lawsuits, settlements, and court rulings. This
is a very considerable class, for court decisions are not only a matter of public record, often
recorded in printed reports and online databases. Suits against lawyers and adverse judgments
and settlements are also widely reported in popular professional media, such as legal newspapers
like National Law Journal and Texas Lawyer, and electronic publications such as and



The dramatic shift of legal malpractice law from an obscure supporting role in civil
litigation to center stage undoubtedly has many causes. However, two contributions are
indisputable. The first is the increased attention now accorded to issues of lawyer professional
responsibility generally and the second concerns related developments that occurred in the fields
of medical malpractice and accounting malpractice.
In the early 1970s, two developments catalyzed a re-examination of the standards to
which attorneys are held and the mechanisms for enforcing those standards. The first was a
report issued by an ABA committee chaired by former U.S. Supreme Court Justice Tom C.
Clark. 1 Clark's committee detern1ined that the system for disciplining lawyers for bad conduct
was scandalously deficient and that immediate action was needed to protect both the public and
the integrity of the legal profession. The second development was the discovery during the
Watergate crisis that lawyers had been involved in all types of pernicious practices in presidential
politics surrounding the Nixon AdministJ:ation. As a result of these two events- the Clark
Report and Watergate-a top to bottom review of issues relating to lawyer conduct was
undertaken, with important work performed by state and national bar associations, by law
schools and their accrediting agencies, by scholars and critics of the legal profession, and by
concerned lawyers.


ENFORCEMENT (Final Draft 1970) (better known as the "Clark Report").


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During this overhaul of the legal ethics field, numerous changes were made. Courses on
attorney professional responsibility are now taught in every Jaw school. Knowledge of ethics
rules is tested as a part of the bar examination in most states. The procedures for investigating
grievances and disciplining lawyers have been improved nationwide. And a great body of
literature has emerged addressing issues of lawyer conduct? Theories of lawyer liability that
were once only loosely understood have become well established. One major contribution to this
area of the law was the American Law Institute's drafting and promulgation of the Restatement
(Third) ofthe Law Governing Lawyers.3
At the same time that the issues of attorney conduct were being accorded greater attention
in the legal profession generally, changes were taking place in related fields of law. Suits against
doctors and accountants became commonplace. As a result, it no longer seemed strange to think
about whether another class of professionals-lawyers-could be held liable for losses caused by
deficient practices. Indeed, it was only logical that, if doctors and accountants could be held
liable for negligence or under other legal theories, lawyers should be held to similar standards.
The expansion of professional malpractice liability was part of the same movement that, between
the 1960s and 1980s, saw the passage of consumer protection laws in every state and adoption of
products liability principles throughout the country. Each of these legal developments greatly
increased the chances that persons innocently harmed by business enterprises could recover
compensation for their losses.


In the twenty-first century, lawsuits against lawyers are no longer a novelty. Nor are
findings of lawyer liability. Though it is difficult to measure growth in this area of the law,
analysts attentively track the patterns of litigation, reporting on increases or fluctuations in the
number and size of court judgments and in the amounts paid by lawyers or their insurers to settle
liability claims. 4 Looking at the last forty years, one can only conclude that legal malpractice
field has experienced tremendous growth and that it is today an very important area of civil law.

No End in Sight

In the field of medical malpractice litigation, legislatures, in recent years, have enacted
numerous statutes to limit the liability of doctors. However, widespread " tort reform" for the
benefit of lawyers is not on the horizon. Only a few states have attempted to pass comprehensive


See Vincent R. Johnson, Justice Tom C. Clark's Legacy in the Field ofLegal Ethics, 29

of the Restatement, particularly suitable for use in law school courses, is available: AMERJCAN



Page 4
legislation. 5 Lawyers, it seems, are not viewed with the same sympathy as those who practice
medicine-or at least they have not effectively lobbied for legislative protection from legal
liability. The risk of being sued for legal malpractice is likely to remain a serious threat to
lawyers and their law firms under common law principles for many years to come.
The practice of law is a complex enterprise and many clients are inevitably disappointed
with the results obtained in litigation, business transactions, or domestic relations matters. As a
result, virtually every lawyer is a potential malpractice defendant. Indeed, a lawyer's mere
assertion of rights under a client contract can thrust a lawyer into the cross-hairs of litigation. A
suit to collect unpaid legal fees can easily trigger a counterclaim for legal malpractice. 6

Practicing Law Defensively

Good lawyers practice law defensively in order to minimize the risks of being sued or
found responsible for harm caused by improper conduct. Some law firms have developed
detailed procedures to reduce the risk of errors that might give rise to legal malpractice claims
and to document compliance with ethical obligations. Those procedures, sometimes embodied in
a law firm handbook or policy manual, define what is acceptable firm practice with respect to
such important matters as acceptance or rejection of new clients, termination of representation,
identification and resolution of conflicts of interest, fee arrangements, and service on corporate
clients' boards of directors.




Today, avoidance of malpractice liability is also a pervasive theme in the continuing legal
education programs that lawyers in most states are required to attend as a condition for annual
renewal of a license to practice law. This is a desirable development. As the standards of
conduct for lawyers continue to evolve and theories of liability proliferate, information about
limiting exposure and protecting clients from harm must keep pace with developing ideas about
what good practice requires. Chapter 10 explores various strategies for preventing legal


The Costs of Legal Malpractice

A voiding a malpractice claim does more than save a lawyer or law firm from liability for
an adverse judgment or settlement and the costs of presenting a defense. It also preserves the
mental well being and productivity of the lawyers who are involved in fending off allegations of
Legal malpractice litigation is often complex and frequently takes years to run its course.



A notable example is the Alabama Legal Services Liability Act. See ALA. CODE §
6-5-570 et seq. (Westlaw 2009).

See, e.g., Levy and Craig v. D.S. Sifers Corp. 147 P.3d 163 (Kan. Ct. App. 2006).

Page 5
While a suit is pending, a lawyer who is a named defendant is likely to suffer considerable
distress when confronting the possibility that ruinous results that may follow if the claim is
successful. If the claim is a matter of public record, or a topic of discussion in the legal
community, the lawyer may suffer harm to reputation and loss of business. Professionals
colleagues might understandably be less likely to refer a case to a lawyer who is the defendant in
pending malpractice litigation, for negligent referral is itself a basis on which lawyers are sued
for malpractice (see Chapter 8). Even if business does not decline, there is the inevitable stigma
of having to defend a malpractice claim. Harm to reputation may be hard of quantify, but it
nevertheless can be a very considerable loss.



If the lawyer does not have malpractice insurance, the costs of mounting a defense can be
a heavy burden on a law practice. Moreover, even if the lawyer has insurance there are limits to
what insurance will cover in the way of defense costs and liability. The mere fact that a lawyer's
malpractice insurer had to pay out money to defend a claim or satisfy a judgment or settlement is
likely to make the lawyer's future insurance premiums rise. Malpractice insurance is discussed
in Chapter 11.
Aside from "out of pocket" costs, a pending malpractice suit is certain to impair the
defendant lawyer's productivity. It takes a great deal of time to respond to demands under the
discovery rules to produce documents, answer interrogatories, or give depositions. This is
particularly so, where, as is often the case, a malpractice claim arises out of a complex series of
transactions spanning many years and involving numerous actors. Typically, defending a claim
entails constructing a detailed history about facts that have long since faded or disappeared from
memory. This often must be done under circumstances where documentary evidence is either
sorely lacking or, alternatively, so abundant that it is necessary to sift through hundreds or
thousands of documents to identify relevant material. Even when the defendant lawyer is not
directly responding to discovery requests, it is essential for the lawyer to monitor the
developments on both sides ofthe litigation. Of course, other members ofthe targeted lawyer' s
firm may be forced to spend time on tasks related to the litigation, such as explaining what role
they played in the underlying facts or evaluating the terms on which a claim should be settled. A
malpractice claim presents a serious threat to a law firm's productivity, even if the claim is
ultimately found to lack merit.


Legal Malpractice Law as a Specialty

Legal malpractice law is now its own specialized area of the law. 7 Some lawyers devote
all or part of their law practices to suing other lawyers or to defending lawyers charged with
wrongdoing. Many law professors serve as expert w itness in legal malpractice litigation. This is
particularly true of professors who teach both professional responsibility and torts because,
substantively, legal malpractice law lies at the intersection of those two major fields of study.


(2008 ed.).

Page 6
Not surprisingly, there has been an explosion oflegalliterature bearing upon issues of
lawyer liability. Treatises, textbooks, and numerous law journal articles or symposia now focus
on the standards that animate the law of legal malpractice. Legal malpractice Jaw is now an
important subject of legal study.



Page 1
Chapter Two
Overview of Theories of Liability
02 Nutshell Rev 6 VRJ.wpd
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Multiple Claims in a Single Lawsuit



The Consequences of Classification ......... . . .. ............. . ...... .. . Page 3
Scope of Liability . . .... . .............. . ....... . . . ..... . ...... . Page 3
Defenses ......... . .......... .. ........... .. .... . .... . . . . ... . Page 4
Malpractice Insurance .. .. . ...... . ..... . ......... . ..... . ...... . Page4
Vicarious Liability ........... . ...... . ... .... ........ . ........ . Page4
Retnedies .............. . ........ . . . ........... . . . .......... . Page 5
Discharge in Bankruptcy . .. . ... ....... .................. . . .... . Page 5



Culpability ................. ... . .. . . .... ..... ............. .. . ......
Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negligence and Recklessness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Strict Liability for Breach of Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Clients, Prospective Clients, and Nonclients . ....... . ........ . . . . .... .. ... Page 6


Malpractice Versus Discipline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6


The Restatement of the Law Governing Lawyers . . . . . . . . . . . . . . . . . . . . . . . . . . Page 7



Except for rules related to vicarious liability (see Chapter 8) and breach of contract (see
Part A-3 of this Chapter), an attorney is not held strictly liable for harm suffered by either a client
or a nonclient. In every malpractice suit based on tort principles (including claims for breach of
fiduciary duty, discussed in Chapter 4), it must be shown that the defendant lawyer acted
culpably. The plaintiff must prove that the defendant intended to cause harm or failed to exercise
care to prevent foreseeable losses from occwTing.


Intent means that the defendant desired to cause a result that the law forbids or acted with
substantial certainty (i.e., certainty for all practical purposes) that the result would follow.


Respectively, these two kinds of intent are called "purpose" and "knowledge."' For example, if a
lawyer deliberately embezzles money belonging to a client, the intentional tort of conversion has
been committed because the lawyer acted with "purpose." It was the lawyer's goal or objective
to exercise dominion and control over the money in a manner inconsistent with the rights of the
client. Similarly, if a lawyer knowingly assists a client in breaching the client's fiduciary duties
to a third person, the lawyer may be liable to the third person for the tort of intentionally aiding
and abetting a breach of fiduciary duty, because the lawyer acted with "knowledge." (See
Chapter 4 Part _ .) On the assumed facts, the lawyer was substantially certain that the breach
being assisted would occur.

Negligence and Recklessness

Lack of care comes in two varieties: negligence and recklessness. Negligence is the
failure to exercise ordinary care. A lawyer who carelessly does not calendar the filing date for a
lawsuit and therefore neglects to commence the action before it is barred by the statute of
limitations is liable for negligence. Recklessness is an extreme lack of care, which is sometimes
defined as conscious indifference to a known risk of serious harm. Thus, a lawyer who asserts a
false statement of fact as though it were true, even through the lawyer does not know whether or
not the statement is correct, may be found to have acted recklessly and subject to liability for the
tort of deceit. (See Chapter 5 Part _ , discussing "scienter" as an element of deceit.)


Strict Liability for Breach of Contract

Lawyers can be sued for breach of contract based on nonperformance of express or
implied promises. Culpability is generally not an issue with respect to such claims, because the
law of contracts cares little about why a material breach occurs. 2 Of course, a lawyer whose
breach of contract is intentional, reckless, or negligent, rather than innocent, will be cast in an
especially unfavorable light in the eyes of the judge or jury. Thus, even in contract actions, a
lawyer's culpability may adversely influence, sometimes in subtle ways, the resolution of issues



1 2005).

In Evra Corp. v. Swiss Bank Corp., 673 F.2d 951 (7th Cir. 1982), a case not involving
lawyer liability, Judge Richard Posner explained:
[C]ontract liability is strict. A breach of contract does not connote wrongdoing; it
may have been caused by circumstances beyond the promisor's control-a strike,
a fire, the failure of a supplier to deliver an essential input. ... And while such
contract doctrines as impossibility, impracticability, and frustration relieve
promisors from liability for some failures to perform that are beyond their control,
many other such failures are actionable although they could not have been
prevented by the exercise of due care.
673 F.2d at 956-57.

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in the case, including procedural rulings and calculation of damages.
In some cases, the jury is given considerable leeway to determine what was impliedly
promised by the lawyer. In Pierce v. Cook/ an attorney jointly represented a husband, wife, and
child on a medical malpractice claim. During the course of the representation, the attorney had an
adulterous affair with the wife. In affirming a $1.5 million award to the husband, the Supreme
Com1 of Mississippi said that it was for the jury to determine whether the contract to provide
services in the medical malpractice litigation was breached.

Multiple Claims in a Single Lawsuit

Of course, applicable rules of civil procedure allow a plaintiff to assert in a single lawsuit
multiple theories of liability reflecting different levels of culpability. If a lawyer fails to convey
to a client information material to the representation, the aggrieved client might alternatively
allege that the lawyer committed intentional fraud, negligence, or breach of a contractual promise
to relay the information. In determining whether one or more of the causes of action is
established, the finder of fact will need to decide whether the defendant intended to cause harm,
failed to exercise care, or made an innocent mistake (as well as whether any promise was made
relating to the matter in question).



Some decisions reflect concern about the improper fracturing of a single legal malpractice
claim into multiple causes of action. Thus, a court may hold that a breach of contract claim must
be dismissed in a case that also alleges negligence, if the breach of contract claim amounts to
nothing more than an argument that the representation was incompetent and negligent. 4 It
therefore may be important for a plaintiff pleading alternative claims to emphasize how the facts
support distinct, rather than redundant, theories of liability. On particular facts, this may mean
proving that promises were expressly made by the defendant and not just implied by the
defendant's conduct.
In some states, alleging alternative causes of action against an attorney is not permitted.
For example, in Alabama, there is "only one ** * cause of action against legal service providers
*** known as the legal service liability action," which "embraces all claims for injuries or
damages or wrongful death whether in contract or in tort and whether based on an intentional or
unintentional act or omission."5




See Oberg v. Burke, 2007 WL 1418546, *4 (Mass. Super.) (finding a breach of
contract claim duplicative and granting summary judgment for the defendant); Shefman v.
Eisman, 2006 WL 3826756 (Mich. Ct. App.) (· ------'


992 So.2d 612 (Miss. 2008).

See ALA. CODE§ 6-5-572 & -573 (Westlaw 2009).


The Consequences of Classification

In a tort action, a great deal depends upon the degree of the defendant lawyer's
culpability. The consequences of classifying the defendant's conduct as intentional, reckless, or
negligent relate to such matters as: scope ofliability, affirmative defenses, insurance coverage,
vicarious liability, remedies, and discharge in bankruptcy.

Scope of Liability

The scope of a defendant's liability generally extends further in cases involving highly
blameworthy conduct. 6 This is because where culpability is great, it is possible to impose
extensive liability without offending the principle that liability should be proportional to fault.
Not surprisingly, a lawyer who makes an intentional misrepresentation of fact may be held liable
to a wider class of plaintiffs than a defendant who makes a merely negligent misstatement. (See
Chapter 5.)



Under generally applicable rules of contributory negligence, comparative negligence, and
comparative fault, negligence on the part of the plaintiff is a defense to a claim based on
negligence, but not to one based on intentionally tortious conduct. (See Chapter 7.) Whether the
defense may be raised in an action alleging that a lawyer acted recklessly or is subject ~o strict
liability depends on state law. (!d.) In contrast, if the plaintiffs action is for breach of contract,
negligence on the part of the plaintiff is not a defense at all.
The length of the statute of limitations applicable to attorney malpractice actions often
depends upon the nature of the claim. For example, intentional tort claims for fraud or
conversion may be subject to different statutes of limitations than claims for negligence or breach
of contract. It is not possible to generalize about whether certain causes of action have longer or
shorter statutes oflimitations than others. The answer simply depends on the law of the
governing jurisdiction. Note, however, that some states apply a single statute of limitations to
actions against lawyers based on their professional conduct regardless of the theories of liability
alleged. 7

Malpractice Insurance

Many lawyers carry malpractice insurance, although others do not. A policy typically
imposes two obligations on an insurer: a duty to defend a claim against the insured and a duty to



No . 1 2005) (stating the rule in the context of physical harm).

See, e.g, HaiTis v. City of St. Clairsville, Ohio, 2006 WL 3791406, *6-*7 (S.D . Ohio).

Page 5
indemnifY losses resulting from the claim. Malpractice policies generally cover claims involving
negligence, but exclude intentional torts from coverage. Whether other claims, such as actions
for breach of contract or negligent misrepresentation, are covered depends on the terms of the
policy. Malpractice insurance is discussed in Chapter 11.

Vicarious Liability

Malpractice claims are often asserted against law firms as entities based on the tortious
conduct of principals (partners or shareholders), lawyers employed by the firm (associates), or
nonlawyer legal assistants (paralegals). Vicarious liability is imposed on firms for harm caused
by any of those persons "who was acting in the ordinary course of the firm's business or with
actual or apparent authority." 8



Negligence frequently falls within the "ordinary course of the firm 's business" because
failure to exercise care is often incidental to acts intended to benefit the fitm (e.g. , the drafting of
documents for clients). In contrast, many intentional torts giving rise to malpractice claims (e.g.,
sexual abuse of a client or embezzlement of money) are devoid of any purpose on the part of the
actor to benefit the firm, and to that extent are difficult or impossible to fit within even a
generous definition of the "ordinary course of the firm's business." Some intentionally tortious
conduct, such as over-billing of clients is intended to, and does, benefit a law firm by increasing
revenues, and may be properly regarded as within the "ordinary course of the firm's business."
Thus, firms are sometimes vicariously liable for the intentionally tOI1ious conduct of principals
and employees.



Proof of high culpability on the part of the defendant may have at least two significant
advantages in terms of the remedies available to a malpractice plaintiff. First, subject to
important statutory and constitutional limitations, punitive damages may be awarded in addition
to compensation for the plaintiff. Precisely what the plaintiff must prove in order to recover a
punitive award varies with the law of the relevant state. In general, only intentionally tortious
conduct, or in some cases recklessness, is sufficient to form the predicate for a punitive award.
Proof of mere negligence is never able to justifY responsibility for punitive damages. (See
Chapter 6.)


In addition, plaintiffs often seek not only damages, but forfeiture of attorney' s fees. Loss
of attorney's fees is a matter of discretion with the coUI1, which will only be ordered where there
is proof that the defendant committed a clear and serious breach of duty. In determining whether
that threshold is met, courts consider several factors, including the culpability of the defendant's
conduct. (See Chapter 4 Part _.) Forfeiture is more likely to be ordered, and more likely to be
total rather than partial, if the defendant has engaged in intentional or reckless conduct, than in





Page 6
negligent or innocent conduct. For example, a lawyer is more likely to be forced to return or not
collect fees if the plaintiff proves that the lawyer intentionally misused the client's confidential
information for personal benefit, than if the lawyer negligently lost a file containing confidential
client data.

