CLE: 2010: Defending a Legal Malpractice Claim

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CLE: 2010: Defending a Legal Malpractice Claim

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Vincent R. Johnson

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

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2010-03-12

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St. Mary's University School of Law Alumni Homecoming

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Defending a Legal Malpractice Claim

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

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This material is taken from Susan Saab Fortney & Vincent R.
Johnson, Legal Malpractice Law: Problems and Prevention
(Thomson/West 2008). Pagination differs from the original. Crossreferences may no longer be accurate.

Chapter 7

DEFENSES AND
OBSTACLES TO RECOVERY

A. Contributory Negligence,
Comparative Negligence, and
Comparative Fault
The Shift to Comparative Principles. The adoption of comparative
principles (particularly, "comparative negligence" and "comparative fault")
was the most important doctrinal innovation in American tort law in the
twentieth century. In many jurisdictions, this change not only altered the
two most important defenses based on plaintiffs' conduct ("contributory
negligence" and "assumption of the risk"), but catalyzed a host of related
changes throughout the law of injury compensation (including a re-thinking of the rules on joint-and-several liability). Basic law school courses
cover the full story ofthis transformation. However, because tort defenses
based on the plaintiffs conduct are often asserted in legal malpractice
cases-which usually are said to "sound in tort"-the broad outlines ofthe
shift to comparative principles are recounted below, albeit in simplified
form.
Common-Law Contributory Negligence. Contributory negligence
refers to the plaintiffs unreasonable conduct that contributes to the production of the plaintiffs harm. A century ago, the law on contributory
negligence had two important characteristics. First, the defense was total.
Any negligence on the plaintiffs part wholly barred recovery. Second, the

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LEGAL MALPRACTICE LAW

2

defense only applied in negligence cases. Thus, contributory negligence
was a potent, but limited, defense. A small amount of plaintiffs carelessness was enough to wholly save a negligent defendant from liability , but
a great deal of plaintiffs negligence was irrelevant in an intentional-tort
action. In the second half of the twentieth century, the two important
characteristics of contributory negligence-total defense and applicability
only to negligence- were greatly altered.

Comparative Negligence. Generally in the 1970s, most states replaced contributory negligence with either a "pure" or "modified" scheme
of comparative negligence . Under pure comparative negligence, carelessness on the part of the plaintiff reduces, but does not bar, recovery. A
plaintiff responsible for 10% of the negligence which causes the plaintiffs
harm can recover 90% of those losses; a plaintiff 85% responsible can
recover 15% of the losses. Under pure regimes, the reduction in recovery
corresponds exactly to the plaintiffs percentage of the total negligence.
In contrast, states with modified comparative negligence regimes
impose a 50% threshold. If the plaintiff is less negligent than the defendant (i.e. , responsible for less than 50% of the total negligence), reduced
recovery is permitted. For example, a plaintiff responsible for 35% of the
total negligence can recover 65% of his or her losses. In contrast, if the
plaintiff is more negligent than the defendant (i.e. , responsible for more
than 50% of the total negligence), no recovery is allowed. Illustratively, in
a case where an insurance company sued the attorney it had retained to
defend its insured, the jury had found the insurance company 97% com paratively negligent. The appellate court upheld that finding because
there was evidence that the plaintiff insurance company had erred in "not
making it clearer to*** [the defendant attorney] that it expected him to
locate and call*** [certain} witnesses, not making any effort on its own to
locate them or attending more closely to the case, and not giving adequate
investigation and consideration to settlement possibilities." 1 A judgment
for the defendant attorney was therefore affirmed, even though the attorney was 3% negligent, because the state had a modified comparative negligence system.
In cases where the plaintiff and defendant are equally at fault (i.e.,
they share 50%-50% responsibility for the negligence) the result under
modified comparative negligence depends on how the 50% threshold is
framed by state law. If state law bars recovery by plaintiffs whose negligence is "greater than or equal to" the defendant, a plaintiff equally at
fault with the defendant cannot recover. If the law only prohibits recovery
by a plaintiff "more at fault than" the defendant, the equally negligent
plaintiff may recover 50% of the losses sustained. In one case, the client
was found to be 50% comparatively negligent because it had failed to keep
the defendant lawyer apprised of relevant facts and failed to follow counsel's advice. The court ruled that no recovery for legal malpractice was
1.

Reliance Nat'l lndem. Co. v. Jennings, 189 F.3d 689, 694 (8th Cir. 1999).

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

3

permitted because under Utah law, "[t]o recover damages, defendant's
negligence must be greater than plaintiffs."2
Difficult questions arise when there is more than one defendant in a
case. Volumes have been written on how the 50% threshold requirement
under a modified regime should be applied in cases where there are multiple tortfeasors. For example, if the plaintiff is 40% comparatively negligent, and two defendants are each 30% negligent, is the negligence of the
two defendants added together for the purposes of determining whether
the plaintiff was the more negligent party? That is often the case, but it
is not possible to generalize. Consulting local law is essential. Similar
questions arise with respect to modified comparative fault regimes (discussed below).

Comparative Fault. "Comparative negligence" was replaced in many
states, generally in the 1980s or 1990s, by "comparative fault," which
broadens the reach of the defense based on the plaintiffs negligence. Under comparative fault (which is sometime called "comparative responsibility"), "fault" is defined to encompass more than just negligence. Typically,
"fault" includes n egligence, recklessness, strict-liability conduct, and postaccident failure to mitigate damages, but not intentionally tortious conduct. In a given case, fault on the part of the plaintiff is compared with
fault on the part of the defendant, and recovery is allowed on eith er a
"pure" or "modified" basis. For example, a client more at fault than the
lawyer will be allowed partial recovery of damages under pure comparative fault systems, but nothing under modified comparative fault systems.3
Assumption of Risk . Where comparative principles apply, assumption ofthe risk implied from the plaintiffs conduct is ordinarily treated as
equivalent to carelessness on the part of the plaintiff. (That form of assumption of the risk is said to be "merged" into comparative negligence or
comparative fault.) "Express assumption of the risk" (such as a valid written advance release from liability) and assumption of inherent risks in an
endeavor (often called "primary assumption of the risk") continue to be
treated as full defenses. Advance waivers of malpractice liability might be
thought of as express assumption of the risk, but such waivers are seldom
valid. See Part H of this Chapter. Primary assumption of the risk is rarely
discussed in legal malpractice cases.
Three Contemporary Regimes. Today, four states (Alabama, North
Carolina, Virginia, and Maryland) and the District of Columbia still have
common-law contributory negligence. 4 When a choice of law is available
and necessary, it is worth considering whether urging the court to apply
the law of one of these jurisdictions (if that is plausible) might confer
2. Western Fiberglass, Inc. v. Kirton, McConkie and Bushnell, 789 P.2d 34, 36 (Utah
Ct. App. 1990) (finding the plaintiff 50% comparatively negligent).
3. Wilson v. Pickens, 196 S.W.3d 138 (Tenn. Ct. App. 2005) (reversing an award to
a malpractice client who was "at least 50% at fault").
4 . See VINCENT R. JOHNSON & ALAN GUNN, STUDIES IN AMERICAN TORT LAW 770-71
(3d ed. 2005).

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LEGAL MALPRACTICE LAW

advantages on a defendant.5 The remaining forty-six states have either
pure or modified comparative negligence or pure or modified comparative
fault.
In a legal malpractice case, it is important to first ask whether carelessness by the plaintiff is a defense to the cause of action being asserted.
Negligent conduct by the plaintiff can normally be asserted as a defense
to a claim based on recklessness or negligence, but not as a defense to a
breach of contract or an intentional tort claim. (Whether negligence is a
defense to a breach of fiduciary duty claim may depend upon whether the
breach offiduciary duty was intentional as opposed to negligent, although
some states look at the issue in other ways). Second, if the defense applies,
it is critical to ascertain which regime governs under applicable state law:
contributory negligence, comparative negligence, or comparative fault.
In states that have adopted comparative principles, lawyers and judges still sometimes talk about "contributory negligence," using that term as
a generic reference to carelessness on the part of the plaintiff. Similarly,
in comparative fault states, practitioners and jurists may still speak of
"comparative negligence," with no intention of suggesting that the defense
is limited to negligence cases. Consequently, it is important to interpret
these legal terms in context.

1. Conduct Contributing to the Plaintiffs Harm
Many cases raise issues of whether recovery in a legal malpractice
action is barred or reduced by carelessness on the part of the plaintiff
which contributes to the production of the harm. For example, in Arnav
Indus., Inc. Retirement Trust v . Brown, Raysman, Millstein, Felder &
Steiner, L.L .P., the issue before the New York court was whether a client
had "a cause of action for legal malpractice where that client signed***
[an erroneously] revised settlement stipulation without reading it, relying
on its attorney's misstatement that the stipulation was changed to correct
only one typographical error."6 At the time, New York followed comparative fault. Not surprisingly, the court held that the client's "failure to read
*** the stipulation in its entirety and to notice changes other than the
typographical changes their attorney had represented to be the only changes to the stipulation *** [did] not defeat their cause of action against
their attorneys for professional negligence."7 The court noted that the
"culpable conduct of a plaintiff client in a legal malpractice action may be
pleaded by the defendant attorney, by way of affirmative defense, as a

5. Note, however, that Virginia says that "an action for the negligence of an attorney
in the performance of profess ional services, while sounding in tort, is an action for breach
of contract." Cox v. Geary, 271 Va. 141, 624 S.E.2d 16, 22 (2006) (citations omitted).
6. Arnav Indus., Inc. Ret. Trust v. Brown, Raysman, Millstein, Felder & Steiner,
L.L.P., 96 N.Y.2d 300, 751 N.E.2d 936, 937, 727 N.Y.S.2d 688 (2001).
7. 751 N.E.2d at 938.

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

5

mitigating factor in the attorney's negligence,"8 but then cited an earlier
case which had vacated a 35% reduction in recovery where an attorney's
erroneous advice to a client made it improper to hold that a client
contributorily negligent for failing to apply for rezoning and for failing to
pay taxes on certain property.9 Interestingly, Arnav Industries actually
involved two errors. The one, discussed above, related to the erroneous
stipulation that was not carefully reviewed by the client, which caused
millions of dollars in losses. The other related to the filing of the stipulation in the wrong county, which led a bankruptcy court to invalidate a
$100,000 payment under the stipulation as an impermissible preference,
causing the client to suffer losses in that amount. It is easy to see that
even if the plaintiffs alleged comparative fault had caused part of the first
multi-million dollar loss, it had nothing to do with the misfiling and therefore should not reduce recovery for the $100,000 lost as an impermissible
preference.

PROBLEM 7-1
THE LAWYER AS CLIENT
Charles Cortez, a licensed lawyer, hired another lawyer, Leo Lehman
to defend him in a suit brought against Cortez on a bond. Cortez advised
Lehman that h e had several defenses, including a "complete defense" on
the merits, which he explained in detail to Lehman. As a result of negligence, Lehman failed to a ssert the complete defense in pleadings which
raised several other defenses. Before the pleadings were filed, Cortez
reviewed the pleadings in detail, as well as the cases cited therein. Cortez
either knew or should have known that the "complete defense"-which
might or might not have been successful-was not asserted in the pleadings. Allegedly as a result of Lehman's negligence, Cortez suffered an
adverse judgment. The "complete defense" could not be raised on appeal
since it had not been urged in the trial court, and the appeal was unsuccessful. Cortez then sued Lehman for malpractice to recover his losses.
Lehman argued that recovery was barred by Cortez's own negligence.
Please address the following questions:
(a) What issues must be resolved in order to determine whether the
malpractice action will be successful?
(b) How does the sophistication of Cortez affect comparative fault if
that principle is relevant?

8. 751 N.E.2d at 939 n.2.
9. The earlier case was Cicorelli v. Capobianco, 89 A.D.2d 842, 453 N.Y.S.2d 21
(1982), mod. 90 A.D.2d 524, 453 N.Y.S.2d 21 (1982), affd. 59 N.Y.2d 626, 463 N.Y.S.2d 195,
449 N.E.2d 1273 (1983).

LEGAL MALPRACTICE LAW

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2. Avoidable Consequences and Failure to Mitigate
Throughout the law, a plaintiff has a duty to mitigate damages. Under
tort principles, the duty to mitigate is sometimes referred to as the
"avoidable-consequences rule." According to that rule, a negligent plaintiff
cannot recover compensation for losses that the plaintiff could have avoided by exercising reasonable care after the harm occurred. Thus, in personal injury cases an injm·ed plaintiff must seek medical treatment if a
reasonable person would do so to mitigate physical problems that might
otherwise get worse. Similar principles apply in legal malpractice cases.
BORLEY STORAGE AND TRANSFER Co., INC. V. WHITTED
Supreme Court of Nebraska
271 Neb. 84, 710 N.W.2d 71 (2006)
STEPHAN,J.

