Lawyer Malpractice Class #1
Welcome to Hofstra Law School’s course on “Lawyer Malpractice”
This is the first installment of what will be an effort to make available to all law students and lawyers the contents of the course materials which I use in teaching this course at Hofstra University Law School. I have had the privilege and pleasure of teaching this course since 1990. In the process, I've learned a lot about this fascinating and relatively new area of law. I've even gained a few insights into what it's all about. In addition to academics, I've also been professionally involved as an advocate and expert in over a thousand of these cases. Now, it's time to share whatever I may have learned in the process with a larger "classroom". Why?
The aim of this course is simple: to teach law students and lawyers how NOT to practice law. Now with the technology of this blog, and the consequential morphing of the classroom into an online lecture hall with no borders or time limits, my hope remains humble: to do something meaningful that will help make us all better lawyers, if for no other reason than to help restore the faith of too many disappointed clients in our legal and judicial system. Learning about how we commit malpractice and how to avoid it is not limited to a course in law school. Nor should it be left behind once new lawyers go out into the real world. That's why we've gone to the internet. It's here. Whenever you want and wherever you are.
Legal malpractice lawsuits have proliferated in the past couple of decades to the point where it has been called “the tort of the new millennium.” That may well be why it makes sense to learn from the mistakes of others. And that is what we plan to do here. We are going to be studying court decisions which read like short stories of what, why and how not to practice law. But we're going to learn more. For those litigators among us, we are going to learn how to prosecute legal malpractice actions where that's warranted and necessary and how to defend against legal malpractice actions that should not have been brought.
Actually, legal malpractice is a hybrid type of claim that mixes elements of contract law and tort law with an abundant serving of fiduciary duty law. It also throws in to the mix elements of consumer protection law and legal ethics. It has clearly become one of the prominent subdivisions of one of the newest areas of substantive law called “the law governing lawyers”.
Different states have developed their own unique approach to lawyer malpractice. Some states might be characterized as pro-lawyer others pro-client. Still others seem pro-plaintiff (whether one is a client or some third party who is outside of the traditional client-lawyer relationship) or pro- defense. Liability insurance is an important driving force in legal malpractice litigation. But the insurance industry is, and should be, essential in helping lawyers learn which professional standards are acceptable and which are not.
There is much debate about many topics in the area of lawyer malpractice. But one thing on which most agree is defining the constituent elements of a legal malpractice claim. In general, here are the elements of the cause of action:
1. An attorney–client relationship (or some other relationship wherein a non-client relies on an attorney and the attorney is aware of that reliance);
2. The relationship gives rise to a duty of care on the part of the attorney which the attorney fails to comply with;
3. That breach of duty is the proximate cause of
4. Actual damages suffered by the plaintiff.
Short of these 4 constituent elements of the cause of action for legal malpractice, the debate rages:
What is an attorney-client relationship? What is the scope of the relationship? Who is entitled to rely on an attorney even though they are outside of the relationship? How to define the duty? Does the duty fall within the scope of the relationship? Can a duty that is provided in, say, the Rules of Professional Conduct be enforced in the setting of a legal malpractice law suit? Does the contract statute of limitations apply or the tort statute? Is the fiduciary duty statute of limitations any different? Does that apply in all legal malpractice cases? How do we define proximate cause? Is it “but for” or is it “substantial factors” or something else”? How do you prove or disprove proximate cause? What’s a “case within a case” anyway”? How do you prove what would have happened in the case out of which the legal malpractice arises? How do you prove what would have happened in a non-litigation (transactional) matter if the lawyer wasn’t professionally negligent?
And these are just some of the questions, for starters. So, where to start is the question. If you choose to read only one case throughout this entire course, here’s where you should begin: Probably one of the oldest and one of the few legal malpractice cases decided by the United States Supreme Court.
Savings Bank v. Ward, 100 US 195 (1880).
Student feed back is important. That's why we have the ability to post comments to this lesson. Please feel free to do so. In that way, we can have discussions on what I hope will be helpful to you.
Welcome aboard!
