by Jessica Kelly
Former clients of attorneys frequently assert Chapter 93A claims in legal malpractice cases, but they do not often win Chapter 93A damages. In Massachusetts, a plaintiff, in extreme circumstances, may recover under Chapter 93A as a result of an attorney’s unfair and deceptive conduct. It is unclear, however, whether a former client can recover Chapter 93A damages he or she could have recovered in an underlying case in a subsequent legal malpractice action. Available Massachusetts case law, including an unreported decision on a motion in limine by the Superior Court in Chafetz v. Day Pitney LLP, et al., No. SUCV 1484-03597 (Mass. Super. Ct. May 25, 2018), suggests that lost punitive damages, such as those available under Chapter 93A, are not recoverable in a professional negligence case.
I. General Law on Damages Recoverable in Legal Malpractice Actions
Legal malpractice claims represent a hybrid of contract and negligence causes of action, yet recovery is generally limited to tort-based damages, e.g. direct and consequential damages for the reasonably foreseeable losses plaintiff suffered as a result of the attorney’s negligent conduct. Plaintiffs often try these claims as a “case-within-the-case,” having to prove that they would have obtained a better outcome in the underlying matter had the attorney not breached the standard of care. Plaintiffs also have to prove both the damages they would have recovered, and the collectability of those damages.
Direct damages are those reasonably flowing from the tortious conduct, such as the value of a lost settlement or judgment or the attorneys’ fees incurred to fix an attorney’s mistake. Consequential damages are those losses that occur as a result of the direct loss, such as damage to reputation, lost profits and other economic losses. The economic loss doctrine, which usually precludes recovery for purely economic losses in negligence actions, is inapplicable to legal malpractice claims.[i]
Plaintiffs must also prove that their damages are more than speculative and, if relevant, that they would be recoverable in the underlying action. Emotional distress damages are probably not recoverable in a Massachusetts legal malpractice action absent exceptional circumstances (such as a client being imprisoned as a result of attorney negligence), because emotional distress is usually not a reasonably foreseeable result of an economic loss.[ii] As discussed in detail below, punitive damages and attorneys’ fees incurred to prosecute a malpractice action are also not recoverable, unless the former client can also prove that the attorney’s conduct violated Chapter 93A.
II. Recovery of Legal Malpractice Damages Under Chapter 93A
Chapter 93A, which protects consumers and businesses against unfair and deceptive business practices, applies broadly to the conduct of any business engaged in trade or commerce. Legal malpractice plaintiffs often plead a Chapter 93A claim on the assumption that the threat of treble damages and attorneys’ fees can lead to quicker and more favorable settlements. The reality, however, is that it is rare for a legal malpractice plaintiff to recover damages under Chapter 93A. This is because ordinary negligence or breach of contract alone does not rise to the level of unfair and deceptive conduct. To recover under Chapter 93A, evidence of something more, such as self-dealing or fraudulent acts, must exist.[iii] It is also unlikely, albeit unsettled, that plaintiffs can recover lost Chapter 93A damages in a subsequent malpractice action.
A. Direct Claims Against Attorneys For Violation of Chapter 93A
The ability of a plaintiff to bring a direct claim under Chapter 93A in a legal malpractice action depends on whether the alleged conduct of the defendant attorney occurred within trade or commerce and whether the conduct is unfair or deceptive. Courts have held that “the practice of law constitutes trade or commerce for purposes of liability under [Chapter] 93A,” but the outcome is very fact dependent.[iv]
The closer question is whether the attorney’s conduct was actually unfair or deceptive. An attorney will only be directly liable for violation of Chapter 93A for conduct involving “dishonesty, fraud, deceit or misrepresentation.”[v] There are few decisions where a Massachusetts court has allowed a claim against an attorney to proceed past a dispositive motion[vi] and even fewer where the attorney was actually found liable under Chapter 93A.[vii] This limited set of case examples suggests, however, that conflicts of interest, financial misconduct and dishonesty are common themes for successful direct Chapter 93A claims regarding attorney misconduct.