***
Borley Storage was a family business operated by Harry Barley and
Maxine Barley. On December 10, 1982, Barley Storage entered into an
agreement to sell its business to Borley Moving and Storage, Inc. (Barley
Moving). Borley Moving was a new entity formed by the longtime manager
ofBorley Storage, Dennis Bauder, and his wife, Wanda Bauder, who were
the sole shareholders of the new corporation. Barley Moving had no assets
prior to the sale.
Whitted represented Barley Storage in the seller-fmanced transaction
and prepared all of the documents related to the sale of the business. ***
Borley Moving agreed to pay a purchase price of $250,000 ***. Payments
were to begin on February 1, 1983, and continue through January 1, 1993.
The purchase agreement also provided that the Bauders would execute a
promissory note for the purchase price. A promissory note dated January
3, 1983, in the amount of$250,000 payable to Barley Storage was executed
by Dennis Bauder, by Wanda Bauder, and by Dennis Bauder in his capacity as president ofBorley Moving. The note provided that the said parties
"jointly and severally" promised to pay the principal amount with interest
*** in 119 monthly installments commencing on February 1, 1983. It
further provided that "[i]f the makers' [sic] fail to pay any installment
when due, then the entire unpaid principal balance, together with accrued
interest, s hall at the option of the holder, immediately become due and
payable without notice."
Pursuant to the purchase agreement and to provide security for the
transaction, Barley Moving granted Barley Storage a security interest in
the personal property, rolling stock, and accounts receivable associated
with the business. Barley Moving also granted Borley Storage a first deed
of trust in certain real property. Whitted prepared and filed a mortgage
and a financing statement to perfect the security interests in the personal
property a nd accounts receivable. The financing statement was filed on

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

7

July 12, 1983. *** [T]his security interest lapsed on July 12, 1988, 5 years
after its filing, because no continuation statement was timely filed.
Barley Moving defaulted on the purchase agreement in 1991, and
Borley Storage thereafter attempted to recover by foreclosing on the real
estate and recovering the collateral. Barley Moving filed bankruptcy in
1993. The bankruptcy court approved a reorganization plan in 1995, and
Barley Storage's claim was valued at $308,000. Approximately $140,000
was secured by the real estate and rolling stock. However, because a second creditor had filed a financing statement with respect to the personal
property and Barley Storage failed to file a continuation statement prior
to the expiration of the 5-year period, Barley Storage)ost its priority with
respect to the personal property and accounts receivable. Instead, the
second creditor received approximately $64,000 based on its secured interest. Barley Storage never sought recovery from the Bauders on the promissory note.
In this malpractice action, Barley Storage alleged that Whitted negligently failed to file or advise its officers of the need to file the continuation
statement necessary to preserve the priority of its security interest in the
personal property and accounts receivable associated with the business,
thus depriving Barley Storage of security valued at $106,000. Whitted
denied that he was negligent, and he alleged as an affirmative defense
that Barley Storage failed to mitigate its claimed damages. Mter trial, a
jury entered a verdict in favor of Whitted. ***.
Several of the issues presented in this appeal relate to the undisputed
fact that Barley Storage did not make a claim against the Bauders on the
promissory note which the Bauders executed personally in connection with
their purchase of the business. ***.
***. [The court held that "the district court did not err in determining
as a matter of law that the Bauders were personally liable on the note
notwithstanding the failure to file a continuation statement, and in so
instructing the jury."]
Barley Storage contends that the district court erred in receiving
certain evidence on, and instructing the jury with respect to, the affirmative defense of mitigation of damages. Barley Storage argues that as a
secured creditor, it had a right to choose whether to sue on the promissory
note or proceed against the collateral. ***. Barley Storage contends that
it "clearly elected to recover its collateral, and did not then, nor has it
since, ever sought a dollar judgment against any maker of the note."***.
It characterizes the instant action for attorney malpractice as "merely an
extension" of its efforts to recover the value of its collateral and argues
that Whitted, who is alleged to have caused the loss of collateral, should
not be permitted "to dictate the manner in which the secured creditor
seeks to recover its losses upon default." ***.
*** [I]t is clear that the lapse of the security interest in 1988 did not
automatically result in any damage to Barley Storage. Had the Bauders,

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LEGAL MALPRACTICE LAW

as com akers, made timely payments on the note, the lapse of the security
interest would have been of no consequence. ***. The loss of the security
interest deprived Borley Storage of one of its remedies in the event of
default by Borley Moving, but it did not extinguish the alternative remedy
of enforcing the Bauders' personal liability on the note.*** .
Under the doctrine of a voidable consequences, which is another name
for the failure to mitigate damages, a wronged party will be denied recovery for such losses as could reasonably have been avoided, although such
party will be allowed to recover any loss, injury, or expense incurred in
reasonable efforts to minimize the injury. ***. A plaintiffs failure to take
reasonable steps to mitigate damages bars recovery, not in toto, but only
for the damages which might have been avoided by reasonable efforts.***.
A plaintiffs duty to mitigate damages arises only after a defendant's ne gligence. ***.
Borley Storage next assigns error with respect to the receipt into evidence of two financial statements signed by Dennis Bauder reflecting his
assets and liabilities in 1990 and 1991. ***.
***.Here, the Bauders' financial ability to satisfy a judgment on the
promissory note was relevant to the issue of whether it would have been
reasonable for Borley Storage to pursue such a claim in mitigation of its
damages. *** [T]he district court did not abuse its discretion in declining
to exclude the fmancial statements ***.
*** [W]e conclude that there was no reversible error, and the judgment of the district court *** should therefore be affirmed.
Affirmed.

Notes on Mitigation
1. Duty to Appeal Before Suing for Malpractice? In a m atter relating to a litigation error, must the plaintiff appeal an adverse judgment
before suing for malpractice in order to mitigate damages? In Hewitt v.
Allen, 10 the Nevada Supreme Court said:
If an appeal would be a futile gesture, that is, the appeal would
most likely be denied, then litigants should be able to forgo an appeal, or dismiss a pending appeal, without abandoning their legal
malpractice actions ***.

*** [T]he defendants in the legal malpractice action are able to
assert, as an affirmative defense, that the proximate cause of the
damages was not the attorney's negligence, but judicial error that
could have been corrected on appeal. *** [B]ecause the issue is raised in the context of an affirmative defense, the attorney defendant
has the burden of proof to establish that an appeal would have been
10. 43 P.3d 345 (Nev. 2002).

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

9

successful. Finally, whether an appeal is likely to succeed is a question of law to be determined by the trial court.11
2. Duty to Appeal Rather Than Settle? A related question is w hether a voluntary settlement of the underlying case bars a client from suing
a lawyer for malpractice in the handling of the case. The Fifth Circuit,
predicting Louisiana law, found that there is no per se bar arising from
settlement. The court wrote:
[S]uch an immutable rule could cause the client to miss a favorable
but fleeting opportunity to make a financially favorable settlement;
and settlement may often be a better method of damage mitigation
than is appeal. We cannot imagine that Louisiana's highest court
would impose such a rigid, blanket requirement ***.12
If a malpractice plaintiff need not appeal, what proof of reasonableness should be required of a plaintiff who settles before a lawyer can be
held liable for the costs of the settlement? Chapter Nine Part C discusses
the obstacles for settling clients who challenge their lawyers' conduct.
3. Reduction by the Amount That Would Have Gone to a Contingent Fee? Suppose that malpractice occurs in the course of contingent-fee
representation. In a subsequent malpractice suit, should the client's recovery be reduced by the amount that would have gone to pay the lawyer's
contingent fee if the work had been properly performed? Many courts
refuse to make any reduction. The Supreme Court of New Hampshire
reasoned:

[W]hether a plaintiffs legal malpractice recovery should be reduced
by the amount of attorney's fees the plaintiff would have paid for
the defendant's competent performance is "still [an] unsettled issue." ***.
Some jurisdictions that have addressed this issue have held that the
verdict should be reduced by the amount of the contingency fee
because only then would the verdict reflect what the plaintiff would
have recovered had the defendant performed competently in the
underlying action. ***.
We disagree that reducing the verdict by the amount of the contingency fee puts the plaintiff in the same position that he or she
would have been in if the defendant had performed competently in
the underlying action. If we were to hold that the verdict must be
reduced by the amount of the contingency fee, at the conclusion of
the malpractice action, the verdict would be reduced by the amount
of the contingency fee, and the plaintiff would have to pay his or her
new attorney for the services that the new attorney provided in the
prosecution of the malpractice action. We think this is an inequitable result. 13
11. 43 P.3d at 348-49.
12. American Reliable Ins. Co. v. Navratil, 445 F. 3d 402, 406-07 (5th Cir. 2006).
13. Carbone v . Tierney, 151 N.H. 521, 864 A.2d 308, 319 (2004).

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LEGAL MALPRACTICE LAW

PROBLEM 7-2
THE FLAWED TRUST
Chase and Claire Cumberland, husband and wife, hired a lawyer ,
Larry Lambertson, to provide estate planning services. The couple requested an estate plan that would allow all property they owned upon the
death of the first of them to be available to support the s urvivor for life .
The couple also expressed a desire to minimize future estate taxes.
To accomplish these objectives, Lambertson prepared two trusts, A
and B. Unfortunately, a critical paragraph governing distribution s from
Trust B during the lifetime of the surviving spouse was omitted. When
Chase died, the omission of the critical paragraph prevented Claire from
gaining practical access to the property that she thought would be available to her. As a result, Claire was unable to take advantage of various
financial opportunities and was otherwise greatly inconvenienced.
Claire complained to Lambertson for more than six months, but he
never mentioned that the omission in the trust document could be corrected through judicial reformation of the trust. As a nonlawyer, Claire
had no idea that there were legal procedures for reforming a document.
Claire eventually hired new counsel, James Newly, who commenced a
malpractice action against Lambertson based on his negligence in drafting
the trust. The suit seeks damages to compensate Claire for the fact:
that she is precluded from practical enjoyment of the property
built up during the marriage;
that she has had to, and will continue to have to, employ professionals to guide her in coping with the limitations posed by the
misdrafted trust;
that the actions of the defendant have caused conflict within the
family and great distress to Claire;
that she now has to pay accountants to file income tax returns
for an irrevocable trust that does not need to exist; and
that she is exposed to possible litigation by aggrieved beneficiarie s of the trust.
Lambertson's malpractice defense lawyer now argues that recovery of
the alleged damages is barred by Claire's failure to seek reformation of the
trust document.
(a) Pleas e evaluate the merits of this argument, laying out the steps
in your reasoning process.
(b) What ar e the malpractice prevention lessons?

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

11

B. Unlawful Conduct
1. In General
In recent years, many state laws and judicial decisions have limited
the right of a person engaged in serious criminal conduct to maintain a
tort action for harm sustained in the course of that endeavor. For example,
a California statute states broadly:
In any action for damages based on negligence, a person may not
recover any damages if the plaintiffs injuries were in any way proximately caused by the plaintiffs commission of any felony, or immediate flight therefrom, and the plaintiff has been duly convicted of
that felony.14
In Barker v. Kallash, the New York Court of Appeals said:
[A] distinction must be drawn between lawful activities regulated
by statute and activities which are entirely prohibited by law. In the
first instance, *** a violation of a statute governing the manner in
which activities should be conducted, would merely constitute negligence or contributory negligence*** [and] would today be resolved
under the rule of comparative negligence ***. However, when the
plaintiff has engaged in activities prohibited, as opposed to merely
regulated, by law, the courts will not entertain the suit if the plaintiffs conduct constituted a serious violation of the law and the injuries for which he seeks recovery were the direct result of that violation.15
The principles underlying such statutes and decisions have sometimes
found application in legal malpractice cases. For example, a Texas case
held that public policy barred a legal malpractice action for damages suffered by clients who were convicted of knowingly committing bank fraud
after they had allegedly received negligent advice relating to a loan transaction.16 The court wrote that the ''basic policy is that individuals who
have committed illegal acts shall not be permitted to profit financially or
be otherwise indemnified from their crimes." 17
As discussed below, the most common variation of the unlawful-conduct rule in the field attorney liability is one which bars a claim for malpractice committed by a criminal-defense lawyer.

14. CAL. Crv. CODE § 3333.3 (Westlaw 2006).
15. 63 N.Y.2d 19, 468 N.E.2d 39, 41, 479 N.Y.S.2d 201, 203 (1984).
16. Saks v. Sawtelle, Goode, Davidson & Troilo, 880 S.W.2d 466,470 (Tex. App.-San
Antonio 1994).
17. Id. at 470.

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LEGAL MALPRACTICE LAW

2. The Exoneration or Innocence Requirement in
Criminal-Defense Malpractice
CAANAN V. BARTE
Supreme Court of Kansas
276 Kan. 116, 72 P .3d 911 (2003)

The opinion of the court was delivered by LUCKERT, J .:
***.Marvin Canaan, after being convicted of first-degree murder***
[and] sentenced to life in prison, sued his court-appointed defense attorneys and their legal investigator for legal malpractice . ***.
While this case was proceeding, Canaan sought postconviction relief
by filing a prose*** motion.*** Judge Cleaver ruled that there was no
basis for Canaan's claim of ineffective assistance of counsel and denied his
***motion.
***
"Today, the courts generally have accepted the principle that guilt or
innocence is relevant to pleading and proving a legal malpractice cause of
action." 3 Mallen & Smith, Legal Malpractice § 26.3, 810 (5th ed. 2000) .
*** [A] majority of states addressing the issue have held that successful
postconviction relief is a prerequisite to the maintenance of a legal malpractice action arising out of criminal proceedings.
***
Canaan argues that*** attorneys practicing criminal and civil law are
subject to the same duty of care, and are implicitly subject to suits for
money damages where the attorney's failure to exercise due care results
in harm, whether that harm be a wrongful conviction, lost plea bargain
opportunity, or an excessive sentence.***.
*** [A] majority of courts considering the issue have held that a plaintiff must show exoneration by postconviction relief before he or she can
sue defense lawyers: [citations to cases applying Alaska, Florida, Illinois,
Maryland, Nevada, Oregon, Pennsylvania, Tennessee, Texas, and Virginia
law omitted] .
Some courts, including many which appear in the first category, hold
that a plaintiff must show actual innocence.***. [Citations to cases applying Alaska, California, Georgia, Kentucky, Massachusetts, Nebraska,
Nevada, New York, New Hampshire, Pennsylvania, Texas, and Virginia
law omitted.]
***
Various policies or justifications have been stated for the exoneration
rule, including: equitable principles against shifting responsibility for the
consequences of the criminal's action; the paradoxical difficulties of awarding damages to a guilty person; theoretical and practical difficulties of

