Legal Malpractice Experts to Prove a Reasonable Settlement Value in the Underlying Case
Fishman v. Brooks, 396 Mass. 643; 487 N.E.2d 1377 (1986) (PDF)
MA Underlying Personal Injury Action
Student Contributor: Natalie Resto
Facts: Brooks hired Fishman to represent him in an action for personal injuries he sustained when a negligently operated motor vehicle collided with the bicycle Fishman was riding. Fishman did not commence the personal injury suit until 16 months after the accident, and did not obtain service on the driver defendant for more than 10 months after filing the complaint. He also made a settlement demand of $250,000 on the driver’s insurer when the insurance coverage was $1 million. Shortly before trial, after Fishman told Brooks that he could not win if he went to trial, Brooks agreed to settle his personal injury claim for $160,000. The client sued the attorney for malpractice. The jury found for clients and the attorney appealed.
Issue: Whether the trial court properly admitted the testimony of an adjuster and tort lawyer as to liability and causation?
Ruling: The court affirmed the lower court’s holding. It found that expert testimony from an experienced tort lawyer and an experienced claims adjuster as to reasonable settlement value of underlying claim was properly admitted, and that
evidence of the fair settlement value of the underlying claim was admissible to prove not only Fishman’s negligence but also that his negligence caused a loss to Brooks. Id. at 648.
Lesson: An attorney is liable when he causes a client to settle a claim for an amount below what a properly represented client would have accepted. The court states that the typical case of malpractice liability for an inadequate settlement involves an attorney who, having failed to prepare his case properly or lacking the ability to handle the case through trial (or both), causes his client to accept an unreasonable settlement.
EDITOR'S NOTE: With our thanks to Westlaw, Thomson Reuters for permitting the case hyperlink.
The use of experts to prove the settlement value of a case in order to prove legal malpractice damages is inherently speculative and other states have rejected this approach. Texas courts, for example, have generally resisted any efforts to modify the client's burden of proving the "case within the case," i.e., proving that the client would have had a better result at trial if the case had been properly tried -- not just a chance at a better settlement. A damages measure based on reduced settlement value (1) unjustifiably presumes the adverse party in the underlying case would have agreed to settle for amount that the expert considers reasonable, and (2) allows recovery under the "loss of chance" theory, which Texas courts have rejected. (The loss of chance theory would allow recovery for malpractice that reduced the chance of success from 30% to 20%, even though in both cases the client would not have prevailed at trial.) See, e.g., Keck, Mahin & Cate v. National Union Fire Insurance Co., 20 S.W.3d 692 (Tex. 2000) (to prove damages due to allegedly excessive settlement, plaintiff must show that if case had been tried with a reasonably competent, malpractice-free defense, judgment amount would have been less than actual settlement); Kramer v. Lewisville Memorial Hospital, 858 S.W.2d 397 (Tex. 1993) (rejecting loss of chance doctrine for medical malpractice cases and observing that if applied to legal malpractice cases the doctrine would allow an unsuccesful litigant to sue for damages if "he or she had a less than 50 percent chance of winning, but is able to adduce expert testimony that his or her lawyer negligently reduced this chance by some degree.")
New Jersey falls into the Fishman v. Brooks (above) camp and takes a similar approach on the subject matter of expert testimony, when it come to putting a value on an underlying case. In Kelly v. Berlin, 300 NJ Super. 256 (App Div. 1997), the Court was confronted with the issue of what would the reasonable value of an injury have been had it been correctly diagnosed. Here's what the Court said:
"Expert testimony was necessary to determine the fair settlement value of plaintiff's motor vehicle accident claim had plaintiff been aware of his spondylolisthesis condition. Without expert testimony, a jury simply does not have the knowledge, training, or experience to decide the settlement value of plaintiff's claim. While juries may generally determine damages in the ordinary case, the trial court properly concluded that laypersons do not have the knowledge, from their common experience, to evaluate and determine damages in a case of this kind, that is, to determine the difference between the amount plaintiff actually received in his settlement and the amount he would have received had his lower back condition been made known prior to the settlement.