Discharge in Bankruptcy

A lawyer who is the subject of an adverse malpractice judgment may sometimes escape
liability for the award by filing for bankruptcy protection. In general, bankruptcy offers debtors a
clean start financially, except with respect to certain obligations that are exempted from
Whether a malpractice judgment is dischargeable is determined, in part, by the culpability
on which it is based. Debts resulting from "willful and malicious injury by the debtor to
another"9 are not dischargeable . Many intentional tort judgments will fall within this category.
For example, if a lawyer cheats a client in distlibuting settlement proceeds is sued for
malpractice, a judgment is likely to be undischargeable. In contrast, if the error in paying out
settlement funds was merely negligent, that form of liability may be dischargeable.
Further, debts arising from "money, property, services*** obtained by false pretenses, a
false representation, or actual fraud" are not dischargeable. 10 Thus, whether the slate of
obligation is wiped clean by bankruptcy for a judgment based on misrepresentations made in a
tax shelter opinion letter relating to an investment opportunity in which the lawyer held an equity
interest may hinge upon whether the lawyer acted with scienter (knowledge of falsity or reckless
disregard for the truth), and thus committed common law fraud, or whether the errors in the
opinion letter were the result of mere negligence.




In suits against lawyers, the likelihood of success often varies according to the status of
the plaintiff. Clients stand in the most favored position and are usually much more likely to
prevail than nonclients. This is true because lawyers owe a wide range of duties to clients, but
relatively few duties to nonclients. For example, a lawyer has a duty to exercise reasonable care
to protect the interests of a client (see Chapter 3), but no such general duty to a nonclient (see
Chapter 5). However, clients and nonclients occasionally enjoy the same forms of protection
from harm. A lawyer cannot deliberately deceive a person regardless of whether that person is a
client. The law of fraud is discussed in Chapter 5.



Clients, Prospective Clients, and Nonclients

Because important questions of liability turn upon whether one is a client or a nonclient,



11 U.S .C.A. § 523(a)(6) (West 2009).
11 U.S.C.A. § 523 (a)(2)(A) (West 2009).

Page 7
special rules have evolved to determine when a lawyer-client relationship is established. (See
Chapter 3.)
Prospective clients are persons who seek legal representation, but who may never become
clients. That would be true, for example, if, after an initial interview with a lawyer, a prospective
client decided not to hire the lawyer or if the lawyer declined the representation. Other
prospective clients eventually become clients because an attorney-client relationship is formed.
Questions arise as to what duties are owed to a prospective client. Not surprisingly, a lawyer
owes a prospective client some, but not all , of the duties owed to a client. Those duties are
discussed in Chapter 3.



Malpractice Versus Discipline

It is important to differentiate lawyer disciplinary liability from malpractice liability. A
disciplinary action against a lawyer commenced by the relevant state authority based on alleged
violation of the state's rules of professional conduct. If the prosecution proves its case, discipline
is imposed to protect the public in general or the justice system from harm caused by that kind of
improper conduct. A lawyer who has violated the disciplinary rules may, for example, be
reprimanded, suspended from practice for a period of time, or, in extreme cases, disbaned.
Because many disciplinary infractions are related to drug and alcohol abuse, bad work habits, or
deficient knowledge of the law, a disciplined attorney may also be required to participate in a
drug or alcohol treatment program, office management supervision, or remedial education. In
some cases, restitution of money to an aggrieved client or third person may be ordered as part of
discipline. Thus, an attorney who has stolen client funds may be required to repay that amount to
the client. However, the primary purpose of discipline is not to secure compensation for injured
persons, but to police and protect the reputation of the profession and to safeguard clients
generally by enforcing professional standards of conduct

In contrast to discipline, the usual goal of a legal malpractice action is monetary redress
for a particular person, group, or entity harmed by a lawyer's misconduct. The representation of
a malpractice plaintiff is normally handled on a contingent fee basis by a private attorney,
although other fee anangements are possible. If the suit is successful, a lawyer with a contingent
fee typically receives a percentage (perhaps one-third) of the resulting settlement or judgment.
The fee may escalate depending on the point at which the matter is concluded. For example, the
plaintiffs lawyer may be entitled to 25% if the matter is resolved before trial, 30% after the
litigation commences, and 35% if the matter requires an appeal. In most states, contingent fee
agreements must be written and must spell out clearly the extent to which the client is
responsible for the expenses of litigation (e.g., filing costs and expert witness fees), and whether
those amounts are deducted from a gross recovery before the lawyer's entitlement to attorney's
fees is calculated. 11 Moreover, a client is entitled to a second written statement showing how the



Page 8
client's portion of the recovery was calculated. 12
A state's codified rules ofprofessional responsibility (often patterned on the American
Bar Association's Model Rules of Professional Conduct) are the basis for determining whether
discipline should be imposed. Those same rules may also play a role in malpractice litigation.
(See Chapter 3 Part _ .) However, the principles governing lawyers's civil liability are also
drawn extensively from other bodies of law, such as the law of torts, agency, and contracts. In
contrast, those bodies of law play a minimal role in disciplinary actions.



The Restatement ofthe Law Governing Lawyers

Some of the provisions in the Restatement13 parallel rules set down in disciplinary codes.
However, other parts of the Restatement address nondisciplinary matters that are generally not
addressed in the Model Rules of Professional Conduct or parallel state codes, such as: formation
and termination of an attorney-client relationship; principles of authority; basic rules of liability
for negligence and breach of fiduciary duty; liability to nonclients; fees (including modification
of fee agreements, fees in the absence of an agreement, and forfeiture); attorney-client privilege;
and work product privilege.
The provisions in the Restatement are not the law anywhere until they have been adopted
by a court or other legal authority. Nevertheless, the Restatement represents the considered
wisdom of the country's most prestigious law reform organization. The ability to invoke the
Restatement in support of one's position is a considerable asset in litigation or legal argument.
Moreover, the Restatement is a valuable source of guidance in sorting through the difficult issues
of attorney conduct that arise in the practice of law.







Chapter 3
03 Nutshell Rev 27 VRJ.wpd
Thursday, March 19, 2009






Duty to Exercise Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 2
To Whom is a Duty Owed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 2
Three Types of Attorney-Client Relationships . . . . . . . . . . . . . . . . Page 3
Court Appointment ................. . .. .. ......... Page 4
Express Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4
Mistake .. . ........... . . . ............ . .. . ........ Page 4
Prospective Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 7
Class Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 9
Scope of Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 9
Defining the Scope ofRepresentation .......... .... ......... Page 9
Termination ofthe Relationship ... . .... ... .. ... . ......... Page 12
Breach of Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 13
The Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 14
An Objective Measure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 14
Risk Balancing and Economic Analysis . . . . . . . . . . . . . . . . . . . . Page 15
Specific Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 16
Exercise of Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 17
The "Mere Error of Judgment" Fallacy . . . . . . . . . . . . . . . . . . . . . Page 18
Not Every Error is Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 18
Novel Theories, Trends, and the Law of Other Jurisdictions . . . . Page 19
Expert Testimony .. .. .. ..... ... ................ .... ..... .... . Page 19
The Necessity of Expert Testimony . . . . . . . . . . . . . . . . . . . . . . . . Page 19
Expert Affidavit Requirements . . . . . . . . . . . . . . . . . . . . . Page 20
Admissibility of Expert Testimony . . . . . . . . . . . . . . . . . . . . . . . . Page 20
Geographic Frame ofReference .. .. .... .. ... ..... ........ Page 21
The Role of Legal Malpractice Experts . . . . . . . . . . . . . . . . . . . . . Page 22
Duties and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . Page 22
Independence Versus Partisanship . . ..... . .. . . .... ... Page 22
Effectiveness .......... . .. .. .... ................ Page 23
Reliance on Ethics Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 25
Expert Witness Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 26
Specialists and Novices ............... .. ................. . .... Page 26
Negligence Per Se in Legal Malpractice ..... ..................... Page 28
Informed Consent in Legal Malpractice . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 30
Causation . . .... . ............... . ... .. .. .. ....... . .. .. ........ .... Page 32
Factual Causation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 32
The "But For" Test . . . ... .. ... . . ....... . ................ Page 33
The Exception for Independently Sufficient Causes ..... Page 35
"Trial within a Trial" Analysis ....... . .................. .. Page 35
Spoliation of Causation Evidence . . ................. Page 36

Page 2



Loss of a Chance . . .. . . . ................ .. .............
Proximate Causation . . . .. ...... .. . .......... . ... ...... . . . ... .
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Superseding Causation and Shifting Responsibility ..... . .. . ..
Intervening Negligent Conduct . ..... . ......... . ....
Subsequent Counsel's Failure to Act ..... . .. ....... . .

Page 37
Page 39
Page 39
Page 40
Page 40
Page 41

Duty to Exercise Care

In the field of lawyer malpractice liability, negligence is the most important cause of
action. That is true, first, because the general principles of negligence are well established and so
adaptable that they cover, at least potentially, virtually every type of error that attorneys make
that causes harm to others. Second, as noted in Chapter 2, negligence has important advantages
over other causes of action. Negligence liability is typically covered by malpractice insurance
(see Chapter 11) and is frequently imputable to a law firm and its principals under applicable
rules of vicarious liability (see Chapter 8). To this extent, there is an increased likelihood that a
malpractice judgment based on negligence can be collected after it is won.




Nevertheless, liability for negligence is carefully limited both by the elements of the cause
of action and by special rules which guide the application of negligence principles in the context
of professional legal services. As in other areas of the law, a negligence action against a lawyer
has four elements: duty, breach, causation, and damages. A plaintiff may recover from a lawyer
for negligence only if the plaintiff suffered damage that was caused (both factually and
proximately) by the defendant's violation of a duty owed to the p laintiff. If any of the four
elements of negligence is missing, the action fai ls. This chapter explores the elements of duty,
breach, and causation. Damages is discussed in Chapter 6.


To Whom is a Duty Owed

In areas of to11law involving physical harm, a defendant often owes a duty of care to any
person foreseeably endangered by the defendant's misfeasance. As Chief Judge Benjamin N.
Cardozo famously wrote in Palsgrafv. Long Island Railroad Co., 1 a case involving physical
injuries resulting from the explosion of a package, "the risk reasonably to be perceived defines
the duty to be obeyed."
However, lawyer malpractice rarely results in personal injury or property damage. In
most cases, the harm is not physical, but purely economic. Because the economic consequences
of negligence are often wide ranging, the law has traditionally been reluctant to recognize


162 N .E . 99 (N.Y. 1928)

Page 3
liability for negligence causing only economic harm. 2 It is therefore not surprising that a lawyer
does not owe a duty of care to every person who might foreseeably be affected by the lawyer's
careless conduct. In fact, the scope of a lawyer's duties is rather tightly circumscribed. The
clearest case in which a duty of care is imposed on a lawyer is where the plaintiff is a client.
Lawyers also owe certain duties of care to persons who might eventually become clients, such as
those in the process of seeking a legal advice (prospective clients) and members of a class whose
interests may be affected by class action litigation (actual or putative class members). Other
nonclients have a difficult time stating a claim against a lawyer for negligence. Liability to
nonclients is discussed in Chapter 5.

Three Types of Attorney-Client Relationships

Clients stand in the most preferred position when it comes to lawyer liability. They are
entitled to have their lawyers exercise reasonable care to protect their interests from harm .3
Clients therefore usually have no difficulty establishing the duty element of a negligence cause of
action,4 provided that the alleged negligence falls within the "scope of the representation," a
concept that limits the extent of duty (discussed below in Part _j.


The critical question, then, is who qualifies as a "client." At one level, the answer is
simple. An attorney-client relationship is created only three ways: by judicial appointment, by
express agreement, and by mistake. The relevant provisions in the Restatement provide that:
A relationship of client and lawyer arises when:
( 1) a person manifests to a lawyer the person's intent that the lawyer
provide legal services for the person; and either
(a) the lawyer manifests to the person consent to do so; or
(b) the lawyer fails to manifest lack of consent to do so, and the
lawyer knows or reasonably should know that the person
reasonably relies on the lawyer to provide the services; or
(2) a tribunal with power to do so appoints the lawyer to provide the



See Vincent R. Johnson, The Boundary-Line Function ofthe Economic Loss Rule, 66
WASHINGTON & LEE L. REv. _ (2009) (discussing compensation for purely economic harm
caused by negligence).


(discussing duties to a client in general).

One interesting exception to this general proposition concerns lawyers hired by unions
to represent union members. In such cases, federal labor laws preclude an aggrieved union
member from suing the lawyer for malpractice. The member's claim is against the union for
breach of the duty of fair representation.

Page 4
services. 5
Thus, two of the three ways of establishing a lawyer-client relationship-court
appointment and express agreement-are relatively formal and easy to recognize. However, the
third type of attorney-client relationship--which is created by mistake- is subtle, and to that
extent it is a more dangerous theory of legal liability.

Court Appointment

Com1 appointment involves the judicial exercise of official power to instruct a lawyer to
render legal services to an affected individual. This is a formal process that requires that a
lawyer be notified that the tribunal has determined that the lawyer must act to protect the interests
of a specific person or group. For example, a court may appoint a lawyer to represent an indigent
individual accused of crime. In these types of cases, there is little chance that a lawyer will not
understand that there is a lawyer-client relationship. However, uncertainties about who qualifies
as a client may arise when a lawyer is appointed by a com1 as counsel to represent a class in class
action litigation (see Part_ of this Chapter).




Express Agreement

An express agreement to create an attorney-client relationship is also marked by certain
formalities : a person requests legal services; the lawyer, by words or conduct, manifests
willingness to provide those services; often, an agreement is reached on the terms of
compensation; and ideally, the obligations of the lawyer and client are embodied in a written
contract of employment. Because the lawyer has in fact consented to render legal services, there
is no chance that the lawyer will be surprised that an attorney-client relationship has been
established. Of course, there may be a misunderstanding as to the scope of the lawyer's
obligations to the client (see Part_ of this Chapter).


In contrast to attorney-client relationships established by court appointment or express
agreement, a relationship arising from mistake may create obligations that come as an
unwelcome surprise to an attorney in the form of actual or potential liability in a malpractice
action. This is particularly true because in many instances there may be an attorney-client
relationship even though no fee was ever paid or even agreed upon. However, the surprise to the
attorney cannot be total, for the putative client must have requested legal services. In the words
of the Restatement, the person must have manifested to the lawyer "the person's intent that the
lawyer provide legal services for the person."6 Nonetheless, the circumstances may be such that




§ 14 (2000).


§ 14( 1) (2000).

Page 5
the lawyer did not expect to be exposed to liability for failure to protect the plaintiffs interests.
Consider three common scenarios. First, some persons seek legal advice in what are
essentially casual settings. For example, a lawyer may be asked questions of legal significance
not in a law office, but at some event, such as a party, a sporting event, a church gathering, or a
shopping mall. In some instances, the person making the inquiry may be seriously seeking legal
guidance and discussing a matter of great importance to the person. However, the lawyer,
perhaps because of the casual setting, may fail to appreciate that fact, or may even give an
evasive response which induces detrimental reliance. For example, a lawyer mi ght incautiously
say, "That's a good question; let met look into it," or "I need to think about that." If the lawyer
forgets about the question or otherwise fails to get back to the person making the inquiry, the
lawyer may have opened the door to liability. The putative client may believe that the lawyer has
taken the matter under advisement and will provide direction if there is anything the person needs
to do to protect his or her interests.



A second common scenario involves the ownership of entities. For example, suppose
that several doctors want to form an ambulatory surgery center, that they are negotiating with a
management group compromised of non physicians, and that a lawyer is hired to do the legal
work for the doctors by creating a limited partnership that will own and run the center. The
lawyer may believe that the lawyer represents the entity that will come into being (the limited
partnership), or perhaps the unincorporated association that reflects the common undifferentiated
interests of the doctors (vis-a-vis the management group) that exist before a limited partnership is
created as a result of the papers drafted by the lawyer. However, if a dispute later arises, an
individual doctor may allege that the doctor reasonably believed that the lawyer was personally
representing and protecting the doctor's own interests (vis-a-vis other participating doctors).


Or suppose that the owners of a small, closely-held corporation ask a law firm to provide
representation regarding certain issues of legal liability. The firm may believe that it represents
only the entity, but the owners of the closely-held corporation may allege that they believed that
the law firm, which was in communication with them personally, was. also acting to protect their
individual legal interests.


A third common scenario involves entity constituents, such as the officers, directors, and
employees of corporations. The constituent, as a result of regular dealings with the company's
legal counsel, may come to view that lawyer as a trusted legal advisor. The officer, director, or
employee of the entity may believe that the lawyer is protecting his or her personal interests, and
not just the interests of the corporation.


A key issue in these types of cases is whether the putative client "reasonably relie[d] on
the lawyer to provide ... [legal] services."7 That is, was it reasonable for the person to think that
the lawyer was protecting the person's own interests? In many cases, this is a hotly contested



§ 14 (2000).

Page 6
issue of fact, which is what makes attorney-client relationship by mistake such a dangerous
theory of liability. The issue of whether it was reasonable for the plaintiff to think there was an
attorney-client relationship will ultimately be decided by a fact finder, typically a lay jury. which
may sympathize more with the plaintiff than with the malpractice defendant.
There are many factors that might bear upon whether it was reasonable for a person
seeking legal services to believe that an attorney-client relationship had been created. The fact
finder may want to know: Was there a written contract of employment? Who did it name as the
"client?" To whom were the invoices for legal services sent, and who paid the bills? Who was
listed as the "client" in the firm's filing system and conflicts-checking database? What did the
lawyer tell the putative client? What statements were made in correspondence? To whom were
letters and electronic messages addressed? What did the regarding line (e.g. , "Re: ***") ofthe
letters say? Was the "client" a sophisticated person who was unlikely to misunderstand to whom
representation was being provided? Did the plaintiff hire other lawyers, either in this instance or
in other matters, to protect the plaintiffs interests? Did the lawyer ever enter an appearance in
litigation saying that the lawyer was appearing on behalf of the putative client8 or tell a third
party that the lawyer represented the putative client? 9






Under the mistake theory of attorney-client relationship, it is not enough that the plaintiff
seek legal services and reasonably believe they are being rendered. The lawyer must also have
known or had reason to know that the plaintiff was relying on the lawyer to provide those
services. Thus, there is one question about the state of mind of the would-be client, and another
about the state of mind of the lawyer. However, the latter matter is often not a great obstacle to a
finding of liability. A jury willing to believe that it was reasonable for a person to have relied
upon a lawyer to provide legal services will often be ready to find that the lawyer knew or should
have know of that mistake and should have corrected it.


The Restatement says that, insofar as concerns the " rights of third persons," "[a] lawyer
who enters an appearance before a tribunal on behalf of a person is presumed to represent that
person as a client. " RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 25 & cmt. d
(2000). However, the presumption does not apply to "litigation between lawyer and client, where
the person seeking relief usually bears the burdens of persuasion and of coming forward with
evidence." !d. § 25 cmt. d. Nevertheless, whether a lawyer entered an appearance on behalf of a
client would seem to be a factor relevant to the issue of whether there was an attorney-client

Cf Geddes v. Campbell, 2006 WL 3352182, *4 (Cal. Ct. App.) (in the context of

complex transactions involving numerous entities and related individuals, the court found that
there was a question of fact as to whether the defendant lawyer represented the plaintiff
individual in a connection with an initial transaction to which the plaintiff was not a party, based
in part on the fact that the defendant had subsequently written a letter stating that he represented
the plaintiff in a second, closely related transaction).

Page 7
Sloppy business practices greatly increase the risks of a lawyer being held liable for
having failed to protect the interests of a person who claims client status under the mistaken
relationship theory of liability. Employment agreements and other correspondence should
clearly document in writing who is, and who is not, being represented. Similarly, the owners and
representatives of entities should be informed-again preferably in writing, when that is
feasible-that they are not being personally represented (unless the lawyer intends to provide
representation). When reliable written evidence disclaiming representation can be adduced in a
malpractice suit, it is likely to be given great weight by the fact finder. Tangible evidence that
the lawyer took steps to avoid a misunderstanding of the lawyer's role may be a critical factor in
avoiding a finding that the plaintiff was a client.