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

13

proving causation; the potential undermining of the postconviction process
if a legal malpractice action overrules the judgments entered in the postconviction proceedings; preserving judicial economy by avoiding relitigation of settled matters; creation of a bright line rule determining when
the statute of limitations runs on the malpractice action; availability of
alternative postconviction remedies; and the chilling effect on thorough
defense lawyering. We find many of these stated reasons persuasive .
Many courts*** express concern that a criminal defendant should not
be allowed to profit from his or her own illegal conduct and find that it is
improper to shift the burden of responsibility for the crime away from the
criminal and to the defense attorney. ***. Similarly, it is stated that a
criminal's conviction and sentence are the direct consequence of the criminal behavior, regardless of any negligence by the attorney. ***.
*** [A]llowing recovery of damages without exoneration is contrary to
the fundamental principle of tort law that damages are provided only for
legally protected legal interests (Restatement [Second] of Torts§ 1, comment d, § 7[1] [1965] ), "and the liberty of a guilty criminal is not one of
them. The guilty criminal may be able to obtain an acquittal if he is skillfully represented, but he has no right to that*** [result."***. Also,] "monetary remedies are inadequate to redress the harm to incarcerated criminal defendants." ***.
*** [B]ecause of the antecedent criminal conduct, it cannot be said
that "but for" the attorney's conduct the outcome of the criminal proceeding would differ. Thus, "without obtaining relief from the conviction or
sentence, the criminal defendant's own actions must be presumed to be
the proximate cause of the injury." ***.
***. Defense attorneys should not have to spend time and energy in
"defensive" lawyering to avoid potential malpractice claims. Further, it is
important to ensure an adequate supply of lawyers willing to undertake
the representation of indigent defendants. ***.
Not all courts have adopted the exoneration rule. Courts in*** [Alabama, Indiana, Michigan, New Mexico, and Ohio] have criticized or rejected the exoneration rule, often in cases where a plaintiff had obtained
postconviction relief.
*** Canaan argues that legal malpractice should be viewed in the
same manner as a lost chance for a better recovery in medical malpractice .
*** [Krahn v. Kinney, 43 Ohio St.3d 103, 105, 538 N.E.2d 1058 (1989)], in
considering whether an attorney could be negligent for failing to advise his
or her client of a plea offer, stated: "[T]he injury in such a situation 'is not
a bungled opportunity for vindication, but a lost opportunity to minimize
her criminal record."' ***. The public policy reason for the loss of chance
theory is that, if such claims were barred, doctors would be free of liability
for even the grossest malpractice in treating seriously ill or injured patients. Canaan argues the same rationale applies here. A criminal defendant's "preexisting injury" is the charge against him, and the attorney's

14

LEGAL MALPRACTICE LAW

job is to minimize the consequences of that charge. If an attorney negligently fails to communicate a plea offer or immunity offer, the defendant
has been harmed by losing the chance for a better outcome. ***.
This argument does not survive when weighed against the public
policy reasons against allowing a criminal defendant to sue his defense
attorney as set out by the cases adopting the exoneration rule. As stated
in [Peeler v. Hughes & Luce, 909 S.W.2d 494, 497-98 (Tex. 1995)]: "The
lost opportunity of an admittedly guilty person to escape prosecution because of her lawyer's negligence does not override the public policy against
shifting the consequences of a crime to a third party." ***. Canaan's argument is directly at odds with the idea that a criminal defendant should not
be able to shift responsibility onto his or her defense attorney when it is
the accused's own criminal behavior that is the direct and proximate cause
of the conviction. If accepted, Canaan's position would allow convicted
criminals to sue their defense attorneys for damages any time they believed their attorney should have asked for a lesser included instruction,
for example. Canaan's argument that defense attorneys would escape
liability for malpractice also ignores the fact that all attorneys are subject
to disciplinary rules requiring them to represent their clients in a diligent
and competent manner.
***.As stated in [Wiley v. County of San Diego, 19 Cal. 4th 532, 538,
79 Cal. Rptr. 2d 672, 966 P.2d 983 (1998)]:
"In*** instances of attorney negligence, postconviction relief will
provide what competent representation should have afforded in the
first instance: dismissal of the charges, a reduced sentence, an advantageous plea bargain. In the case of trial error, the remedy will
be a new trial. If the defendant has in fact committed a crime, the
remedy of a new trial or other relief is sufficient reparation ***.
Those courts analogizing to civil actions have not considered the
implications of postconviction relief for ineffective assistance of
counsel. ***Given that availability, it is inimical to sound public
policy to afford a civil remedy, which in some cases would provide
further boon to defendants already evading just punishment on
'legal technicalities."' ***.
*** [W]e find the majority view persuasive. We hold that before Canaan may sue his attorneys for legal malpractice he must obtain postconviction relief.
Because of the procedural posture of this case, we need not address
whether a plaintiff must prove actual innocence. Canaan*** attempted
to establish ineffective assistance of counsel. His petition was denied.
Thus, Canaan has not been successful in obtaining any form of postconviction relief.
***
Affirmed in part and reversed in part.

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

15

Notes on Unlawful Conduct
1. The Running of the Statute of Limitations on Criminal-Defense Legal Malpractice. As the principal case suggests, an exoneration

or innocence requirement poses a substantial obstacle to a legal malpractice action brought by a former criminal-defense client. That obstacle is
compounded if a state follows a two-track approach in calculating the
running of the statute of limitations. As described in Ereth v. Cascade
County: 18
The crux of the issue is whether the statute of limitations for legal
malpractice should be tolled for the criminal defendant while he or
she pursues a claim for postconviction relief or whether he or she
should pursue a claim for legal malpractice simultaneously with the
claim for postconviction relief. ***.
*** [O]ther jurisdictions are divided***. The first group of states
have adopted what is referred to as a "one-track" approach. These
courts 1·equire a criminal defendant to first litigate a successful
claim for postconviction relief before permitting him or her to file a
claim for legal malpractice against counsel. ***. The second group
of states have adopted a "two-track" approach. This allows a defendant to simultaneously pursue a claim for postconviction relief in
the criminal court and a claim for legal malpractice in the civil courts. ***.
Under the one-track approach, the statute of limitations does not
begin to run until the criminal defendant is exonerated through
some sort of postconviction relief. Under the two-track approach,
the statute of limitations commences to run upon discovery of the
error, irrespective of whether postconviction reliefis sought or granted. The advantage to each is illustrated by a review of two decisions***.
We first review the one-track approach. In Shaw v. State, Dep't of
Admin. (Alaska 1991), 816 P.2d 1358, the Alaska Supreme Court
held that a convicted criminal defendant must obtain postconviction
relief as a precondition to maintaining a legal malpractice claim
against his or her attorney. ***.
The Shaw court ruled that Shaw's legal malpractice claim was not
barred by the statute of limitations and that the statute was tolled
until Shaw had received postconviction relief. The Shaw court held
that public policy supported some form of postconviction relief as a
prerequisite to filing a claim for legal malpractice . According to the
court, judicial resources are conserved since, if the defendant is
denied postconviction relief, the legal principle of collateral estoppel
serves to eliminate any frivolous malpractice claims. Furthermore,
18. 81 P .3d 463, 463 (Mont. 2003).

LEGAL MALPRACTICE LAW

16

the court found that the requirement of postconviction relief promoted judicial economy because a number of the issues litigated in
the quest for postconviction relief, such as proximate cause and
damages, would be duplicated and relevant in the legal malpractice
claim. Additionally, the Shaw court highlighted the importance of
developing a bright line test for purposes of assisting courts in applying the statute of limitations.
In Seevers v. Potter (1995), 248 Neb. 621, 537 N.W.2d 505, 510, the
Nebraska Supreme Court, while noting, "[t]he simplicity of the
[single track] rule appears attractive at first blush," found that the
Michigan Supreme Court's "two-track" analysis in Gebhardt v.
O'Rourke (1994), 444 Mich. 535, 510 N.W.2d 900, to be more persuasive .***.
***. The Gebhardt court concluded the statute of limitations starts
to run on the date the criminal defendant discovers counsel's negligent acts or omissions. As the Gebhardt court observed, it is not
unusual for a party to have both a criminal matter pending before
a court, and a related civil suit arising out of that criminal matter
also pending. In those instances, the court presented with the civil
suit will commonly yield to the criminal matter, allowing it to proceed so the rights of the criminal defendant will not be infringed.
***
The Ereth court found the two-track approach "more persuasive because it incorporates a strict reading of the statute of limitations that at
the same time addresses the problems posed by multiple litigations." 19 The
court noted that a "trial court handling the civil suit would have discretion
regarding the duration of the stay, keeping in mind the nature of the claim
asserted for postconviction relief."20
2. Fees Barred by Unauthorized Practice of Law. A malpractice
claim is often met with a counterclaim for unpaid fees that the plaintiff
owes the defendant law firm. In one such case, the California Supreme
Court held that a New York law firm's unauthorized practice of law in
California barred enforcement of its fee agreement with respect to legal
services performed in California.21
3. Fees Barred by Improper Solicitation. In some states, a contract
procured by improper client solicitation is unenforceable.22

19. 81 P.3d at 469.
20. Id.

21. Birbrower, Montalbano, Condon & Frank, P.C. v. Superior Ct. of Santa Clara
County, 17 Cal. 4th 119, 139, 949 P.2d 1, 70 Cal. Rptr. 2d 304 (1998).
22. See CHARLES W. WOLFRAM, MODERN LEGAL ETHICS 787 (1986). See also TEX.
DISCIPLINARYR. PROF'LCONDUCT R. 7 .03(d) {2007) (providing that a "lawyer shall not enter
into an agreement for, charge for, or collect a fee for professional employment obtained in
violation" of the Texas anti-solicitation rules).

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

17

PROBLEM7-3
CLIENT FRAUD ON INVESTORS
Lacole Linden, a lawyer, represented Cassandra Cider in the sale of
investment interests in a new business . Soon after the sale, the business
went bankrupt. The investors then sued Cider for fraud based in part on
misstatements contained in written materials provided to the investors in
connection with the sale. Lawyer Linden had assisted Cider in preparing
the written materials based on information provided by Cider. At trial,
Cider was held liable to the investors for common-law fraud in the amount
of $200,000. Although Cider believed there were appealable issues that
might have resulted in reversal of the judgment, Cider settled the case
with the investors by paying $120,000. Thereafter, Cider sued lawyer
Linden for malpractice. Please address the following questions:
(a) What arguments could Linden make in asserting that client Cider's
unlawful conduct bars a malpractice claim?
(b) What impact does the settlement of the case have on whether an
unlawful conduct defense can be asserted?
(c) Is it important whether or not Cider's malpractice complaint alleges
that Lawyer Linden recommended or participated in the conduct that the
jury in the investors' suit found to be fraudulent?

C. Malpractice Statutes of Limitations
1. In General
A cause of action for legal malpractice must be commenced within a
certain period of time, and failure to do so subjects the claim to dismissal.
The filing period depends upon the applicable statute oflimitations, which
typically gives the plaintiff a period of years within which to assert a
claim. The policy behind such laws is clear:
[S]tatutes of limitations *** preclude claims in which a party's
ability to mount an effective defense has been lessened or defeated
due to the passage of time. The policy underlying*** statutes of
limitations is, at its roots, one of basic fairness.*** [O]ur system of
jurisprudence is designed to achieve substantial justice through
application of the law after the parties h ave had an opportunity to
fully present both sides of a controversy. The failure to bring an
action within a reasonable time is clearly not conducive to a full
presentation of the evidence nor a search for the truth. ***.23
In thinking about statutes of limitations, consider the following:

One Statute or Many? First, are different theories of liability (e.g.,
breach of contract, negligence, fraud, and deceptive trade practices)
23. Ereth v. Cascade County, 318 Mont. 355, 81 P.3d 463, 466 (2003).

18

LEGAL MALPRACTICE LAW

govern ed by the same statute of limitations or by different statutes? Some
states apply one statute of limitations to all theories of liability asserted
against a lawyer. In other states, the statute of limitations varies
depending on the nature of the claim. For example, a fraud claim might
be subject to a longer or shorter statute of limitations than a negligence
claim.
«Occurrence, versus "Damage." Second, when does the statute of
limitations begin to run? Under some laws, the cause of action accrues and
the clock starts to tick when the harmful acts or omissions occur, even
though harm has not yet taken place. Under other provisions, the statute
of limitations begins to run only once the alleged malpractice causes
damage.
Tolling. Third, is there any reason why the running of the statute of
limitations will be suspended or "tolled"? Many statutes of limitations
incorporate into their text a discovery rule which suspends the running of
the statute during a certain period of time because of the non-obvious
nature of the claim. Other jurisdictions have judicially crafted discovery
rules. Many states also recognize tolling based on the minority of the
plaintiff, continuation of the attorney-client relationship, pursuit of postconviction relief, or fraudulent concealment by the defendant. (See Part C3.)
Statutes of Repose. Fourth, can a claim be time-barred even if the
statute of limitations has not expired? In various areas of the law (e.g. ,
products liability or construction defects), states have adopted "statutes of
repose." These statutes are sometimes part of the same legislative
enactment which defines the statute of limitations, and other times are
separate laws. Statutes of repose hold that after a certain period of time
has expired (e.g., ten years after a product was first sold or after a building
was erected), a claim related thereto is barred regardless of what the
statute of limitations otherwise provides. This can be true even if the
harm has not yet occurred (e.g., if the defect in the product or building
does not cause harm until year fourteen). Statutes of repose often reflect
the powerful influence of enterprises whose interests they protect. Such
laws occasionally have been held to be unconstitutional, but frequently
they have survived judicial challenges.
Do lawyers have sufficient influence to secure state passage of a legal
malpractice statute of repose? Would legislators, subject to popular
election, be willing to pass such a consumer-unfriendly rule? The medical
profession has procured passage of medical-malpractice laws in virtually
every jurisdiction, some of which include statutes of repose. In some states, the legal profession has succeeded in gaining enactment of similar
laws. In Illinois, for example, a statute applicable to lawyers defines both
the statute of limitations and the statute of repose. The two relevant
sections provide:

DEFENSES AND OBSTACLES TO RECOVERY

Ch. 7

19

(b) An action for damages based on tort, contract, or otherwise***

against an attorney*** must be commenced within 2 years from the
time the person bringing the action knew or reasonably should have
known of the injury for which damages are sought.
(c) An action described in subsection (b) may not be commenced in
any event more than 6 years after the date on which the act or
omission occurred. 24

Tort Refonn. Efforts to "reform" the law of torts sometimes seek to
shorten the period within which legal malpractice actions may be filed.
Such changes raise important questions of constitutional law and issues
of basic fairness. Thus, it is not surprising that courts sometimes use their
powers of judicial review to invalidate statutory changes to established
tort principles. For example, the Illinois statute, quoted immediately
above, has been held to be unconstitutional when applied without
exceptions, such as tolling during minority.25 Moreover, the Supreme
Court of Illinois has held that a change in the law shortening a legal
malpractice statute of limitations or statute of repose cannot be applied
retroactively to bar suit by a claimant who has not had a reasonable period
of time after the change in which to file an action. 26

2. Commencement of the Running of the Statute
The Alabama Legal Services Liability Act27 applies to all actions against "legal service providers" alleging a breach of their duties in providing
legal services. Under § 6-5-572(2), the term "legal service provider"
includes lawyers, the entities in which they practice, and non-lawyer staff
members. Section 6-5-572(1) provides that:
A legal services liability action embraces any form of action in which
a litigant may seek legal redress for a wrong or an injury and every
legal theory of recovery, whether common law or statutory,
available to a litigant in a court in the State of Alabama now or in
the future .
Section 6-5-57 4 then states:
(a) All legal service liability actions*** must be commenced within
two years after the act or omission or failure giving rise to the
claim, and not afterwards; provided *** that in no event may the
action be commenced more than four years after such act or
omission or failure ***.
(b) Subsection (a) of this section shall be subject to all existing
provisions oflaw relating to the computation of statutory periods of
24.
25.
2006).
26.
27.

