In Parkinson v. Bevis, (Docket No. 46269), the Idaho Supreme Court reinstated an equitable disgorgement action filed by a client against her former divorce attorney.
Parkinson filed a claim for breach of fiduciary duty against her former attorney, alleging that he wrongfully revealed a confidential email to her ex-husband’s attorney after a settlement had been reached in her case. The trial court dismissed the action on the ground that Parkinson was not damaged because the email was revealed after the case settled.
The Idaho Supreme Court reversed the dismissal and reinstated the complaint for breach of fiduciary duty. The Court explained that Parkinson was not seeking damages for legal malpractice, but was seeking equitable disgorgement of legal fees paid to her prior attorney. The explanation
Parkinson’s original complaint contained three factual allegations: (1) Bevis shared attorney-client confidential information with her husband’s attorney; (2) Bevis was complicit with her husband’s attorney in securing a divorce for her husband on terms more favorable to him than to her; and (3) that Bevis failed to evaluate fully the true value of the marital community’s real property. Parkinson’s complaint then alleged Bevis “was subject to ethical and fiduciary duties” to her and that he “breached his duties by, among other things, disclosing attorney-client privileged communications to [her husband’s attorney] during the course of the divorce proceedings . . . .” Despite this list of allegations, Parkinson made only one claim for relief in her complaint: “Bevis breached his duties to Parkinson by, among other things, disclosing attorney client privileged communications to Welsh during the course of the divorce proceedings, all to Parkinson’s damage in an amount to be proven at trial.”
Despite this original prayer for damages, in her memorandum filed opposing the motion to dismiss, Parkinson clarified that she was not seeking damages, but she was seeking fee disgorgement, noting, “Parkinson is not asking Bevis for the value of any lost divorce claims. Rather, Parkinson seeks relief from the breach of her attorney-client confidences. . . . Parkinson’s remedies of disgorgement and forfeiture of attorney fees are implicit in her breach of fiduciary duty claims.” She also filed an affidavit including the email Bevis allegedly forwarded to Mr. Welsh.
At the hearing on Bevis’ motion, counsel for Parkinson stated the following during oral argument:
Ms. Parkinson’s breach of fiduciary duty claim is different than a legal malpractice claim in terms of remedy . . . . Forfeiture of legal fees serves several different purposes. It deters attorney misconduct, a goal worth furthering regardless of whether a particular client has been harmed.
Thus, Parkinson made clear, and placed Bevis and the court on notice, that she intended to pursue an equitable-fee disgorgement claim against Bevis, rather than a damages claim. The district court recognized this in its memorandum opinion granting the motion, and even considered whether Parkinson should have been allowed to amend her complaint to clearly state the relief she was seeking….
The sanction of fee forfeiture is available when an attorney violates his duty to his client in a serious way. The criteria listed in section 37 are to be used to determine whether the trial court may order forfeiture of all or a portion of an attorney’s fee as an appropriate equitable remedy in these circumstances. To reiterate, those factors are (1) the extent of the misconduct, (2) whether the breach involved knowing violation or conscious disloyalty to a client, (3) whether forfeiture is proportionate to the seriousness of the offense, and (4) the adequacy of other remedies.
Comment: this is an important decision. It is often the case that a breach of fiduciary duty claim is dismissed because it is essentially identical to a legal malpractice claim. Here, the plaintiff cleverly used the theory of equitable disgorgement to support her claim for a return of fees paid because the lawyer breached his duty to her.
If you have a question about a legal malpractice claim, do not hesitate to contact me.
Edward X. Clinton, Jr.