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Collateral Estoppel Is Usually Not A Defense to A Legal Malpractice Action

Collateral estoppel is a doctrine that allows a court to bar relitigation of an issue that was already decided in a prior case. This case, Hexum v. Parker and Parker & Halliday, 2017 IL App (3d) 150514-U, is unpublished. The decision is one of many that reject a collateral estoppel defense to a legal malpractice action.

Hexum sued his lawyers for legal malpractice for allegedly giving him negligent advice in his divorce case; specifically as to the amount of maintenance he would owe.

In the underlying divorce case, Hexum entered into an agreement with his ex-wife to pay her $6250 per month and 35% of any bonus or stock option that he exercised.

After judgment was entered in the divorce case, Hexum filed a motion to vacate the settlement on the ground that he was subject to coercion by his lawyers. The court rejected the coercion argument.

In the legal malpractice case, the defendants moved to dismiss on collateral estoppel grounds. The trial court granted the motion, but the Appellate Court reversed. As the court explained, “the defendants have failed to satisfy the first requirement of collateral estoppel because the legal and factual determinations made in the divorce proceedings are not identical to those presented in the current legal malpractice suit.” Opinion at ¶ 21. The issues in the divorce case were whether the settlement was procured through fraud, coercion or was unconscionable. The issue in the legal malpractice case is whether Hexum’s lawyers breached the duty of care in giving advice. Because those issues are not identical, collateral estoppel does not apply. Nor did the issues that were resolved in the divorce case “conclusively determine the factual questions of whether the defendants misinformed Mark and whether the defendants’ action caused Mark to agree to the marital settlement agreement.” Opinion ¶ 25.

Collateral estoppel is almost never a good defense to a legal malpractice action because the issues in the two cases tend to differ. Further, if collateral estoppel was a defense, it could swallow up the doctrine of legal malpractice. The court would say “you lost the underlying case, so you can’t sue for malpractice.” The client would respond “if my lawyer had only done X, I would have won the underlying case (or gotten a better deal).”