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We are often asked to evaluate potential malpractice claims. Here is what we need to know before we can take your case:

(a) What happened? How did things go bad? Why do you believe your lawyer was responsible? In your opinion what was the mistake of the lawyer?

(b) When did it happen? This is really important because the statute of limitations is usually two years from whenever you sustained damages from the alleged malpractice. The statute of limitations is complicated and can require extensive analysis. There are often no clear answers to this question.

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In Scully v. Novack & Macey, LLP, 2022 IL App (1st) 210319-U, the Illinois Appellate Court affirmed the dismissal of slander of title claims against the Defendant law firm. The law firm represented some of the parties to a family feud over inherited real estate. During the litigation, the law firm, under instructions from its client, placed a lis pendens on real property. The claims for slander of title against the law firm were dismissed under the absolute litigation privilege. A lis pendens is a public document filed with the Recorder of Deeds that gives notice to any purchaser that the property is subject to a claim in litigation.

As the court explained, “Illinois’s absolute litigation privilege derives from section 586 of the Restatement (Second) of Torts. That section provides, ‘An attorney at law is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding, or in the institution of, or during the course and as part of, a judicial proceeding in which he participates as counsel, if it has some relation to the proceeding.’ ¶ 42.

The absolute litigation privilege barred any claim against the law firm for its action in filing the lis pendens. The court also noted that the attorneys had a valid reason to file the lis pendens. ¶ 45. Because the lis pendens related to the pending litigation and served the interests of their clients, the law firm’s actions were absolutely privileged.

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The Second District of the Illinois Appellate Court recently decided Nutter v. Schiller DuCanto & Fleck, 2022 IL App (2d) 210376, in which it held that a legal malpractice claim was barred by res judicata because the lawyer and the client had previously engaged in litigation over the lawyer’s fee petition. The court summarizes the procedural history of the dispute as follows:

¶ 11 On December 18, 2020, defendants moved to dismiss plaintiff’s legal malpractice complaint. They alleged that res judicata barred plaintiff from bringing the action because (1) the legal malpractice case and the fee petition concerned the same parties, (2) the order awarding defendants fees and costs was final, and (3) the fee petition and malpractice action involved the same legal services. See 735 ILCS 5/2-619 (West 2020). In response, plaintiff asserted that res judicata did not bar his legal-malpractice action because he had a right to a jury trial in the legal-malpractice action and no such right in the marriage dissolution proceedings. Thus, application of res judicata would deprive him of his right to a jury trial.

¶ 12 Although the trial court held a hearing on the motion to dismiss, no transcript (or acceptable substitute) from that hearing was filed in this court. See Ill. S. Ct. Rule 323(c) (eff. July 1, 2017). Following that hearing, the trial court granted defendants’ motion to dismiss. In doing so, the court noted in its written order that “plaintiff recognized that the two competing claims could be consolidated and tried together, and even acknowledged that the court could try both cases together or bifurcated with plaintiff’s claim of legal malpractice tried to a jury and defendant’s petition for Section 508 fees tried in simultaneous or sequential bench trial.” The court continued that “[t]he divorce court judge had set a longer briefing schedule on the petition for fees, and yet there was no response filed by the plaintiff, only the last minute filing of the legal malpractice law case.” The court observed that plaintiff essentially sat on his hands, “pinning all hopes on the motion for continuance based on the recent filing of this [legal malpractice] case filed in the `Law’ division of the court.” This timely appeal followed.