735 lll. Comp. Stat. 5/13-214.3 (Westlaw 2007).
See DeLuna v. Burciaga, 223 Ill. 2d 49, 857 N.E.2d 229, 245, 306 Ill. Dec. 136 (Ill.

See Perlstein v. Wolk, 218lll. 2d 448,844 N.E.2d 923, 934,300 Ill. Dec. 480 (2006).
ALA. CODE § 6-5-570 et seq. (Westlaw 2007).

20

LEGAL MALPRACTICE LAW
limitations for the commencement of actions, *** provided, that
notwithstanding any provisions of such sections, no action shall be
commenced more than four years after the act, omission, or failure
complained of; except, that in the case of a minor under four years
of age, such minor shall have until his or h er eighth birthday to
commence such action.
PROBLEM 7-4
THE F AlLURE TO NOTIFY THE INSURER

DiCetro Steel Co. hired Liam Lunar, a lawyer, in March 1998 to
defend it in a toxic waste disposal suit. The potential liability was covered
by DiCetro's insurance, but only if notice of the claim was promptly
provided to the carrier. Lunar allegedly agreed to notify the insurers, but
in December 2003 advised DiCetro that the companies had not yet been
contacted. Between 1998 and October 31, 2005, Lunar billed DiCetro more
than $104,000 in fees and expenses. At no time did DiCetro question why
no defense or other financial assistance was being provided by the
insurance company. However, DiCetro allegedly sought assurances
through the years that the insurance claim was being handled by Lunar.
On the advice oflawyer Lunar, DiCetro settled the toxic-waste dispute
in August 2005. In September 2006, the insurer was finally notified of the
claims, the litigation, and the completed settlement. The carrier denied
coverage based on untimely notice, which should have been provided when
the claim first arose.
DiCetro has sued Lunar for malpractice . Pursuant to a tolling
agreement between the parties,28 the malpractice action, which was flied
on March 26, 2008, was deemed to have been filed on October 1, 2007.
Lunar has filed a motion for summary judgment based on the statute of
limitations defense.
(a) Assume that cases in the state are in conflict as to whether the
statute of limitations for legal malpractice begins to run when the
negligent act or omission occurs (the "occurrence approach") or when the
negligent act or omission causes damages (the "damage approach"). If the
state has a statute identical to the Alabama Legal Services Liability Act
(ALS.LA), quoted above, is DiCetro's claim timely under either approach?
(b) Articulate the arguments supporting and opposing the motion.

28. A tolling agreement estops the defendant from asserting the affirmative defense
of statute of limitations with respect to the period covered by the agreement. C{ Payton v.
Monsanto Co., 801 So. 2d 829, 834 (Ala. 2001) (citing Sokol v. Bruno's, Inc., 527 So. 2d 1245
(Ala. l988)). A tolling agreement may be useful when parties are attempting to resolve a
malpractice claim without the bad publicity that attends a public filing. A tolling agreement
can provide more time for negotiations.

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

21

3. Tolling
a. The Discovery Rule
HUMPHREYS V. ARGABRITE
United States Court of Appeals for the Sixth Circuit
162 Fed. Appx. 544 (6th Cir. 2006)
PER CURIAM.

The plaintiff, Alyssa Humphreys, filed this legal malpractice action in
September 2003 against defendant William Argabrite, who had
. represented her in 2000 in the divorce action she filed against her former
husband. *** [T]he district court*** held that the action was barred by
Tennessee's one-year statute of limitations ***. The plaintiff appeals,
contending that her cause of action did not accrue until she was informed
by subsequent counsel *** [on] September 20, 2002, that her original
attorney, Argabrite, had acted negligently in advising her to agree to the
settlement that she and her husband had approved in the uncontested
divorce action two years earlier. Hence, she contends, the statute of
limitations did not run prior to the filing of this suit on September 8, 2003.
***
In March 2000, in contemplation of a divorce from Danny Humphreys,
her husband of 16 years, Alyssa Humphreys contacted attorney William
Argabrite, a Kingsport attorney who had earlier prepared the couple's
wills and assisted them in some business matters, and asked him to refer
her to a competent divorce attorney. Although Argabrite had little
experience in handli7;1g. di,_vorce cases, he eventually became plaintiffs sole
attorney in the divorce proceedings. His job was made easier by the fact
that, prior to meeting with Argabrite, Alyssa and Danny Humphreys had
mutually agreed that they would split the marital assets equally,
providing Alyssa with certain real and personal property, and that she
would have primary custody of their two children. They had also agreed
that the plaintiff would receive $10 million in cash, representing her
one-half share of the couple's financial interests in the various Humphreys
family's coal companies, with the understanding that she would not insist
upon a professional appraisal of the value of those companies. It was also
understood that the $10 million would be paid out in annual installments
and would not carry interest. ***.
*** [B]ased upon this initial agreement, Argabrite negotiated a
marital dissolution agreement for plaintiff, and on December 12, 2000, the
Chancery Court for Washington County, Tennessee, approved the
agreement and granted Alyssa Humphreys a judgment of divorce . The
decree essentially incorporated the couple's original agreement***. ***
Alyssa Humphreys received approximately $7 million worth of
unencumbered assets, including the family home and cars, plus the
settlement of $10 million, to be paid out without interest over a period of

-

-

22

LEGAL MALPRACTICE LAW

15 years. For Argabrite's work negotiating the agreement, the plaintiff
paid him approximately $70,600 in attorney's fees . She also gave him an
$8,000 "tip" to express her appreciation, intending the money for the
purchase of a set of golf clubs.
The payment on the $10 million settlement amounted to $666,667 per
year, which Danny Humphreys arranged to make from the proceeds of a
$6.5 million annuity that he purchased. When plaintiff was informed,
during negotiations, that her husband would pay only $6.5 million for the
annuity, she asked Argabrite, "Where is my other $3.5 million?" To this
question her attorney replied, 'Why do you care how he pays for it, Alyssa,
as long as you get what you want?" Plaintiff testified that she "told Mr.
Argabrite that this was very shrewd of Danny [Humphreys] to come up
with an idea like [paying via a $6.5 million annuity] and [she] couldn't
help but feel that [she] was losing $3.5 million." She nevertheless agreed
to the annual payments at the time that the marital agreement was signed. She also agreed to forego interest on the annual payments, having
previously informed Argabrite and her then-husband that she didn't need
to receive interest on the $10 million because she "could invest it and
make [her] own interest."
The marital dissolution agreement did not provide for alimony.
Humphreys admits that she knew, before the divorce was finalized, that
there was no alimony provision but claims that, when she asked Argabrite
about it, h e told her, ''You don't want alimony, you'll have to pay taxes on
it."
*** [I]n September 2002, the plaintiff met with Steven Raynor, an
attorney*** [who] told Humphreys that he thought Argabrite had been
negligent in his representation of her. Humphreys later claimed that prior
to meeting with Raynor, she believed that Argabrite had done a good job
of representing her. However, based on her conversations with Raynor,
she contacted a malpractice attorney and, on September 8, 2003, filed a
malpractice claim against Argabrite and his law firm[.] *** [P]laintiff
alleged that Argabrite acted negligently with regard to alimony, child
support, and the $10 million interest-free settlement provision. The
district court granted summary judgment to defendants on the ground
that the complaint was time-barred***.
***Humphreys claims that the one-year period did not begin to run
until September 20, 2002, when Humphreys first learned from Raynor
thatArgabrite might have committed malpractice. Tennessee courts apply
a "discovery rule" in determining when a legal malpractice action accrues
for limitation purposes. ***.
***. Taken in t he light most favorable to the plaintiff, the evidence
shows *** that t he plaintiffs malpractice claim accrued at the time the
divorce decree was entered because she knew or should have known of her
injury at that point. Concerning the statute of limitations for legal
malpractice claims, the Tennessee Supreme Court has held that:

-

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

23

[The knowledge prong of the "discovery rule" is met] whenever the
plaintiff becomes aware or reasonably should have become aware of
facts sufficient to put a reasonable person on notice that an injury
has been sustained***. We have stressed, however, that there is no
requirement that the plaintiff actually know the specific type of
legal claim he or she has, or that the injury constituted a breach of
the appropriate legal standard. Rather, the plaintiff is deemed to
have discovered the right of action if he is aware of facts sufficient
to put a reasonable person on notice that he has suffered an injury
as a result of wrongful conduct. ***.A plaintiff may not, of course,
delay filing suit until all the injurious effects or consequences of the
alleged wrong are actually known to the plaintiff.
*** [T]he plaintiffs testimony indicated that, well before her conversation
with Raynor-indeed, even before the divorce became final-she had full
know ledge of the facts that she now contends reflect negligence on the
part of the defendant. ***. She testified that she at one point asked Argabrite about alimony, but she conceded knowledge that she was not awarded any alimony under the marital dissolution agreement. Her testimony
further demonstrates that she was aware that her ex-husband would be
paying much less in child support than the percentage recommended by
the Tennessee child support guidelines. Finally, the plaintiff argues that
she never realized that, because the $10 million settlement was to be paid
out over the course of 15 years without interest, she would not receive the
equivalent in value of a $10 million lump sum. But her testimony clearly
established her understanding that Danny Humphreys had arranged to
purchase a $6.5 million annuity that would be used to fund annual
payments to her and, thus, that the immediate value of her award was
only $6.5 million.
***
On appeal, the plaintiff makes much of the fact that she had only an
associate degree in arts, had very limited work experience, and had never
been through a divorce before; she argues that she could not be expected
to understand complex concepts such as the future versus present value
of money and thus had to rely completely on what Argabrite told her. Her
testimony reveals, however, that she understood the general financial and
legal concepts at issue and was fully cognizant of the facts giving rise to
those concepts. ***. Hence, the district court correctly found that ***
regardless of the plaintiffs reliance on erroneous legal advice, the plaintiff
had knowledge of the facts from which a reasonable person would be put
on notice that she has suffered an injury as a result of the defendant's
wrongful conduct.
*** [W]e conclude that*** the malpractice action*** is time-barred.
We therefore affirm the judgment of the district court***.

24

LEGAL MALPRACTICE LAW

Note on Discovery of Malpractice
1. Discovery of Malpractice in Complex Transactions. The
complexity of some types of legal representation may prevent the client
from discovering malpractice. However, courts are often reluctant to find
that the client did not understand what was happening. Guest v.
McLaverty29 is illustrative:
McLaverty represented Guest by appointment as a public defender
***. The last work McLaverty did for Guest was*** [when] Guest
entered a guilty plea and was then released from jail on his own
recognizance .
***
The allegations of the complaint make it clear that prior to August
22, 2001, Guest was aware that: McLaverty only visited him on a
few occasions and each occasion for a short period of time; McLaverty would not accept .telephone calls from Guest while he was
incarcerated and instructed him to write letters instead; and finally,
he repeatedly pled with McLaverty to perform his own investigation
into the allegations. We determine that this was "sufficient to put
a reasonable person on inquiry regarding an [act or] omission." ***.
It is clear from Guest's complaint that he was dissatisfied with
McLaverty by the time he was released from jail on August 22,
2001. This was further evidenced by the fact that he frred McLaverty and hired a new attorney shortly after being released from jail.
***

-

-

-

Guest cites Watkins Trust v . Lacosta, 2004 MT 144, 321 Mont. 432,
92 P.3d 620, for the proposition that: "[i]f a legal transaction is
beyond the understanding of a layperson and the date of discovery
is disputed, summary judgment is not appropriate." *** He claims
he did not understand that he had a malpractice claim***. Watkins,
however, is clearly distinguishable . The facts of that case involved
highly complex issues in estate and tax planning.***. We concluded
that a trustee, even though she had been provided with a copy of
the trust, could not have known, as a matter of law, that her
attorney had erred in telling her that the trust was revocable. ***.
The record in Watkins established that the trust involved "would be
very difficult for the average layperson to understand[,]" and
further "[the expert] testified that even as an estate and tax
planning expert, he had to spend many hours reading the [t]rust
agreement before he could understand it." ***. In this case, unlike
the trustee in Watkins, Guest knew substantially all of the salient
facts by the time McLaverty preformed his final services, on August
22, 2001. 30
29. 322 Mont. 421, 138 P.3d 812 (2006).
30. 138 P .3d at 813.

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

25

b. The Continuous Representation Rule
Many states hold that the running of the statute of limitations is tolled
while the attorney-client relationship is still in progress. However,
difficult questions sometimes arise as to when such relationships
terminate . Moreover, in some cases, facts may arise during the course of
continuing representation that are so significant that it is fair to end the
tolling and commence the running of the limitations period.31

DELEO V. NUSBAUM
Supreme Court of Connecticut
263 Conn. 588, 821 A.2d 7 44 (2003)
SULLIVAN,

C.J.

***. The plaintiff, David DeLeo, brought this action against the
defendants, Edward Nusbaum, an attorney, and the law firm of Nusbaum
and Parrino, P. C. ***.The plaintiff claimed that the defendants had failed
to represent him adequately in a dissolution action brought by his wife.
The plaintiff commenced his action against the defendants by service of
process on June 27, 1996. ***. Specifically, the plaintiff claimed that the
defendants negligently had entered into a stipulated agreement, on behalf
of the plaintiff, in which the plaintiff was permitted only supervised
visitation with his children. *** [T]he defendants denied these allegations
and asserted as a special defense that the plaintiffs claims were time
barred by§ 52-577, which provides: "No action founded upon a tort shall
be brought but within three years from the date of the act or omission
complained of."
*** [The trial] court granted the defendants' motion for a directed
verdict*** . Thereafter, the plaintiff appealed*** and we transferred the
appeal to this court ***.