By contrast, evidence that the plaintiff was orally advised at an earlier date that the
plaintiff was not being represented is much less helpful. Often the plaintiff denies that the lawyer
orally disclaimed representation. In a swearing-match between the patties, the lawyer's selfserving testimony may be found wanting. This may be true for no other reason than that it would
have been so easy for the lawyer to have documented the disclosure in a writing that would have
been a more dependable piece of evidence. From the perspective of law and economics
scholarship, it might be said that liability in these types of cases is likely to be imposed on the
lawyer because the lawyer was the "cheapest cost avoider" in preventing a misunderstanding
about who was being represented.

Prospective Clients

Persons seeking legal services sometimes never become clients. This is true, for
example, if the person elects not to hire a lawyer or if the lawyer declines the representation.
Nevertheless, in the course of determining whether an attorney-client relationship will be
commenced, a person seeking legal services may entrust confidential information to a lawyer.
Likewise, a lawyer may provide advice relevant to the client's interests, such as a preliminary
assessment of the merits of a claim or defense. Therefore, it is not surprising that the law
recognizes that lawyers owe some duties to prospective clients.
According the Restatement:
(1) When a person discusses with a lawyer the possibility of their forming a
client-lawyer relationship for a matter and no such relationship ensues, the lawyer
(a) not subsequently use or disclose confidential information learned in the
consultation, except to the extent permitted with respect to confidential
information of a client or former client***;
(b) protect the person's property in the lawyer's custody***; and
(c) use reasonable care to the extent the lawyer provides the person legal

Page 8
services. 10
This means, for example, that a lawyer may be subject to liability for telling a prospective
client, without qualification, that a claim has no merit, if careful research and investigation of the
facts would have led to a contrary conclusion. Similarly, if a lawyer misstates the applicable
statute of limitations in advising a prospective client to seek other counsel, the lawyer may be
subject to liability if the misstatement induces the person to delay the search for counsel until the
claim is time-batTed.
Certain duties relating to the impmiant subject of conflict of interest survive the
termination of an attorney-client relationship. (See Chapter 9.) Similarly, information learned
from a prospective, rather than actual, client may create conflicts of interest that disqualify the
lawyer from representing certain persons in the future. According to the Restatement:
(2) A lawyer*** may not represent a client whose interests are materially adverse
to those of a former prospective client in the same or a substantially related matter
when the lawyer or another lawyer whose disqualification is imputed to the lawyer
*** has received from the prospective client confidential information that could
be significantly harmful to the prospective client in the matter, except that such a
representation is permissible if:
(a) (i) any personally prohibited lawyer takes reasonable steps to avoid
exposure to confidential information other than information appropriate to
determine whether to represent the prospective client, and (ii) such lawyer
is screened *** [from involvement in the representation]; or
(b) both the affected client and the prospective client give informed
consent to the representation ***. 11




Thus, in dealing with prospective clients, it may be important to limit the scope of
discussion in a way that minimizes the risks of future disqualifying conflicts of interest. Of
course, regardless of whether an initial consultation is narrowly limited or wide ranging, a lawyer
must keep track of information relating to the identity of a prospective client and the matters
about which the legal representation was discussed. This is so because the lawyer is obliged to
comply with conflict of interest rules in the future, even if a conflict does not emerge until many
years later. Systematic procedures for tracking information and identifying conflicts of interest
are discussed in Chapter 10.




of interest rule relating to former prospective clients is narrower than the conflict of interest rule
applicable to former (actual) clients (see MODEL RULE OF PROF'L CONDUCT R. 1.9 (2009). This
makes sense since a narrower range of duties is owed to a former prospective client than to a
former client.

Page 9

Class Members

A lawyer appointed to represent a group of persons in class action litigation has an
attorney-client relationship with the named class representatives. The lawyer also owes certain
legal and ethical duties to members of the class, at least until they opt out of the lawsuit. Assume
that a law firm represents in housing litigation a class defined as the tenants who resided in a
building on a certain date. In that situation, the firm has a duty to distribute the proceeds of a
judgment or settlement only to members of the class, and not to other persons who may have
resided in the building on earlier occasions.12
However, if a potential class has not been cetiified as one suitable for aggregate litigation,
the unnamed members of the putative class are not clients. In the usual case, those persons never
requested legal services from the lawyer and no court ever appointed the lawyer to represent
them. Thus, the potential class members fall within none of the three categories of attorneyclient relationship discussed above (see Part __j.

Scope of Representation

A lawyer' s duties to a client extend only as far as the scope of the representation. Thus, a
lawyer who serves as general counsel to a corporation has a much greater range of potential
liability than a lawyer hired by a corporation to handle only an isolated matter.





Defining the Scope of Representation

In assessing scope of representation, it is useful to focus on what services the client
requested and what services the lawyer agreed to provide. Statements in the lawyer-client
employment contract about the contemplated legal work are highly relevant. However, other
factors also must be taken into account. These factors include the history of dealings between the
patties and whether the client employed different attorneys to handle other legal matters for the
client. If the lawyer has served as the sole, all-purpose counsel for a client over a period of years,
it is easier to conclude that a new matter of the legal significance discussed with the lawyer was
within an expanded scope of the representation, regardless of what the original lawyer-client
contract said. Similarly, if a business entity hires different lawyers from time to time or
simultaneously to handle diverse matters, it may be difficult to prove that a new matter, even if it
was called to the attention of the defendant attorney, was within the scope of the defendant's
representation of the plaintiff. The client may have mentioned the matter just to test the
attorney 's reaction, before deciding whom to hire to handle the representation. Thus, it makes a
difference whether the client knows how to hire and fire lawyers or direct their rendition of legal
services, or whether the client is inexperienced in dealing with lawyers and depends upon
counsel to do whatever is necessary to protect the client's interests.


See Taylor v. Akin, Gump, Strauss, Hauer & Feld, 859 A.2d 142 (D.C. 2001).

Page 10
The scope of employment may change during the course of legal representation. As time
passes, a client may ask a lawyer to address matters that were not contemplated at the time the
retainer agreement was initially signed. Thus, testimony about an expanding range of
representation may be credited by a jmy, even if it differs from the written terms of the
engagement. The failure to revise the original statement of scope of representation may mean
simply that the document was not updated, rather than that the scope of representation never
Relevant rules governing professional conduct afford lawyers and clients broad latitude in
defining the scope of representation. 13 Thus, the Model Rules state that "[a] lawyer may limit the
scope of the representation if the limitation is reasonable under the circumstances and the client
gives informed consent." 14 This means that "[w]hen a lawyer has been retained by an insurer to
represent an insured, ** * the representation may be limited to matters related to the insurance
coverage." 15



In Lerner v. Laufer, 16 a lawyer had a client sign a detailed statement acknowledging that
the lawyer was only reviewing a property settlement agreement for the purpose of ensuring that it
reflected the terms of an earlier mediation, and that the lawyer was not advising the client on the
fairness of the deal, nor had he investigated the divorcing couple's assets or liabilities. In a
subsequent malpractice action, the court held that the lawyer did not breach the standard of care
by performing no discovery or investigatory services related to the fairness of the property
settlement agreement because the scope of representation had been limited to exclude those
services. Relevant to whether the limited scope of representation was reasonable was the fact
that there was no dispute relating the client's "competence, her general knowledge of the family's
financial and personal affairs, or the voluntariness ofher actions in submitting to mediation." 17
However, in some cases, a limitation on duty so impairs the efficacy of a lawyer's
services that it is unreasonable and therefore invalid and unenforceable. Consider, for example,
the case of a lawyer advising a client on a contract for the sale of goods to a foreign buyer. If the
lawyer-client contract provides that the lawyer is not obliged to consider issues arising under
international law, such as the Convention on the International Sale of Goods, that limitation may
be so unreasonable that it may do nothing to limit the lawyer's liability arising from related


(discussing agreements limiting client or lawyer duties).






359 N.J. Super. 201, 819 A.2d 471 (App. Div. 2003).



Page 11
issues that the lawyer fails to address.
In some cases, doubts about the scope of representation are construed against the
lawyer. 18 For example, if a lawyer unsuccessfully represents a person in a judicial proceeding,
and "the lawyer and the client have not agreed that the lawyer will handle the matter on appeal,
the lawyer must consult with the client about the possibility of appeal before relinquishing
responsibility for the matter." 19
In a related vein, some cases bold that a lawyer's duties extend beyond that strict scope of
representation and encompass closely related matters. For example, in Geddes v. Campbell, 20 the
court held that if a lawyer represented an individual in connection with the sale of certain
partnership property, and discovered by reading the partnership agreement that the individual
owed certain fiduciary duties to others, the lawyer had a duty to advise the individual with
respect to his fiduciary duties, regar·dless of the precise scope of the representation. The court
An attorney who undertakes one matter on behalf of a client owes a duty to
consider and advise the client as to other related matters the client may be
overlooking and which should be pursued to avoid prejudicing the client's
interests. "[E]ven when a retention is expressly limited, the attorney may still have
a duty to alert the client to legal problems which are reasonably apparent, even
though they fall outside the scope of retention." 21



However, other cases appear to be contrary. In Ambase Corp. v. Davis Polk &
Wardwel/, 22 the New York Court of Appeals held that a law firm that successfully represented a
client in a tax protest had no duty to question whether an agreement between the client and a
related company could have been interpreted to relieve client of tax liability in the dispute with
the Internal Revenue Service. The court wrote:



The retainer agreement states that AmBase has "engaged [Davis Polk] to represent


(providing that "any contract limiting the representation is construed from the standpoint of a
reasonable client").



2006 WL 3352182 (Cal. Ct. App.)


Geddes v. Campbell, 2006 WL 3352182, *5 (Cal. Ct. App.), quoting Nichols v. Keller,
15 Cal. App. 4th 1672, 1684, 19 Cal. Rptr. 2d 601 (1993).

8 N.Y.3d 428,866 N.E.2d 1033, 834 N.Y.S.2d 705 (2007).

Page 12
[it] as agent for City Investing to resolve the tax issues currently before" the IRS.
The plain language of the retainer agreement indicates that Davis Polk was
retained to litigate the amount of tax liability and not to determine whether the tax
liability could be allocated to another entity. Thus, the issue whether plaintiff was
primarily or secondarily liable for the subject tax liability was outside the scope of
its representation. 23

Termination of the Relationship

Termination of the attorney-client relationship greatly contracts the scope of duties owed
to a client. At the moment of termination, the client, who previously occupied the most preferred
status, is transformed into a former client to whom only limited duties are owned. The most
important of the surviving duties is continued confidentiality of client information. However, the
array of duty is somewhat larger. As expressed by the Restatement, after a lawyer-client
relationship has ended, a lawyer must:



(a) observe obligations to a former client such as those dealing with client
confidences ** *, conflicts of interest ** *, client property and documents * **, and
fee collection***;
(b) take no action on behalf of a former client without new authorization * * *;
(c) take reasonable steps to convey to the former client any material
communication the lawyer receives relating to the matter involved in the
representation; and
(d) take no unfair advantage of a former client by abusing knowledge or trust
acquired by means of the representation. 24
Cases occasionally say that a lawyer owes a former client a continuing duty of loyalty. 25
That is certainly not true in any broad sense. A past engagement is not transfo1med by
termination of the representation into a life time of far ranging obligations. As the language
quoted above from § 33 of the Restatement suggests, specific duties of loyalty are owed to former
clients, such as preservation of confidences and avoidance of carefully defined types of conflict
of interest. However, there is no general continuing duty of loyalty that requires a lawyer to look
after a former client's best interests. Of course, lawyers may, and frequently do, feel moral
obligations of loyalty to former clients, and often they tailor their conduct in accordance
therewith. Depending on the facts, solicitude for the interests of former clients may be
appropriate and wholly laudable. Nevertheless, malpractice law is concerned with legal
obligations, and there is no general, broad-ranging duty of loyalty to a former client that is





834 N.Y.S.2d at 709.

§ 33(2) (2000).

Page 13
enforceable in an action for negligence or under any other legal theory.
A lawyer's authority to represent a client may end for any of several reasons. Authority
terminates if the client discharges the lawyer; if the client dies or, in the case of an entity client,
loses its capacity to function ; if the lawyer dies or becomes physically or mentally incapable of
providing representation, is disbarred or suspended from the practice of law, or is ordered by a
tribunal to cease representing the client; or if the representation has ended as provided by
contract or because contemplated services have been completed. 26 However, termination of
authority to act is not the same as termination of representation. Some ofthe named factors that
bear on the issue of authority (e. g., death of the client or lawyer) may also support the conclusion
that the representation has ended. However, other considerations may be relevant. As the
commentary to the Model Rules states:
If a lawyer's employment is limited to a specific matter, the relationship
terminates when the matter has been resolved. [However, if]*** a lawyer has
served a client over a substantial period in a variety of matters, the client
sometimes may assume that the lawyer will continue to serve on a continuing
basis unless the lawyer gives notice of withdrawal.27
Harkening back to the mistake theory of attorney-client relationship (see Part A-1-a-3 of
this Chapter), it is useful to ask whether the person who was previously represented still
reasonably believes that he or she is a client. If so, it may well be the case that the attorney-client
relationship has not ceased, and that plenary duties are still owed to that person.



Breach of Duty

Whether a lawyer breached a duty of care to the plaintiff is normally a question of fact for .
the jury (or for the court sitting as fact finder). However, in cases where fair minds could not
differ, a court may rule as a matter of law that the defendant acted unreasonably. This may be
true, for example, where a lawyer fails to file a lawsuit before the statute of limitations lapses or

Conversely, a court may sometimes rule as a matter of law that certain conduct was not
negligence. In a recent Ohio case/8 the court found that the record contained no evidence of
foreseeable harm to a man's estate based on his naming a Defined Pension Benefit Trust as the


as opposed to the lawyer, suffers from incapacity, special rules apply. See id. § 24 (discussing
duties to clients with diminished capacity).





See Driftmyer v. Carlton, 2007 WL 1229305, * 14 (Ohio Ct. App.).

Page 14
beneficiary of his life insurance policy. The estate therefore could not maintain an action for
legal malpractice against the decedent' s lawyer based on the lawyer' s alleged failure to
recommend the establishment of a separate trust to avoid estate taxation of life insurance
proceeds. The decision is an apt reminder of the fact that negligence is the unreasonable failure
to foreseeable harm. If hru.m is not foreseeable, the failure to avoid it is not a breach of duty
under negligence principles.

The Standard of Care

An Objective Measure

The law of negligence sets an objective standard for evaluating the conduct of a defendant
lawyer. The question is simply whether the defendant did what a reasonably prudent lawyer
exercising ordinary care would have done under the same or similar circumstances. Either the
defendant measures up to that standard, or the defendant falls short. There is no good faith
defense to a negligence claim. 29 The fact that the defendant was trying to do his or her best, or
very much hoped to benefit the client, is not the issue. The relevant inquiry is whether the
defendant acted reasonably.




Note carefully that the standard of care is not defined by reference to what the "average"
lawyer would have done in the same or similar circumstances. That would imply that lawyers in
the less skillful part ofthe profession were necessarily negligent, which is not correct. 30 The duty
is not to be average, or better than average, but to be reasonable under the circumstances.
An objective negligence standard makes sense from a consumer protection perspective.
When any client walks into any law office, the client is guaranteed a certain objectively defmed
level of protection with respect to a host of important matters, such as protection of confidential
infonnation, avoidance of conflicts of interest, communication of material information, and
diligence in researching legal and factual issues. By mandating the exercise of reasonable care,
the law of negligence not only protects clients who do not know what risks should be considered
in hiring a lawyer, it also makes the engagement of legal representation more efficient for
sophisticated clients. Every client is assured, in the absence of provision to the contrary, that
every lawyer comes with all of the "standard equipment" that is reasonably necessary for
effective and ethical legal representation. This includes, for example, knowledge of the law,
legal research skills, diligent work habits, good office practices, and conf01mance with
professional ethics rules.



See Cosgrove v. Grimes, 774 S.W.2d 662, 664-65 (Tex. 1989).

(stating point).


Page 15

Risk Balancing and Economic Analysis

In the law of negligence generally, the standard of care is discussed in different ways. For
example, rather than asking whether the defendant acted appropriately in the anthropomorphic
terms of what a reasonably prudent person would have done,31 courts or scholars sometimes ask
whether the risks outweighed the utility of the actor's conduct32 or whether the burden of
prevention outweighed the gravity of the threatened loss viewed in light of the probability of that
harm occurring.33 Interestingly, balancing tests and economic analysis seem to play almost no
role in legal malpractice cases. Courts and scholars rarely speak in those terms, although it is not
clear why that is so. The relevant inquiry in evaluating whether a lawyer acted appropriately is
virtually always framed in terms of custom. That is, the question is whether the defendant
exhibited the level of care that is customary among lawyers in the relevant geographic area. 34
(See Part_ of this Chapter.)
The extent to which risk-utility calculations or other aspects of economic analysis apply
(or do not apply) to legal malpractice claims has yet to be fully charted. Nevertheless, it is worth
noting that such principles have occasionally played a role in medical malpractice litigation. In
the famous and controversial case of Helling v. Carey, 35 the Oregon Supreme Court in effect
employed a type of economic analysis in concluding that the defendant ophthalmologist was
negligent in following the customary practice of not testing persons under forty years of age for
glaucoma. The court found that the test, if properly administered, would have been relatively
simple, inexpensive, and dependable, and that without the test detection of the disease, at that
time, was virtually impossible. Mindful of the "grave and devastating" nature of the potential
harm to the plaintiff patient and of the slight burden that administering the test would have



(P.F.D. No. 1 2005) (stating that"the 'reasonable care' standard for negligence is basically the
same as a standard expressed in terms of the 'reasonably careful person' (or the 'reasonably
prudent person')").

(P .F.D. No. 1 2005) (discussing the "risk-benefit test" for negligence).

The landmark case is United States v. Carroll Towing Co., 159 F.2d 169 (2d Cir. 1947)
(Learned Hand, J.) (stating that" if the probability be called P; the injury, L; and the Burden, B;
liability depends upon whether B is less than L multiplied by P: i.e. , whether B < PL").

(discussing competence).

83 Wash.2d 514, 519 P.2d 981 (Wash. 1974).

Page 16
imposed, the court held that it was negligent as a matter oflaw not to give the test. 36

Perhaps similar balancing-test arguments could be made in the legal malpractice context.
For example, in Hodges v. Carter,37 the lawyers representing the plaintiff in a case involving
denial of insurance coverage for losses resulting from a fire were not liable for failing to predict
that a long-observed practice for serving out-of-state insurance companies with process would be
held invalid. However, it might have been argued that once it was known that the insurance
companies were contesting the validity of the customary procedures, the defendants should not
have gambled that the procedures would be upheld by the state high court. Instead, the lawyers
should have reinitiated the suit within the approximately sixty days then available by serving
process in a different manner, assuming that was possible. Viewed in terms of economic analysis,
it was arguably negligent for the attorneys not to incur the slight burden of re-instituting the suit
when doing do would have avoided great harm (loss of coverage) that, while unlikely (because
the challenged practice was long-standing), was nevertheless a serious risk (because validity of
the process had been contested). If the case had been argued in those terms, the result might have
been different.
If there is persuasive reason why balancing tests and economic analysis do not apply in
the field of legal malpractice, it may relate to the need to ensure that lawyers have room to
exercise discretion without fear of legal liability. (See Parts_ of this Chapter.)


