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Lose and Lose Again

In Kozal v. Snyder, 978 N.W.2d 174, the Nebraska Supreme Court held that an attorney did not commit legal malpractice because the purported error was a close call and the law was unsettled. in the underlying case, the attorney represented clients who wished to renew liquor licenses. The Nebraska Supreme Court held that the case he filed was insufficient because he failed to name as parties and serve the citizens who objected to the renewal of the liquor licenses.

Kozal then filed a claim against the lawyer, but the Nebraska Supreme Court affirmed the dismissal of that legal malpractice case as well. The court’s reasoning:

When Snyder filed the appeal underlying Kozal I, in which he did not name the citizen objectors as parties, the issue of naming citizen objectors in appeals from decisions of the NLCC was an unsettled issue of law. Additionally, Snyder did not have a duty to inform his clients regarding the unsettled area of law. We therefore find that the district court did not err when it concluded that, as a matter of law, appellees did not breach the applicable standard of care.

There was a dissent joined by two justices.

“I disagree, however, with the majority’s conclusion that the doctrine of judgmental immunity should be extended such that, with the exception of advice regarding settlement offers, a lawyer cannot be liable for failing to advise clients regarding risks posed by unsettled areas of law. In my view, the rationale for the judgmental immunity rule does not neatly fit when it is claimed that a lawyer was negligent for failing to advise clients regarding risks posed by unsettled areas of law. To take this case as an example, Snyder would not have had to predict that this court would determine that failing to name the citizen objectors was a jurisdictional defect that would require dismissal to advise his clients of the risks and benefits of naming or not naming the citizen objectors.

I agree with the majority that our decision in Wood, supra, held only that the judgmental immunity doctrine did not cover a failure to advise claim in the context of advice regarding settlement offers. But, on the other hand, much of our reasoning in that case would apply to other contexts as well. We noted, for example, that a lawyer need not accurately predict the future course of the law in order to advise a client regarding unsettled issues in the law. We also reasoned that if the judgmental immunity rule applied to an attorney’s failure to inform a client of unsettled legal issues relevant to a settlement, “an attorney could forgo conducting research or providing a client with information on a relevant legal issue once he or she determined that the legal issue at hand was unsettled in this state.” Id. at 117, 589 N.W.2d at 108. It strikes me that today’s decision appears to immunize lawyers from potential liability if they take that very course in an area that does not involve providing advice on a settlement offer.

Because I would not apply the doctrine of judgmental immunity to the failure to advise claims, I would treat such claims as subject to ordinary legal malpractice standards. In other words, I would treat the questions of whether the standard of care required a lawyer to advise a client of risks posed by unsettled areas and whether the lawyer met that standard as questions of fact. And because the appellants offered an expert affidavit that the standard of care required such advice here, I would not affirm the entry of summary judgment on that claim. That outcome would not ensure victory for appellants. Rather, it would require a trial where Snyder could offer evidence that this was not an issue on which lawyers of ordinary skill would have advised their client or that, given his relationship with appellants, this was not an issue on which his clients would have reasonably expected to be so advised.

Much of lawyering, it seems to me, involves identifying risks and advising clients of potential consequences so that clients can make informed choices. If a lawyer fails to advise a client of a risk when other lawyers in the community would normally provide such advice and the client can prove resulting damages, I do not think the judgmental immunity doctrine should close the courthouse doors to that client, merely because the risk involved an unsettled issue of law. For that reason, I respectfully dissent.”

Comment: I agree with the dissent. The lawyer has a duty to inform his clients where the law is unsettled and has to be smart enough to spot issues. The decision, in my view, simply immunizes bad lawyering. Lawyers have a duty to think and a duty to inform the client when there is an issue that is murky.

Ed Clinton, Jr.

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