A recent case, Masellis v. Law Offices of Leslie Jensen, 50 Cal. App. 5th 1077, Court of Appeals of California (5th District. June 2020), discusses the burden of proof in a “settle and sue” legal malpractice case. That is a case where the plaintiff (represented by the lawyer) settles the underlying matter and then sues his lawyer alleging that the settlement was insufficient due to legal malpractice.
Here is the summary by Court of the issue and the conclusion:
The main legal question in these appeals is what burden of proof is appropriate in a legal malpractice action alleging an inadequate settlement? The defendant attorney Leslie F. Jensen (Attorney) addresses this question in two steps. First, she contends the elements of causation and damages in a “`settle and sue'” legal malpractice case must be proven to “`a legal certainty.'” (Filbin v. Fitzgerald (2012) 211 Cal.App.4th 154, 166 [149 Cal.Rptr.3d 422] (Filbin).) Second, she contends the legal certainty standard imposes a burden of proof higher than a mere preponderance of the evidence.
We disagree with defendant’s second contention. In California civil litigation, a preponderance of the evidence is the default burden of proof. (Evid. Code, § 115.) No published legal malpractice case using the term “legal certainty” expressly states the default burden of proof is replaced by a standard higher than preponderance of the evidence. Indeed, there is little discussion of the burden of proof in the legal malpractice cases using the term “legal certainty.” Consequently, we conclude the term is ambiguous. We resolve that ambiguity by interpreting the statement that a plaintiff must present “evidence showing to a legal certainty that” the alleged breach of duty caused an injury (Filbin, supra, 211 Cal.App.4th at p. 172) as simply referring to the degree of certainty inherent in the applicable burden of proof. For “settle and sue” legal malpractice actions, we conclude the applicable burden of proof is a preponderance of the evidence. (Evid. Code, § 115; see Johnson, Causation and “Legal Certainty” in Legal Malpractice Law (2018) 8 St. Mary’s J. Legal Malpractice & Ethics 374, 377-379.)…
As explained below, we conclude the applicable standard of proof for the elements of causation and damages in a “settle and sue” legal malpractice action is the preponderance of the evidence standard. First, use of the preponderance of the evidence standard of proof is appropriate because it is the “default standard of proof in civil cases” (Conservatorship of Wendland, supra, 26 Cal.4th at p. 546) and use of a higher standard of proof “occurs only when interests `”more substantial than mere loss of money”‘ are at stake.” (Ettefagh, supra, 150 Cal.App.4th at p. 1590.) Wife’s legal malpractice action involves a claim to recover money as compensation for damages suffered. The parties have equal interests at stake because every dollar Wife recovers is a dollar Attorney must pay. In such situations, the risk of error usually is allocated more or less equally between the parties by applying the preponderance of the evidence standard of proof. (Id. at p. 1589.) In other words, when the dispute is over money, there rarely are compelling policy grounds for preferring one side’s interests over the other. (Ibid.)
1093*1093 Second, our conclusion that the preponderance of the evidence standard is the proper standard for “settle and sue” malpractice actions is supported by dicta in Viner v. Sweet (2002) 30 Cal.4th 1232 [135 Cal.Rptr.2d 629, 70 P.3d 1046] (Viner). There, the California Supreme Court concluded that a client alleging legal malpractice occurred in the performance of transactional work must prove the “causation element according to the `but for’ test, meaning that the harm or loss would not have occurred without the attorney’s malpractice.” (Id. at p. 1235.) The court compared this conclusion about transactional work with litigation work, stating: “In a litigation malpractice action, the plaintiff must establish that but for the alleged negligence of the defendant attorney, the plaintiff would have obtained a more favorable judgment or settlement in the action in which the malpractice allegedly occurred. The purpose of this requirement, which has been in use for more than 120 years, is to safeguard against speculative and conjectural claims. [Citation.] It serves the essential purpose of ensuring that damages awarded for the attorney’s malpractice actually have been caused by the malpractice.” (Id. at p. 1241.)
This statement’s reference to a more favorable judgment or settlement is broad enough to include the “settle and sue” malpractice action brought by Wife against Attorney. The Supreme Court made a further reference to the causation test for litigation malpractice and mentioned the applicable burden of proof: “For the reasons given above, we conclude that, just as in litigation malpractice actions, a plaintiff in a transactional malpractice action must show that but for the alleged malpractice, it is more likely than not that the plaintiff would have obtained a more favorable result.” (Viner, supra, 30 Cal.4th at p. 1244.) Requiring proof that something is “`more likely than not'” is a preponderance of the evidence standard. (People v. Superior Court (Kaulick) (2013) 215 Cal.App.4th 1279, 1305, fn. 28 [155 Cal.Rptr.3d 856].)
Our Supreme Court’s dicta are “highly persuasive,” and we will generally follow it unless there is a compelling reason not to do so. (Evans v. City of Bakersfield (1994) 22 Cal.App.4th 321, 328 [27 Cal.Rptr.2d 406].) Appellant has not identified a compelling reason for rejecting our Supreme Court’s statements about the standards for establishing causation in a litigation malpractice action, which statements encompassed cases alleging an inadequate settlement.
Third, part III of Professor Johnson’s article provides a lengthy discussion of the cases cited by Attorney. (Johnson, Causation and “Legal Certainty” in Legal Malpractice Law, supra, 8 St. Mary’s J. Legal Malpractice & Ethics at pp. 387-397.) Based on his review of California case law, Professor Johnson 1094*1094 concluded the principle that causation of damages in a legal malpractice action must be proven with “legal certainty” is ambiguous and described two alternate interpretations: “If this means simply that factual and proximate causation of damages must be proved by the plaintiff by a preponderance of the evidence, there is nothing exceptional about what this line of California cases asserts. If, however, legal certainty imposes a more demanding burden of proof than the preponderance of the evidence standard, then these California cases reflect a dubious departure from principles widely accepted in American law, and a serious threat to the fairness of legal malpractice litigation.” (Id. at pp. 377-379, fns. omitted.)
Professor Johnson concluded that establishing damages in a legal malpractice action by a preponderance of the evidence “is likely to strike a fair balance between the interests of plaintiffs and defendants, not to mention the interests of the legal profession and the public at large.” (Johnson, Causation and “Legal Certainty” in Legal Malpractice Law, supra, 8 St. Mary’s J. Legal Malpractice & Ethics at p. 405.) His analysis of the policy considerations for using this standard of proof is set forth in part IV of the article and is not repeated here. (Id. at pp. 397-402.) In closing his article, Professor Johnson urges California courts to “abandon the misleading language of legal certainty and speak plainly about the need of legal malpractice plaintiffs to prove causation of damages by a more likely than not preponderance of the evidence showing.” (Id. at p. 405.) The present case is an object lesson for how the ambiguous term “legal certainty” hinders a clear understanding of the burden of proof and wastes resources of the litigants and judicial system.
In summary, we conclude the applicable standard of proof for the elements of causation and damages in a “settle and sue” legal malpractice action is the preponderance of the evidence standard set forth in Evidence Code section 115. A higher standard of proof is not “otherwise provided by” the judicial decisions relied upon by Attorney. (Evid. Code, § 115.) Accordingly, we reject Attorney’s argument that a higher burden of proof in “settle and sue” legal malpractices cases is an uncontroverted legal principle that must be applied in this case.
This is a thoughtful opinion and the holding is consistent with the law of Illinois and other states.
Ed Clinton, Jr.