Specific Duties: Competence and Diligence

It is difficult to specify what specific obligations are encompassed by the duty of care
because virtually every aspect of a lawyer's performance could be treated as a subcategory. A
lawyer's duty of reasonable care extends to every aspect of the client's representation.
At a general level, there are at least two overarching obligations encompassed by the duty
of reasonable care: competence38 and diligence.39 Competence entails many things, including
both knowledge (of the law, legal institutions, ethical restrictions, and, to some extent, human
nature) and professional skills (relating, for example, to research, writing, advocacy, and dispute
resolution). On particular facts, the duty of competence may require a lawyer to refer a potential
client to a specialist if representation entails a need for greater knowledge or skills than are



23 9 N.C. 517,80 S.E.2d 144 (N.C. 1954).





83 Wash.2d at 5 I 9, 519 P.2d at 983.


Page 17
typically possessed by an ordinary practitioner. 40
Diligence requires that timely attention to the client's affairs and reasonable persi stence in
the face of obstacles. Diligence also requires a lawyer to perfmm whatever tasks are appropriate
to the representation. The degree of diligence required of a reasonably prudent attorney varies
according to many factors, including the importance of the matter, the instructions of the client,
including deadlines, the costs entailed by the works, customary practice among other lawyers ,
and the press of competing obligations as that affects the time available. If a client instructs a
lawyer to draft a will and trust within a day because the client is gravely ill, and the instrument
turns out to be invalid, the time limitations under which the lawyer was acting will be a relevant
factor in determining whether reasonable care was exercised.41
Certain specific obligations, such as the duty of candor (see Chapter 4 Part__), are
discussed in other parts of the text.


Exercise of Judgment

To say that lawyers are held to an objective standard of care normally defined by
reference to customary professional practice is not to say that there is only one way to practice
law and that anything else is negligence. Indeed, most legal assignments entail a degree of
factual and legal complexity that may make any of several approaches to serving the client's
needs reasonable and appropriate. In view of this reality, it is not surprising that the application
of negligence principles to legal malpractice litigation has been articulated in a way that allows
room for an attorney's exercise of discretion. For example, an "appellate attorney is not required
to raise every claim of arguable legal merit in order to be an effective counsel.'"' 2 Thus, decisions
relating to which issues to raise, or whether to appeal rather than seek reconsideration of an
adverse finding, will ordinarily not form the basis for a malpractice action.43
A lawyer is negligent only if the lawyer does what no reasonable prudent lawyer could
do, or fails to do what every reasonable pmdent lawyer must do. Between those broad extremes,
there is a wide field of discretion. Some lawyers would handle a matter one way and others
would handle it another way. The mere fact that the someone else would have done differently






See Kandalaft v. Peters, 2007 WL 1138395, at *3.


See Kandalaft v. Peters, 2007 WL 1138395, at *3 (rejecting malpractice claim).

Page 18
than did the defendant is merely evidence of a divergence of opinion or practice. 44 To establish
negligence, the evidence must show that no reasonably prudent lawyer could have done what the
defendant did. That is, the evidence must show that the defendant's choice was unreasonable.
For example, in a case where expeti testimony is essential, no lawyer representing the
plaintiff could elect not to call an expert witness. However, whether the lawyer calls one expert,
two experts, or three is a matter of discretion. Similarly, whether the lawyer defending the same
case elects to introduce opposing expert testimony, or not call an expert and rely on crossexamination of the plaintiffs experts to undermine the plaintiffs case, is presumably a matter of
discretion. There is no xule requiring a defendant lawyer to introduce expert testimony in order
to prevail at trial. 45

It is not sufficient to establish the standard of care, for one of the experts in a legal
malpractice case to say that he or she, if faced with the same facts, would have handled the
matter differently than did the defendant. That is not the question. The issue is not whether
someone (an expert or anyone else) could have done differently, but rather whether in the
exercise of reasonable care no lawyer could have done what the defendant did.




The "Mere Error of Judgment" Fallacy

In efforts to capture the idea that lawyers are not liable under negligence law for the
reasonable exercise of discretion, opinions sometimes (over)state that a mere error of judgment
does not give rise to liability. That, of course, is an imprecise and unnecessarily misleading way
to formulate the rule. If an error of judgment is reasonable, there is no liability. However, if the
choice made by a lawyer was the type of unreasonable choice that no lawyer could make, the fact
that the lawyer was exercising judgment does insulate the lawyer from liability. The essential
question is whether the lawyer acted reasonably, not whether the lawyer's conduct involved a
choice between competing alternatives.

Not Every Error is Negligence

Not every error by a lawyer amounts to negligence. Even reasonably prudent lawyers
make mistakes . Sometimes the law is so confused or undeveloped that it is not possible to


(stating that the duty of competence "does not require a lawyer, in a situation involving the
exercise of professional judgment, to employ the same means or select the same options as would
other competent lawyers in the many situations in which competent lawyers reasonably exercise
professional judgment in different ways").

Note, however, that in some jurisdictions "[a] legal malpractice defendant moving for
summary judgment has the burden of producing expert evidence negating the defendant's breach
of duty." Geddes v. Campbell, 2006 WL 3352182, *6 (Cal. Ct. App.)

Page 19
predict the resolution of an unsettled question or even fully understand the import of a decision
that has already been made. A lawyer must act reasonably in consulting legal authorities and in
interpreting their meaning. A lawyer must consider debatable issues of importance. However,
the fact that the lawyer is wrong does not mean that the lawyer was negligent, if reasonable care
was exercised in arriving at a decision.

Novel Theories, Trends, and the Law of Other Jurisdictions

There is a duty to be aware of novel theories of liability and defenses, trends in the law,
and out of state precedent, but only to the extent that a reasonably prudent lawyer would be
cognizant ofthose developments. For example, in Darby & Darby, P.C. v. VSJlnternational,
lnc.,46 the New York Court of Appeals held that a law firm had no duty to inform its clients about
possible "advertising liability" insurance coverage for their patent infringement litigation
expenses. That was a novel theory which, at the time, had been rejected by courts in the two
states most relevant to the litigation, and was largely unrecognized by courts elsewhere. In not
calling the theory to the attention of its clients, the law firm, therefore, acted reasonably and in a
manner consistent with the law as it existed at the time of the representation.




Expert Testimony

The Necessity of Expert Testimony

Although juries normally play a key role in determining whether a lawyer has breached a
duty of care to the plaintiff, jury members normally have no specialized knowledge about the
responsibilities of members ofthe legal profession. Consequently, expert testimony is necessary
to guide the jury in its assessment of what the standard of care required under the facts of the
case. Indeed, so important is such guidance that the introduction of expert testimony is normally
an essential step in securing an award of damages.47 Only in the rarest of cases- where even lay
persons must know that the lawyer acted improperly- is expert testimony unnecessaty. Courts
have held, for example, that expert testimony was not required where a client suffered a default
judgment because his lawyer did "absolutely nothing to protect him"48 or where the defendant
engaged in an adulterous affair with a client's wife. 49 In contrast, it is beyond the ken of the jury







95 N.Y.2d 308,739 N.E.2d 744,716 N.Y.S.2d 378 (2000).

Paul v. Gordon, 58 Conn. App. 724, 728, 754 A.2d 851 (2000).



See Pierce v. Cook, 992 So.2d 612, 618 (Miss. 2008) (stating that "jurors possess the
requisite knowledge and lay expertise to determine if an adulterous affair between an attorney
and his client's wife is a breach of a duty owed by an attorney to his client").

Page 20
whether a lawyer must_
Where such matters are at issue, expert testimony must be
adduced to prove that the standard of care was violated.

Expert Affidavit Requirements

In an effort to promptly dispose of frivolous claims, a number of jurisdictions have
enacted expert affidavit requirements. A malpractice plaintiff must file an affidavit of merit by
an expert within a specified period of time after the commencement of litigation, or the suit will
be dismissed.

Admissibility of Expert Testimony

Trial courts perform an important gate-keeping function in determining who is qualified
to testify as an expert. In general, the witness must be so well acquainted, by study or
experience, with the matters at issue that it is fair to conclude that the witness' s testimony is
sufficiently informed and trustworthy that it would be appropriate for a jury to rely on that
guidance in rendering a decision.



Many malpractice cases involve questions of legal ethics, such as whether certain facts
created a conflict of interest or had to be disclosed to a client. There are more than a million
lawyers in the United States, and presumably not all of them are qualified to testify as legal ethics
experts simply by reason of the fact that they have been licensed to practice law. Nevertheless,
some lawyers are indeed ethics experts because they have studied (or perhaps helped to draft) the
relevant standards of conduct, served on grievance committees, taught courses, lectured on
malpractice prevention, or served as law firm in-house ethics counsel. Not surprisingly, law
professors who teach courses on attorney professional responsibility frequently appear as expe1ts
in lawyer malpractice litigation. Generally, such faculty members are so well versed with respect
to the standards of conduct for lawyers that their testimony might aid a jury in understanding
what a lawyer was required to do when faced with certain facts.
Legal malpractice cases also raise issues of conduct that are not related to legal ethics.
For example, the question may be whether duty of reasonable care required a lawyer to include a
noncompete provision in a contract/ 0 digitally record an elderly client's signing of a will, or
ensure that a company promising to pay a structured settlement was bonded. 51 Those types of
cases require special expertise not related to ethics, so it is likely that someone other than an
ethics expert will be needed to testify to,supp01t those aspects of a plaintiffs claim. In many
cases, there are multiple experts on each side of the litigation.


See Russo v. Griffith, 147 Vt. 20,510 A.2d 436 (Vt. 1986).


See Lakin v. Williams, 2007 WL 11 70597 (N.D. Okla.).

Page 21

Geographic Frame of Reference

Whether a lawyer's conduct complied with the standard of care can only be determined in
context, an important part of which is the geographic frame of reference. As a general rule,
lawyers are judged by a state-wide standard, because substantive law often varies from state to
state, and so do the ethics rules that govern attorney conduct. Taking this approach, the Vermont
Supreme Court, in Russo v. Grifjith,S2 held that an out-of-town expert's testimony was sufficient
to support a negligence claim because even though the expert was not from the same place as the
defendant, the expert was acquainted with the standard of care in the state.
Some areas of the law are national in scope, such as federal tax law, securities law,
bankruptcy law, and patent Jaw. When a case involves issues relating to these sources of law, it
makes sense that the frame of reference should be national. Of course, a single case may raise
multiple issues, some of which are state-based and others of which are federal. Whether a lawyer
practicing federal tax law in Pennsylvania has a conflict of interest might properly be determined
with reference to the ethics rules governing lawyers in the Keystone State, but whether particular
advice for minimizing tax liability was reasonable might more appropriately be detennined by
reference to what lawyers practicing federal tax law through the United States would regard as
acceptable conduct.
The growing internationalization of law practice raises many questions about how the
standard of care should be defined when a lawyer's work involves international treaties or the
law of other nations, or when the lawyer is located in a foreign county or serves foreign clients.
As yet, there is no clear consensus on these types of questions. Nevertheless, these issues are
sure to be litigated in corning years.



Perhaps the most important consideration relating to geographic frame of reference is that
the standard of care not be defined in purely local terms. Embracing a locality rule raises two
concerns. The first is that it may be difficult or impossible for a plaintiff with a meritorious case
to recruit an expert to support the client's claim from the town or region in which the defendant
practices. In a given locality, there may be a small number oflawyers, and those lawyers may be
reluctant to testify against one another. This is the "conspiracy of silence" problem. The second
concern relates to incentives for good practices. Setting the standard of care at the local level
undercuts the incentives created by the risk of liability for lawyers to keep pace with legal
knowledge and evolving notions of professional conduct in other geographic areas. The standard
of care should be framed in geographic terms that protect consumers of legal services by tending
to ensure that lawyers are not insulated from liability when a particular area lags behind other
legal practitioners in terms of knowledge, skills, and procedures. Fortunately, courts have rarely
applied a locality rule for measuring the performance of lawyers charged with malpractice. The


147 Vt. 20, 510 A.2d 436 (Vt. 1986).

Page 22
standard of care is ordinarily set at the state or national level. 53

The Role of Legal Malpractice Experts

Duties and Compensation

Ethics experts in legal malpractice litigation typically review voluminous amounts of
material, such as underlying documents,54 responses to discovery requests, depositions,
pleadings, and court rulings relating to the case. They do this in order to fully understand the
facts from which the dispute arises and to identity and be prepared to discuss relevant ethics
issues. Other types of experts perform similar tasks. For example, an expert on damages many
need to study the facts of the dispute to construct a model for determining what consequential
damages were caused by alleged negligence. Experts may also need to research the holdings of
other cases or the writings of scholars because malpractice lawsuits frequently raise questions to
which the answers are less than clear, even when viewed from the expert's perspective. All of
this work takes a great deal oftime. Because experts are normally paid by the hour, and
contingent fees are forbidden, 55 litigating a malpractice claim can be a very expensive


It is possible to minimize the expenses of expert testimony by engaging an expert to
testify based solely in response to hypothetical questions, rather than based on review of the facts
of the case. For example, a lawyer can hire an expert to testify in response to a simple list of
questions, such as "Is there a conflict of interest if a lawyer persuades a client to invest in a
business the lawyer owns without disclosing that ownership interest to the client?" Surprisingly,
expert testimony based on hypothetical questions seems to be a practice rarely used in legal
malpractice litigation. Presumably, the lawyers litigating malpractice cases find it more effective
to present expert witnesses who are well acquainted with the dispute and can testify about what
was required by the particular circumstances of the case.

Independence Versus Partisanship

Although the experts who appear in malpractice litigation are selected and paid for their
time by the parties in the case (acting through their lawyers), experts are not merely pmtisans.
An expert has a duty to the court and to the justice system to honestly answer questions, even if




Deciphering handwritten notes made by attorneys or others during the course
representation is often maddeningly tedious, but sometimes holds the key to understanding what
was really going on at a particular point in time.

See MODEL RULES OF PROF'L CONDUCT R. 3.4 cmt. 4 (2009).

Page 23
those answers may hurt the side of the case for whom the expert is working. Moreover, an expert
who has published widely or testified in other cases, must present answers that are consistent
with what the expert has written or stated under oath, otherwise the expert's credibility is likely
to be successfully challenged on cross-examination.
There is ordinarily no attorney-client relationship between an expert hired to work on a
legal malpractice case and the malpractice plaintiff or defendant on whose behalf the expert has
been asked to serve. Because this is true, the conflict of interest rules contained in attorney
disciplinary rules generally do not apply to the expert because the expert is not "representing" a
client. Nevertheless, experts, as agents or subagents, have certain duties to their principals (the
clients for whose benefit they have been engaged). For example, an expert must treat
information learned in the course of working on the case confidentially, unless the information
has become a matter of public record or common knowledge, or some other consideration
warrants revelation. 56 Moreover, in a limited range of cases, it might be argued that a lawyer
who previously served as an expert witness has a conflict of interest that materially limits the
representation of a subsequent client due to obligations of continuing confidentiality owed to the
person for whom the lawyer served as an expert. 57 Conflicts of interest are discussed in Chapter




In most malpractice cases, there are multiple competing versions of the facts that are
supported by the testimony of the various witnesses. Typically, some versions of the facts favor
the plaintiff and others the defendant. It is the rare case indeed where an expert can testify that,
regardless of which set of facts the jury accepts, the lawyer acted appropriately (or
inappropriately). Rather, intellectual honesty and candor to the court normally oblige an expert
to admit that if the jury makes certain findings, the other side wins. Indeed, a lawyer will have
no credibility with the jury, and will be subject to relentless (and well deserved) crossexamination, if the expert fails to concede points that must be conceded. If an expert is asked to
assume that the jury will find that the defendant lawyer knowingly made a false statement of
material fact to a client, the expert cannot opine that the lawyer complied with the standard of
care. Intentional deception about an important matter is never consistent with a lawyer's
obligations. (See Chapter 5 Part_.)
In many cases, there is a dispute about whether an attorney-client relationship existed
between the plaintiff and defendant who are now the parties to the malpractice litigation. If an
attorney-client relationship did exist, it may be clear that the lawyer breached obligations to the
client. If there was no attorney-client relationship, it may be equally clear that there was no
breach. An expet1's testimony must reflect these realities. Knowing and admitting what must be


See ABA Ethics Op. _ _ _ __


See MODEL RULES OF PROF'L CONDUCT R. 1.7(a)(2) (2009).

Page 24
conceded is part of the job of an honest and effective expert.


Testimony on Causation and Damages

The principal focus of a legal malpractice expert's work relates to establishing the
standard of care and whether it was breached. However, in some jurisdictions, the law permits
experts to testify about causation and damages as well. 58 Whether an expett is likely to be
effective in persuading a jury as to what losses were caused by unprofessional conduct probably
depends upon the nature of the malpractice.
For example, suppose that a lawyer breached a duty of candor by failing to tell a client
that the client was entrusting funds to a person the lawyer knew to be a previously convicted
felon, who was once sent to prison for a crime involving financial fraud. The expert may have a
firm and definite conviction that, had the undisclosed information been revealed, the client would
not have entrusted money to the f01mer felon and the funds would not have been lost. A court
might permit such testimony on causation of damages because it does not seem particularly
speculative. On those facts, a jury may well credit what the expert says.



In other cases, it is harder for an expert to trace the lines of factual and proximate
causation that run between breach of duty and alleged damages. Assume that a lawyer has
serious conflicts of interest that are not disclosed and that the transaction in which the lawyer is
assisting a client (say, acquisition of certain assets) fails. It may be difficult for an expert, who
has produced convincing testimony about the conflicts of interest, to persuade a judge or jury that
the expert, based on professional knowledge or experience, knows to a reasonable degree of
certainty that but for the breach ofthe conflicts rules: the defendant lawyer would have
withdrawn; an independent lawyer without conflicts would have been hired; better advice or
assistance would have been provided by the new, unconflicted lawyer; and the plaintiff would
have been able to consummate the purchase of assets on acceptable terms. In some jurisdictions,
such testimony may be permitted because it helps the jury for the expert to connect the dots
between breach of duty and damages. However, in other cases, the testimony may be subject to
challenge as impermissible speculation by the expert.
Factual causation is nmmally established by applying a demanding "but for" test which
requires the plaintiff to prove that if the defendant had not been negligent the harm would not
have occmTed (see Part __ of this Chapter). However, in some jurisdictions, claims for breach
of fiduciary duty are actionable upon a lesser showing that the defendant lawyer's conduct need
only have been a "substantial factor" in producing harm to the plaintiff. (See Chapter 4 Part
_.) Thus, with respect to the example above involving undisclosed conflicts of interest, which
may amount to breach of fiduciary duty, some states, applying a "substantial factor" rule, might
extend greater latitude to an expert in addressing issues of causation.




Page 25

Reliance on Ethics Rules

In forming their opinions, legal malpractice expert witnesses often rely on the text of
relevant disciplinary rules. Thus, an expert in a case where a lawyer is alleged to have taken
advantage of a client from whom something was purchased by the lawyer is virtually cettain to
consider either Rule 1.8(a) of the Model Rules of Professional Conduct or the parallel state
disciplinary rule. These provisions directly address what a lawyer should do when engaging in
business transactions with clients. 59 In these types of cases, the terms of disciplinary rule are
highly relevant to any assessment of what the standard of care requires.60
While expert reliance on ethics rules is typically not troublesome, ignorance or disregard
ofthe disciplinary rules is another matter. An "expert" who is unaware of what a state's
disciplinary rules require might not be permitted to testify on the ground that the expett's opinion
is not sufficiently informed as to be likely to assist the jury. For example, in a recent malpractice
case that arose from legal representation of a medical prutnership in a peer review process, a
lawyer who was an ethicist at a prestigious university and a highly regarded expert in medical
peer review procedures was not permitted to testify about whether the defendant lawyers had
acted properly because the expert had admitted that he was unacquainted with the state's
disciplinary rules governing lawyers.



