Three Words No Attorney Wants To Hear

2023 began with a bang. I was called upon to mediate a complex legal malpractice claim for a plaintiff (husband and wife) against two lawyers and their two separate law firms.

Legal malpractice cases are never easy, but to make matters even more complicated, the legal malpractice case arose from another very difficult case—an underlying medical malpractice case.  No lawsuit had been filed yet and based on discussions between the plaintiffs’ lawyer and the defense lawyers, everyone believed that pre-suit mediation would be a great idea.

The plaintiff’s’ initial demand of $2.6 million greatly exceeded the two firm’s policy limits. Both defendants countered with an offer in the low six figures. Clearly, the parties had a large gap to span to reach a mediated resolution.

The plaintiffs’ counsel had done an outstanding job of outlining the care provided to the plaintiff-wife after the alleged medical malpractice and supported that care with some medical records.  Plaintiffs were willing to compromise their claims and put a very painful situation behind them. Indeed, the defendant lawyers and their carriers also wanted to resolve the case to avoid further time, expense, and potential reputational harm. But a problem developed. As we progressed, it became apparent during mediation that the plaintiffs had not provided pre-incident medical records and the plaintiff-wife’s more recent treatment records to defense counsel.  To that end, the defendants were willing to offer substantial money to get the case settled pre-suit; however, the defendants were not able to evaluate fully the claims and potential defenses absent the plaintiff-wife’s other medical records. Unfortunately, this led to the case not resolving, the parties going their separate ways, and the legal malpractice lawsuit being filed soon thereafter.

This event led me to think about a reality many attorneys are not aware of. Scarily, statistics used to show that a lawyer could anticipate at least 1 claim or Bar complaint during their career.  Now, insurance industry experts tell me that a lawyer can expect to receive 3 to 5 legal malpractice claims or Bar complaints during their career.  Indeed, at some point in their career a lawyer could hear these three words–

“Legal malpractice claim.”

No attorney wants to hear these three dreaded words, but a malpractice claim is an unfortunate possibility when working within the legal field. Knowing more about the issues that can prompt a malpractice claim and how the underlying legal claim can influence a subsequent malpractice claim can better position you to avoid or defend one. Read on for a closer look at these factors, and the role that mediation can play in resolving these issues.

Issues That Can Trigger Legal Malpractice Claims

The basis behind a legal malpractice claim can vary widely, both in the nature of the claim itself, and the underlying action that prompted the initial attorney-client relationship. Let’s first explore some of the issues that can lead to a legal malpractice claim.

While different factors may prompt the filing of a legal malpractice claim, chief among them is the failure to properly communicate with the client. Maintaining clear and open lines of communication with a client is essential to maintaining the attorney-client relationship. A lack of or ineffective communication can lead to an erosion of trust between the client and the attorney. That in turn can cause the client to believe that the attorney breached a duty and the reason for the client’s loss was because of that breach. This breakdown in communication can be as simple as failing to return client calls or to update the client on the case’s progress to more egregious missteps such as failing to disclose potential conflicts of self-interest.

An attorney can err in communication by failing to confirm legal advice in writing. An attorney can give good oral advice until blue in the face, but if the attorney doesn’t confirm that good advice in writing, the client may well deny that such good advice was ever given. Many attorneys communicate very well orally and can effectively convey useful legal advice to their clients through this means. But memory is fallible, and over time that verbal advice can morph and change in the mind of the client to the point where it may no longer resemble the original message. Failing to reiterate these discussions in writing can lead to disputes with no way to clarify the actual advice given.

The legal business is competitive, leaving some attorneys to believe that they have to “puff” to land a new client. Indeed, attorneys may overpromise in order to create the perception that they are acting zealously on behalf of their clients. This competitiveness may also motivate attorneys to guarantee results, leaving clients with unrealistic expectations about their attorneys’ abilities and failing to prepare clients for results short of complete success. The ultimate result? A disgruntled client. An attorney who has created unreasonable client expectations may appear to lack diligence, which can lead to recrimination by the client if the case or transaction is unsuccessful — even though the attorney acted diligently. The client’s (mis)perception of a “job not-so-well-done” can lead to a malpractice claim.

Other simple errors can lead to the breakdown of the relationship. Persistent drafting mistakes, missing deadlines, or irregularities in billing can happen, despite an attorney’s best efforts. Failing to disclose and correct those errors, or honestly admitting them, can lead to unhappy and distrustful clients who want to determine if those errors alone led to the loss of their case or failed business venture.

