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

Draper v. Brennan, 142 N.H. 780 (1998)

N.H.: Underlying  Employment Litigation

Student Contributor: Jason W. Hake

Facts: A former client commenced a legal malpractice action against the law firm that had previously represented him against a bank. Although the law firm had facilitated a settlement agreement in the underlying litigation, the former client alleged that the loss of his health insurance coverage under the settlement agreement was due to the law firm’s negligence in negotiating and attempting to have the settlement agreement enforced. In particular, the former client had expressed concerns over certain language and ambiguities in the agreement and believed that he and his family would be provided with free medical insurance until he reached the age of sixty-five (65) under the same. However, when the law firm had attempted to enforce the settlement agreement, the Court held that the bank could require the former client to pay a portion of his own medical insurance premiums. Although the client was notified in 1991 that he would be required to pay a portion of his own medical insurance premiums, he waited until 1994 to commence a legal malpractice action against his former attorneys. The trial court determined that the former client’s claims were barred by the applicable statute of limitations and the former client appealed.

Issue: Was the former client’s legal malpractice claims barred by the applicable statute of limitations?

Ruling: Yes. The former client’s claims that arose from the date of the settlement in 1998 were barred by the applicable six-year statute of limitations found in the pre-1986 New Hampshire statute. The latest possible date for the accrual of the former client’s claims was when he was advised that he would have to pay a portion of his medical insurance premiums. However, this claim was barred by the amended three-year statute of limitations found in the applicable amended New Hampshire statute. As a result, the determination of the trial court was affirmed.

Lesson: This is a basic statute of limitations scenario. Do not rely upon ambiguities in the law to bolster your time to commence an action. Seek legal assistance as soon as you feel you have been wronged. 

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Martos v. Concilio, 427 Pa. Super. 612; 629 A.2d 1037 (1993)

Student Contributor: Christopher Henn

PA Underlying divorce- property settlement agreements

Facts: The plaintiff retained defendant to represent him in his divorce. Plaintiff and his former spouse agreed to a property settlement. The parties then executed a new property settlement agreement that modified the first. The second settlement resolved property distribution and custody of their children. Alimony, debt repayment and other obligations were submitted for judicial determination. The trial court appointed a master to make recommendations after the property settlement agreement was incorporated by court order. Following the master’s recommendations, plaintiffs financial burden exceeded $250,000. Dissatisfied, the Plaintiff brought a malpractice suit against defendant attorney alleging inadequate representation. The Plaintiff was especially displeased that the terms reached by the first settlement agreement had been renegotiated in the second settlement agreement.

Issue: Whether the plaintiff was required to allege fraud in the inducement of the property settlement agreement.

Ruling: The court distinguished its prior holding in Collas v. Garnick, 425 Pa. Super. 8 (1993) by noting that there were two separate and distinct actions in that case; “[t]he prior action in which they signed the release had been completely settled; the action which they planned to bring against the seatbelt manufacturer was a separate and distinct action.” Id. at 615.

After recognizing the judicial preference for settlement, the court recited its holding in Miller v. Berschler, 423 Pa. Super. 405 (1993) as dispositive of the issue;

a party dissatisfied with the settlement agreement can only seek redress if it can establish that it was fraudulently induced into agreeing to settle, and it is incumbent on the client to plead with specificity fraud in the inducement.

The Lesson: Once a client expressly agrees to settle a dispute he will not be permitted to recover against his attorney on a malpractice claim absent fraudulent conduct by the attorney. However, if the settlement of one dispute serves to prevent subsequent actions against third parties, without the client’s knowledge, the client may be permitted to recover on a malpractice theory.