"The many factors that go into a settlement are not within the knowledge of the average juror. An expert in the settlement of claims, such as an experienced torts attorney or an experienced claims adjuster, is necessary to explain the various factors which are taken into consideration in the settlement of a case of this kind. Such an expert could explain which factors are relevant and how they affected this matter to enable the jury to determine whether the defendant doctors' negligence caused plaintiff to settle for a lower amount than he otherwise would have, and, if so, the amount of damages plaintiff sustained as a result. For example, such expert testimony could render a comparison of similar claims in the area, an analysis of how plaintiff's other injuries would have affected the settlement of his lower back injury, an opinion as to the value of plaintiff's lower back injury in light of its projected severity when the case settled, and an analysis of how legal issues would have affected the settlement amount. See Duncan v. Lord, 409 F. Supp. 687, 692-93 (E.D. Pa. 1976); Fishman v. Brooks, 487 N.E.2d 1377, 1380-81 (Mass. 1986). As the Federal District Court in Jiffy Foods Corp. v. Hartford Accident and Indem., 331 F. Supp. 159, 160 (W.D. Pa. 1971), stated in determining how the reasonableness, or unreasonableness, of a settlement amount would be proved:
"The issue we must resolve is this: may the third party plaintiff, Hartford, offer proof of the reasonableness of the settlement agreement in the Howard case by expert testimony, or is it necessary to in fact present the facts of the Howard case to a jury for its determination of liability and the amount thereof.
"We conclude that what confronts us is a question of the reasonableness of a business decision. What a particular jury in fact would decide as to the liability of Jiffy to Howard or the amount of damages is not particularly material. We are concerned with the soundness of a business judgment to settle particular litigation for a given amount. Such a decision properly requires consideration of available factual information, an understanding of the applicable law, and knowledge of jury verdicts in the forum in which the action is to be tried. These are the tools which the litigator must employ in evaluating any given case. He must determine the reasonable value of the case in view of the risks of litigation. An attorney may decide to settle a case that could have been won, but the fact that it might have been won does not automatically make his settlement unreasonable. Litigation is a complex business requiring the attention of the specialists. The reasonableness of what such specialists do in a given case is the type of technical matter in which the lay jury can be helped by the opinions of experts, for we are dealing with a question not of what areasonably prudent man would do, but what a reasonable prudent attorney would do."
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That being said, and given the abundance of and easy access to jury verdict and settlement reports accumulated over years of experience, why would such objective evidence not be appropriate for experts, such as claims-adjusters-turned-expert witness, to rely upon? With such a firm factual foundation, why would an appropriately qualified expert's opinion on the value of a case (and thus the reasonableness of a settlement in any case) be speculative? Is this not the very type of objective evidence that an expert usually relies upon in coming to his opinions? Isn't such objective evidence made available by commercial vendors (e.g., Westlaw, Lexis/Nexis, etc.) for the very reason to help us make informed judgments on what the reasonable value of a case might be? So why can't an expert in a legal malpractice case use this objective statistical evidence as a factual foundation on which to express an opinion as to the reasonableness of an underlying settlement? With such objective evidence, properly tapered and tailored to any particular fact pattern by the appropriate expert, a fairly reliable conclusion can be reached by the expert, and then accepted or rejected by a fact-finder. That seems to be a much better informed opinion that takes it out of the range of speculation.
Fascinating to see how different states approach the same problem so differently.
Viva la difference!
I don't agree with the ruling in this case. The amount of money other plaintiffs have gotten for their injuries does not necessarily determine what future plaintiffs can also recover. Perhaps I would need a better understanding of what an expert could contribute to the matter in order to agree with the court here.
I agree with the concerns Rachel Morris has with this ruling. The outcome of one setlement does not in any way influence or predict the outcome of another settlement. An expert wittnesses testimony about what the average settlement in a situation like this may shed light on what has happened in the past and give a client a better idea of what to expect or shoot for but it will not accrately predict the settlement at issue. The expert testimony may put a fair settlement value on a case but as long as the settlement agered to is not so far off the fair value or settlemnet amounts agreed to previously, the testimony should not create liability for the attrney for lost settlement value.