Prof. W.
PS If you prefer not to post publicly, feel free to contact us. There's a "Contact Us" box for your convenience, on the margin to your left.
Is the Savings Bank v. Ward case still good law?
I would venture to say that almost every state has some privity requirement between lawyer and client as part of its law, to some extent. For many years it was the majority rule and it may still be. I've noticed that some states enforce a privity requirement more stringently than others. New York and Illinois are good examples--both "very privity" states. In some states, privity has been rejected entirely, such as New Jersey where an adverse lawyer can be held liable to an adverse party. For example, we will study a case where the attorney for the seller of real estate was found liable to the purchaser of property. That's really the antithesis of privity. In other states, there's a combination of some cases that require privity others not. You will see this latter alternative by looking at how many different ways a non-client is able to sue a lawyer. We'll learn about those in a few weeks. Then, you have the Restatement of Law Governing Lawyers, §51 Duty of Care to Non-Clients. So, to answer your question: is Ward still good law? The answer is a definitive yes except in those case where it is a definitive no!
I hope I haven't confused you. Keep the comments and questions coming!
Prof. W.
In cases where an attorney for the seller of real estate is sued by the buyer of that real estate, would the claim have to be something egregious like misrepresentation or fraud?
Cases of a buyer of real estate suing the seller's attorney are very unusual but one NJ case made a big splash when the Court permitted that to happen. That case is Petrillo v. Bachenberg, 139 NJ 472 (1995). When you think of it a case like that really turns the adversary system of law on its head. Why should the adverse attorney have a duty to the adverse client, especially if the client is going to be represented by their own attorney who should protect the client? Protect the client from what is the question. Under what circumstances does an adverse attorney have a duty to the adverse client? It is, as you quite correctly suggest--in cases of misrepresentation, when the adverse client reasonably relies on the seller's attorney's misrepresentation and the seller's attorney reasonably expects that the adverse client will so rely. We'll be talking alot more in the weeks ahead about this very scenario and how the law has developed to the extent where lawyers have duties to adversaries. On the other hand, there are others who argue that this is not surprising at all. Just look at the Ward case carefully and see what are the two exceptions to the privity rule? Those two exceptions answer your question perfectly and explain why there does not have to be an attorney client relationship for the buyer to sue the seller's attorney.
Good question.
Prof W.
In regards to Savings Bank v. Ward--the case that you asked us to comment on--I did not really see any novel principles of law. It seems to stand for the general principle that you mentioned in class: in order to be held liable for malpractice, a plaintiff must establish privity with the defendant lawyer. In the case, only the borrower, who requested the lawyer's opinion of the title report, and not the lender, had a legal relationship with the lawyer. Relying on other people's appraisals is one of the reasons lenders got the economy into the current financial morass. The lender should have had its own lawyer examine the title before making the loan.
Yacov:
Read again. I see very novel principles. Like the exceptions to the privity rule. And what about 3rd party reliance on the lawyer's work? What's novel is when you apply these principles to the setting of lawyer malpractice. Now that's exciting. Just wait and see.
Like I said in the comments on the post before the link to the Ward case. If you choose to read no other case throughout the semester (not a good idea), read Ward. You'll see at the end of the semester that every innovation in the law of lawyer malpractice is hinted at in the words of Ward. It's almost a prophetic decision.
Prof. W.
With regard to attorney client relationships, would you say that fearing liability to third parties prevents attorneys to some degree in acting zealously for their own clients?
There should be no fear of liability, if the lawyer complies with what I view to be his/her very first fiduciary duty--buying adequate professional liability insurance. My feeling is that like continuing legal education, legal malpractice insurance should be mandatory!
If you buy enough insurance (and it is affordable), then you have thus protected your client first and foremost from what we can all be guilty of--being human. And from time to time making honest mistakes, which might cause damage to a client.
In keeping with the essence of the lawyer's fiduciary duty, we must protect our clients first. Before we protect ourselves! (Believe it or not).
What do you think?
Prof W.