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This is a case of litigation malpractice. In Best Choice Products, Inc. v. Hendrick, Bryant, Nerhod, Sanders & Otis, Ltd, No. COA21-163, the Court of Appeals of North Carolina reinstated a legal malpractice action. Law Firm had represented Best Choice in an underlying case. According to the Complaint, the Law Firm failed to produce certain documents in the underlying case and the case was dismissed. The opinion at paragraph 4 quotes the key allegations of the Complaint:

¶ 4 On 20 July 2020, Best Choice filed its complaint against Defendants for professional malpractice. Best Choice attached to its complaint as exhibits the summary judgment order entered 24 July 2017, and an order granting sanctions on 25 January 2018 from the Prior Lawsuit. Best Choice made several allegations in its complaint relating to Defendants’ negligent representation and listed specific instances in which Defendants failed to meet the standard of care in rendering legal services in the Prior Lawsuit, which it designated as “Defendants’ Failures.” Best Choice made the following allegations pertinent to our review:

33. Defendants’ Failures continued in the Prior Lawsuit through the Orders referenced below, prevent Best Choice from avoiding or mitigating the adverse consequences imposed by the Orders.

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A recent decision by the Ohio Court of Appeals, Meehan v. Smith, 2022 Ohio 2359 (8th Appellate Dist. 2022), is instructive on the difficulties that an expected beneficiary of a will or estate plan sues for legal malpractice. The expected beneficiary (daughter of the decedent) claimed that she was a client or intended beneficiary of the estate planning law firm that revised her mother’s estate plan.

{¶ 15} At the discovery deposition in this case, appellant testified that she never signed an engagement letter with appellees. She also testified that she personally never paid them any money (she only issued checks drawn from Teepee & Petunia’s accounts at her parents’ direction). However, appellant testified that when her parents initially sought estate planning services, and she and other family members met with appellee attorney Smith, “it was [her] assumption that he was representing the entire family.” Appellant testified that she had that assumption because Smith “would always say to [her] specifically if [she] had any questions to make sure [she] [s]hould give him a call.”

{¶ 16} Appellant further testified that she “felt [she] was being included” in the meetings with her parents and brothers, and Smith “represented the documents.” Donna’s estate planning also provided for the possibility that her 2018 trust funds could be used for appellant’s own estate planning — a point appellant relies on for her claim of the establishment of an attorney-client relationship. Appellant did admit that Smith never told her he was representing the entire family. She further admitted that Smith never told her he was representing her personally. She testified that Smith never told her in “those specific words” that he was her attorney, but she “felt like [she] was his client because [she] was included, as were [her] brothers that were there. It was [her] understanding that [Smith] was representing the family under the estate planning of [her] parents.” (Emphasis added.) The record demonstrates that appellant does not have any legal training.

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One of the most difficult issues in some malpractice litigation is whether the law suit was timely or not. Generally, the plaintiff has two years from the date of discovery of the problem. Each case is different and there is often argument as to when a plaintiff should have become aware of the facts leading him to suspect legal malpractice. The defense will often argue that the plaintiff should have suspected his injury or investigated the problem before the plaintiff contends that he was aware.

Suburban Real Estate Services, Inc. v. Carlson, 2022 IL 126935, clarifies some of these issues for legal advice that causes litigation. In the Carlson case, in 2010 the plaintiff hired a lawyer to advise him on how to terminate a joint venture with another company. The attorney allegedly advised the plaintiff to terminate the arrangement. In August 2010, the adverse party disagreed and filed a lawsuit for breach of fiduciary duty. In July 2015, after a trial, the court awarded damages in favor of the adverse party.

The key question is when did the claim arise? The defense argued that the statute of limitations began to run when the plaintiff had to hire a new attorney to defend the breach of fiduciary action. So under the defense view, plaintiff discovered his injury in 2010 and should have sued for malpractice by 2012.  Plaintiff argued that he was not aware of the allegedly incorrect legal advice until the adverse judgment was entered in the underlying case in 2015. The Illinois Supreme Court held that the injury accrued upon the entry of the adverse judgment.

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Here are a few risk management ideas for the New Year.

  1. Make sure all clients sign engagement letters and provide retainers.
  2. Make sure your malpractice insurance is up to date. Every year I defend lawyers who failed to obtain insurance. Let’s make sure that lawyer isn’t you this year.
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In Estate of Christo v. Law Offices of Thomas Leahy, 2021 IL App (1st) 200575-U, the Appellate Court reversed the entry of judgment in favor of a law firm in a legal malpractice case filed by the Public Guardian. The Leahy Firm had represented Barbara Rose Christo, Peter Christo and Fay Christo in a wrongful death action arising out of the death of their father, Thomas Christo.