B. Claims to Recover Lost Chapter 93A Damages
Although there is no Massachusetts appellate precedent on the issue, legal malpractice plaintiffs are likely barred from seeking punitive damages that they would have recovered in the underlying case absent their attorney’s negligence. Stated differently, it is unlikely that plaintiffs can seek from a former attorney in a legal malpractice action their missed opportunity to recover under Chapter 93A in the original litigation. The rationale was set forth in a motion in limine decision in a recent Superior Court action, Chafetz v. Day Pitney LLP, et al.
In Chafetz, the former clients sued two attorneys and two law firms alleging negligence in the handling of a lawsuit against the builder of the former clients’ home and in the builder’s eventual bankruptcy. Specifically, in relevant part, the former clients alleged that the defendants failed to file a non-dischargeable Chapter 93A claim in the builder’s bankruptcy action. The former clients claimed that the “lost potential punitive damages” were a “‘reasonably foreseeable loss’ caused by [their attorneys’] negligence and thus recoverable in the malpractice action.”
On its face, the former clients’ claim made sense, assuming they could prove that the defendant in the underlying matter actually violated Chapter 93A. If it turned out that the attorneys were negligent in not bringing the Chapter 93A claim, the former clients’ missed opportunity to bring such a claim was an actual harm. The former clients’ ability to pursue damages for that harm is founded on the notion that plaintiffs in tort actions should be compensated “for all of the damages proximately caused by the defendant’s negligence.”[viii]
The position that lost punitive damages are compensable in a legal malpractice action, however, is the minority view. This view was stated in Jacobsen v. Oliver, 201 F. Supp. 2d 93, 102 (D.D.C. 2002) where the United States District Court for the District of Columbia held that the former clients could assert claims for “lost punitives” in their legal malpractice action. The Court held that the policy reasons for compensating the plaintiffs for their actual harm caused by their attorneys’ negligence was more important than the policy reasons for shielding attorneys in a subsequent malpractice case from lost punitive damages. The Court also noted that “[a]ttorneys who appreciate that they will be liable in malpractice actions for ‘lost punitives’ will be motivated to exercise reasonable care in investigating or defending punitive damages claims.”[ix] Courts in other jurisdictions have taken similar positions.[x]
The Chafetz Court, however, took the majority view and granted Defendants’ motion in limine to preclude the recovery of punitive damages and/or any mention of them during trial. The Court held that plaintiffs could not seek the lost Chapter 93A damages because the public policy behind the statute is to punish and deter the wrongdoer, e.g. the defendant in the underlying case, and thus, would not be served by making the attorney defendants pay them. The Court also held that the Legislature enacted Chapter 93A to encourage the wrongdoer to settle and take responsibility early on for unfair and deceptive behavior. The Court wrote that the “public policy goal is not fostered by permitting recovery of lost punitive damages in a negligence case against a lawyer.”
The Chafetz Court relied, in substance, on three cases. The first was Kraft Power Corp. v. Merrill, 464 Mass. 145, 159 (2013), where the Supreme Judicial Court held that a plaintiff cannot seek Chapter 93A damages against a defendant who becomes or is deceased. This is because Chapter 93A “can no longer achieve the goals of punishing a defendant or deterring him from future misconduct when the wrongdoer has died.” While not on point to the circumstances in Chafetz, the Kraft case emphasizes that the purpose behind Chapter 93A is no longer served when the punitive and deterring effects of Chapter 93A are no longer directed at the actual wrongdoer.
