Articles Posted in Bad Settlement

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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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Phinisee v. LAYSER, Dist. Court, ED Pennsylvania 2014 – Google Scholar.

One common claim against a lawyer is that he failed to obtain a good enough deal for his client. Here, the lawyers obtained $1.2 million for the plaintiff and her minor child in a lawsuit against the United States. After accepting the settlement, she filed suit for legal malpractice. Plaintiff was apparently unhappy about a Medicaid lien and the amount of the settlement.  The district court dismissed the lawsuit on a motion to dismiss. The district court held that the claims were not negligence claims, but, rather claims that the amount of the settlement was insufficient, which are not valid claims under Pennsylvania law.

What the court is saying is that you need more than a bad result to allege legal malpractice. You need to allege some error by the lawyer. Here, plaintiff did not allege an error by the lawyer.