*** [A]t the time the trial court directed judgment in this case, there
was no appellate case law in this state addressing whether this state
recognized the continuous representation doctrine . The doctrine, however,
enjoys widespread support in other states. Indeed, a majority of states
that have considered this doctrine have adopted it in some form. 3 R.
Mallen & J. Smith, Legal Malpractice (5th ed. 2000) § 22.13, p . 437.
The continuous representation doctrine was developed primarily in
response to the harsh consequences of the occurrence rule, under which
the period during which an action may be brought begins to run at the
time ofthe allegedly tortious conduct, even though the attorney continues
to represent the client, the client m ay be unaware of the tortiousness of
31. Cf Coyle v. Battle, 47 N.H. 98, 782 A.2d 902, 906 (N.H. 2001) (declining to adopt
the continuous representation doctrine because the facts did not demonstrate the plaintiffs
"innocent reliance" on the defendant attorney, for "[t]he plaintiffs not only 'question[ed] and
assess[ed]' the defendants' billing practices, but found them lacking").

26

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the conduct, and there has not yet and may never be an injury as a result
of that conduct. *** [C]ourts adopting the continuou s representation
doctrine have frequently held it to be analogous to the course of treatment
rule [in medical-malpractice litigation]. ***.
After the filing of this appeal, the Appellate Court recognized the
continuous representation doctrine, concluding that, in legal malpractice
cases, the statute of limitations is tolled during that period for which the
plaintiff"must show that (1) the attorney continued to represent him and
(2) the representation related to the same transaction or subject matter as
the allegedly negligent acts." Rosenfield v. Rogin, Nassau, Caplan, Lassman & Hirtle, LLC, 69 Conn. App. 151, 166, 795 A.2d 572 (2002).
In Rosenfield, the Appellate Court stated: "We conclude that we
should adopt the continuous representation doctrine for several reasons.
First, we already permit tolling of the statute of limitations under the
continuing course of conduct and continuous treatment doctrines, which
are very similar in policy and application to the continuous representation
doctrine. Second, to r equire a client to bring an action before the
attorney-client relationship terminates would encourage the client
constantly to second-guess the attorney and force the client to obtain other
legal opinions on the attorney's handling of the case. Nothing could be
more destructive of the attorney-client relationship, which we strive to
preserve. Third, requiring a client to bring a malpractice action against
the attorney during the pendency of an appeal from the judgment in an
underlying action in which that attorney allegedly committed malpractice
could force the client into adopting inherently different litigation postures
and thereby compromise the likelihood of success in both proceedings
because the client would be defending the attorney's actions in the appeal
and contesting the attorney's actions in the malpractice action***. Fourth,
the policy underlying the statute of limitations is upheld because the
conduct that is the subject of legal malpractice actions is generally
memorialized in court pleadings or in hearing transcripts and, thus, the
dangers associated with delay are lessened ***. Fifth, adoption of the
continuous representation doctrine would prevent an attorney from
postponing the inevitable event of defeat beyond the statute of limitations
period to protect himself from liability for his actions." ***.
In addition ***, two principal rationales have been identified as
underlying the continuous representation doctrine. The first is that "a
person seeking professional assistance has a right to repose confidence in
the professional's ability and good faith, and realistically cannot be
expected to question and assess the techniques employed or the manner
in which the services are rendered." ***. The second is that the continuous
representation doctrine furthers the goal of "enabling the attorney to
correct, avoid or mitigate the consequences of an apparent error***." ***.
We fmd these reasons persuasive***.

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

27

*** [W)e conclude that the continuous representation doctrine,
suitably modified to reflect these competing interests, should be adopted.
Thus, today we join the majority of states that have adopted the
continuous representation doctrine. ***. Under the rule we adopt today,
a plaintiff may invoke the doctrine, and thus toll the statute oflimitations,
when the plaintiff can show: (1) that the defendant continued to represent
him with regard to the same underlying matter; and (2) either that the
plaintiff did not know of the alleged malpractice or that the attorney could
still mitigate the harm allegedly caused by that malpractice during the
continued representation period.
With regard to the first prong, we conclude that the representation
continues for the purposes of the continuous representation doctrine until
either the formal or the de facto termination of the attorney-client
relationship. The formal termination of the relationship occurs when the
attorney is discharged by the client, the matter for which the attorney was
hired comes to a conclusion, or a court grants the attorney's motion to
withdraw from the representation. A de facto termination occurs if the
client takes a step that unequivocally indicates that he has ceased relying
on his attorney's professional judgment in protecting his legal interests,
such as hiring a second attorney to consider a possible malpractice claim
or filing a grievance against the attorney. ***.A client who has taken such
a concrete step may not invoke this doctrine, because such actions clearly
indicate that the client no longer is relying on his attorney's professional
judgment but instead intentionally has adopted a clearly adversarial
relationship toward the attorney.***.
*** [W]e reject the [suggested] requirement *** that the client
continue to trust his attorney in order for the attorney-client relationship
to continue for purposes of this doctrine. This requirement would
necessitate determinations of how much disenchantment with a client's
attorney is too much, both by courts applying the rule and by clients
seeking to ascertain the date upon which their malpractice claims will be
barred. Equally important, a client is free to change his or her mind and
reestablish a relationship of trust even after actions or statements, such
as the letter written in the present case by the plaintiff to his wife, that
may indicate a lack of such trust in his attorney at the time made. ***.
*** [T]he continuous representation doctrine ***only tolls the statute
of limitations for as long as either the plaintiff does not know of the
alleged malpractice or the attorney may still be able to mitigate the harm
allegedly caused. Tolling the statute while the plaintiff lacks actual
knowledge of the alleged malpractice ser ves the purpose of not requiring
the client to second-guess his attorney. Tolling the statute while the
attorney may be able to mitigate the damage permits the client, without
endangering his malpractice claim, to allow the attorney who is already
working on his case to attempt to mitigate or even prevent harm.
Furthermore, it will ordinarily be the case that tolling while mitigation
remains possible will prevent the client from having to sue his attorney

28

LEGAL MALPRACTICE LAW

while the initial litigation is pending. When none of these purposes is
furthered by tolling the statute, however, the tolling must end.
In applying this test to the facts of the present case, we conclude the
following. First, with regard to whether there was a de facto or formal
termination of the relationship, the trial court, in finding that the
plaintiffs relationship with the defendants had deteriorated to such an
extent that the plaintiff was not entitled to the protection of this doctrine,
relied on evidence that the plaintiff had sent a letter to his wife stating
that "you[r] lawyers have not only committed malpractice in handling this
case but are guilty of billing fraud," and "[m]y lawyer has not done much
better." The act of sending this letter to the plaintiffs wife does not rise to
the level of unequivocally indicating that the plaintiff had ceased relying
on his attorney's professional judgment in protecting his legal interests
and, therefore, as a matter of law, does not constitute a de facto
termination of the attorney-client relationship.
Accordingly, we next consider whether the plaintiff can establish
either the mitigation or lack of knowledge components of the second prong.
The trial court found that the plaintiff had admitted that the defendants
could not have mitigated the damage allegedly caused by their negligence
in 1992. Thus, because ofthe inability to establish mitigation, the plaintiff
is required to show that he had no knowledge of the defendants'
negligence. The plaintiff has not presented any evidence on this issue, nor
was it considered by the trial court, because the plaintiff and the trial
court reasonably did not understand the rule to require such evidence. ***.
The judgment is reversed and the case is remanded to the trial court
for further proceedings according to law.

Notes on the Continuous Representation Rule
1. General Relationship versus Specific Matters. Courts
sometimes conclude that continuing representation of a client is not a
continuation of the same representation that involved the alleged
malpractice. For example, in Bastys v. Rothschild, a client brought a legal
malpractice action based on a lawyer's loss of the client's prenuptial
agreement and purportedly negligent advice with respect to a divorce
settlement. 32 In refusing to apply the continuous-representation rule, the
court wrote:

New York's continuous representation doctrine does not apply to a
client's "continuing general relationship with a lawyer."***. Rather,
it tolls the statute of limitations "only where the continuing
representation pertains specifically to the matter in which the
attorney committed the alleged malpractice."*** . While the record
shows that Rothschild continued to provide Jonas Bastys with
estate planning advice into the limitations period, plaintiff has

-

32. 154 Fed. Appx. 260, 261-62 (2d Cir. 2005).

DEFENSES AND OBSTACLES TO RECOVERY

Ch. 7

29

failed to demonstrate that any advice rendered after July 15, 1994,
"pertain[ed] specifically'' to the matters that are the subject of the
malpractice claim. ***.33
However, other decisions have been more willing to fmd the type of
continuation of representation that triggers the tolling rule. For example,
in Williams v. Maulis, the court held that an attorney's continued
representation of the estate of a widow's deceased husband was a
continuation of related services that the attorney had performed for the
widow in negotiating a contract for deed, which was the focus of the
alleged malpractice.34
2. Practice Pointer: The Hidden Danger of Mitigating the
Effects ofMalpractice. An attorney who confesses malpractice to a client
and then assists the client in mitigating the effects of that error may
inadvertently toll the running of the statute of limitations. In Gold v.
Weissman, an attorney (Weissman) told his client (appellant) that he had
failed to file the client's medical malpractice action within the statute of
limitations. 35 Weissman blamed the error on his "attorney service" and
"asked for more time to pursue the attorney service and in the meantime
suggested that appellant file a complaint against her doctor with the
Division of Medical Quality of the Medical Board of California (the
Board)." Weissman "emailed appellant's daughter, confirming he had
prepared the draft complaint and reiterating his willingness to file it for
her," although the client "apparently chose not to file the complaint." The
client later argued that the attorney's conduct tolled the running of the
statute of limitations. The court wrote:
Weissman continued to explore possible compensation from the
attorney service in the year before appellant filed her lawsuit. He
also agreed to prepare a Board complaint in response to the
question by appellant's daughter ofwhatrecourse remained against
appellant's doctor other than the time-barred malpractice lawsuit.
Both appellant's unfiled lawsuit and Board complaint thus arose
from the same event: her doctor's malpractice. Moreover, the
lawsuit and Board complaint shared a common purpose: to permit
appellant some measure of redress for her injuries and thus some
relief-psychic from the Board complaint, financial from the
lawsuit-and possible closure. The distinctions Weissman tries to
draw between the lawsuit and the Board complaint-different
forums and types of relief-do not change the fact that the same
medical malpractice gave birth to both proceedings***. Accordingly,
the [trial] court erred in finding Weissman's representation of
appellant was not continuous and did not toll the statute of
limitations. 36
33.
34.
35.
36.

Id. at 262.
2003 S.D. 138, 672 N.W.2d 702, 707-07 (2003).
114 Cal. App. 4th 1195, 1197, 8 Cal. Rptr. 3d 480 (2004).
Id. at 1201.

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3. Local Court Rules and Termination of the Lawyer-Client
Relationship. In Smith v. Conley, the court found that an attorney-client
relationship involving the client's conviction for passing bad checks
terminated not on the date that the attorney filed a motion in the trial
court to withdraw from the representation, but on the date that the
attorney clearly informed the client that he no longer could represent him
and that he would not file further actions on his behal£.37 The court said
that local court rules on withdrawal varied, and that "efficient
administration of justice would not be served" by holding that those
variable standards controlled the running of the statute of limitations.
"The date of termination of an attorney-client relationship for*** [statute
of limitations] is a fact-specific determination to be made according to the
rules set forth by statute and by case law ." 38

PROBLEM7-5
THE MISSED MARITIME DEFENSE
In January 2004, Chad's Cargo, Inc. hired Larmar Lorey, a lawyer, to
defend it against a maritime personal-injury suit. The plaintiff seaman
was injured while boarding a vessel when the wash of a tugboat owned by
Chad's Cargo caused him to fall from the gangplank. Lorey failed to file a
timely maritime-limitation pleading, which would have had the effect of
limiting the liability of Chad's Cargo to the value of the vessel and its
freight. On August 31, 2005, the trial court in the personal-injury suit
rendered judgment on a jury verdict for an amount greater than the limit
that would have been imposed by a timely maritime-limitation pleading.
On September 15, 2005, Chad's Cargo hired additional counsel to file
post-judgment motions and an appeal. The case was ultimately settled,
and based on the agreement of the parties the court of appeals dismissed
the appeal on May 19, 2006.
On February 19, 2008, Chad's Cargo filed a malpractice lawsuit against Lorey, alleging that Lorey breached the standard of care by failing to
file a timely maritime-limitation pleading. Lorey has moved for summary
judgment on the grounds that the two-year statute of limitations on
Chad's Cargo's malpractice claim began to run no later than January 27,
2006, the date when the parties purportedly agreed to settle the
underlying personal-injury case. Assume that the version of the
continuing representation rule discussed above in DeLeo v. Nusbaum is
in effect.
(a) When did the statute of limitations begin to run?
(b) Should the court grant summary judgment for Lorey?

37. 109 Ohio St. 3d 141, 846 N.E.2d 509, 512-13 (2006).
38. Id. at 513-14.

Ch.7

DEFENSES AND OBSTACLES TO RECOVERY

31

c. Fraudulent Concealment
Fraudulent conduct by an attorney will give rise to professional
discipline39 and civilliability. 40 In addition, if an attorney's fraud relates
to the facts giving rise to a legal malpractice claim, that conduct may also
toll the running of the statute of limitations. This rule has been narrowly
interpreted by some courts. For example, in Delanno, Inc. v. Peace,41 the
Arkansas court explained:
In order to toll the statute of limitations, the fraud perpetrated
must be concealed.***. Fraudulent concealment consists of"some
positive act of fraud, something so furtively planned and secretly
executed as to keep the plaintiffs cause of action concealed, or
perpetrated in a way that conceals itself." ***.
Here, the appellant asserts that the telephone conversation in the
spring of 2001 between Gail Delanno and the appellees regarding
the tax situation constitutes fraudulent concealment. In that
conversation, the appellees told Mrs. Delanno that they had on file
a tax clearance letter for Delanno from the State, which absolved
Delanno of any tax liability relative to the purchase of Encompass'
assets, and furthermore that the appellees would take care of the
tax matter.
The appellees' statements regarding the tax clearance letter were
inaccurate . However, assuming arguendo that the statements
amounted to a positive act of fraud, in order to show that the
statute of limitations was suspended, the appellant must prove that
the statements constituted fraudulent concealment. In order to
show fraudulent concealment, the appellant must prove that the
statements were positive acts of fraud that were furtively planned
and secretly executed, and that the statements were concealed, or
perpetrated in a manner that concealed itself. ***.
Delanno has not produced any evidence showing that the inaccurate
statements made by the appellees were furtively planned and
executed, or concealed. The appellant essentially argues that
because the lawyers made statements that proved to be untrue,
and, because a jury could possibly conclude that the lawyers were
aware of and attempted to conceal that fact, the statements may
therefore constitute fraudulent concealment. This argument does
39. See MODEL RULES OF PROF'L CONDUCT R. 8.4(c) (2007) (stating that "(i)t is
professional misconduct for a lawyer to: *** (c) e ngage in conduct involving dishonesty,
fraud, deceit or mis representation").
40. See Chapter Five Part B. Most courts agree that the tort of fraud consists of five
elements: "(1) a false representation of a material fact; (2) knowledge that the
representation is false or that there is insufficient evidence upon which to make the
representation; (3) intent to induce action or inaction in reliance upon the representation;
(4) justifiable reliance on the representation; and (5) damage suffered as a result of the
represe ntation." Delanno, Inc. v. Peace, 366 Ark. 542, 2006 WL 1644634, at *2.
41. 2006 WL 1644634.