The case settled and each plaintiff received approximately $550,000. The complaint alleged that Peter Christo misappropriated the funds belonging to his sister, Barbara, who was disabled. The legal malpractice complaint alleged that the Law Firm was aware that Barbara had significant intellectual disabilities but it failed to seek a guardianship for Barbara or otherwise protect her interest in her share of the settlement funds.

After a bench trial the trial court ruled in favor of the Law Firm on all claims holding that the Law Firm met the duty of care and that Barbara could not prove proximate causation. Barbara appealed on several grounds. The Appellate Court reversed the judgment on the ground that the trial court had misstated the evidence, in particular the testimony of a Doctor who testified that Barbara was disabled.

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Katz v. Katten Muchin 2021 IL App (1st) 200331, is a malpractice case in which the Illinois Appellate court reversed the dismissal of a legal malpractice case.  Andre Katz filed a petition to be appointed the temporary guardian of his mother on June 9, 2017. He learned that his mother had retained Katten Muchin to revise her estate plan to his detriment. On November 16, 2017, Katz took the deposition of one of the lawyers at Katten Muchin who had represented his mother and who had re-drafted the estate plan to Katz’s detriment (and to the advantage of his brother).

On June 27, 2019, Katz filed the legal malpractice action against Katten Muchin. Katten Muchin argued that the two-year statute of limitations had run because Katz was aware that Katten Muchin had done estate planning work for his mother on June 9, 2017, more than two years before the lawsuit was filed. The trial court dismissed the case on statute of limitations grounds.

Katz appealed. He argued that he was unaware that the lawyers were the cause of his injury until he took the deposition of the Katten Muchin lawyer on November 16, 2017. The Appellate Court reversed the dismissal of the Complaint on the ground that there was an issue of fact as to when Katz discovered his injury.  The opinion carefully discusses the discovery rule and how it is applied.

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Bielfeldt v. Graves, 2021 IL App (3d) 200118-U, should be a published opinion. In any event, it stands for the proposition that a legal malpractice claim was timely under the federal savings statute. Here a timely legal malpractice claim was filed in federal court. The federal court dismissed that claim for lack of subject matter jurisdiction. Bielfeldt re-filed the claim within one year of the dismissal by the federal court.

¶ 17 Bielfeldt argues that the malpractice claim was timely filed under the savings statute, section 13-217 of the Code (735 ILCS 5/13-217 (West 1994)). Under that provision, if the action is dismissed by a federal district court for lack of jurisdiction then, “whether or not the time limitation for bringing such action expires during the pendency of such action, the plaintiff*** may commence a new action within one year or within the remaining period of limitation, whichever is greater.” Id. This section only applies, though, when a plaintiff has initially filed suit in a timely manner, and the original statute of limitations has not expired before that action was ever filed. Leffler v. Engler, Zoghlin & Mann, Ltd., 157 Ill. App. 3d 718, 723-24 (1987).

¶ 18 Graves does not dispute that the state court complaint was filed within one year of dismissal from the federal court. However, Graves argues that Bielfeldt first asserted allegations of legal malpractice arising from the “Major Event” in the third amended complaint in federal court, which was not filed until August 3, 2016, after the statute of limitations would have expired according to Graves. The pleadings in the court below, however, allege that Bielfeldt did not receive a letter until on or about January 23, 2015, indicating the shares of stock to Graves that allegedly diluted his ownership interest. For purposes of a motion to dismiss, Bielfeldt sufficiently pled a legal malpractice claim against Graves that was filed within two years of when Bielfeldt allegedly knew or reasonably should have known of his injury. Thus, the legal malpractice claim survives as timely filed pursuant to the savings statute and we reverse the dismissal of count VII and remand this matter to the trial court for further proceedings as to count VII.

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