Chicago Legal Malpractice Lawyer Blog
Merrifield v. ATS Advisors, Michigan Supreme Court (March 6, 2026)
Background
Plaintiffs Nick Merrifield and Merrifield Machinery Solutions sued ATS Advisors, James Sullivan, and Shane Randell for accounting malpractice and sought to recover attorney fees as an element of their damages. The Oakland Circuit Court dismissed that claim, and the Court of Appeals affirmed, holding that the American rule barred recovery of attorney fees as damages.
The American Rule Issue
Michigan generally follows the American rule, which prohibits recovery of attorney fees as costs or damages unless a statute, court rule, or recognized common-law exception applies. The Court of Appeals acknowledged the Supreme Court’s recent decision in Hark Orchids, LP v. Buie (December 30, 2024), but read it narrowly — concluding it applied only to legal malpractice claims, not accounting malpractice.
The Supreme Court’s Holding
The Michigan Supreme Court reversed in part, holding that the Court of Appeals read Hark Orchids too narrowly. The key points:
- Hark Orchids established that attorney fees incurred to correct or limit harm caused by malpractice are inherent in the underlying injury and therefore do not implicate the American rule at all.
- That principle is not limited to legal malpractice. The Court extended it to accounting malpractice, drawing on Hark Orchids‘ own language analogizing legal malpractice to medical malpractice, accounting malpractice, and other professional negligence contexts.
- The underlying rationale — making injured clients whole by allowing recovery of reasonable mitigation costs — applies equally across professional malpractice disciplines.
Important Limitation
The Court emphasized a significant caveat from Hark Orchids: plaintiffs cannot recover all attorney fees incurred in mitigation. Recoverable fees must be reasonable and necessary to mitigate the harm caused by the malpractice.
Disposition
Reversed in part and remanded to the Oakland Circuit Court for further proceedings. Jurisdiction not retained.
Practice Note: This decision meaningfully expands the reach of Hark Orchids and is significant for professional liability litigation in Michigan. Attorneys handling accounting, engineering, or other professional malpractice claims should now affirmatively plead attorney fees as a recoverable element of damages, being careful to document that fees were reasonable and necessary to mitigate the specific harm caused by the malpractice.
Comment: So, your fees incurred to prosecute the legal malpractice case are not recoverable as damages, but the fees you incurred to remedy the underlying breach of duty are recoverable. Let’s use an example: Your accountant makes an error that causes you extra taxes. You retain a lawyer or accountant to file an amended return and defend the audit. You can recover these costs in your legal malpractice case against the accountant. You can’t recover the fees you paid your current lawyer to sue the accountant for malpractice.
Ed Clinton, Jr.