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Muhammed v. Strassburger, McKenna, Messer, Shilobod and Gutnik
526 Pa. 541, 587 A.2d 1346 (Pa. 1991)

PA Underlying Medical Malpractice Litigation

Student Contributor: Justin B. Lieberman

Facts: Former client sued attorney for legal malpractice after the client was unhappy with the settlement received in the underlying medial malpractice action. In the underlying action clients accepted a settlement offer at a pre-trial conference, and then recanted the acceptance after their lawyer informed the opposing side of acceptance. The opposing side sought enforcement of the settlement and the trial court, at an evidentiary hearing, upheld the settlement, as did the Superior Court on appeal. The clients filed suit against the attorneys. The law firm defended on the following grounds: that the action should be dismissed as the claims were too speculative and settling clients were seeking to relitigate the settlement. The case was brought to the Supreme Court of Pennsylvania.

Issue: Can a settling defendant sue his/her lawyer for malpractice although they agreed to settle the underlying claim?

Ruling: A client cannot bring a malpractice claim against a former attorney because of their later dissatisfaction of a settlement to which they agreed,  unless they can show some fraudulent conduct by the attorney  in advising the client on accepting the settlement. Here, the clients, were dissatisfied not able to renegotiate their settlement after they had already voluntrarily accepted an offer. They were thus, not fraudulently induced to settle by their attorney.

We foreclose the ability of dissatisfied litigants to agree to settlement and then file suit against their attorneys in the hope that they will recover additional monies.

Lesson: An attorney may not be held liable when a client later decides they are unsatisfied with a settlement they willingly agreed to at a prior time, unless the attorney fraudulently induced or intentionally misadvised the client to accept the settlement.

Editor's note: This was the law in PA for many years. The stringent rule in this case, of barring a malpractice suit against the lawyer who represented the settling party-- has  since  been substantially limited  and liberalized.

See, e.g., McMahon v. Shea, 441 Pa. Super. 304, 657 A.2d 938 (1995).

The holding in Muhammad has been rejected in New Jersey (Ziegelheim v. Apollo, 128 N.J.250, 607 A.2d 1298 (1992) and Connecticut (Grayson v. Wofsey, Rose, Kweskin & Kuriansky, 231 Conn. 168, 646 A.2d 1994).

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Newell v. Hudson,
376 N.J. Super. 29, 868 A.2d 1149 (App. Div. 2001)

Student Contributor:  Natalie Resto

NJ Underlying matrimonial action

Facts: Hudson, an accountant, retained Newell as her attorney to defend her in a matrimonial action filed by her then husband. After lengthy negotiations and discussions with Newell, Hudson signed an Interspousal Agreement, which provided that she would receive monthly limited payments for four years based upon his income plus a discretionary bonus. Before Hudson signed the agreement, Newell explained to her the concept of alimony, and advised her that the amount she received might depend, in part, on the marital standard of living. After entering into the agreement Hudson and her husband each testified that they understood and voluntarily consented to the terms of the agreement.

About a day later, Hudson contacted Newell stating that she felt “pressured and intimidated by her husband’s counsel, the Judge and Newell,” and called into question his preparation and legal representation. Newell later filed a suit against Hudson for failing to pay outstanding legal fees. She filed a counterclaim alleging that Newell had committed legal malpractice by, among other things, failing to serve interrogatories on her husband, and failing to secure documents reflecting the status of certain investment accounts.

Issue: Can a litigant, dissatisfied with her decision to enter into a settlement, bring a claim for legal malpractice alleging that she actually had not understood the agreement, and was forced to enter into it, or will she be judicially estopped from bringing such a claim? 

Ruling: The court barred Hudson’s legal malpractice claim:

Hudson’s self-serving behavior is precisely the type of inconsistent judicial position-taking that the doctrine of judicial estoppel is designed to prevent. To permit this litigant to assert a contrary position in the malpractice action presumably to bolster her counterclaim in an effort to defeat Newell’s legitimate claim for counsel fees would result in a miscarriage of justice and impugn the integrity of the judicial process. Id. at 47.

Lesson:  New Jersey does not allow litigants to sue for legal malpractice based on settlement agreements that were entered into voluntarily, freely, and willingly in the underlying action.  Superficial allegations of duress and intimidation will not be countenanced by the Court.  Dissatisfaction with a settlement agreement is not grounds for a legal malpractice action in New Jersey. 

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