It seems to me the case is upholding the sanctity attorney-client relationship. The rule of law in determining legal malpractice seems to be combining the principles of tort, contracts, and fiduciary duty. Although the lender was injured they failed to satisfy the privity requirement. It seems, if this were not the rule of law, the effects stemming from the malpractice of a lawyer to a client would be ever-reaching.
While protecting our clients interests should be a top priority, our own interests as attorneys should be a close second. The legal community as a whole also needs protection from those within who choose to intentionally deviate from legally permissible behavior, such as filing frivolous lawsuits.
Mandatory insurance would certainly be a great way of ensuring adequate protection of both interests, however, I am concerned that a few members of the bar who do have insurance might collude with some clients to "extort" from insurance companies recoveries that might have been doubtful in the "blown" underlying case. I'm hoping that in the following classes we take up this issue to see how it would be handled and how ethical lawyers are protected from those who are not.
A few additional thoughts on Savings Bank v. Ward, 100 U.S. 195 (1880). As a matter of initial impression, it appears as though the bank failed to exercise their own due diligence. A mortgagor could potentially end up being an adverse party to the mortgagee bank. Therefore, one would imagine that the bank (as they are now occasioned to do) would do their own research pertaining to the mortgagor's solvency and/or title. If an individual approached me and asked for a large sum of money and expressly agreed to transfer to me their car in case they defaulted, I would not rely upon any "third-party" representations regarding the borrower's ability to do the same. It would consequently be dishonest for me to pass the blame on that "third party" in the event I am left without a viable remedy. The duty here properly belonged to the bank, and liability would have belonged to THEIR attorney in the case that they bothered to get one and the results turned out the same. Poor banking man...
I am not sure if I understand the dissent in Savings Bank v. Ward 100 U.S. 195 (1880). Under the dissent, a lawyer would be liable to a third party relying on the lawyer's work. The basic principle is that only those who enter in contract have the right to recover. There are exceptions to that rule: cases where fraud and collusion are alleged and proved, or where there are acts of negligence being imminently dangerous to the lives of others. If the dissent isn't arguing that it falls within one of these exceptions, then what is the justification in which the third party should be liable? If it's just the third party's loss, then wouldn't there be no point at which such actions would stop?
In response to Jason Hake:
I believe I understand your example with the car, but I don't think comparing an unnamed "third-party" is particularly helpful in this case. I agree with you when you say that you would not rely upon any third-party representations in regards to the sale of the car. I imagine many would agree. But if the facts were more like those in Savings Bank v. Ward, it might change the minds of some people. Let's say the third-party making representations about the sale of the car was a lawyer. I know the public sentiment about lawyers these days isn't particularly positive. However, I would venture to say that many would still trust a lawyer's word about legal issues.
In Savings Bank v. Ward, if the defendant lawyer was just a layperson making a representation about the title, there would not be a case. I believe one of the issues in this case was the way lawyers are trusted and held to their word due to their supposed (or expected) knowledge and expertise in a certain area of law.
Hey Nicole:
I agree with your sentiment that a lawyer's representations should be held to a higher standard. Notwithstanding, I feel as though the Bank should have inquired (perhaps through an attorney of their own) as to the borrower's solvency and title. I would never rely upon the representations of a potential adversary's attorney, notwithstanding the higher standard they should properly be held to. If I were to rely upon a potential adversary's attorney to my detriment, I would feel dishonest passing the blame on them. However, I think you've pointed out a major flaw in my argument.
I found it interesting that Justice Clifford pointed out that, "Attorneys-at-law are officers of the court, admitted as such by its order; but it is a mistake to suppose that they are officers of the United States, as they are neither elected nor appointed in the manner presribed by the Constitution for the election or appointment of such officers" Savings Bank v. Ward, 100 U.S. 195, 198. Is it the case then that attorneys holding such elected positions as District Attorney or Attorney General would be held to a higher standard of care so that there need not be privity between an injured party and the elected attorney where reliance causes actual damages? What about attorneys that work in the DA's or AG's office but were not themselves elected? Would it be the same with Judges who were either eleceted or appointed?