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:
The Nebraska Supreme Court has held, “A client who has agreed to the settlement of an action is not barred from recovering against his or her attorney for malpractice if the client can establish that the settlement agreement was the product of the attorney’s negligence.” Wolski v. Wandel, 275 Neb. 266, 271, 746 N.W.2d 143, 148-49 (2008). This is true even where a court has approved the settlement agreement. Bruning v. Law Offices of Ronald J. Palagi, 250 Neb. 677, 551 N.W.2d 266 (1996). In Bruning, the plaintiff entered into a workers’ compensation lump-sum settlement agreement and executed a release of claims. The settlement was approved by the compensation court, as well as a district court. The plaintiff subsequently commenced an action against his workers’ compensation lawyers for professional negligence on several different grounds, including obtaining a settlement that was inadequate. The defendants in that case argued they were entitled to judgment as a matter of law because the execution of the settlement and release in the underlying action barred the professional negligence action. The Nebraska Supreme Court disagreed, setting forth the legal principle above that a client is not barred from bringing a malpractice action simply because he agreed to a settlement. Id.
Applying the legal principles set forth above, neither Shriner’s settlement of her personal injury claim nor the ruling by the district court for Hall County that the settlement agreement was enforceable bars Shriner’s legal malpractice action against Friedman.
Although this states a claim, it is often difficult to win a legal malpractice case where the client accepted a settlement. Such cases can be viewed with skepticism and the client who takes the benefit of a settlement and then sues can appear to be greedy.
The Nebraska Court of Appeals also rejected the attorney’s additional defenses of collateral estoppel, judicial estoppel and equitable estoppel. Courts rarely apply these doctrines in legal malpractice cases because it is usually unfair to apply issue preclusion to a ruling in the underlying case because the plaintiff argues that his/her former attorney did not do a good job in the underlying case. So, if a court dismisses a lawsuit based upon the statute of limitations defense, the plaintiff in the legal malpractice case is arguing that he would not have lost the underlying case if his lawyer had done a good job.
Edward X. Clinton, Jr.