The second case was Dwidar-Kotb v. Altman & Altman, LLP, NO. MICV2011-04614, 2013 LEXIS 840 (Mass. Super. Ct. Mar. 13, 2013), another Superior Court decision. In Dwidar-Kotb, the former client sued his lawyer for negligence arising from an employment matter in which the former client had sought, among other claims, damages under the Massachusetts Wage Act, which, like Chapter 93A, allows for the recovery of punitive damages. The Court held that the plaintiff could not seek punitive damages under the Wage Act in the subsequent malpractice action, holding that the “purpose of awarding punitive damages would not be accomplished or served in a malpractice claim against attorneys.” In other words, where the attorneys were not responsible for the Wage Act violations, but rather for the failure to bring the Wage Act claims, the purpose of imposing punitive damages no longer existed.[xi]
The third case was Ferguson v. Lieff, Cabraser, Heimann & Bernstein, LLP, 69 P.3d 965 (Cal. App. 4th 2003), in which the California Supreme Court disallowed the recovery of lost punitive damages in a legal malpractice action. In Ferguson, the Court focused on, among other things, the “moral determination” involved in the award of the punitive damages and that such a determination is a highly subjective decision for the judge or jury in the first instance. As such, the Chafetz Court noted that it would be speculative for it to determine whether and what the Bankruptcy Court may have awarded as punitive damages in the underlying case assuming that the former clients proved that the attorney defendants had been negligent in not bringing the Chapter 93A claim.
The Chafetz Court distinguished the case before it from cases where the legal malpractice plaintiff was a defendant in the underlying case who then sought to recover the punitive damages awarded against him or her, which the plaintiff alleges would not have been assessed but for attorney negligence. Other courts have not made this distinction and have cited to cases involving both situations interchangeably.[xii] From a practical standpoint, seeking to recover punitive damages against an attorney that were actually assessed in an underlying action, is much less speculative than seeking to recover damages that may or may not have been awarded in an underlying action. Perhaps the Chafetz Court left the door open for such claims in Massachusetts because of this significant difference.
In the end, the Chafetz Court entered an order precluding plaintiffs from seeking lost treble damages under Chapter 93A as part of their damages in the legal malpractice action. The decision is in line with the majority view and the purpose of Chapter 93A. Punitive damage are not compensatory, but rather provide the plaintiff a windfall “to punish and deter the wrongdoer”.[xiii] Therefore, lost punitive damages should not become compensable in a later malpractice action.[xiv]
In sum, legal malpractice plaintiffs can recover for their actual damages, assuming they are not speculative and can be proven to a reasonable certainty. Their ability to recover under Chapter 93A, however, is very limited, unless the lawyer’s own conduct was unfair or deceptive. It is also likely that Massachusetts will follow the rationale of Chafetz and Dwidar-Kotb in regards to the recovery of lost punitives in a legal malpractice action if and when that issue reaches the appellate level.
Jessica is a litigation partner at Sherin and Lodgen LLP, where she assists clients in a variety of industries with complex business litigation, including finance, biotech, and national retail. She also represents lawyers and law firms in professional liability malpractice disputes and disciplinary investigations before the Massachusetts Board of Bar Overseers (BBO).
[i] See Clark v. Rowe, 428 Mass. 339, 342-343 (1998).
[ii] See Meyer v. Wagner, 429 Mass. 410, 423 (1999).
[iii] See id., at 424.
[iv] Compare Brown v. Gerstein, 17 Mass. App. Ct. 558, 571 (1984) (plaintiffs satisfied trade or commerce element because attorney represented them in the context of commercial real estate business), with First Enterprises, Ltd. v. Cooper, 425 Mass. 344, 348 (1997) (internal business dispute was not trade or commerce for purposes of Chapter 93A).
[v] Poly v. Moylan, 423 Mass. 141, 151 (1996).
