Articles Posted in Attorney-Client Relationship

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Source: GOESEL v. BOLEY INTERNATIONAL (HK) LTD., Court of Appeals, 7th Circuit 2015 – Google Scholar

This case concerns an appeal by a law firm of a decision by the district court to reduce a contingent fee award.

The parties agreed to a contingent fee under which the lawyers would receive one-third of any award and the expenses would be covered by the clients.

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A legal malpractice case requires careful analysis. Even if the lawyer was negligent in some way, did the negligence make any difference in the ultimate outcome? To evaluate a legal malpractice case, you must evaluate the underlying case as well.

Rodi v. Horstman, 2015 IL App (1st) 142787 is such a case. Rodi hired Horstman to handle an appeal of an unfavorable decision. It is undisputed that Horstman filed the notice of appeal one day late and the Appellate Court held that it had no jurisdiction. Rodi then sued Horstman for legal malpractice, but the trial court granted summary judgment for Horstman and the Appellate Court affirmed. The reason is that even if Horstman had timely filed the notice of appeal the appeal was a loser.

The Underlying Case:

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Beery v. Chandler, Dist. Court, ED Missouri 2015 – Google Scholar.

Plaintiff sued his former personal injury lawyer for legal malpractice, alleging that the lawyer negligently advised him to reject a settlement offer. The lawyer sued for legal fees under breach of contract, quantum meruit and unjust enrichment theories. Plaintiff moved to dismiss the claim on the ground that the lawyer was not licensed in Missouri.  Plaintiff noted that the Missouri state court had denied the lawyer a lien on the recovery on the ground that the lawyer was not licensed.

The district court rejected that argument apparently on the ground that the lawyer was licensed in Illinois and appears to have done work on the case. There is some suggestion that the lawyer indicated on his stationery that he had an office in Missouri.

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Scott v. Burgin, DC: Court of Appeals 2014 – Google Scholar.

The issue of privity frequently arises in legal malpractice litigation. A party lacks privity when the party did not have an attorney-client relationship with the lawyer. Recently, the privity rule has been relaxed by courts to allow lawsuits for legal malpractice by some persons who did not have an attorney-client relationship, such as the beneficiaries of an estate plan. Thus, a lawyer who breaches the duty of care in drafting an estate plan can sometimes be subject to suit by the beneficiaries who lost their inheritance.

Here, the plaintiff was the girlfriend of the decedent. She alleged that the lawyers for Kenneth Woodruff were negligent in failing to prosecute his divorce action against his wife. Burgin alleged that, had the divorce been obtained, she would have been eligible to receive certain retirement benefits upon Woodruff’s death.

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CRIMSON TRACE CORPORATION v. DAVIS WRIGHT TREMAINE LLP, 355 Or. 476 – Or: Supreme Court 2014 – Google Scholar.

This is an important issue in legal malpractice litigation – what happens to the communications between lawyers in a law firm and their in-house counsel. In this case the Oregon Supreme Court has recognized that those communications are privileged under the attorney-client privilege.

Oregon’s Evidence Code has a pertinent provision:

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You are an employee of a corporation. Something bad happens and the corporation’s internal lawyer (or an outside lawyer) tells you he wants to talk to you. When the interview starts, he tells you that he does not represent you, he only represents the corporation. You don’t think about the significance of this statement and you start talking. Later, the corporate lawyer prepares a report or refers you for prosecution, all in the name of protecting the company. You have fallen into a trap and you can’t get out.

When you hear that statement (I represent the corporation, not you), you need to understand this:

(1) the corporate lawyer is not here to protect me;

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Davis v. Fenton, Dist. Court, ND Illinois 2014 – Google Scholar.

Chief Judge Castillo has stayed an unusual legal malpractice case pending the outcome of arbitration. The case is highly unusual because it was filed by Kelli Dudley a lawyer who defends against foreclosures.  In this case her client alleges that her former foreclosure defense attorney, Ernest Fenton, engaged in violations of the Fair Housing Act, 42 U.S.C. Section 3601 and the Civil Rights Act of 1866, 42 U.S.C. §§ 1981 and 1982, as well as common law legal malpractice.

The district court followed well-settled law in enforcing an arbitration clause in the engagement letter and staying the case in favor of arbitration, pursuant to the Federal Arbitration Act. The district court also rejected claims that the Defendant had waived the arbitration clause.

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Cabrera v Collazo 2014 NY Slip Op 00622.

This is an opinion of the New York Supreme Court, Appellate Division. The facts were simple. The attorney missed the applicable statute of limitations and the client’s claim was barred. In such cases, the lawyer is liable for legal malpractice if the client can prove that, but for the attorney’s error, he would have won the underlying case.

Here, the lawyer’s estate raised an unusual defense. The attorney defendant passed away before the statute of limitations on the client’s claim ran. The lawyer’s estate is really making this argument: the lawyer passed away while the client’s claim was still viable, therefore, the client could have chosen another lawyer and filed the claim in timely fashion.

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In Frechtman v. Gutterman, 2014 NY Slip Op 00437, the Supreme Court, Appellate Division, a lawyer received an irate letter from his client in which his services were terminated. The lawyer sought to sue for defamation. The trial court dismissed the defamation case and the Appellate Division affirmed.

The letter contained the following statements: “We do not believe you adequately represented our interest,” “We believe your failure to act in our best interest in reference to certain matters upon first engaging in the matter may equate to misconduct, malpractice, and negligence,” “We believe that your future representation on this matter only became necessary, as a result of mistakes and oversights made by you acting as counsel,” and “[w]e believe that we should not pay for the value of services for which any misconduct or counsel oversight relates to the representation for which fees are sought.”

The trial court held that the statements above were merely statements of opinion, not statements of fact, and, thus, were not actionable. The court found the use of the phrase “we believe” significant. The court further held that statements by a client discharging a lawyer are absolutely privileged.  Finally, the court also held that a qualified privilege would apply and that the plaintiff did not allege malice sufficient to overcome the privilege.

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The case is captioned Iowa Supreme Court Attorney Disciplinary Board v. Robert Allan Wright, Jr., 13-0780, December 6, 2013.  The Iowa Supreme Court disciplined Wright for (a) failing to recognize a Nigerian scam and (b) allowing other clients to participate in the scam.  This case has received a fair amount of press attention, but the press has ignored the main issue in the case from a lawyer discipline perspective.

The trouble began when Wright was contacted by a client, Floyd Madison who informed Wright that Madison was the beneficiary of a large bequest from a long-lost cousin in Nigeria. Madison told Wright that he needed to pay $177,660 in inheritance taxes and then he (Madison) would receive the money. Most lawyers would have told Madison that the transaction was a scam. Wright, however, drafted a contingency fee agreement under which Wright would receive 10% of the inheritance in exchange for representing Madison.

Wright then made more mistakes. He urged several of his clients to loan money to Madison to help Madison pay the “inheritance taxes.”  At Wright’s urging, several of his other clients made loans to Madison. Wright placed the proceeds of the loans in his trust account. The opinion states “Wright stipulated that he failed to advise White, Stodden and Nunneman that they should seek independent counsel before making the loans to Madison.”