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Withdrawal From A Lawsuit Does Not Bar A Legal Malpractice Claim

This is an important issue in legal malpractice cases. A lawyer represents a client in litigation. If the lawyer is granted leave to withdraw from that matter by the court, does that decision bar a legal malpractice claim by the client? The Washington Court of Appeals held that the withdrawal, even where approved by a court, does not collaterally estop a legal malpractice claim.

Generally, a litigant must establish four things to collaterally estop the other party from litigating an issue: (1) the identical issue was decided, (2) there was a final judgment on the merits, (3) the party against whom the doctrine is asserted must have been a party to the earlier proceeding, and (4) application of collateral estoppel will not work an injustice against the estopped party.

The court explained that two of the four factors required to establish collateral estoppel were not present:

With that understanding of Washington law, we now, finally, turn to the collateral estoppel questions presented by this appeal. The trial court found that the first and fourth factors of collateral estoppel—identity of issues and injustice to a party—were not satisfied. We again agree with the trial court.

The first consideration of collateral estoppel is whether the previous actionnecessarily decided the same issue presented in the current case. Christensen,152 Wn.2d at 307. As suggested by our previous discussion, the answer in this case is “no.” At issue in the first case, as with most contested cases of withdrawal, was whether or not the Attorneys complied with CR 71. The court did not answer the questions of whether the Attorneys correctly perceived that ethical considerations required them to withdraw or that the Attorneys actually were motivated by that reason. Judge Plese’s comments concerning the Attorneys’ ethical obligations, affirmed by this court’s acceptance of that rationale in the first appeal, merely confirmed that the Attorneys properly stated their ethical concerns in conformity with comment 3 to RPC 1.16. Neither Judge Plese nor this court determined that there actually was an ethical problem with continued representation.[6]

Accordingly, the first factor of collateral estoppel is not present. While the failure to establish any of the court prongs of the collateral estoppel standard is fatal to the petitioners’ argument, we briefly will discuss the fourth factor because the trial court also relied on it and the parties have argued it.

The fourth factor is whether applying collateral estoppel would work an injustice to a party. We agree that it would in this circumstance. The Schibels asked to address the court in chambers so that Mr. Johnson and his attorney would not hear the details of their disagreement with the Attorneys. When Judge Plese correctly determined that the issue could not be heard ex parte, the Schibels were left with the dilemma of either not raising the issue or having Johnson’s attorney listen to the Attorneys discuss the weakness of their pending case. Under those circumstances, we cannot conclude that it would be fair to bind them to a decision where not all evidence and argument were presented. The trial court correctly determined that it would work an injustice to collaterally estop the Schibels despite the prior extended litigation of the CR 71 issue.

This case could prove to be very important as there are many cases where a lawyer withdraws from a matter but is later sued for legal malpractice.

Source: SCHIBEL v. EYMANN, Wash: Court of Appeals, 3rd Div. 2016 – Google Scholar

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