Testimony of an expert that departs from what the disciplinary rules require may be found
to be so subjective as to provide no reliable basis for a jury determination that the defendant
lawyer breached the standard of care. Thus, one court held that, notwithstanding an expert's
report to the contrary, an attorney who had agreed with a client to a limited scope of
representation relating to the client's divorce had no duty to discuss with the client her feelings of
guilt and how they might have affected an agreed property settlement. 61 The expert's report
failed to establish "an authoritative or recognized standard of care" that rose above provisions in
the disciplinary rules allowing a lawyer and client to limit the scope of representation. 62
Whatever obligations there might have been for the lawyer to explore the client's guilt feelings,


See MODEL RULES OF PROF'L CONDUCT R. 1.8(a) (2009) (providing that "A lawyer
shall not enter into a business transaction with a client *** unless: (1) the transaction and terms
on which the lawyer acquires the interest are fair and reasonable to the client and are fully
disclosed ***; (2) the client is advised in writing of the desirability of seeking and is given a
reasonable opportunity to seek the advice of independent legal counsel on the transaction; and (3)
the client gives informed consent***").

See generally Douglas R. Richmond, Why Legal Ethics Rules are Relevant to Lawyer
Liability, 38 ST. MARY'S L.J. 929 (2007).



See Lerner v. Laufer, 359 N.J. Super. 201, 819 A.2d 471 (App. Div. 2003).
359 N.J. Super. at 217, 819 A.2d at 483.

Page 26
the court found, appeared to be "personal" to the expert. 63
Of course, there are sources of guidance other than disciplinary rules that should be taken
into account by ethics expe1is. Case law, advisory ethics opinions, or scholarly writings may
amplify or clarify what disciplinary rules say, or may make a convincing case for why a particular
rule is inadequate or sets an appropriate standard for discipline but not for malpractice. An
expert is free to consider other authorities, and may form an opinion at odds with language in the
state's disciplinary rules. For example, even if the state' s disciplinary rule on confidentiality
does not expressly permit an attomey to disclose client information to a third party when seeking
ethics advice relating to the representation/4 an expert might reasonably opine that such
disclosure does not violate the standard of care because other authorities recognize the propriety
of such disclosures. Of course, an expert whose opinion departs from the terms of a disciplinary
rule in stating the standard of care should expect to be called upon in cross-examination to
defend that position. 65


Expert Witness Liability

While the opinions expressed by experts may be harmful to persons involved in the
litigation, experts normally cannot be sued because of the wide-recognized judicial proceedings
privilege (sometimes called the litigation privilege). The privilege bars a civil action for
damages against persons participating in litigation (e.g., judges, jurors, and witnesses). However,
the privilege, as it applies to expert witnesses, may have limits. At least in theory, an expert who
fails to review crucial documentary evidence, or does so carelessly, should no more be immune
from suit than a lawyer who fails to adequately prepare for trial. Lawyers are routinely sued on
this type of claim. Neve1iheless, there is little precedent to suppmi a theory of expert witness
liability for negligence. 66

Specialists and Novices

According to a number of cases, lawyers who specialize are held to a higher standard of
care than lawyers who do not specialize. Conceptually, this has appeal, for those with talent




359 N.J. Super. at 219, 819 A.2d at 484.


Cf MODEL RULES OF PROF'L CONDUCT R. 1.6(b)(4) (2009) (expressly allowing a
lawyer to disclose client information to seek advice about compliance with ethics rules).

Cj. [CHECK] Sealed Party v. Sealed Party, No. Civ. A. H-04-2229, 2006 WL
1207732, at* 11 n.30 (S.D. Tex. May 4, 2006) (holding that where the text of an ethics rule is
contradicted by expert testimony the former controls).

See generally Douglas R. Richmond, The Emerging Theory ofExpert Witness
Malpractice, 22 Cap. U. L. Rev. 693 (1992).


Page 27
should be encouraged not to waste it. Nevertheless, the difficulties of implementing a higher
standard of care for specialists (or for others) deserve consideration.
In practice, it is easiest to hold specialists to a higher standard ifthere is some clear point
of reference that can be used to articulate what a specialist knows or does that is different from or
superior to what an ordinary practitioner would know or do. For example, some states have
certification processes by which a lawyer earns the right to call himself or herself a specialist.
These credentialing processes typically involve either educational requirements and/or
demonstrations of proficiency through examinations or peer review. If that is the case, the
standard of care for a certified specialist could be established by producing expert testimony from
another certified specialist, or by reference to the principles that are taught or tested in the
credentialing process (assuming those principles are distinguishable from what ordinary lawyers
know or do).
However, if specialization is understood in a de facto sense and means simply that a
lawyer has devoted a percentage of his or her practice to a particular kind of work for a period of
years, it is hard to know how the applicable standard of care would be established. Would a
plaintiff have to adduce expert testimony from another lawyer who devoted a similar percentage
of practice to the same type of work for about the same number of years? Could an expert who
has specialized in an area of the law for twenty years be permitted to state how much care needed
to be exercised by a defendant lawyer who has specialized in the same area for just one year, five
years, or ten years?


If de facto specialists are held to a higher standard of care, what about other groups that
could be treated similarly? Should there be a higher standard of care for lawyers practicing in
large law firms, or graduates oflvy League law schools, or lawyer's who earned LL.M. degrees
in the field of their alleged malpractice. It is easy to see why tort law has normally eschewed
fracturing the standard of care into a myriad of different measures. In the absence of a clear point
of reference (such as a certification process) for articulating what the higher standard entails, the
preferable course maybe the one that minimizes complexity. Lawyers- regardless of where they
graduated from law school, what courses they took, what degrees they earned, or what kind of
firm they practice in-should be held the standard of conduct of an ordinary, reasonable prudent
lawyer under the same or similar circumstances. One of the circumstances may be the fact that
the lawyer has practiced in a particular field for many years, and an opponent might rightly argue
that point to the jury. However, de facto specialization should not change the standard of care.
Rather it should be merely a factor relevant to whether ordinary care was exercised. 67



The Restatement is unclear as to whether specialization changes the standard of care or
is merely a circumstance relevant to whether the lawyer has acted in conformance with the usual
standard of ordinary care under the circumstances. In a discussion of lawyers who claim to be
experts or specialist, the commentary to § 52 says that ''a lawyer who represents to a client that
the lawyer has greater competence *** is held to that higher standard." RESTATEMENT (THIRD)
OF THE LAW GOVERNING LAWYERS § 52 cmt. d (2000) (emphasis added). However, that

Page 28
Note that holding specialists to a higher standard might not necessarily be an advantage to
malpractice plaintiffs. If establishing the higher standard complicates the presentation of the
malpractice case, or if finding a qualified expert to testify about the higher duty of care is
difficult, a plaintiff may not be better off than if an ordinary standard of care were applied, with
due consideration to the circumstances surrounding the representation.
At the other end of the spectrum, new members of the legal profession are ordinarily held
to the same standard of care as those with experience. There is no "learners petmit" for the
practice of law that absolves novices from liability for mistakes that could have been avoided
through the exercise of reasonable care. One possible exception to this rule is where the novice
discloses to the client the novice's lack of knowledge or inexperience. Assuming that the lawyer
is not so lacking in qualifications that a client could not reasonably consent to be represented by
that lawyer, the disclosure of limitations and client consent may lower the applicable standard of
care, at least temporarily. 68

Negligence Per Se in Legal Malpractice

In ordinary negligence actions, there is sometimes a shortcut to establishing breach of
duty. In a majority of jurisdictions, an unexcused violation of a legislative enactment may be
treated as conclusive proof that the defendant acted unreasonably. This is called negligence per
se, meaning negligence "in itself." Proof of the unexcused violation obviates the need for a
"totality of the circumstances" inquiry into the facts surrounding the defendant's conduct. 69
Breach of the duty of reasonable care is conclusively established by evidence of the unexcused



language is part of a comment entitled "[s]imilar circumstances," the fust sentence of which says
that "A lawyer's representations or disclaimers and qualifications may constitute circumstances
affecting what a client is entitled to expect from the lawyer." Jd. §52 cmt. d (emphasis

The Restatement says that an agreement limiting the duty that a lawyer owes to a client
is permissible if the client is adequately informed and the terms of the limitation are reasonable.
"disclaimers and qualifications may constitute circumstances affecting what a client is entitled to
expect from the lawyer." !d. at§ 52 cmt. d. However, an illustration adds that a general waiver
of the duty of competence would be invalid. !d. § 19 illus. 3.

In a minority of states, violation of a standard-setting legislative enactment is only (a)
presumptive evidence of negligence or (b) some evidence from which negligence may be
inferred. In those jurisdictions, a detailed inquiry into the facts may still be necessary to
determine whether the presumption of unreasonable conduct is rebutted by other evidence or
whether the permissible evidence of negligence that the violation constitutes is sufficiently strong
to warrant a finding of unreasonableness in light of competing evidence.



Page 29
A legislative enactment may set the standard of care for a civil cause of action for either
of two reasons. The first reason is that the enactment so provides by language making clear that
one of the remedies for breach of its requirements is a civil suit for damages. The second reason
that an enactment may set the standard of care is that, even though it is silent as to civil liability,
a court determines that it is an appropriate indicator of whether the defendant acted reasonably.
In making that assessment, a court considers whether the enactment was intended to protect the
class of persons of which the plaintiff was a member from the type ofbarm that occurred. 70 If the
answer is yes on both accounts, a court may embrace the statute as setting the standard of
conduct of a reasonably prudent person, provided there are no good reasons to the contrary. A
court might decline to hold that a legislative enactment sets the standard of care if it is obsolete
or vague. Likewise, the court should not bold that a statute sets the standard of care if there is
evidence that the legislature intended other penalties, such as criminal or administrative fines, to
be the exclusive remedy for a violation or intended that a violation of the enactment, by itself, not
trigger liability for negligence.



State disciplinary rules typically contain a provision similar to one found in the Model
Rules of Professional Conduct, which states that " [v]iolation of a Rule should not itself give rise
to a cause of action against a lawyer nor should it create any presumption in such a case that a
legal duty has been breached."71 It is clear from this type of provision that the drafters did not
intend for a violation of the rules to support a negligence per se argument. Similarly, the rules
adopted by the Securities and Exchange Commission72 pursuant to the federal Sabanes-Oxley
Act, 73 which impose various duties on attorneys, expressly indicate that they do not create a
private right of action against an attorney and or law firm. Again, it seems clear that a negligence
per se argument is foreclosed. Of course, this does not mean that disciplinary rules and
Sarbanes-Oxley regulations must play no role in a legal malpractice action, but simply that a
violation of their provisions does not establish a shorthand route to a finding that the defendant
acted unreasonably. The plaintiff may still argue that the defendant was negligent under the
usual "totality of the circumstances" test, one of the facts being that the rules in question were
violated. So too, an expert testifying in support of the plaintiffs case may base his or her
opinion about the standard of care in part on what legislative enactments state about the duties of
attorneys, even those enactments will not allow a negligence per se line of reasoning. (See Part
Summarizing the relationship between rules of attorney conduct and the standard of care


No.1 2005).




Sarbanes-Oxley Act of2002, Pub. L. No. 107-204, 116 Stat. 745 (2002).

Page 30
in malpractice litigation, the Restatement explains:
Proof of a violation of a rule or statute regulating the conduct of lawyers:
(a) does not give rise to an implied cause of action for professional negligence or
breach of fiduciary duty;
(b) does not preclude other proof concerning the duty of care *** or the fiduciary
duty; and
(c) may be considered by a trier of fact as an aid in understanding and applying the
standard of*** [care or fiduciary dutyJ to the extent that (i) the rule or statute was
designed for the protection of persons in the position of the claimant and (ii) proof
of the content and construction of such a rule or statute is relevant to the
claimant's claim. 74


Some legislative enactments applicable to lawyers, among others, are likely to support a
negligence per se argument against a legal malpractice defendant. For example, many states
have passed security breach notification laws which require database possessors (like law firms)
to protect the personal information of data subjects (like present and former clients) from
unauthorized access and to notify data subjects when the security of their personal information
has been breached. Some of these laws expressly provide for civil liability for damages/ 5 though
others are silent on the issue. It would not be surprising for a court to hold that a lawyer was
negligent per se based on an unexcused violation of these statutory obligations. 76

Informed Consent in Legal Malpractice

The doctrine of informed consent is well established in the medical malpractice field.
With limited exceptions, the doctrine requires a physician to disclose to a patient the material
risks and available alternatives to a course of treatment. The failure to make such disclosures and
obtain consent is actionable negligence, regardless of whether the physician otherwise exercises
care in treating the patient.
Clients, like patients, have a right to exercise extensive control over their own affairs,





See, e.g., CAL. Crv. CODE§ 1798.84 (Westlaw 2009) (allowing an injured customer to
"institute a civil action to recover damages"); 815 ILL. CoMP. STAT. ANN. 530/5, et seq.
(Westlaw 2007) (allowing a deceptive trade practices action, which permits a person who suffers
actual damage to recover actual economic damages).

See generally Vincent R. Johnson, Cybersecurity, Identity Theft, and the Limits ofTort
Liability, 57 S.C. L. REv. 255 (2005).


Page 31
including their legal representation. 77 Consequently, there is no reason why the informed consent
doctrine should not apply as readily to legal malpractice cases as it does in suits against
physicians. Although the term "informed consent" only occasionally appears in court opinions
dealing with legal malpractice, the underlying idea is well established. A lawyer has an duty to
communicate to the client material information relating to the client's case.78 Failure to keep a
client reasonably informed is negligence. Moreover, the language of"informed consent" is
becoming better established in the law of attorney professional responsibility than was previously
true. The most recent major revision of the Model Rules of Professional Conduct so frequently
used the term "informed consent" that the drafters deemed it necessary to define those words in
the code's definitional section. 79 While the term "informed consent" may take on a different
meaning in the malpractice context than it has in lawyer discipline, there is reason to think that
courts will become increasingly comfortable with talking about lawyers' obligations in terms of
" informed consent" and whether material risks and alternatives were disclosed.


With respect to lawyers' liability for negligence, three issues relating to informed consent
are likely to warrant attention and debate. The first concerns materiality, since even in the
medical malpractice field, only materials risk and alternatives need to be disclosed. The term
materiality has diverse meanings in different areas of the law. In many instances, it means
simply that the matter is of such weight and moment that a reasonable person would take it into
account in making a decision. Considering that the purpose of the informed consent doctrine is
to enable clients to decide their own affairs, courts should interpret the term "material" in a
manner that does not frustrate the purposes of the rule. Nevertheless, the term has limits. For
example, a lawyer is not liable for failing to advise a client to assert a claim for insurance
benefits for which the client is not eligible. 80 One way to explain this result is to say that the
undisclosed infmmation was not "material."


Second, attention must be paid to exceptions to informed consent obligations. In
medicine, a physician need not disclose a risk if it ought to be known by everyone or is in fact


allocation between a client and a lawyer of authority to decide); id. § 22 (discussing authority
reserved to a client).

(discussing a lawyer's duty to inform and consult with a client); MODEL RULES OF PROF'L
CONDUCT R. 1.4 (2009) (discussing communication).


See MODEL RULES OF PROF'L CONDUCT R. l .O(e) (2009) (stating that as used in the
Model Rules, '" [i]nfmmed consent' denotes the agreement by a person to a proposed course of
conduct after the lawyer has communicated adequate information and explanation about the
material risks of and reasonably available alternatives to the proposed course of conduct").


See Abbo v. Perkins, 2007 WL 949760, *6 (Ohio App. 2007).

Page 32
known to the patient; if there is an emergency and the patient is incapable of determining whether
treatment should be administered; or if full disclosure would be detrimental to the patient's care
and best interests. These exceptions are narrowly construed so that they do not undercut the
policies behind the informed consent doctrine. Presumably, similar exceptions will apply to the
informed consent doctrine in the legal malpractice field.
Third, it is important to remember that failure to obtain informed consent is merely
evidence of breach of duty. A plaintiff suing for negligence must still prove that the breach of
duty caused damages. Causation is discussed below in the next Part of this chapter. It suffices to
note here that in the medical malpractice field, a large majority of courts hold that in proving
causation in an info1med-consent case, the appropriate inquiry is whether a reasonable person (as
opposed to the specific plaintiff) would have made a different decision if the undisclosed matter
had been called to attention. 81 The same path may be followed in legal malpractice cases for
plu·asing the inquiry in reasonable-person terms minimizes the risk that self-serving testimony by
the plaintiff will distort the assessment of whether the nondisclosure did in fact cause damage.


Consider this example: a client alleges that the defendant attorney failed to advise the
client about the risks of submitting a dispute with a third party to arbitration, rather than
resolving the dispute in court. Among the undisclosed risks are the fact that the arbitrators are
not strictly bound by substantive law and that there is very little opportunity for judicial review of
an unfavorable arbitration decision. In a legal malpractice action alleging lack of informed
consent, the plaintiff will have to establish that the undisclosed matters were material, that a
reasonable person would not have agreed to arbitration if that information had been disclosed,
and that a court of law would have rendered a decision more favorable to the client.
Consequently, the plaintiff in an informed consent case faces many obstacles in proving


As in any other tort action, a plaintiff suing a lawyer for negligence must prove that the
lawyer's umeasonable conduct caused harm. As usual, the inquiry into causation has two
aspects. Factual causation requires that the defendant's conduct be significantly linked to the
damages the plaintiff alleges, and proximate causation requires that it be fair to hold the
defendant responsible for damages factually caused. Factual and proximate causation are
discussed in the following sections.

Factual Causation

No matter how serious a lawyer's negligence, causation of damage is not presumed. For
example, if a new associate with no experience and inadequate supervision makes serious errors




See Ashe v. Radiation Oncology Assoc., 9 S.W.3d 119, 123 (Tenn. 2000) (endorsing
the majority objective standard).

Page 33
in trying a case, the plaintiff must still prove that those errors had an adverse impact on the
result. 82

The "But For" Test

Legal malpractice cases are governed by the principles of factual causation that apply in
other areas of tort lawY Thus, the well-known "but for" test is the most common method of
proving factual causation. Under that test, the plaintiff must show that but for the negligence of
the defendant, harm would not have occurred. For example, "[i]n an action alleging that an
attorney failed to perfect an appeal, the plaintiff must prove that he or she would have been
successful on appeal if the appeal had properly been perfected."84
In one recent case85 arising from the dissolution of a marriage, a divorcing couple had
agreed that the wife was entitled to half of the husband's retirement benefits. However, the
husband's lawyer erred, first, by drafting a stipulation that sought to implement the agreement by
means not permitted by law (an immediate payment from the retirement fund based on present
value), and, second, by failing to advise his client of the further steps he had taken to correct the
first error (a delayed payment of a percentage of the husband's retirement benefits). The court
held that the lawyer's malpractice did not cause damages, because the husband had agreed to an
even division of retirement benefits and that was what was ultimately achieved.


In another recent case, the plaintiff alleged that but for a law firm's failure to provide
proper tax advice "it would not have had to maintain the multi-million dollar loss reserve on its
books, creating the appearance that it had a negative net worth, which caused it to lose business
opportunities and incur monetary damages." 86 However, the court found that the plaintiff failed
to establish factual causation of damages, because the loss reserve had been in place for years
before the law firm was hired and still carried on the books after the law firm advised the
plaintiff that there was a very strong case that it had no liability for the taxes in question.




See Alexander v. Turtur & Associates, Inc., 146 S.W.3d 113 (Tex. 2004).


that "liability for a" lawyer's breach of a duty of care or breach of fiduciary duty *** [is]
determined under generally applicable principles of causation and damages).

Universal Underwriters Ins. Co. v. Judge & James, Ltd., 372 Ill. App. 3d 372, 865
N.E.2d 531,538 (2007).