32

LEGAL MALPRACTICE LAW
not take cognizance of the elements of fraudulent concealment.
Regardless of possible conclusions by a jury, some evidence of
secretive, furtive, or deceptive action designed to conceal the
existence of a fraudulent act is n ecessary to satisfy the appellant's
burden. Because the appellant has produced no evidence consistent
with fraudulent concealment other than the inaccurate statements
made by the appellees, we conclude that Delanno has not proven
that the statutory period was tolled by fraudulent concealment. 42

D. Non-Assignability
of Legal Malpractice Claims

-

In some cases it can be argued that recovery is barred by a state rule
prohibiting assignment of legal malpractice claims. In Kommavongsa v .
Haskell,43 the Supreme Court of Washington explained:
[E]ven where assignability [of causes of action] is the general rule,
some 18 jurisdictions have held that public policy considerations
dictate a different rule for legal malpractice claims. 44
In Picadilly, Inc. v. Raikos, 582 N.E.2d 338 (Ind. 1991) the Indiana
Supreme Court held that a party may not assign a legal malpractice
claim to someone who was his adversary in the underlying
litigation. ***.
The Picadilly court observed that the common law in most states,
including Indiana, teaches that any chose in action that survives
the death of the assignor may be assigned. This rubric dates from
an English statute enacted in 1330, which permitted the executor
of a decedent's estate to sue on actions for trespass to chattels
owned by the decedent. Over the centuries, courts interpreting this
statute came to view assignment and survival as "convertible
propositions."***. [However, the Picadilly] ***court concluded that
rather than relying entirely on ancient common law rules that may
have outlived their usefulness, "[a]ssignment should be permitted
or prohibited based on the effect it will likely have on modern
society, and the legal system in particular."***.
The Picadilly court concluded that to allow the assignment of
malpractice claims, particularly to allow such assignments to one's
adversary in the same litigation that gave rise to the alleged

-

42. ld. at *2-3.
43. 149 Wash. 2d 288, 67 P.3d 1068, 1068 (Wash. 2003) (en bane).
44. [Fn. 2 stated:] The parties' research reflects that 18 out of 25 states that have
examined this issue have prohibited such assignments entirely. A number of these states
have done so at least in part because torts arising out of injuries done to the person,
reputation or feelings of the injured parties, or arising out of contracts of a purely personal
nature (such as marriage) are not assignable in their states, and legal malpractice is seen
as a species of injury to the person; moreover, the attorney-client relationship arises from
a contract of a purely personal nature.***.

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

33

malpractice, would weaken at least two standards that define the
lawyer's duty to the client: the duty to act loyally and the duty to
maintain client confidentiality.***. As for the duty to act loyally:
If assignments were permitted, we suspect that they would
become an important bargaining chip in the negotiation of
settlements-particularly for clients without a deep pocket. An
adversary might well make a favorable settlement offer to a
judgment-proof or financially strapped client in exchange for
the assignment of that client's right to bring a malpractice claim
against his attorney. Lawyers involved in such negotiations
would quickly realize that the interests of their clients were
incompatible with their own self-interest. ***.
As for the duty of lawyers to maintain client confidences and
secrets, the Picadilly court observed that once a client sues his
attorney, the attorney is permitted to disclose confidential client
information that is reasonably necessary to establish a defense. So
long as the client maintains control over the suit, the scope of the
disclosure can be limited by the client's power to drop the claim.
Once the client assigns the claim, the client's control over the
litigation is lost, but the attorney's right to defend by revealing
client information survives. ***.
Finally, the Picadilly court was concerned about the erosion of
public confidence in the legal system that is likely to follow from
assignment oflegal malpractice claims to an adversary in the same
litigation that gave rise to the alleged malpractice. ***.
In Zuniga v. Groce, Locke & Hebdon, 878 S.W.2d 313 (Tex. Ct. App.
1994), *** the Texas Court of Appeals made an astute observation:
Most legal malpractice assignments seem to be driven by forces
other than the ordinary commercial market. In most ***, the
motive for assignment was the plaintiffs inability to collect a
judgment from an insolvent, uninsured (or underinsured)
defendant. In several instances, the malpractice plaintiff was
the original plaintiff who, unable to collect against the original
defendant, obtained the malpractice action in hopes of
satisfying the underlying judgment.
***.To allow such assignments would serve two principal goals:
enabling the defendant-client to extricate himselffrom liability,
and funding the original plaintiff's judgment. But to allow
assignments would exact high costs: the plaintiff would be able
to drive a wedge between the defense attorney and his client by
creating a conflict of interest; in time, it would become
increasingly risky to represent the underinsured,
judgment-proof defendant; and the malpractice case would
cause a reversal of the positions taken by each set of lawyers

-

34

LEGAL MALPRACTICE LAW
and clients, which would embarrass and demean the legal
profession.45
***

Finding some of these expressed concerns to be "overstated" and other
to be "persuasive," the Kommavongsa court held that legal malpractice
claims are not assignable. The majority reasoned:
[W)e think that prohibiting such assignments in general will
provide less incentive for collusion, based on the self-interests of the
defendant in the underlying litigation. A defendant who can assign
his or her legal malpractice claim in exchange for a covenant not to
enforce a judgment in the underlying litigation would have little
incentive to seriously litigate the amount of damages allegedly
arising from his or her negligence. *** [A] stipulated judgment
cannot properly serve as an indication of the actual damages, if any
there were, as a result of the alleged legal malpractice. ***.
Prohibiting the assignment of legal malpractice claims to an
adversary in the same litigation that gave rise to the legal
malpractice claim will not prevent clients from pursuing their own
legal malpractice claims to judgment, and then assigning their
judgments in order to satisfy their own liabilities or submitting to
execution upon such judgments. Thus, prohibiting such
assignments will not protect lawyers from the consequences of their
own legal malpractice. *** .46
The Kommavongsa dissenters strongly objected to the new rule:
Today the majority adopts a rule oflaw to protect lawyers among all
the professions-that is only lawyers-from malpractice claims
where the claim has been assigned. The majority adopts this rule
***based on public policy grounds which are in fact not exclusive
to the legal profession. The confidentiality and fiduciary aspects
cited by the majority apply as well to many professionals ***.
To support its public policy concern, the majority invokes the legal
profession's sacred cow-access to justice. The argument is that
lawyers may be unwilling to accept cases if they might face
malpractice liability in an assigned claim. The same argument could
be made for any other professional, yet there is no concern that
patients might face an access to medical care problem *** ! 7

45. Id. at 1072-77.
46. Id. at 1078-79.
47. Id. at 1083·84 (Ireland, J., dissenting).

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

35

PROBLEM7-6
A DEAL WITH ONE OF THE DEFENDANTS
Calder Calhoun, a ceramic artist, hired Ladislav Lamb, a lawyer, to
represent him in a legal malpractice action against two other lawyers
(Lebel Able and Laban Baker). Calhoun believes that Able and Baker
poorly represented Calhoun in conjunction with an unsuccessful art
transaction, causing Calhoun serious financial losses.
In discovery, Lamb has had difficulty unearthing information that will
be helpful to the malpractice case . Bob Tops, your law school classmate
and co-clerk at the Lamb firm, has suggested to Lamb that it might be
useful to try to turn the two defendant lawyers (A and B) against each
other, hoping that cross accusations will result in the revelation of
information useful in Calhoun's malpractice claim.
Tops, who saw something like this on a television program,
recommends that Lamb, acting on behalf of Calhoun, offer Able this deal:
(1) Able will remain a named defendant in the case, testify truthfully
against Baker, and after the conclusion of the litigation will pay Calhoun
$10,000. (2) Calhoun will agree not to collect from Able any part of a
judgment entered against Able, and will refund to Able fifty cents of every
dollar that Calhoun collects from a judgment against Baker in excess of
$25,000. Tops thinks that this agreement will inspire Able to make sure
Baker is implicated by the testimony at trial.
Lamb has never heard of anything like this and has asked for your
advice on whether to pursue the proposed arrangement.

E. Joint Liability and Reimbursement
If there are two or more tortfeasors, a lawyer can defend against a
claim for legal malpractice by arguing the liability is "several" only, rather
than "joint and several." If that argument is successful, the lawyer will be
liable only for the lawyer's individual contribution to the plaintiffs harm.
In contrast, if liability is joint and several, the lawyer will be liable for
harm that other joint tortfeasors caused, as well as for harm that the
lawyer caused individually. However, even in that case, a lawyer can
defend against disproportionate responsibility by asserting claims for
contribution or indemnity against other joint tortfeasors. This section
considers the rules governing joint and several liability, contribution, and
indemnity.
Joint and Several Liability Traditionally. Joint and several
liability means that two or more persons (joint tortfeasors) can be sued
and held liable for the same harm. Any joint tortfeasor can be made to pay
as much as the full amount of the joint liability, although the plaintiff can
collect the full amount only once. For example, if two lawyers, A and B,
are sued and held jointly and severally liable to the plaintiff for damages
in the amount of$10,000, the plaintiff can collect all the money from A, or

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36

LEGAL MALPRACTICE LAW

all the money from B, or part of the money from each. However, the sums
recovered by the plaintiff may total no more than $10,000 from A and B
together, since that is the amount to which the plaintiff is entitled under
the judgment.
Under the traditional tort rules, joint and several liability arose in
three situations. Those cases involved:
(1) indivisible harm caused by multiple tortfeasors;
(2) concerted action; and
(3) vicarious liability.
For example, if lawyer A was negligent in failing to investigate the
facts of a case, and lawyer B, A's supervisor, was negligent in failing to
discover and correct the error, A and B could be sued and held jointly and
severally liable if their separate acts of negligence caused the loss of the
case, since that would qualify as indivisible harm.
Similarly, if two lawyers conspire to deplete a client's trust account,
and A takes money from the account to buy a car and B takes money to
pay for a vacation, A and B can each be held liable for all of the losses to
the client because they acted in concert. This is true even though the harm
could rationally be divided (A could theoretically be held liable only for the
funds used to buy the car, and B could be held liable only for the cost of
the vacation). Such segregation of damages is not allowed in concertedaction cases.
Further, if a plaintiff alleges that a law firm is liable based solely on
the rule of respondeat superior for the negligence of an associate within
the scope of employment, the l aw firm and the associate can be sued
together and held jointly and severally liable for the harm. On the
assumed facts, the .law firm would be liable for the blameworthy conduct
of the associate based on vicarious liability.

Joint and Several Liability Today. The three traditional categories
of joint and several liability are a useful starting point for thinking about
whether persons can each be held liable for the same harm. However, the
rise of comparative principles, which in many states caused the doctrine
of contributory negligence to be replaced by comparative negligence or
comparative fault (see Part A of this chapter), has led virtually all
jurisdictions to re-examine when liability for harm should be apportioned,
rather than imposed jointly and severally. Many changes have been made
and today the rules are far more complex than a generation ago.
With respect to multiple tortious acts causing indivisible harm:
some states retain the old rule of joint and several liability;
some impose only apportioned several liability;
some say that the joint and several liability is imposed on
tortfeasors responsible for more than a certain percentage of the
total fault in the case (e.g., more than 50% responsible); and

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

37

some say that joint and several liability depends on other factors,
such as whether the acts in question constitute a specified type of
crime. 48
There are other variations.
Joint and several liability based on concerted action survives today in
most jurisdictions. The same is true of joint and several liability based on
vicarious liability (such as where a law partnership and partner are both
liable for torts of the partner committed within the scope of the
partnership business). However, practicing lawyers should not rely on
generalizations about the law nationally and mustconsultlocalprovisions.

IndemnityandContribution.Ajointtortfeasorwhopaysmorethan
his or her fair share of the damages may have a right to recover
reimbursement from another joint tortfeasor. Indemnity is total
reimbursement, generally limited to cases where one party is wholly at
fault and the other is entirely innocent. For example, if a law firm pays a
judgment based solely on vicariously liability for the tort of a paralegal
acting within the scope of employment, the law firm will normally be
entitled to 100% reimbursement-indemnity-from the paralegal
(although, of course, it may be difficult to collect that amount). Depending
on the circumstances, partnership agreements, contracts or state law may
provide for indemnification. For example, a law firm dissolution
agreement may state that some partners will indemnify others for any
future losses relating to the prior activities of the former partnership.
Contribution is partial reimbursement. In many states, the rules are
statutory, but in others contribution rights are created by common law. 49
In most states, contribution is calculated on a percentage or "comparative"
basis. For example, suppose that A and B are joint tortfeasors and that the
jury finds that A was 70% responsible for the harm, while B was only 30%
responsible. In a state allowing proportional contribution, if A pays the
plaintiffs judgment in the amount of $100,000, A may be able to obtain
reimbursement from B in the amount of $30,000. Note, however, that
there are many variables. For example, contribution is normally not
available to intentional tortfeasors; a joint tortfeasor's right to
contribution may depend upon his or her satisfying (fully paying) the
judgment of the plaintiff; and a contribution claim must be asserted in a
timely fashion that complies with applicable rules of civil procedure. 50
Some states still calculate contribution on a pro rata basis which is a
relatively crude system of counting heads and dividing rather than
calculating respective degrees of fault. For example, if there are three joint
tortfeasors, A, B, and C, and A pays the plaintiffs judgment, A can obtain
48. See RESTATEMENT ( TmRD) OF TORTS: APPORTIONMENT OF LIABILITY § 17 cmt. a
(2000) (describing different five "tracks" of liability).
49. See McLaughlin v. Lougee, 137 P .3d 267, 277 (Alaska 2006) (allowing common·law
proportional contribution).
60. See id. at 272 (declining t o adopt the rule followed by some courts which provides
that all claims, including contribution claims, must be tried in one action).

