Articles Posted in Bad Deals

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This is a decision of the Nebraska Court of Appeals reinstating a legal malpractice claim against a personal injury attorney even though the underlying case was settled.

The defendant attorney urged the client to accept a $45,000 settlement of a personal injury claim arising out of an auto accident. The plaintiff agreed to the proposed settlement, but then sued the lawyer for legal malpractice. The basis of her claim was essentially that the settlement was inadequate because she had suffered serious permanent injuries requiring medical expenses far exceeding the amount of the settlement.

The court explained:

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This is a legal malpractice case arising out of a divorce case. Plaintiff alleged that her ex-husband concealed assets during the divorce case and that her lawyers were negligent in failing to discover those assets. The lawyer defendants moved to dismiss the case, but the Appellate Division of the Supreme Court of New York reversed and ordered that the case be dismissed.

Reasoning: The court recited the elements for a legal malpractice case (a) duty; (b) breach of duty; (c) proximate causation (that the plaintiff suffered a loss caused by the lawyer’s conduct) and (d) ascertainable damages. In the case of a settlement of the underlying case, the plaintiff must prove that the settlement of the action was effectively compelled by the lawyer’s action.

In this case, the court held that there was no proof that the plaintiff was compelled to enter into the settlement by the lawyer’s actions because the plaintiff was aware, before she settled, that her husband had concealed assets. The court explained: “Here, to the extent that the complaint asserted that the appellants were negligent in failing to ascertain the full extent of the assets of the plaintiff’s former husband, it failed to sufficiently allege that the stipulation of settlement entered into was effectively compelled by the mistakes of counsel, since the plaintiff acknowledged that she elected to enter into the settlement agreement even though she was aware that her former husband had not fully disclosed his assets.”

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SILVAGNI v. Shorr, 2015 PA Super 62 – Pa: Superior Court 2015 – Google Scholar.

This is a Pennsylvania decision affirming the dismissal of a legal malpractice case. The plaintiff alleged that his lawyer breached the duty of care by advising him to settle his workers’ compensation matter. Plaintiff also claimed that the lawyers gave him incorrect legal advice. But for that incorrect legal advice he would not have settled the case.

In the practice area, this is known as a bad deal case. Plaintiff agrees to settle a case and then regrets the settlement or believes that the settlement amount was too low. The complaint frequently contains an allegation that the lawyer pressured the client into the settlement.