See Faber v. Herman, 731 N.W.2d 1 (Iowa. 2007).

Ambase Corp. v. Davis Polk Wardwell, 8 N.Y.3d 428, 866 N.E.2d 1033, 834 N.Y.S.2d
705, 710 (2007).


Page 34
Proving causation often requires a plaintiff to show that an alternative sequence of events
would have occurred but for the defendant's breach of duty. Proof by a preponderance of the
evidence is required. The mere fact that another sequence of events might have occurred is
insufficient to prove factual causation. 87 Rather, it must be shown that, more likely than not, but
for the lawyer's negligence, a different series of events would have occurred.
The mere fact that an alternative sequence of events involves several variables does not
necessarily preclude proof of causation, if each of those variables is susceptible to proof. In one
recent case, the court found that causation was not "beyond the realm of proof" or a matter of
speculation where it was necessary for the plaintiff to show that, if the defendant lawyer had
advised the plaintiff to make certain disclosures to a third party, the plaintiff would have
followed that advice and the third party would have agreed to a release of liability.88 Presumably,
the plaintiff could testify about whether he would have followed the advice; the defendant could
challenge that testimony or introduce contrary evidence; and the jury could resolve the issue, one
way or the other. As to whether the third-person would have signed a release, the court noted
simply that the person "could be questioned about whether he would have signed such a release
had he known what he alleged in his complaint [in a separate action against the plaintiff] he did
not know." 89



If a plaintiff wishes to recover damages resulting from a business transaction that
allegedly failed as a result of a lawyer's negligence, the plaintiff must show that but for the
lawyer's errant conduct the transaction would have succeeded and the losses would not have
been suffered. Likewise, if the plaintiff alleges that a lawyer' s failure to disclose relevant
information to the client caused a lawsuit not to settle a claim and eventually precipitated a
disastrous jury verdict, the plaintiff must convince the jury that, but for the nondisclosure, there
could have been a meeting of the minds at the relevant point in time on an acceptable settlement
amount. If such evidence is adduced, the plaintiff can then recover the difference between the
lesser amount for which the case would have settled and the excessive amount of the jury verdict.
In cases involving multiple tortfeasors, each may be a "but for" cause of the same harm.
(Whether each tortfeasor is then liable for the entire harm or just a portion of the harm is
discussed in connection with the subject of joint and several liability in Chapter 7 Part_.)


C.f Bristol Co., LP v. Osman, 190 P. 3d 752, 758 (Colo. Ct. App. 2007) (in a suit based

on a law firm's alleged failure to provide proper advice about the defense of laches, the cowt
found that the portions of the the plaintiffs complaint addressing causation were insufficient to
support an award of damages because they were purely hypothetical and speculative and did not
identify an actual harm, but merely "a harm that might have occurred had events unfolded

Geddes v. Campbell, 2006 WL 3352182, *7 (Cal. Ct. App.)


2006 WL 3352182, *8.

Page 35
Suppose that Lawyer #1 negligently omits important provisions from a contract, and that
successor counsel, Lawyer #2, negligently fails to discover the omission at a time when it would
have been possible to reform the instrument at minimal costs to the client. If the client becomes
liable under the contract for onerous amounts as a result of the omitted provisions, the client can
successfully sue either lawyer or both. But for Lawyer #1 's omission of the provisions, the client
never would have become liable under the contract. But for Lawyer #2' s negligence, the
omission would have been discovered, the contract would have been reformed, and the client
would not have incurred contractual liability. The negligence of each lawyer is a factual cause of
the plaintiffs harm.
( 1)

The Exception for Independently Sufficient Causes

Authorities widely recognize that even if the "but for" test cannot be met, the defendant's
conduct is a factual cause ofthe plaintiffs harm if the defendant's conduct was independently
sufficient to cause the harm. 90 This rule, too, applies to legal malpractice cases. Consider the
following scenario: Lawyer #3 and Lawyer #4 are each asked to draft separate provisions for a
complex document. Each lawyer does so negligently, and each act of negligence is sufficient to
render the document entirely invalid, causing losses to the client. Lawyer #3 does not escape
liability because Lawyer #4's conduct would have precipitated the same losses, and vice versa.
Each lawyer's conduct was independently sufficient to cause the invalidity of the document, so
each is held responsible even though it cannot be said that either was a "but for" cause of the




"Trial within a Trial" Analysis

Establishing factual causation requires the plaintiff to prove what would have happened if
the facts had been different. This normally is done during the malpractice lawsuit, and the
process is commonly referred to as a "trial within a trial." The expression is particularly apt
when the alleged malpractice relates to an underlying litigation claim, because the first lawsuit
must be presented within the context of the malpractice action to see what the result would have
been but for the defendant lawyer's negligence. For example, a malpractice plaintiff may allege
that, but for the lawyer's negligence, the plaintiff would have secured a more favorable result in
an earlier litiga6on. In that case, " [a]ll the issues that would have been litigated in the previous
action are litigated between the plaintiff and the plaintiffs former lawyer, with the latter taking
the place and bearing the burdens that properly would have fallen on the defendant in the original


No. 1 2005).



Page 36
In a recent New York case,92 the plaintiff alleged that the defendant attorney failed to file
her slip-and-fall case before the statute oflimitations expired. The court held that the defendant
attorney was entitled to summary judgment because the "plaintiff failed to introduce any
evidence that the casino either created the dangerous condition, or had actual or constructive
knowledge of it." 93 Absent such evidence, the plaintiff could not prove that she would have
prevailed on the underlying premises liability claim.
One practical consequence of the "trial within a trial" process is that legal malpractice
cases can be exceedingly complex. This is particularly so if the underlying mater involved a
sophisticated area of practice of the type that is ordinarily difficult to understand even without the
added complexities of a legal malpractice overgloss (e.g., representation of an entity in a litigated
intra-entity dispute involving numerous entity representatives and stakeholders). In some cases,
holding a trial within a trial requires the presentation of so many witnesses and documents that
the process will be so prolonged that there is little hope of keeping the jury's attention focused
until the conclusion of the case. Even then, if all the evidence is presented, the jury may not fully
comprehend the matter. Faced with these realities, some cases settle because it is unlikely that a
better result will be f011hcoming if the litigation is allowed to run its course.




In order to minimize the complexity of the trial within a trial process, it may make sense
to sever the underlying action for a separate trial. Procedures in some states permit this. 94
If malpractice is alleged to have tainted an earlier trial of the underlying matter, it is
reasonable to consider whether it would be possible to ask the judge or jurors if the decision
would have been different but for the malpractice. However, this is not permitted on either
account. The judge in the earlier proceeding is not allowed to testify in the malpractice lawsuit.
Testimony by the former judge would be unduly prejudicial because the prestige of the judge's
judicial office would be aligned with one of the parties in the malpractice litigation. For
somewhat different reasons, generally relating to impracticality and inefficiency, jurors from the
first proceeding are also not allowed to testify about whether they would have decided the
underlying case differently if the lawyer had not been negligent.

Spoliation of Causation Evidence

Sometimes a lawyer's negligence results in the loss of evidence needed by a client to
prove that the lawyer's negligence caused damages. If this is true, a court may remedy the
spoilation by instructing the jury that it may infer that the lawyer's negligence caused damage, or


See Aquino v. Kuczinski, Vila & Assoc., P.C., 39 A.D.3d 216, 835 N.Y.S.2d 16,


835 N.Y.S.2d at 20.


See, e.g., ALA. CODE§ 6-5-579 (Westlaw 2008).



Page 37
the court may shift to the lawyer the burden of disproving causation.
For example, suppose that a lawyer deceives a client for period years about performing
work to investigate the facts of the client's case. 95 By the time the deception is discovered, it
may be too late to assemble the essential witnesses and documents. Or suppose that a lawyer
negligently discards an allegedly defective product, such as the wreckage of the client's car96 or
appliance, with the result that it is impossible to prosecute a products liability claim. In these
types of cases, it is unfair to require the client, in a suit against the lawyer, to prove that the
underlying claim would have been won. A spoliation inference or presumption may be an
appropriate remedy for this kind of misconduct, at least where the spoliation was culpable,
unexcused, and clearly injurious to the client.
Some states permit an independent tort action based on intentional or negligent spoliation
of evidence. However, the trend favors using spoliation inferences or presumptions when that is
feasible. The jury is told that it may infer, or in the absence of evidence to the contrary is
required to presume, that the missing evidence would have been favorable to the plaintiff.
Lawyers discard things all the time, such as notes, hardcopy documents, e-mail messages,
and electronic files. To some extent, this is essential, for otherwise law offices would become
nothing more than warehouses for information that might or might not later be useful. Careful
attention to a thoughtfully crafted document retention policy can help to protect lawyers from
spoliation claims because it may explain why it was reasonable, rather than negligent, to discard
certain papers or electronic files. Of course, whenever it is foreseeable that a dispute that might
call for information pertaining to a client, ordinary policies on document retention must give way
to more careful implementation of the duty to preserve client information and property.



Loss of a Chance

Loss of a chance is not a theory of factual causation, but rather a different way of looking
at damages. The chance of securing a successful result is regarded as something imp01iant, the
loss of which is a kind of damage itself. If that is true, proving factual causation is simple: all
that the plaintiff must show is that but for the defendant's tortious conduct, the valuable chance
would not have been lost.
A number of states have accepted loss of a chance arguments, generally in the context of


See Jerista v. Murray, 185 N.J. 175, 883 A.2d 350, 366 (2005) (allowing a spoliation
inference where a lawyer deceived clients for nine years about the status of their case).



See Galanek v. Wismar, 68 Cal. App. 4th 1417, 81 Cal. Rptr. 2d 236, 242 (1999)

(~hifting the burden of proof to a lawyer who negligently failed to preserve the plaintiff's car).

Page 38
medical malpractice. 97 For example, assume that a doctor negligently fails to read an x-ray that
revealed cancer, and that during the period that the cancerous condition goes undetected, the
plaintiffs chances of survival decline from 40% to 10%. Most persons would regard the lost
chance of survival as an important loss, and some states permit recovery. This may be tlue even
if, as in the scenario, the patient was already more likely than not to die at the time that the initial
x-ray was taken. In the subsequent action, the doctor's negligence is a "but for" cause of the lost
chance of survival, rather than of the death.
Courts and scholars sometimes bristle at the mere mention of loss of a chance as a
legitimate rationale for recovery, fearing that it is an unwise step down an ill-advised path to
theories of probabilistic causation that lie far afield from the certainties of the "but for" rule.
Perhaps it is therefore not surprising that few cases have expressly endorsed the loss of a chance
theory in the legal malpractice context. Nevertheless, the Restatement opines that "a plaintiff
who can establish that the negligence or fiduciary breach of the plaintiffs former lawyer
deprived the plaintiff of a substantial chance of prevailing and that, due to that misconduct, the
results of a previous trial cannot be reconstructed, may recover for the loss of that chance in
jurisdictions recognizing such a theory of recovery in professional-malpractice cases generally."98
There are many cases where lawyers' negligence does indeed cause the loss of an
important chance, such as where a lawyer neglects to relay a settlement offer or plea bargain that
might have been accepted. Some decisions effectively recognize the loss of a chance doctrine
without using the term. For example, in Vahila v. Hal/,99 the Supreme Court of Ohio held that, in
order to succeed in a malpractice action, the plaintiffs were not required to show that they would
have prevailed in certain civil, criminal, and administrative proceedings absent negligence of
their attorneys. The court wrote:


[W]e reject any finding that the element of causation in the context of a legal
malpractice action can be replaced*** with a rule of thumb requiring that a
plaintiff * ** prove in every instance that he or she would have been successful in
the underlying matter(s) giving rise to the complaint. ** *. A strict "but for" test
*** ignores settlement opportunities lost due to the attorney's negligence. 100


See, e.g, Jorgenson v. Vener, 616 N .W.2d 366 (S.D. 2000); see generally DavidA.
Fischer, Tort Recovery for Loss ofa Chance, 36 WAKE FOREST L. REV. 605 (2001) (exploring
non-arbitraty limiting principles that would permit courts to use loss of a chance outside of the
medical context).



674 N .E .2d 1164 (Ohio 1997).



674 N .E.2d at 1168-69 (intemal quotations omitted).

Page 39

Proximate Causation

The requirement of proximate causation is a policy-based inquiry into fairness. The rule
holds that even ifthe defendant factually caused the plaintiffs harm, the defendant will not be
accountable if it would be unfair to impose responsibility.

In General

There are many different ways of talking about fairness. Thus, as in other areas of tort
law, a malpractice defendant's conduct may be found not to be a proximate cause of a loss that
was unforeseeable, or not within the risks that made the defendant's conduct tortious, 10 1 or if too
many intervening forces contributed to the production of the loss. 102



Consider the economic "meltdown" of2008-09. Lawyers presumably contributed to the
marketing of the sub-prime loans and financial "derivatives" that many persons say were an
important cause of the crisis. If those lawyers are sued for malpractice by the entities they
represented (or their successors in interest, see Chapter 5), or by investors or lenders who
suffered losses, one defense may be lack of proximate causation. The argument, presumably,
would be that a collapse of the American economy on a scale approaching the Great Depression,
was so unforeseeable and had so many contributing causes, that it would be unfair to hold
particular lawyers liable for resulting damages. Of course, whether that is a good argument
depends upon how one reads legal history. There are literally thousands of cases addressing the
issue of proximate causation in tort law generally, and many addressing it specifically in the
context of the lawyer liability.
If one frames the proximate causation inquiry in terms of foreseeability, it is important to
remember that strict foreseeability of harm is never required--otherwise many tortfeasors would
escape liability. All that is usually needed to make it fair to hold the defendant responsible is that
the defendant should have foreseen, in loose terms, harm to the class of persons of which the
plaintiff is a member of the type that in fact occurred. Differences in the manner of occurrence
are generally irrelevant, as is the fact that the hatm may have been greater than expected. 103


No. 1 2005) (providing that " [a]n actor's liability is limited to those physical harms that result
from the risks that made the actor's conduct tortious").

See Cleveland v. Rotman, 297 F.3d 569, 573 (7th Cir. 2002) (stating, in a case not
involving legal malpractice, that "[a] proximate cause is one that produces an injury through a
natural and continuous sequence of events unbroken by any effective intervening cause").

423-24 (3d ed. 2005).


Page 40
There are legal malpractice cases which trace proximate causation quite far. For
example, a negligent lawyer may be held liable for _ _ _ _ __
On the other hand, some decisions have saved a lawyer from liability based on lack of
proximate causation. In one recent dispute, the Seventh Circuit ruled that huge expenses
incurred in fighting a discovery motion were not recoverable by an insurer in its legal malpractice
action against a law firm hired to represent its insured because it was unforeseeable that a failure
to produce documents would "spawn a million-dollar bill for attorneys fees." 104


Superseding Causation and Shifting Responsibility

Superseding causation and shifting responsibility are particular aspects of the proximate
causation inquiry. The former concerns intervening acts or forces which contribute to the
production of the plaintiffs harm. Sometimes those intervening forces break the chain of
proximate causation, in which case they are called superseding causes. In contrast, shifting
responsibility concerns the question of whether someone else's failure to act saves an antecedent
tortfeasor from liability. Sometimes, but not often, an omission breaks the chain of proximate
The operative principles in this area are much the same as they are in any case raising
issues of proximate causation. If the act or omission is foreseeable or part of the risks that made
the defendant's conduct tortious, it probably does not preclude a finding of proximate causation.
However, at least two points deserve special mention.

Intervening Negligent Conduct

First, it is often the case that negligence by a subsequent actor does not prevent a finding
of proximate causation. Taking an example from the physical injury context, suppose that a
driver negligently strikes a pedestrian, who is then taken to an emergency room and, as a result of
the harried conditions that prevail there, receives negligently deficient medical care. The driver
is likely to be held liable both for the initial injuries sustained in the collision and for the
aggravated injuries resulting from the negligent medical treatment. 105 As to the latter component





TIG Ins. Co. v. Giffin Winning Cohen & Bodewes, P.C., 444 F.3d 587, 592 (7th Cir.


See Whitaker v. Kruse, 495 N.E.2d 223, 226 (Ind. Ct. App. 1986) ("[s]ince he put the
injured person in the position of needing medical services, the tort-feasor is liable for any
additional injury resulting from the medical treatment"); W. PAGE KEETON ET AL, PROSSER AND
FOR PHYSICAL HARM§ 35, cmt. c (P.F.D. No. 1 2005) (opining that "[t]he actor is not subject to
liability for enhanced hatm caused by extraordinary or unusual acts that create risks of harm
different from those normally created by efforts to render aid").

Page 41
of damages, the reasoning is likely to be that one of the risks to which the driver subjected the
pedestrian was the risk of negligent medical care in a chaotic emergency room environment. Put
somewhat differently, negligently deficient medical care is a foreseeable risk, not because it is so
common that it is probable, but because it is not so rare or bizarre that it should save the driver
from liability for aggravated injuries that would not have been incurred but for the driver's
The same principles apply in the field of legal malpractice. Think back to the example
above, where Lawyer # 1 negligently omits important provisions from a contract, and another
lawyer, Lawyer #2, negligently reviews the document and fails to discover the omission at a time
when it would have been possible to reform the instrument. Lawyer #2's negligent actions do
not prevent Lawyer # 1 from being found to be a proximate cause of losses caused by omission of
the provisions from the document. (Of course, Lawyer #2 ' s negligence is also a proximate cause
of the harm, since that was precisely the hrum that was foreseeable ifLawyer #2 failed to
exercise care in reviewing the document.)

Subsequent Counsel's Failure to Act

In general, American tort law is reluctant to allow a tortfeasor to escape liability merely
because someone else subsequently failed to act to prevent the harm from occurring. The
subsequent omission, even if negligent, usually does not break the chain of causation. 106 A
person who causes an accident is liable for injuries resulting from the victim' s loss of blood or
exposure to bad weather, even if someone else could have stopped to render aid and assistance
before those consequences developed.
Nevertheless, in some cases, the law holds that even if one person sets the stage for harm
to occur, responsibility for preventing that harm shifts to some other person. Generally, these are
cases where the antecedent tortfeasor has done everything possible to prevent the risk of harm
from coming to fruition or where the other person's failure to act is so unforeseeable, bizarre, or
abnormal that it is unfair the hold the initial tortfeasor liable.
For example, suppose that a store sells a defective portable heater and upon learning of
the danger undertakes a massive recall campaign advising the public of the danger and offering a
substantial cash bonus to purchasers who allow the store to deliver a free replacement. If a
child's parents fail to return their heater after repeatedly receiving notice of the recall and its
favorable terms, and the child is injured when the heater catches fire, it might be argued that the
store is not liable because responsibility for preventing the harm shifted to the parents. That is, if
the store did everything reasonable to recall the defective product and the parents' refusal of the
substantial cash bonus and delivery of a free replacement was essentially unforeseeable, the store
may escape liability based on lack of proximate causation.



Page 42
In the legal malpractice context, these types of issues arise in cases where one lawyer,
who acted negligently, is replaced by a second lawyer who then fails to avert the harm by
identifying the problem and taking effective action. In many situations, the second lawyer's
omission does not save from liability the lawyer who initially set the stage for harm to occur.
Consider a variation of the example discussed above, assuming that after Lawyer #1 omits
important terms from a document, and that successor counsel, Lawyer #2, does not review
document at all and therefore fails to discover the deficiency and seek reformation of the
document. 107 It seems quite unlikely Lawyer #2's omission will save Lawyer #1 from liability.
On the stated facts, there is no reason to say that the first lawyer did everything possible to
prevent the harm from coming to pass, nor is there any reason to think that Lawyer #2's omission
was so unforeseeable or extraordinary that it would be unfair to hold Lawyer #1 responsible for
harm caused by the missing provisions.