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reimbursement for one-third of the amount from Band one-third of the
amount from C, regardless of their respective fault.
Comparative contribution, like indemnification awarded in cases of
vicarious liability, helps to ensure that liability is distributed in proportion
to fault. Proportionality is an important principle in modern tort law.
However, proportional responsibility may only be achieved if all of the
joint tortfeasors possess assets to pay their share. If an employee is
judgment-proof, an employer 's right to indemnification from the employee
may be worthless. So too, one of several tortfeasors whose multiple tortious acts caused indivisible harm may be required to bear more than a fair
share of the loss if another tortfeasor has no money to pay a contribution
judgment or is not subject to the jurisdiction of the court.
The classic tort regime of joint and several liability supplemented by
indemnity and contribution essentially took the position that full
compensation of the plaintiff was more important than limiting a
defendant tortfeasor's liability in proportion to fault.5 1 Not all states agree
with these priorities. In many instances, recent tort reform efforts have
struck a different balance . In some states, where joint and several liability
has been limited, legislatures or courts have sometimes said that the most
important thing is that no one pay for more harm than he or she caused,
even if that means that the plaintiff obtains less than full recovery.52
Indemnity or Contribution from Predecessor Counsel and CoCounsel. Legal malpractice cases occasionally raise the issue of whether
indemnity or contribution can be obtained by a defendant attorney from
predecessor counsel or co-counsel. Some states resolve these questions
largely by reference to general state rules on contribution and indemnity.
For example, a New York court broadly stated that:
Consistent with *** general principles, New York courts have
routinely recognized that an attorney defending a legal malpractice
action may state a valid claim for contribution against another
attorney alleged to have contributed to the injury for which the
plaintiff client complains ***.
Thus, it is well-settled that an attorney sued for malpractice may
bring a third-party complaint seeking indemnity or contribution
against an attorney, whether retained subsequently, concurrently,

61. Seattle First Nat'l Bank v. Shoreline Concrete Co., 588 P.2d 1308, 1312 (Wash.
1978) C'[t]he cornerstone of tort law is the assurance of full compensation to the injured
party").
62. Cf. Church v. Rawson Drug & Sundry Co., 173 Ariz. 342, 842 P.2d 1355, 1364
(Ariz. Ct. App. 1992) (in holding that a statute abolishing joint and several liability was
constitutional, the court wrote, "(i]f*** the plaintiff cannot receive payment for his injuries
from *** [other tortfeasors], there is no compelling social policy which requires the codefendant to pay more than his fair share of the loss").

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

39

or independently, whose negligence has contributed to or
aggravated the plaintiffs damages ***. 53
However, other courts have been troubled by the real or apparent
policy implications of allowing one of a client's attorneys to seek
contribution from another. For example, California decisions prohibit a
negligent first ·attorney from seeking reimbursement from a negligent
successor attorney, but allow reimbursement claims by one co-counsel
against another in some circumstances. In Musser v. Provencher, 54 the
California Supreme Court addressed these issues. (Note that California
allows equitable or partial indemnity on a comparative basis, which is
what other states refer to as comparative or proportional contribution. 55 )
The court wrote:
The Courts of Appeal have given various reasons for barring
indemnification in predecessor/successor cases, *** but an
examination of their opinions reveals two fundamental policy
considerations. The first policy consideration is avoiding conflicts of
interest between attorney and client: The threat of an
indemnification action would arguably create a conflict of interest
between the successor attorney and the client because the greater
the award the successor attorney managed to obtain for the client
in the malpractice action, the greater the exposure [of the successor
attorney] to the [claim of the] predecessor attorney in the
indemnification action. ***. The second policy consideration is
protecting confidentiality of attorney-client communications: In
order to defend against an indemnification action, the successor
attorney might be tempted to compromise the confidentiality of
communications with the client. ***.
The question we must consider, therefore, is whether allowing
equitable indemnity would be contrary to public policy when one
concurrent counsel or cocounsel sues another.

*** [W]hether a claim for indemnity is allowable in concurrent
counsel or cocounsel cases should be decided *** on a case-by-case
basis***.
*** [In the case before the court, a bankruptcy attorney had
erroneously told a family law attorney that a request for support
incidental to divorce proceedings would not violate the automatic
stay imposed by the bankruptcy court. As a result of the error the
state court of appeals ·r eversed the support awards and "(fjacing
punitive damages for violation of the automatic stay," the divorce
client settled with her husband for less than the original support
order and then sued her family law attorney for malpractice. The
53. Bolton v. Weil, Gotshal & Manges, LLP, 9 Misc. 3d 1105(A), 806 N.Y.S.2d 443,
2005 WL 2185470, *3 (N.Y. Sup.).
54. 28 Cal. 4th 274, 48 P.3d 408, 408, 121 Cal. Rptr. 2d 373 (2002).
55. See id. at 411.-Eds.

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LEGAL MALPRACTICE LAW
family law attorney then sought indemnification from the
bankruptcy attorney who had provided the erroneous advice.
Discussing the conflict of interest issue, the court wrote:] The
conflict of interest we are concerned about is not a conflict between
an attorney's duty to the client and the attorney's purported duty
to concurrent counsel or cocounsel ***.Rather, the conflict*** [is]
between an attorney's duty to the client and the attorney's
self-interest. [These facts give us no reason] *** to believe that an
attorney's self-interest will interfere with loyalty to the client just
because the attorney, as a joint tortfeasor, may face an
indemnification claim if the client sues the attorney's concurrent
counsel or cocounsel for malpractice.
The other relevant policy is protecting the confidentiality of
attorney-client communications. ***. [The client] ***, in her
settlement with [the family law attorney], expressly waived her
attorney-client privilege with respect to *** [the bankruptcy
attorney's] representation of her in the bankruptcy portion of the
dissolution action. [Therefore, confidentiality is not an issue.]
In conclusion, because the policy considerations that underlie the
rule barring indemnification claims in predecessor/successor cases
do not obtain in this concurrent counsel case, it would be unjust to
deny*** [the family law attorney] an opportunity to seek indemnity
or contribution from [the bankruptcy attorney). 56

F. Releases and Covenants Not to Sue
Most tort claims are settled rather than fully litigated. When a case is
settled, the plaintiff recovers an amount of money in exchange for
assuring the defendant that there will be no further efforts to hold the
defendant legally responsible for the claim in question. The assurance is
embodied in a document, which is normally called a release or a covenant
not to sue. Under traditional rules, a plaintiff, by signing a release, gave
up the right to sue any person (including the settling party and other joint
tortfeasors) for the claim. In contrast, a covenant not to sue was simply a
contractual agreement not to sue the defendant who paid the settlement;
the right to sue others was retained by the plaintiff.
The legal distinction between releases and covenants not to sue was
lost on most laypersons, who sometimes, acting without legal counsel,
inadvertently signed a document that gave up rights they intended to
reserve. In other instances, a document labeled a release said in its text
that the right to sue other persons for the harm was retained, thus
creating a legal inconsistency between the title and the text that called
into question the effect of the document.

56. Id. at 411-14.

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DEFENSES AND OBSTACLES TO RECOVERY

41

Today, most states hold that by signing a settlement document, a
plaintiff does not give up rights against persons not named in the
document or intended by the plaintiff to benefit from the release. 57
According to the Restatement, a "valid release of one tortfeasor *** does
not discharge others liable for the same harm, unless it is agreed that it
will discharge them." 58 The Restatement commentary adds that the intent
to reserve rights need not be expressed in writing and can be proved by
parol evidence. Some courts have gone further than the Restatement in
attempting to prevent unfairness and uncertainty in the use of settlement
documents. Thus, the Texas Supreme Court has ruled that a settlement
document releases from liability only those tortfeasors named or otherwise
specifically identified in the document and no others.5 9
Credits and Satisfaction of Judgment. One joint tortfeasor is
normally entitled to a credit for an amount paid to the plaintiffby another
joint tortfeasor. According to the Uniform Contribution Among Tortfeasors
Act, which has been adopted in several states:
When a release or a covenant n ot to sue or not to enforce judgment
is given in good faith to one of two or more persons liable in tort for
the same injury or the same wrongful death:
(a) It does not discharge any of the other tortfeasors from liability
for the injury or wrongful death unless its terms so provide; but it
reduces the claim against the others to the extent of any amount
stipulated by the release or the covenant, or in the amount of the
consideration paid for it, whichever is the greater; and,
(b) It discharges the tortfeasor to whom it is given from all liability
for contribution to any other tortfeasor. 60

PROBLEM 7-7
THE WRONGFUL INCARCERATION RELEASE
Camden Cox was convicted of abduction, murder, and burglary, and
sentenced to a term of incarceration for fifty years. Six years into his
imprisonment, Cox petitioned for a writ of habeas corpus, and five years
later the writ was granted. The next day, the State and Cox jointly moved
to vacate the abduction, murder, and burglary convictions. The circuit

57. See also Winters v. Patel, 154 Fed. Appx. 299, 303 (3d Cir. 2005) (holding that a
release, which relinquished claims against parties in a privacy action and others "who are
jointly and severally liable," did not release a malpractice claim against a lawyer who was
neither a party or joint tortfeasor in the privacy action, nor an intended beneficiary of the
release).
68. RESTATEMENT (SECOND) OF TORTS § 885 (1979).
69. McMillen v. Klingensmith, 467 S.W.2d 193, 196 (Tex. 1971).
60. UNIF. CONTRIBUTION AMONG TORTFEASORS AC'r § 4 (Westlaw 2007).

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court entered an order vacating the convictions, dismissing the
indictments, and releasing Cox from custody.
With the assistance of a member of the State Senate, Cox requested
compensation from the State for his wrongful incarceration. The State
General Assembly then approved "An Act for the relief of Camden Cox."
The Act stated:
That there shall be paid for the relief of Camden Cox from the
general fund of the State treasury, upon execution of a release of all
claims he may have against the State or any agency,
instrumentality, officer, employee, or political subdivision (i) the
sum of $350,000 to be paid to Camden Cox and (ii) an annuity for
the primary benefit of Camden Cox in the cumulative amount of
$400,000.
Cox subsequently executed a document releasing
all claims Cox may have against the State or any agency;
instrumentality; officer; employee or political subdivision of the
Commonwealth in connection with his arrest, conviction and
incarceration [during the eleven years in question], subsequently
vacated.
Shortly thereafter, Cox filed a legal malpractice action against the
court appointed lawyer, Lambert Lang, who had represented him in the
abduction, murder, and burglary trial. Cox alleged that Lang failed to
exercise reasonable care in the conduct of Cox's defense. Lang thereafter
filed an answer asserting that the malpractice action was barred by the
release that Cox signed with the State.
How should the court rule?

Notes on Settlement and Contribution
1. How Settlement Affects Contribution Rights. Most states hold

that a settling joint tortfeasor is entitled to seek contribution from nonsettlingjoint tortfeasors, provided the settlement was reasonable in amount.

As to whether contribution may be obtained from a settling joint
tortfeasor, states are deeply divided. Some authorities hold that in order
to promote settlements, a settling joint tortfeasor must be insulated from
further liability that might arise from a subsequent contribution claim.
Others say that early settlement-perhaps as a result of a "sweetheart"
deal with a favored potential defendant, such as a family member-should
not be allowed to frustrate the public policy of distributing liability in
proportion to fault. They hold that contribution from a settling joint
tortfeasor must be permitted. As a result of this disagreement about
priorities, some states allow a contribution claim to be asserted against a
settling joint tortfeasor; others do not; and still others have crafted

Ch. 7

DEFENSES AND OBSTACLES TO RECOVERY

43

different rules, such as saying that by settling with Dl, plaintiff gives up
against D2 a portion of the damages equivalent to Dl's percentage share
of the total fault.
2. Advance Payments by the Defendant. Sometimes a defendant's
liability for certain elements of damages is not disputed. For that and
other reasons, defendants may make payments to or for the plaintiff in
advance of trial. Some jurisdictions have passed laws that expressly
address the issue of advance payments by a defendant in a legal
malpractice action. The Alabama Legal Services Liability Act contains
such a provision, which includes an interesting twist in subsection (b):
(a) In all legal service liability actions, any advance payment made
by the defendant or his insurer to or for the plaintiff, or any other
person, may not be construed as an admission of liability ***.
Evidence of such advance payment is not admissible until there is
a final judgment in favor of the plaintiff, in which event the court
shall reduce the judgment to the plaintiff to the extent of advance
payment. The advance payment shall inure to the exclusive credit
of the defendant or his insurer making the payment. In the event
the advance payment exceeds the liability of the defendant or the
insurer making it, the court shall order any adjustment necessary
to equalize the amount which each defendant is obligated to pay,
exclusive of costs.
(b) In no case shall an advance payment in excess of an award be

repayable by the person receiving it.61

G. Immunities and Privileges
Public Defenders. Malpractice actions against public defenders are
often barred by some variety of statutory immunity. For example, a
Tennessee court62 found that an assistant public defender was immune
from suit for malpractice under either of two state laws. The first provided
that:
No court in this state has*** authority to entertain any suit against
the state or against any public defender or any employees thereof
acting in their official capacity with a view to reach the state, its
treasury, funds or property, or the funds or property of any public
defender or its employees for any act of negligence arising from the
execution of the employee's official duties as an employee of the
district public defenders conference ***. 63
The second statute said that:
State officers and employees are absolutely immune from liability
for acts or omissions within the scope of the officer's or employee's
61. ALA. CODE§ 6-5-576 (Westlaw 2007).
62. Osborne v. Goodlet, 2005 WL 1713868, *1 (Tenn. Ct. App.).
63. TENN. CODE ANN. § 8-14·209 (Westlaw 2007).

