One of the more obscure rules in the world of legal malpractice is that legal malpractice claims cannot be assigned. The lawyer-client relationship is one of “privity.” It is a direct relationship between the client and the lawyer. Sometimes in litigation, one party requests that the other party assign to it a legal malpractice claim against the other party’s lawyer. This is exactly what occurred in Thompson v. Harrie, No. 22-1058 (8th Circuit February 3, 2023). In this case, the claim against the lawyer was assigned by the defendant in the underlying lawsuit. Thompson had no attorney-client relationship with Harrie or the other defendants. Instead, the legal malpractice was assigned to her as part of a settlement. Courts frown on this behavior because it can leave the lawyer vulnerable to a claim from a party the lawyer never represented. In the underlying case Thompson sued Helgeson to recover for damages sustained in an automobile accident. Thompson won a judgment against Helgeson’s estate but decided not to collect. Instead, she obtained an assignment of any claim Helgeson could have made against his own attorney.
The court describes the procedural history of the case in this way:
In January 2018, Thompson sued the law firm and Nodak in South Dakota state court, alleging claims for the unauthorized practice of law, fraud and deceit, civil conspiracy, and barratry/abuse of process. The law firm removed the case to federal court, and the district court dismissed the entire suit for failure to state a claim. Following the dismissal, Thompson agreed with Helgeson’s estate that she would not execute the judgment if Helgeson’s estate assigned its potential claims against the law firm and Nodak to her. This agreement, which was reduced to writing, expressly included claims of malpractice, and directed that Thompson was entitled to all proceeds recovered from the assigned claims.