Legal Malpractice Law Review : Professional Responsibility Case Summaries & Commentary : Bennett J. Wasserman : LegalMalpractice.com : Lawyer Malpractice & Legal Ethics

Moores v. Greenberg 834 F.2d 1105, (1st Cir. 1987)

Fed'l Underlying Longshoreman's Act personal injury

Student Contributor: Ryan O'Donnell

Facts: Longshoreman was injured during the course of his employment and was able to collect compensation benefits through his employer. He then retained an attorney to bring a  liability claim against the ship owners. The ship owners allegedly made two settlement offers of $70,000 and $90,000, which the attorney did not communicate to the client. The third party liability claim was subsequently lost, and the client brought this malpractice claim against the attorney claiming that he would have accepted the settlement offer had he been informed of it. The attorney was found to be liable for $12,000, and he appealed the verdict claiming that the settlement offers were too meager to be relayed.

Issue: Is a lawyer required to communicate all reasonable settlement offers?

Ruling: Yes. A lawyer has a duty to use a degree of skill, diligence, and judgment necessary to the practice of his profession and which others who are similarly situated ordinarily possess. “As part and parcel of this duty, a lawyer must keep his client seasonably appraised of relevant developments, including opportunities for settlement.” The court implies that an attorney might not have a duty to communicate offers only when they are “so divorced from a realistic appraisal of the merits,” and unresponsive to the upside and downside of the litigation.

Lesson: A lawyer has a duty to keep his client informed of relevant developments, including opportunities for settlement. Lawyers are obliged to promptly communicate to the client settlement offers and all matters that may be relevant to the client’s appreciation and understanding of the matter.

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Conklin v. Hannoch Weisman,  281 N.J.Super. 448 (App. Div. 1995)

Student Contributor: Maninder (Meena) Saini

NJ Underlying failure to explain contract terms leading to loss of equity in realty.

Facts: A New Jersey partnership, Conklin Farms (plaintiff), was represented by Kemph and his law firm, Hannoch Weisman, P.C. (defendants) in the sale of undeveloped land. Initially, plaintiff used that land for mining, but due to rezoning laws, the plaintiff sold the land to a developer because the value of their land increased significantly. Through advice from the defendants, the plaintiff agreed to subordinate the mortgage to institutional construction-money mortgages. The sale closed and the development project failed. The property was foreclosed by the mortgage lenders and left no equity for the plaintiff. In addition, the plaintiff’s buyers and guarantors all filed for bankruptcy, leaving the plaintiff with a substantial loss. The plaintiff then filed a lawyer malpractice lawsuit claiming that the defendants’ explanations to plaintiff of the meaning and risks of the subordination agreement were inadequate and inaccurate.

Issue: Did the defendants adequately inform the plaintiff of the meaning and risks of the subordination agreement?

Ruling: The appellate court held that the defendant was negligent in representing the plaintiffs in connection with explaining subordination and the risks associated with it.

An attorney has a legal duty to explain to their clients the meaning of an agreement and to further warn them of its risks, even if the risks are not reasonably foreseeable. The duty to advise the client fully and truthfully is inherent in the attorney-client relationship.

Lesson: An attorney must always fully and truthfully explain any agreements into which its client is entering. Further, the attorney must alert its clients of all risks so they can make an informed decision. This rule is even more important whenever the client raises any doubt as to the agreement because the court may instruct the jury to apply a “subjective standard” in deciding the negligence claim; that is, would the plaintiff, not the objective  "prudent person", have declined to enter into the agreement knowing all the risks? This subjective standard is easier to overcome and may be damaging to the attorney’s case.

Note: Make sure to see the NJ Supreme Court decision in this case which held that to prove proximate cause in a legal malpractice case, the negligence of the attorney need be a "substantial factor" in causing the damages. 145 N.J.395 (1996)

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With this post, Legal Malpractice Law Review  inaugurates a new section called "Brain Teasers".

 All too often, common transactions we  come across  give rise to complicated legal malpractice (and ethics) issues. With "Brain Teasers" we challenge you to see the issues and discuss how you would approach their resolution. Feel free to post  and share with all of us your comments.

If you have a "Brain Teaser" to share, please email it to us at: experts@legalmalpractice.com. Make sure to use fictitious names. And we'll post it so that everyone can benefit. 

And now, Bill Freivogel, shares with us the Inaugural "Brain Teaser":

Eighteen months ago Tom represented the borrower in a loan transaction. Tom’s client is now in deep trouble and may be headed for bankruptcy court. One of the bankruptcy lawyers in the firm, Bob, while reviewing the loan transaction, notices that the remedies opinion in Tom’s closing opinion did not contain a critical provision dealing with bankruptcy. Bob goes to Tom and asks whether that omission was intentional. In looking at his notes Tom quickly realizes that his assistant had misinterpreted one of his edits. This could further complicate life for Tom’s already shaky client and for Tom’s law firm. Tom goes to his firm’s general counsel, Barbara and asks for guidance. Barbara pulls in another partner, Jerry, for a second opinion about what should have been done.

While the above scenario raises many issues, here are a few. First, what, if anything, must Tom tell his client? The trickier question is when must Tom tell his client. Second, are any of the communications that have just occurred within Tom’s law firm among Tom, Bob, Bill, Barbara, and Jerry, protected by the attorney-client privilege? This second issue will almost certainly arise if either Tom’s client or the lender sues Tom and his law firm for the mistake. Last, when, if ever, should the law firm notify its malpractice carrier or broker. What should the notice say?

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