“The Case Within the Case”

Unlike a typical claim, a legal malpractice claim encompasses both the malpractice complaint against an attorney and the initial underlying claim that led to the creation of the attorney-client relationship. This original underlying issue could involve anything from an estate plan to a real estate transaction to a domestic issue to a business dispute — and any number of practice areas in between.

Due to the legal concept of “the case within the case,” the legal malpractice claimant’s counsel must show that, but for the actions or omissions of the original underlying lawyer, the legal malpractice claimant would have been successful in the underlying litigation or transaction. Conversely, it is the responsibility of the defense counsel to show that the adverse result was caused by something other than the attorney’s acts or omissions.

The challenge for both sides lies in establishing the following as fact:

1. Was there a duty? Can an expressed or implied attorney-client relationship be established? Did a duty arise because the lawyer agreed to perform a specific task? Or did a duty arise to a third party/beneficiary of the lawyer’s legal work?
2. Was there a breach of that duty? Did the attorney who undertook the duty use the requisite skill, prudence, and diligence that another reasonable attorney would use under like or similar circumstances?
3. Was there proximate causation between the breach of the standard of care and the adverse outcome of the underlying claim or transaction?
4. What are the damages? Damages cannot be speculative. Categories of recoverable damages may include general, compensatory, and expenses related to the original underlying representation. In breach of fiduciary duty claims (separate from and not duplicative of malpractice claims), damages may also include disgorgement of the attorney fees paid during the breach period, accrued attorneys’ fees for having to bring the legal malpractice case, and even punitive damages.

Establishing these factors can be a challenge, particularly if the claimant’s legal malpractice attorney is not well-versed in the practice area of the original underlying claim. The claimant’s attorney must spend a great deal of time reviewing the original underlying representation, discussing the merits with experts, and ultimately attempting to determine potential outcomes, all while investigating the missteps or wrongdoing alleged to have taken place during the original underlying representation. It is these additional challenges that make legal malpractice claims so well-suited for mediation.

Considering Mediation

The analysis and the complexity of the initial underlying action, paired with the sensitivity of legal malpractice claims, makes a malpractice claim extremely well-suited for alternative dispute resolution — particularly mediation. The question then becomes, when should you choose mediation?

Mediating a case early in the litigation process is an opportunity to fully educate both sides on the strengths and weaknesses of the claim. It can reveal hidden pitfalls in the underlying claim that can later derail the entire malpractice case or show any damning evidence that could sway a jury. Mediating the case early also allows both sides to determine how far they can, or should, pursue the matter, and the potential time and expense of protracted malpractice litigation.

Advantages of Mediation

There are also specific advantages for those involved. Take the legal malpractice claimant. By the time a legal malpractice case has been filed and is ripe for mediation, the situation behind the original underlying litigation or transaction may have occurred months or even years earlier. The malpractice claimant may be extremely fatigued at having to face another potentially drawn-out legal battle. Investing more time and money in a case that is far from a sure thing may not be desirable either. This fatigue and uncertainty may help persuade a claimant to mediate and try to resolve the case early on.

There are advantages for the claimant’s attorney as well. Learning the perceived value of the original underlying case allows attorneys to adequately advise their clients of the likelihood of success at trial, taking into consideration the time and expense to get to trial. Compromise may prove easier at an earlier stage of the litigation process, as parties tend to dig in as time goes on.

Early mediation presents an opportunity for the defendant/former attorney to resolve the issues quickly, confidentially, and with minimal financial burden or professional embarrassment. A negotiated term of settlement in mediation may include confidentiality and non-disparagement provisions as material terms of the release.

Legal Malpractice Claims Continue to Rise

Historically, when the economy takes a hit, legal malpractice claims rise. In the late 2000s, we saw an increase in malpractice claims concerning real estate matters and we are now beginning to see an increase in malpractice claims regarding estate and probate law.

Experts say we are currently experiencing the largest transition of wealth in human history as the population is aging and transferring wealth to their heirs. With the increase in the need for legal work in these practice areas comes the unfortunate reality that professional mistakes will happen. This, in turn, causes clients to seek redress by bringing more legal malpractice claims.

In fact, many malpractice insurance carriers I’ve spoken with anticipate an increase in legal malpractice claims. In addition, Covid-19 has changed the way we work and interact. Those changes are creating new legal battles with fallout we have not yet realized. The reality is that we can anticipate more legal malpractice claims on the horizon. Mediation at the correct time can help resolve them equitably and efficiently, and should be considered as an avenue for these types of claims.

If you would like to discuss whether mediation is a viable option for your client’s case or whether it’s the right time to mediate your case, feel free to reach out.