An important variation of the subsequent omission problem concerns failure to file suit
before the statute of limitations elapses. Assume, for example, that in declining representation of
a prospective client, Lawyer #5 incorrectly advises the client that the statute of limitations for the
matter is question is longer than it actually is. Does the client's failure to seek new counsel
before the claim is time barred prevent Lawyer #5 from being liable? Probably not. Dilatory
inaction is foreseeable . Or suppose that before the period for filing elapses, the client consults
Lawyer #6, who declines to take the case, or hires Lawyer #7, who then neglects to file suit
before it is too late. In those situations, do subsequent events break the chain of causation so that
Lawyer #5 is not liable for the untimely filing of the case? Does it make any difference whether
Lawyer #6 or Lawyer #7 knows what Lawyer #5 said about the statute of limitations deadline?
Some cases have focused on whether there is a new attorney on board and a fair
opportunity to file the action before the statute of limitations elapses. Those decisions "appear to
have taken the position * ** that when the duty of care shifts from the original attorney to the
successor, so does the liability, provided that the successor had the opportunity to undo or ave11
the hann precipitated by the actions or omissions of the original attorney." 108 However, even if
that is the case, there is reason to distinguish situations where the client merely had the
opportunity, never exercised, to engage counsel before the case became time barred. Thus it has


If Lawyer #2 does not review the document at all, the case involves a subsequent
omission and issues of"shifting responsibility." In contrast, if Lawyer #2 negligently reviews the
document, the case turns on an act, rather than omission, and is likely to be discussed in terms of
"superseding causation." To the extent that superseding causation and shifting responsibility are
animated by the same considerations of fairness and public policy, these distinctions are purely
formal. Nevertheless, some authorities use the terms "superseding causation" and "shifting
responsibility" quite specifically, so that the f01mer refers to the effect of subsequent acts or
forces of nature and the latter to subsequent omissions.

See Lopez v. Clifford Law Offices, P.C., 362 Ill. App. 3d 969, 841 N.E.2d 465 , 475,
299 Ill. Dec. 53 (2005).



Page 43
been held that consultation with possible successor counsel, who declined to take the case before
the statute of limitations expired, is not sufficient to absolve from liability a law firm which
incorrectly advised a prospective client about the statute of limitations when declining
representation. 109





Jd. at476.

Chapter 4. Breach of Fiduciary Duty
Legal Malpractice Law Nutshell
04 Nutshell Rev 10 VRJ. wpd
Thursday, March 19,2009




Lawyers as Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 1
Professional Obligations from a Different Point of Reference . . . . . . . . . . Page 1
Advantages of Fiduciary Principles Over Negligence ..... ....... .. .. . Page 2
The "Substantial Factor" Test for Factual Causation ...... . . .... Page 4
Disclosure Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4
Fee Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6
Aiding and Abetting a Breach of Fiduciary Duty . .. ....... .... ........ . ... Page 8
A Dangerous Theory of Lawyer Liability . . . . . . . . . . . . . . . . . . . . . . . . . . Page 8
Duties to Clients Versus Duties to Nonclients . . . . . . . . . . . . . . . . . . . . . . . Page 9
Tort Principles on Aiding and Abetting ....... . . . .. .. .... .. ....... Page 10
Circumstantial Evidence ofK.nowledge
Page 10
Substantial Assistance ..... . .. ... . .. . ...... .... ......... . . ... . Page 11
Privileges and Defenses .... .. . . . . .. .. ...... .. ................ . Page 12
Implications for Corporate Policy Making ............ . ..... . ... . . Page 13
Intra-Firm Fiduciary Duties .... .. .. .. ...... . . ... . ........ . ......... . . Page 14
Duties of Partners .................... . .............. . ....... . Page 14
Duties of Associates ....... .. . . .......................... . ... . Page 15
Movement Between Law Firms . .. ........... . . . ........... . ... . Page 15
Post-Employment Restrictive Covenants . ..... .. .. .......... . .... . Page 16

Lawyers as Fiduciaries


Professional Obligations from a Different Point of Reference

When a lawyer's performance is examined in terms of the obligations imposed by the law
of negligence, it is clear that there is room for the professional exercise of discretion . A lawyer
need only act reasonably in order to avoid liability. So long as a lawyer does not make a choice
that no reasonably prudent lawyer could make, responsibility for damages will not be imposed.
(See Chapter 3 Part_.)
However, the lawyer-clie.nt relationship is not a mere arms-length transaction, but a
relationship oftmst and confidence that is fiduciary as a matter oflaw. This means that lawyers
must always act with clients' best interests in mind, and those interests must come first.



The professional liability of lawyers can therefore be assessed not only under negligence
principles, but also in terms of whether there has been a breach of fiduciary obligations. Because
that is so, it is important to ask to what extent fiduciary duty law allows lawyers the same room

Page 2
for the professional exercise of discretion that is accorded by the law of negligence. This is an
important question, for the sound exercise of judgment in the face of uncertainty and complexity
is the quintessence of good lawyering. However, judgment can only be exercised if it is
permissible for a lawyer to choose between alternatives. Thus, the answer to the question
depends on how the standard of care for breach of fiduciary duty is framed, and how far that
standard governs.
The language of fiduciary duty is demanding. Fiduciary principles speak, for example,
not of reasonable prudence and ordinary care, but of the utmost good faith, complete fair dealing,
and full disclosure. At least at face value, the language of fiduciary duty appears to require more
of a lawyer than the law of negligence, and, consequently, seems to afford less room for the
exercise of judgment. If that is so, and if fiduciary principles are allowed to sweep too broadly in
determining the obligations of lawyers, there is a risk that by imposing a more demanding
standard for performance they will render negligence law largely irrelevant. With that demise,
the scope for the exercise of discretion would logically contract or disappear.


The key to understanding the proper role of fiduciary principles in the governance of
attorney conduct is to ask whether the matter at issue involves a question of loyalty, and not just
competence or skill. If so, it is reasonable to assume that fiduciary principles apply, for those
norms exist to ensure that obligations of trust are neither betrayed nor ignored. In contrast, if
loyalty is not an issue, then it is likely that negligence principles are sufficient to protect clients
from unnecessary harm. The law of negligence applies to virtually all aspects of modern life, and
it usually provides an appropriate mechanism for balancing competing interests.
Issues relating to conflict of interest, confidentiality, and candor frequently involve
questions of loyalty, and are examples of matters where it is appropriate to presume that fiduciary
duty law may be applicable. In contrast, issues relating to knowledge of substantive law, correct
drafting of documents, and adequate trial preparation often raise questions of competence and
skill, rather than loyalty. To that extent, they may more properly be resolved by reference to
negligence principles.


Of course, there are cases where the same course of professional conduct can raise issues
of both competence and loyalty. A lawyer may violate conflict of interest rules not merely
because the lawyer chooses to sacrifice the interests of a client to competing interests, but
because the lawyer is ignorant of what the rules require or fails to appreciate that they apply to
particular facts. A loyal lawyer does not violate the conflicts rules, but neither does a competent
one. Thus, in some situations, a plaintiff may properly allege that certain lawyer conduct
constituted both a breach of fiduciary duty and the tort of negligence.



Advantages of Fiduciary Principles Over Negligence

As the preceding section suggests, a principal advantage of suing for breach of fiduciary
duty in comparison to negligence is that obligations are often articulated in more demanding

Page 3
terms. This makes it easier for a judge or jury to conclude that the lawyer fell short of what was
required. Beyond that significant distinction, actions for breach of fiduciary duty and negligence
have certain similarities and some important differences.
Breach of fiduciary duty is not a strict liability tort. A plaintiff alleging fiduciary breach
must show that defendant lawyer acted negligently, recklessly, or intentionally in violating
fiduciary principles. For example, if a former corporate client has changed names so frequently
that, in the exercise of reasonable care, the lawyer could not have detected a conflict of interest,
the failure to guard against the conflict during the period in which the relevant facts are unknown
is not a breach of fiduciary duty. Therefore, an action for breach of fiduciary duty cannot be
distinguished from the negligence on the ground that culpability is not required. A suit against
an attorney for breach of fiduciary duty requires at least as much culpability as a suit for the tort
of negligence.
Moreover, the culpability of a fiduciary breach determines whether defenses based on the
plaintiffs conduct (contributory negligence, comparative negligence, or comparative fault,
depending on the state) may be asserted by the lawyer defendant (see Chapter 7). If a lawyer is
charged with breach of fiduciary duty based on negligent failure to prepare documents
embodying the terms of a settlement in a timely matter because the lawyer's needs were placed
ahead of the client' s, the client's own negligent failure to promptly inform the lawyer that an
agreement was reached and that documentation was needed may constitute a total or partial
defense according to state law.
Further, there is no distinction between actions for negligence and breach of fiduciary
duty with respect to expert testimony. In either case, expert testimony is generally required to
establish the standard of care (see Chapter 3 Part _ _.) Typically, at trial or in a deposition, the
same expert will testify as to whether particular conduct, such as the lawyer's practices in
handling client property, constituted negligence, breach of fiduciary duty, or both. An expe1i
claiming acquaintance with the standard of care generally can be assumed to be ready to talk
about a lawyer's duty of reasonable care under negligence law, as well as the lawyer's fiduciary
No useful distinction can be drawn between negligence and breach of fiduciary duty with
respect to statutes of limitations. Claims relating to the two actions are sometimes subject to
different limitations periods. However, which is longer depends on the law of the jurisdiction. It
is not possible to generalize. Moreover, in some jurisdictions that same statute of limitations
governs all legal services claims, regardless of the theory of liability asserted.


The most important (possible) distinctions between negligence and breach of fiduciary
duty claims against lawyers concern fee forfeiture and proof of causation. Malpractice plaintiffs
often seek fee forfeiture in addition to recovery of damages. As explained below, fee forfeiture is
more likely to be awarded if a lawyer has committed a breach of fiduciary duty, as opposed to
mere negligence (see Part C of this Chapter.) The second possible distinction concerns proof of

causation, which is discussed in the next section.

The "Substantial Factor" Test for Factual Causation

If the plaintiff wishes to recover damages, the plaintiff must prove that a lawyer's
negligence or breach of fiduciary duty caused harm. However, some states hold that the
demanding "but for" test for factual causation (see Chapter 3 Part ___) does not apply to claims
for breach of fiduciary duty. In those states, it is enough for a plaintiff to show that the
defendant's conduct was a "substantial factor" in producing the harm for which damages are
sought. This reduced standard makes it considerably easier for the plaintiff to establish that the
defendant should be required to pay damages, for proving "but for" causation is often difficult.
For example, if may be hard for a jury to conclude that, "but for" an undisclosed conflict of
interest amounting to breach of fiduciary duty, a lawyer's efforts to negotiate a corporate merger
would have been successful. However, depending on the strength of the conflict, it may be
possible for the fact finder to determine that the conflict was a "substantial factor" in the failure
of negotiations. Some states apply the more lenient "substantial factor" rule only to cases
involving intentional breaches of fiduciary duty, 1 but other states apply the rule to negligent
breach of fiduciary duty, too.


In one case involving both negligence and breach of fiduciary duty claims, the plaintiff
alleged that certain debatable advocacy tactics had caused the plaintiff to be defeated in
arbitration. The court found that the evidence was insufficient to establish "but for" causation,
and therefore dismissed the negligence claim. However, the court further determined that certain
potential conflicts of interest caused defendants' otherwise defensible tactical decisions to take
on a more troubling gloss, which suggested that divided loyalties had contributed to the
plaintiffs arbitration defeat. The defendants' motion for summary judgment on the breach of
fiduciary duty claim was therefore denied because the plaintiff was only required to show that the
alleged breach of fiduciary duty was a "substantial factor" in the loss at arbitration. 2


Disclosure Obligations

What must a lawyer tell a client? This question arises thousands of times every day in
virtually every law office. Ifthe law of negligence governs, the answer is generally clear. The
lawyer must keep the client reasonably informed about the status of the matter, must respond to
reasonable requests for information, and must provide the information reasonably necessary to
enable to client to make informed decisions about the representation.3 In other words, a lawyer




See Estate ofRe v. Kornstein Veisz & Wexler, 958 F. Supp. 907 (S.D.N.Y. 1997).


a lawyer's duty to infom1 and consult with a client).


Page 5
must act reasonably in communicating with the client.
However, some incautious language in fiduciary duty cases purports to impose on lawyers
a duty of "absolute and perfect candor."4 Surely this is not an accurate statement of a lawyer's
obligations-at least not in every circumstance. If lawyers were routinely subject to actions for
damages for anything falling short of"absolute and perfect candor," lawyers would be compelled
to forego the exercise of judgment about the significance of information and pass on to clients
every fact learned in the course of representation, no matter how dubious, redundant, trivial, or
The one area where the precedent makes clear that something approaching total candor is
required of lawyers is with respect to business transactions between lawyers and clients. As
explained later (see Chapter 9 Part____), the law is highly suspicious of such dealings because of
their potential for abuse of the client. If such a transaction is to be upheld, something akin to
"absolute and perfect candor" on the part of the lawyer is likely to be required.
The reason that a great degree of candor is required in the context of business transactions
is because the interests of lawyer and client are adverse. If that is true, there is reason to think
that the lawyer may be less than fully faithful to the client or protective of the client's interests.
Disclosure duties are also great in other situations where the interests of lawyer and client are
adverse. This is why, if a lawyer's negligent conduct gives the client a substantial malpractice
claim, the lawyer must disclose that information to the client. 5 (See Chapter 11 Part _.)


Special rules have already developed to govern disclosure obligations in certain contexts
where the interests of lawyer and client are adverse. For example, the rules dealing with conflicts
of interest spell out in detail what types of disclosures are required to obtain informed consent or
former client. 6 Similarly, what a lawyer must tell a client about the terms of a contingent fee
agreement, is already clearly specified by applicable rules of ethics. 7 There is no reason to
substitute of an amorphous "absolute and perfect candor" standard for these types of well
developed principles that were undoubtedly formulated with lawyers' fiduciary obligations in
mind. To the extent that a rule of"absolute and perfect candor" defines a lawyer's disclosure
obligations, it should be limited to contexts where the interests of lawyer and clients are adverse
and specific guidance as to what is required of a lawyer has not yet been articulated.


See Vincent R. Johnson, "Absolute and Perfect Candor" to Clients, 34 ST. MARY'S
L.J. 737 (2003).

(stating that disclosure is required).



See, e.g., MODEL RULES OF PROF'L CONDUCT R. 1. 7 cmt. 18 & R. 1.9 (2009).

Page 6
Notwithstanding certain decisions' unquestioning, and sometimes careless, invocation of
the language of "absolute and perfect candor," a review of the cases reveals that the applicability
of any such rule is limited. Outside of situations where there is clear adversity between lawyer
and client, there are virtually no cases that have held a lawyer liable for damages based on
nonnegligent nondisclosure. That is, case holdings usually can be explained on the ground the
lawyers ultimately held liable were negligent or even more blamewmthy. Notwithstanding the
fact that a lawyer is a fiduciary, disclosure obligations in the broad range of situations (where
there is no clear adversity between lawyer and client) should generally be governed by a duty of
reasonableness, which is to say the law of negligence.
There are many factors relevant to the assessment of whether a lawyer has acted
unreasonably or breached a fiduciary duty in not disclosing information to a client. These factors
include the scope of the representation (see Chapter 3 Part___), the materiality of the
information (see Chapter 3 Part __j, whether the information is already known to the client (see
Chapter 3 Part ___), possible competing obligations of confidentiality to others, and any
agreement the lawyer and client have made regarding what should be disclosed. Each of these
considerations limit the disclosure duties of lawyers.



Fee Forfeiture

Every client who is unhappy with a lawyer would like to get back any money already paid
to the lawyer, as well as be excused from paying any fees still due. It is therefore not surprising
claims for fee forfeiture are an increasingly common feature of legal malpractice litigation.
Typically, a malpractice plaintiff seeks both damages for harm caused by the lawyer's
misconduct and fee forfeiture because the client did not get what was paid for, namely
representation by a lawyer faithful to important duties.
If a client is seeking a return of fees that have already been paid, the claim is sometimes
called a request for "disgorgement" of fees . However, the term "forfeiture" is increasingly used
to cover any loss of fees by an attorney, regardless of whether those fees have yet been paid.
In response to a request for fee forfeiture, an attorney may seek a declaratory judgment
that outstanding amounts are owed. Thus, a malpractice plaintiff who does not prevail on a
claims for damages or fee forfeiture is sometime ordered to pay amounts due under the attomeyclient contract. 8
Forfeiture is essentially a restitutionary remedy which is awarded to prevent unjust
enrichment of the attorney. It is therefore generally agreed that forfeiture is available even if the
plaintiff is unable to prove that the lawyer's tortious conduct caused damages. (Damages are
measured by what the plaintiff lost; restitution is measured by what the defendant improperly

See Ambase Corp. v. Davis Polk Wardwell, 8 N. Y.3d 428, 866 N.E.2d 1033, 834
N. Y. S.2d 705, 708 (2007).


Page 7
gainedf The fact that fee forfeiture may be awarded even if damages are not proved is a very
significant remedial consideration, for proving that malpractice was a factual and proximate
cause of harm is often difficult or impossible. The fees paid to a lawyer, particularly if the
representation was complex or extended over a long period of time, may be so great that it may
be worth bringing a malpractice action even if might not be possible to legally link the lawyer's
breach of duty to damages.
The Restatement recognizes that total or partial fee forfeiture may be appropriate in cases
involving a "clear and serious violation of duty." 10 Among the factors that are relevant to the
issue of forfeiture are "the gravity and timing of the violation, its willfulness, its effect on the
value of the lawyer's work for the client, any other threatened or actual harm to the client, and
the adequacy of other remedies. " 11 Some courts also emphasize that, because "the central
purpose of the equitable remedy of forfeiture is to protect relationships of trust by discouraging
agents' disloyalty," an additional factor that must be given great weight in determining whether
fees should be lost is "the public interest in maintaining the integrity of attorney-client
relationships." 12


In one recent case, 13 the Second Circuit denied all compensation to a lawyer who had
secured a multi-million dollar settlement of claims arising from birth-related injuries to a young
child named David. The lawyer had submitted to the court an unexplained request for attorney's
fees in excess of the statutory maximum allowed in medical malpractice cases. The court found
that the evidence indicated that the lawyer had made "only limited inquiries into David's
condition and the nature and extent of David's future medical needs" and "offered none of the
documentation and reports necessary for the court to determine whether the settlement proposed
by the parties was reasonable." 14 The appellate court concluded that "it was not an abuse of
discretion for the district court to determine that Goldman had inadequately represented his
client." 15









Burrow v. Arce, 997 S.W.2d 229, _(Tex. 1999).


See Chen v. Chen Qualified Settlement Fund,--- F.3d ----, 2009 WL 18726 (2d Cir.




F.3d at


F.3d at


Page 8
With respect to fee forfeiture, there are roles to be played by both jury and judge. The
jury normally decides disputed questions of fact, relating, for example to the culpability of the
lawyer's breach of duty. The judge then determines whether forfeiture is appropriate, and if so
what amount of fees should be lost by the lawyer.
Without dispute, a clear and serious breach of fiduciary duty can trigger the powerful
remedy of fee forfeiture. However, whether negligence not amounting to breach of fiduciary
duty is sufficient to warrant total or partial loss of a fee is an open question in many states. The
relevant portions of the Restatement discussing what constitutes a "clear and serious violation of
duty" state that "the source of the duty can be civil or criminal law, including, for example, the
requirements of an applicable lawyer code or the law of malpractice." 16 This language seems to
allow the possibility that negligence not involving disloyalty may, on appropriate facts, support
an award for forfeiture.