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44

LEGAL MALPRACTICE LAW

office or employment, except for williul, malicious, or criminal acts
or omissions or for acts or omissions done for personal gain. ***.64
However, in some states public defenders are not immune from suit.
For example, the California Supreme Court reasoned:
[T]he acts or omissions of a deputy public defender in representing
a defendant in a criminal action do not involve the type of basic
policy decisions that are insulated from liability *** [by statutory
immunity]. Instead, legal representation provided by a deputy
public defender entails operational (as opposed to policy) decisions
that are incident to the normal functions of the office of the public
defender. Once the decision is made to provide legal services, a
deputy public defender's actions implementing that decision do not
qualify for the immunity***.
***. Holding deputy public defenders accountable at law for legal
malpractice ***does not result in unwarrantedjudicial interference
in the affairs of the other branches of government, but rather
simply subjects these public employees to the same principles of tort
law applicable to private attorneys performing identical professional
services in the same type ofproceedings. 65
Court-Appointed Lawyers. Some decisions hold that certain courtappointed lawyers-such as lawyers appointed to represent the interests
of children in child-abuse or marital-dissolution cases-perform a quasijudicial function and are immune from suit for malpractice.66 Such
immunity extends to "actions taken during or, activities necessary to, the
performance of functions that are integral to the judicial process."67
However, other states are directly to the contrary. The Maryland Court of
Appeals held that a court-appointed lawyer for a child had no immunity
from being sued for malpractice. The court found that the functions of the
appointed counsel were "no more 'judicial' than the functions of many
other trial attorneys who are subject to malpractice suits.''68
"Numerous states *** have statutes providing for the appointment of
'guardians ad litem ,' although there is little uniformity in the case law and
statutes *** with regard to the functions, duties, and immunities of
'guardians ad litem."'69 It is debatable whether a tort claim against a
lawyer acting as a court-appointed guardian ad litem should be regarded
as a form oflegal malpractice. However, courts "have almost unanimously

64. ld. at§ 9-8-307(h). See also CONN. GEN. STAT.§ 4-165 (Westlaw 2006) (similar;
applying also to private lawyers appointed by the court as special assistant public
defenders).
65. Barner v. Leeds, 24 CaL 4th 676, 679-92, 13 P .3d 704, 705-714, 102 Cal. Rptr. 2d
97 (2000).
66. See Krause v. Krause, 138 Fed. App'x 911, 913 (9th Cir. 2005) (California law).
67. Carubba v. Moskowitz, 274 Conn. 533, 877 A.2d 773, 778 (2005).
68. Fox v. Wills, 390 Md. 620, 890 A.2d 726, 734 (2006).
69. ld. at 732.

DEFENSES AND OBSTACLES TO RECOVERY

Ch. 7

45

accorded guardians ad litem absolute immunity for their actions that are
integral to the judicial process."70

The Qualified Privilege to Represent One's Client. Various
qualified privileges are recognized throughout the law where there is good
reason to permit or encourage certain types of conduct. For example,
lawyers have a privilege to fulfill their legal and ethical obligations to
their clients, even if doing so may incidentally harm third parties. In a
Texas case, three defendants in an alleged ticket-fixing scheme were
represented by different lawyers, who worked together to craft a joint
defense. After all three defendants were convicted, one of them sued the
lawyer of another for tortious interference with contract, arguing that if
that lawyer had not persuaded the other lawyers to limit the crossexamination of a certain prosecution witness, the plaintiff would not have
been convicted. The court rejected the claim stating:
We find that [attorney] Caballero's conduct was privileged. As long
as our statutes permit the joinder of parties in criminal and civil
litigation, there is an ethical and vital need for attorneys, on behalf
of their respective clients, to meet, discuss, compromise and plan
joint defenses or strategies. This should be done without the fear
that if one or more or all of the parties are unsuccessful that the
attorneys not in privity with the other litigants should be subject to
a tortious interference with contract suit. In such instances,
privilege should, as a matter of law, bar recovery as long as the
interference is done to protect one's contract right to represent one's
own client. 71

H. Arbitration Agreements
Related Ethics Rules. Lawyer ethics codes commonly contain a
provision similar to the ABA Model Rule which provides that a lawyer
shall not "make an agreement prospectively limiting the lawyer's liability
to a client for malpractice unless the client is independently represented
in making the agreement."72
"[M]ost state bar ethics committees have concluded that mandatory
arbitration provisions do not prospectively limit a lawyer's liability, but
instead only prescribe a procedure for resolving such claims." 73 Thus,
advisory ethics opinions suggest that mandatory arbitration clauses in
lawyer-client contracts may be legally valid. However, that does not

70.
71.
72.
73.

Carubba, 877 A.2d at 783.
Maynard v . Caballero, 752 S.W.2d 719, 721 (Tex. App.-El Paso 1988).
MODEL R ULES OF PROF'L CONDUCT R.1.8(h)(l) (2007).
ABA Comm. on Ethics and Profl Responsibility, Formal Op. 02-425 (2002).

46

LEGAL MALPRACTICE LAW

necessarily mean that such provisions are beneficial to clients, since the
decision to arbitrate necessarily involves the forfeiture of valuable rights.74

Adhesion Contracts. Some courts have recognized that arbitration
provisions may be unfair to consumers. A recent Louisiana case considered
the enforceability of an arbitration clause in the lawyer-client contract
which provided:
Any and all disputes, controversies, claims or demands arising out
of or relating to this Agreement or any provisions hereof, the
providing of services by [the Stern Defendants] to [Mr. Lafleur], or
in any way relating to the relationship between [the Stern
defendants] and [Mr. Lafleur] , whether in contract, tort or
otherwise, at law or in equity, for damages or any other relief, made
by or on behalf of [Mr. Lafleur] shall be resolved by binding
arbitration pursuant to the Federal Arbitration Act in accordance
with the Commercial Arbitration Rules then in effect with the
American Arbitration Association. Any such arbitration procee ding
shall be conducted in Harris County, Texas pursuant to the
substantive federal laws established by the Federal Arbitration Act.
The expense of any arbitration shall be a Case Advance pursuing
the Claims. Any party to any award r endered in such arbitration
proceeding may seek a judgment upon the award and that judgment
may be entered by any federal or state court in Harris County,
Texas having jurisdiction. [Mr. Lafleur] understands and
acknowledges that [Mr. Lafleur] is waiving all rights to a trial by a
jury or a judge. 75
The court refused to enforce the arbitration provision because it was
an adhesionary contract. The court wrote:
A contract of adhesion is a standard contract, usually in printed
form , prepa r ed by a party of superior bargaining power for
adherence or rejection by the weaker party. Often in small print,
these contracts sometimes raise a question as to whether the
weaker party actually consented to the terms.*** . However, the
real issue in a contract of adhesion analysis is not the standard form
of the contract, but rather whether a party truly consented to all the
printed terms. ***.
The trial court found that the arbitration provision in the
Agreement at issue was a standard form contract, with small print,
and prepared by t he Stern defendants. While we agree the print
size is small, we do not find that it is unreasonably small.
74. See, e.g., Robert J . Kraemer, Attorney-Client Conund rum: The Use of Arbitration
Agreements for Legal Malpractice in Tems, 33 ST. MARy'sL.J. 909, 917 (2002) (noting that
"the unsophisticated client is at a bargaining disadvantage to the attorney in regard to the
clie nt's rights and duties under a contract*** [a nd] may think that trial is always an option,
regardless of a ny agreement he may sign").
75. LaFle ur v. Law Offices of Anthony G. Buzbee, P.C., 960 So. 2d 105, 110 (La. Ct.
App. 2007).

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DEFENSES AND OBSTACLES TO RECOVERY

47

Furthermore, the arbitration provision is in the same size print as
the r est of the contract and it is sufficiently set apart with a heading
so that the arbitration provision is easily recognizable to anyone
reading the contract. However , we emphasize and agree with the
trial court's assessment that an attorney-client relationship is more
than a contractual one; it is fiduciary, which requires a full and fair
disclosure of all the rights and interest which are materially
affected by the contract.
The trial court determined that this particular arbitration provision
was "unduly burdensome," because it attempts to solely bind the
client, Mr. Lafleur, to the arbitration requirement for any dispute
brought by or on his behalf, while allowing the attorneys, the Stern
defendants, to avail themselves of any and all procedural and
substantive law remedies. The arbitration provision also imposes
the expense of any arbitration exclusively on the client, Mr. Lafleur,
as a "[c]ase [a]dvance" (repayable and reimbursable to the attorneys
under the Agreement, Paragraph 7) regardless of the outcome of the
arbitration proceedings. The arbitration provision further states
that only the client, Mr. Lafleur, "understands and acknowledges
that [he] is waiving all rights to a trial by a jury or a judge" for any
and all disputes arising out of or relating to the Agreement. The
trial court found that under the circumstances, the arbitration
provision was arbitrary and adhesionary, and therefore, lacking in
the requisite consent necessary for enforcement of the provision. We
agree.

***
We find this case distinguishable from Aguillard, 908 So.2d at 21,
wherein the supreme court found that an arbitration clause in an
auction document limited both parties rights to litigate. The Aguillard scenario did not involve the unequal bargaining power that is
inherent in the attorney-client relationship. ***.
*** Due to the lack of mutuality, the arbitration provision was
unconscionable, and we therefore decline to order arbitration. ***. 76

State Arbitration Statutes. There are questions regarding how
lawyer-client arbitration agreements mesh with state statutes governing
arbitration generally or arbitration of certain lawyer-client disputes in
particular. For example, a Texas court held that a legal malpractice action
was not "a claim for personal injury excluded from the scope of the Texas
Arbitration Act.'.n Addressing very different issues, the California
Supreme Court ruled that a client waived his rights under the state's
Mandatory Fee Arbitration Act by filing a malpractice suit, and could not
challenge the arbitral award that had been entered in the suit pursuant

76. Id. at *5-6.
77. 107 S.W.3d 684, 690 (Tex. App.-San Antonio 2003).

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48

LEGAL MALPRACTICE LAW

to a mandatory arbitration provision in the lawyer-client contract.78 As
these rulings suggest, it is important for lawyers to recognize that the
inclusion of an arbitration provision in a lawyer-client agreement may
remove a wide range of legal and factual issues from judicial review and
trigger the applicability of a vast body of arbitration law.

Legal Malpractice Arbitration Laws. Some states have passed
legal malpractice statutes which expressly address the issue of arbitration.
For example, the Alabama Legal Services Liability Act provides:
(a) After a legal service provider has rendered services, or failed to
render services, to a client out of which a claim has arisen, the
parties thereto may agree to settle such dispute by arbitration. Such
agreement must be in writing and signed by both parties. Any such
agreement shall be valid, binding, irrevocable, and enforceable, save
upon such grounds as exist in law or in equity for the revocation of
any contract.
(b)*** [T]he claimant shall select one competent and disinterested

arbitrator, and the party or parties against whom the claim is made
shall select one competent and disinterested arbitrator. The two
arbitrators so named shall select a third arbitrator, or, if unable to
agree thereon within 30 days, then upon request of any party, such
third arbitrator shall be selected by a judge of a court of record ***.
The arbitrators shall then hear and determine the *** dispute in
accordance with the procedural rules established by the American
Arbitration Association. The decision in writing of any two
arbitrators shall be binding upon all parties. Each party shall pay
fees of his own arbitrator, and split the expenses of the third. ***.
A judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. 79

PROBLEM 7-8
PLEADING MALPRACTICE DEFENSES
Lawyer represented a corporate client (Seller) in a business
transaction involving the sale to another corporation (Buyer) of ownership
interests in Seller's corporation that might be found to constitute nonregistered "securities" in violation of state or federal law. After learning
facts that caused it to believe that it had been swindled in the sale, Buyer
sued Seller, based in part on misstatements of accounts receivable and
other assets. Seller then settled with Buyer by obtaining a release in
exchange for payment of a sum of money and assigning its malpractice
claim against Lawyer to Buyer. Buyer (now Plaintiff) then sued Lawyer
(now Defendant) for negligence, negligent misrepresentation, fraud,
breach of fiduciary duty, deceptive trade practices, and liability arising
78. Aguilar v. Lerner, 32 CaL 4th 974, 88 P.3d 24, 32, 12 CaL Rptr. 3d 287 (2004).
79. ALA. CODE§ 6-5-575 (Westlaw 2007).

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DEFENSES AND OBSTACLES TO RECOVERY

49

under state and federal securities laws. Defendant must file an answer to
Plaintiffs complaint. After admitting or denying the allegations in the
Complaint, Defendant might plead, for example:
Specific and Affirmative Defenses
Para. 101. Defendant alleges the following defenses, reserving the
right to amend, change, or add additional defenses as allowed by
law. Each defense is stated in the alternative to, and without
waiving, Defendant's other defenses.
Beginning with paragraph 102, make a comprehensive list of defenses
and affirmative defenses that should be asserted. Remember that defenses
are contentions that either negate the elements of the plaintiffs prima
facie case or are "affirmative defenses," matters which are normally not
part of the case unless the defendant brings them up.80 Remember also
that defenses mentioned in this chapter are only some of those that might
be raised in a legal malpractice action. Other defenses may be rooted in
other areas of the law, such as the law of contract.
Each paragraph in your list of defenses only needs to be one or two
sentences in length: "notice" pleading is sufficient. For example, if laches
were a plausible affirmative defense on the facts of this problem, an item
on the list might read "1.02 Recovery is barred in whole or in part by
laches."
In order to be comprehensive, it might be helpful to list defenses
responding to the various causes of action first and affirmative defenses
second. Think back to the material covered in this chapter, as well as in
earlier chapters (e.g., Chapter 3 Negligence, Chapter 4 Breach ofFiduciary
Duty, Chapter 5 Liability to Third Parties, and Chapter 6 Remedies). You
should be able to list at least a dozen, and perhaps more than two dozen,
defenses and affirmative defenses based on what you have learned in this
course and earlier law school courses. No specific knowledge of securities
law is required in order to answer this question. However, if you are aware
of defenses under securities law, include them on your list.

80. An affirmative defense asserts independent grounds for denying recovery to the
plaintiff. Even if the plaintiff proves the elements of a claim, a successful affirmative
defense enables a defendant to avoid liability.

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Citation

Vincent R. Johnson, “CLE: 2010: Defending a Legal Malpractice Claim,” St. Mary's Law Digital Repository, accessed February 22, 2017, http://lawspace.stmarytx.edu/item/STMU_HomecomingCLE2010Johnson.

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