Nevertheless, the plaintiffs ability to call the lawyer's breach a violation of fiduciary
principles appears to be important. Most of the cases ordering forfeiture involve breaches of
fiduciary duty. Moreover, the Restatement commentary cautions that "forfeiture is generally
inappropriate when the lawyer has not done anything willfully blameworthy." 17 Willfully
blameworthy conduct would seem to amount to disloyalty, and to therefore constitute breach of
fiduciary duty. In addition, "willfully blamewm1hy" conduct would seem to be something more
than mere negligence. That language tends to suggest that something approaching recklessness
or perhaps even intentionally tortious conduct may be required. The decisions on fee forfeiture
often emphasize that forfeiture is appropriate in cases involving serious breach of trust and
disloyalty. Consequently, evidence of a breach of fiduciary duty, as opposed to mere negligence
that does not involve disloyalty, places a party seeking fee forfeiture in a stronger position to
persuade a court that loss of all or part of a fee is appropriate.


Aiding and Abetting a Breach of Fiduciary Duty

A Dangerous Theory of Lawyer Liability

Lawyers can be liable not only for breaching their own fiduciary duties, but for aiding and
abetting other persons in their breaches of fiduciary duties. At one level, this is not surprising
because aiding and abetting liability is a well established, generally non-controversial theory of
tort responsibility. 18 At a different level, however, holding a lawyer liable for aiding and abetting
another's breach of fiduciary duty it is not only surprising but alarming. This is because the
theory has the potential to greatly expand the range of persons to whom lawyers may be






!d. § 37 cmt. d.



c (2000).

Page 9
responsible. Many clients, such as corporate officers and directors, business partners, trustees,
guardians, executors, and majority shareholders owe fiduciary duties to others. This theory says
that on an appropriate set of facts, a lawyer may be liable to persons standing in a fiduciary
relationship with any of these kind of clients, even though those third persons never stood in an
attorney-client relationship with the lawyer.
At least three things make aiding and abetting a breach of fiduciary duty a dangerous
theory of lawyer liability. The first is that the relevant legal principles are not well developed, so
it is difficult for lawyers to intelligently assess the risks and plan accordingly. Second, "aiding
and abetting" claims are often factually complex, typically drawing into the analysis not only
numerous entities or individuals, but also diverse areas of the law from which fiduciary duties
may arise. To this extent, claims against lawyers for aiding and abetting breaches of fiduciary
duty are more expensive to defend, unpredictable, and difficult to manage. Third, in many
respects, the law of fiduciary duty is typically phrased in highly demanding terms with few clear
markers for understanding the extent of obligation (see Part_ of this Chapter). If it is easy for
the fiduciary-client to fall short of fiduciary obligations, it may also be easy for a lawyer to
become liable to a third person for aiding and abetting the fiduciary-client's breach of fiduciary


Claims for aiding and abetting breaches of fiduciary duty are now a common feature of
what might be called "entity disaster" litigation. For example, in the 200 1 collapse of Enron,
then one of the world' s largest companies, Enron's lawyers were sued on many theories,
including aiding and abetting breaches of fiduciary duty. Eventually, some of the firms paid
huge settlements to various plaintiffs. The same was true of the suits against lawyers in the
1990s that followed the Saving and Loan Crisis. It seems certain that in the malpractice cases
that will follow the 2008-09 Wall Street "meltdown" lawyers will be sued for aiding and abetting
breaches of fiduciary duty by the officers and directors who ran the financial institutions that so
spectacularly failed.

Duties to Clients Versus Duties to Nonclients


The first thing to understand about claims for aiding and abetting breach of fiduciary duty
is that there are two very different varieties of the claim. In one case, the claim is asserted
against the lawyer by the lawyer 's own client. Typically, the client is an entity, and the lawyer is
alleged to have aided and abetted fiduciary breaches by constituent representatives of the entity,
such as officers and directors. This is the stronger variety of the claim because lawyers owe
numerous duties to clients. There is nothing shocking about saying, for example, that a lawyer
cannot assist an officer or director in harming the lawyer's entity client. Indeed, in many cases, it
might be possible to forego the language of"aiding and abetting" and simply argue that the
lawyer's conduct was a violation of the lawyer' s own fiduciary obligations to the client.


The second variety of aiding and abetting claim is one asserted by a non-client. Because
there is no privity between the lawyer and non-client, and typically no basis for saying the lawyer



Page 10
personally had any legal duty to the non-client, this is the weaker variety of claim. In this type of
case, the fiduciary being aided by the lawyer is normally the lawyer's client. In that case, it may
be argued that there is a privilege to represent one's client without competing obligations to third
persons, and that privilege may defeat the aiding and abetting breach of fiduciary duty claim.
These kinds of privileges are discussed below (see Part_ of this Chapter). Note, however, that
this kind of privilege has no role in the first type of aiding and abetting claim discussed above. In
that case, the plaintiff is the lawyer's client.

Tort Principles on Aiding and Abetting

Under general tort principles, aiding and abetting liability does not require proof of an
express or tacit agreement on the part of the aider/abetter to participate in a wrongful activity in
violation of the plaintiffs rights. Rather, what is necessary is that the aider/abetter knowingly
provide substantial assistance to one who is engaged in tortious conduct. For this reason, the
aiding and abetting theory oftort liability is sometimes called "concerted action by substantial
assistance." 19



Although courts differ in stating the elements of lawyer liability for aiding and abetting a
breach of fiduciary duty, the requirements are usually simple. Generally, the plaintiff must
prove: (1) that the fiduciary breached a fiduciary obligation to the plaintiff, (2) that the breach
caused damages; (3) that the lawyer knew that fiduciary obligations were being breached; and (4)
the lawyer nevertheless provided substantial assistance to the fiduciary that contributed to the
Aiding and abetting a breach of fiduciary duty is an intentional tort in the sense that it
must be shown that the defendant attorney knew that the person being assisted was committing a
breach of fiduciary duty.20 Presumably, this classification carries with it all of the consequences
that attach to an intentional tort, including the disallowance of defenses based on the plaintiffs
own negligent conduct. (See Chapter 2 Part _ _ .)


Circumstantial Evidence of Knowledge

A lawyer's knowledge of a fiduciary's breach of duty can be proved either by direct
evidence (e.g., e-mail messages clearly indicating what the attorney knew) or circumstantially. In
the latter case, indirect evidence is pieced together to draw a conclusion as to what the defendant
attorney must have known. For example, a lawyer's acceptance of a valuable gift from a
fiduciary known to the lawyer to have longstanding financial problems may provide the basis for
a jury to conclude that the lawyer knew that fiduciary obligations were being violated and that the






1 2005).


Page 11
fiduciary was profiting? 1 In the Enron case, there was no direct evidence of any particular
attorney's knowledge of wrongful conduct by Enron officers, but despite the attorneys' denial of
actual knowledge, there was plenty of circumstantial evidence that attorneys knew that fiduciary
obligations were being betrayed. 22

Substantial Assistance

De minimis non curat lex-the law does not concern itself with trifles . It is therefore not
surprising that aiding and abetting liability will only be imposed on a lawyer who renders
substantial assistance that contributes to a fiduciary breach.
The word "substantial" has different meanings in diverse areas of the law. On some
occasions, a requirement of a "substantial" contribution sets a more demanding level of proof
than on others. There are some court decisions that suggest that for a professional' s assistance to
be "substantial" for purposes of aiding and abetting liability, there must be something more than
rendition of routine professional services. 23 Whether other courts will follow the same path is
open to doubt. Routine legal services, reflecting as they do knowledge of the law, critical
evaluation of the facts, and the exercise of professional judgment, undoubtedly can make a
"substantial" contribution to a fiduciary 's performance (or breach) of duties. If a lawyer renders
routine legal services to a fiduciary whom the lawyer knows is breaching obligations, it is hard to
say why the lawyer should escape responsibility on the ground of not having made a sufficiently
great contribution to the breach.


Presumably, the "substantial assistance" requirement is concerned with ensuring that a
lawyer made a real contribution to the plaintiff's harm. If what the lawyer did was minimal,
irrelevant, duplicative, and of little efficacy, there may be good reason not to impose
responsibility for aiding and abetting a breach of fiduciary duty. However, in other areas of the
law, mere moral support that deliberately emboldens a tortfeasor in perpetrating wrongful
conduct is sufficient to support a finding of aiding and abetting liability. 24 There is little reason
to allow lawyers to escape responsibility on insubstantial contribution grounds, if the lawyer's
conduct emboldens the fiduciary in betrayal of duty, knowing that is what is at stake.


See Chem-Age Industries, Inc. v. Glover, 652 N.W.2d 756 (S.D. 2002).


See Report ofNeal Batson, Court-Appointed Examiner, app. C, at 1-2, In re Enron
Corp., No. 01-16034 (Bankr. S.D.N.Y. Nov. 4, 2003)

See Witzman v. Lehrman, Lehrman & Flom, 60 1 N.W.2d 179, 189 (Minn. 1999)
(involving accountants).




See generally WILLIAM L. PROSSER, LAW OF TORTS §46, at 292 (4th ed. 1971)
); RESTATEMENT (SECOND) OF TORTS §876 (1979) (_ _ _ -'

Page 12

Privileges and Defenses

As mentioned above, if the plaintiff who is bringing an aiding and abetting breach of
fiduciary duty claim against a lawyer is a nonclient, it may be possible for the lawyer to defeat
the claim by arguing that liability to the nonclient should not be recognized because such duties
would be in conflict with obligations owed to a client. That is, if a lawyer owes a duty of
undivided loyalty to a client (as authorities often say), the lawyer's representation of the client
should not be fettered by a theory of liability that recognizes competing obligations to a nonclient
that might distort the representation of a client who is serving as a fiduciary.
Of course, any such argument has limits. It is well recognized that a lawyer may not
assist a client in conduct that is criminal or fraudulent. 25 Such forms of conduct could often be
cast as breaches of fiduciary duty. Moreover, if conflicting interests are the concern, there is no
reason to worry about the conduct of a lawyer that assists a client, or more likely a client
representative, with matters falling outside the scope of the representation (perhaps investment
advice based on business acumen rather than rendition oflegal services), for duties to a client
generally extend no further than the scope of the representation (see Chapter 3 Part__).
Mindful of the risk that imposition of liability may create conflicts of interest for lawyers,
and of the factors that limit that risk, some courts have recognized a privilege that will defeat a
nonclient's claim against a lawyer for aiding and abetting a breach of fiduciary duty. In Reynolds
v. Schrock, for example, the Supreme Court of Oregon endorsed a strong qualified privilege that
protects lawyers for conduct within the scope of representation that is not motivated by the
lawyers' "own self-interest and contrary to their clients' interest," and that does not involve
assisting clients in crime or fraud. 26


It is too early to say whether other courts will follow the lead of the Oregon Supreme
Court. Moreover, in other areas of tort law, courts have held that certain matters, not mentioned
in Reynolds, such as bad faith, ill will, vindictiveness, or excessiveness, can destroy a qualified
privilege. 27 Thus, it remains to be seen what role will be played by qualified privileges in the law
governing lawyer liability for aiding and abetting breaches of fiduciary duty. As mentioned
above, such privileges are likely to be irrelevant in cases where the plaintiff is a client and the
lawyer is alleged to have aided an officer or director in breaching duties to the client. In such
situations, imposing liability on the lawyer would not threaten to divert the lawyer from attention
to the interest of the client, but would instead reinforce obligations owed by the lawyer to the



See, e.g., MODEL RULES OF PROF'L CONDUCT R. 1.2(d) (2009).


341 Or. 338, 142 P.3d 1062 (Or. 2006).




Page 13

Implications for Corporate Policy Making

Subjecting a lawyer to liability for aiding and abetting corporate officers and directors in
conduct that may later be viewed as a breach of fiduciary duty has implications for how lawyers
perform the role of corporate counsel. This is true because prudent lawyers will want to
minimize their exposure to liability under this dangerous theory of legal responsibDity.



Suppose, for example, that a lawyer for a corporation is assisting a corporate division
manager in closing a transaction for the sale of assets, and that the lawyer knows that the
manager has made certain guarantees to the purchaser that the division manager lacked authority
to make. If the purchaser later successfully sues the corporation to enforce those guarantees, the
corporation may seek to hold the lawyer accountable. With the benefit of hindsight, the making
of unauthorized guarantees that could trigger legal liability may be viewed as a breach of
fiduciary duties owed by the division manager to the corporation. Further, the work of the
lawyer, perhaps in transmitting those assurances to the purchaser or embodying them in a
document, may be viewed as aiding and abetting the division manager's breach of fiduciary duty.
Rather than risk liability under this theory, the lawyer, upon becoming aware that the division
manager lacked authority to make the guarantees, might refuse to provide further assistance for
the transaction. This may be true even if the manager insisted that making the guarantees was in
the best interests of the corporation and unlikely to give rise to corporate liability. Indeed, the
lawyer might not ·only refuse to assist the transaction, but might elect to report the matter to
persons with greater authority in the corporation-that is, go "over the head" of the division
manager to force the manager to take a different course. 28 Perhaps this is not a bad result.
Corporations might be better off iflawyers asked more questions about what their clients'
representatives were doing before carrying out orders. (In fact, it is possible to ask whether the
Wall Street meltdown and collapse of major investment banks in 2008-09 could have been
avoided if lawyers had taken a more active role in challenging dubious practices, such as the
marketing of subprime loans and incomprehensible financial derivatives or the use of bonus
compensation arrangements incentives which created disoriented incentives. 29)
Not long ago, the established wisdom of the legal profession, at least in many quarters,
was that corporate lawyers were not supposed to second guess the policy decisions of duly
authorized representatives of corporate entities, such as officers and directors. However, it is
sometimes easy to recast a policy decision as a breach of fiduciary duty. For example, the sale of
an asset for a certain price may later be labeled as a breach of fiduciary duty by those who
disagreed with the decision. The argument would be that disposing of property for inadequate
consideration is a breach of fiduciary obligations.




See Terry Carter, How Lawyers Enabled the Meltdown, and How They Might Have
Prevented It, A.B.A. J., Jan. 2009, at 34; Louise Story, Wall St. Profits Were a Mirage, But Huge
Bonuses Were Real, N.Y. TIMES, Dec. 18,2008, at Al ,col. 1.

Page 14
Exposing lawyers to claims for aiding and abetting breach of fiduciary duty is likely to
cause lawyers to scrutinize the conduct of their corporate clients more than perhaps once was the
case. This is an important change in the world of corporate lawyering, but it is a change
consistent with the temper of the times. The rules recently enacted by the Securities and
Exchange Commission pursuant to the federal Sarbanes-Oxley Act30 and amendments to the
Model Rules of Professional Conduce 1 now encourage, in ah increased range of circumstances,
"up the ladder" reporting of information learned by a lawyer about unlawful conduct or breaches
of duty that could harm the interests of corporate clients. The purpose of such requirements is to
ensure that those at the top of the corporate ladder have the information that is needed to ensure
that the corporations act lawfully and that their interests are protected from harm that can be
caused by the unfaithful or ill-advised conduct of entity constituents.

Intra-Firm Fiduciary Duties

Lawyers owe fiduciary duties not only to their clients, but to the law firms for which they
work. The broad contours of these obligations are sketched below.



Duties of Partners

Under common law principles, members of a partnership are fiduciaries and owe
important fiduciary obligations to one another. A partner may not prefer his or her economic
interests to those of other partners. More specifically, a partner may not injure the partnership by
establishing a competing enterprise. A partner also must disclose to the other partners facts
concerning economic opportunities that relate to the partnership's business.
Of course, common law principles are only the starting point for thinking about partners's
obligations. The common law has been superseded or supplemented by statutes in many states
patterned on the Uniform Partnership Act and the Revised Uniform Partnership Act. Moreover,
many lawyers now practice law in limited liability partnerships and limited liability corporations.
Therefore, when talking about partners' duties, it is essential to consult pertinent legislative
enactments in the relevant jurisdiction to determine whether and to what extent they determine or
alter the common law fiduciary obligations of partners.
There are at least two areas where partners may be charged with violating fiduciary
obligations to one another. The first concerns expulsion or, as it is sometimes called, " deequitization." The second area, which is discussed below (see Part _ of this chapter), involves
a partner's voluntary withdrawal from a firm where the departing partner seeks to take along firm
clients, thus depriving the firm of a future source of revenue.


Sarbanes-Oxley Act of2002, Pub. L. No. 107-204, 116 Stat. 745 (2002).



Page 15

Duties of Associates

Under common law principles, associates are agents who have fiduciary obligations to the
firm for which they work. This means that throughout the course of employment, each associate
lawyer owes the firm duties of care and skill, good conduct, and, within appropriate limits,
obedience. In general, an associate is obliged to disclose to the firm information affecting the
firm 's business and may not divert or usurp business opportunities. In addition, the same type of
departure-based solicitation of clients that creates issues when partners leave the firm may also
arise when an associate moves to another firm or starts a new law office (see Part_ of this
Receipt of an undisclosed commission, bonus, or gift from a third party for performing
duties owed to the firm is a breach of fiduciary duty. 32 This is true even ifthere is no showing
that the firm has been damaged. Similarly, referring a potential firm client to another law firm in
exchange for a commission is also impermissible. However, fiduciary obligations are not
absolute. An associate who recommends that a client engage different counsel because that is in
the best interests of the client is not liable for the fee lost by the associate's firm, provided that
the associate did not profit or gain in some way based on the diversion ofbusiness. 33

Movement Between Law Firms

It was once the case that most lawyers stayed with the same firm for life. Today, that
degree of loyalty and continuity is the rare exception. Lawyers are highly mobile and typically
change firms many times in a career.
A question of tremendous practical importance is whether a lawyer can invite a client the
lawyer served at one firm to transfer the client's business to the lawyer at the next firm. The
answer to the question demands careful consideration, because client solicitation in the context of
moving between law firms raises issues of potential liability under disciplinary, tort, and
fiduciary duty principles. 34 Fortunately, certain once-disputed points are now the subject of
consensus. Thus, the Restatement provides that:


Absent an agreement with the firm providing a more permissive rule, a lawyer
leaving a law firm may solicit firm clients:


Cf Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509


See Brewer v. Johnson & Pritchard, P.C., 73 S.W.3d 193 (Tex. 2002).



See generally Vincent R. Johnson, Solicitation ofLaw Firm Clients by Departing
Partners and Associate: Torts, Fiduciary, and Disciplinary Liability, 50 U. PITT. L. REv. 1-125
(I 988).

Page 16
(a) prior to leaving the firm :
(i) only with respect to firm clients on whose matters the lawyer is actively
and substantially working; and
(ii) only after the lawyer has adequately and timely informed the firm of
the lawyer's intent to contact finn clients for that purpose; and
(b) after ceasing employment in the firm, to the same extent as any other nonfirm
lawyer. 35
Although a few states continue to take a harsh view of departure based client solicitation,
a lawyer who acts in conformity with the Restatement's view is unlikely to be liable for breach of
fiduciary duty or tortious interference with contract or prospective advantage. Professional
discipline is also unlikely for applicable restrictions on solicitation of business normally contain
language providing that communication with one's own present or former clients does not
amount to solicitation. 36


Post-Employment Restrictive Covenants

With respect to departure-based solicitation of clients, the most important principle is that
clients have the right to decide who will provide representation. Not surprisingly, agreements
between lawyers purporting to determine who "owns" which client, or banning departing lawyers
from competing with the former fum, are invalid. 37




See MODEL RULES OF PROF'L CONDUCT R. 7.3 (2009) (permitting contact if the lawyer
has "a fami ly, close personal, or prior professional relationship with the lawyer").




Susan Saab Fortney, Vincent R. Johnson, “CLE: 2009: Legal Malpractice Law in a Nutshell,” St. Mary's Law Digital Repository, accessed February 21, 2019,

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