[vi] See Blast Fitness Grp., LLC v. Dixon (In re Blast Fitness Grp., LLC), Ch. 7 Case No. 16-10236-MSH, Adv. No. 18-01011, 2019 WL 137109 (D. Mass. Jan. 8, 2019) (court held that a breach of duty of loyalty to clients was sufficient to state a claim for violation of Chapter 93A); Baker v. Wilmer Cutler Pickering Hale and Dorr LLP, 91 Mass. App. Ct. 835 (2017) (allegations that company’s lawyers participated in unlawful freeze out of minority members stated a claim for violation of Chapter 93A); Brown v. Gerstein, 17 Mass. App. Ct. 558 (1984) (trier of fact should have been allowed to determine whether attorney’s misrepresentation that he had filed complaint on behalf of clients to stop foreclosure violated Chapter 93A). Of course, the more egregious allegations of lawyers violating Chapter 93A may never appear in court decisions because those cases often settle early in the litigation.
[vii] See Sears, Roebuck & Co. v. Goldstone & Sudalter, P.C., 128 F.3d 10, 19 (1st Cir. 1997) (affirming judgement on Chapter 93A where attorney engaged in illegal billing practices); Guenard v. Burker, 387 Mass. 802, 809-810 (1982) (affirming finding that attorney’s reliance on unlawful fee agreement held to be a violation of Chapter 93A); Walsh v. Menton, No. 932738H, 1994 WL 879470, at *4 (Mass. Super. Ct. Sept. 23, 1994) (failing to apprise plaintiff “of the status of her account and to return her money upon demand was unfair as a matter of law”).
[viii] Jacobsen v. Oliver, 201 F. Supp. 2d 93, 102 (D.D.C. 2002) (internal quotation omitted).
[ix] Id. at 102.
[x] See also Haberer v. Rice, 511 N.W.2d 279, 288 (S.D. 1994); Hunt v. Dresie, 740 P.2d 1046, 1057 (Kan. 1987); Scognamillo v. Olsen, 795 P.2d 1357, 1361 (Colo. App. 1990); Elliott v. Videan, 791 P.2d 639, 645 (Ariz. Ct. App. 1989); Herendeen v. Mandelbaum, 232 So. 3d 487, 492 (Fla. Dist. Ct. App. 2017), review denied, No. SC18-132, 2018 WL 3239289 (Fla. July 3, 2018).
[xi] The same rationale would likely apply to bar claims seeking “lost punitives” in malpractice actions where punitive damages were potentially recoverable in the underlying case under the Massachusetts wrongful death statute, M.G.L. c. 229, or the Massachusetts employment discrimination statute, M.G.L. c. 151B.
[xii] See, e.g., Jacobsen, 201 F. Supp. at 100.
[xiii] See M. O’Connor Contracting, Inc. v. City Of Brockton, 61 Mass. App. Ct. 278, 285 & n.12 (2004) (holding that punitive damages against municipality “punishes only the taxpayers, who took no part in the wrongful conduct, but who nevertheless may incur an increase in taxes or a reduction in public services as a result of the award”).
[xiv] According to the Chafetz docket, the case settled shortly thereafter and thus, the appellate courts will have to wait for another case to decide this issue as binding precedent. Just as asserting a punitive damages claim can hasten settlement, so can removing it from consideration.
by David A. Barry and William L. Boesch
In the midst of a law firm’s handling of a case, a client announces that he believes the firm may have mishandled the matter and that he has retained separate counsel to evaluate the firm’s work. The client insists that the firm continue to handle the matter because withdrawing now would be prejudicial. He says that if the case turns out badly, he will seek indemnity from the firm for his losses.
The lawyers involved in the case turn to their colleagues for advice. They talk and exchange e-mails with the firm’s managing partner, and with others in the firm who have experience in the subject-matter of the case and in professional-liability matters. The managing partner requests a detailed memorandum explaining how the case was handled and why the now-disputed decisions were made.
If a malpractice lawsuit follows, are these in-firm communications privileged against discovery? The ongoing fiduciary obligation of a firm to a current client, and the potential for conflict between the firm’s own interests and those of a client who threatens a malpractice claim, have prompted judges in a series of cases to hold that in-firm communications such as those described in the example above are not privileged, even if conducted with the express purpose of seeking and obtaining legal advice about the client’s threatened claim. E.g., In re Sunrise Securities Litigation, 130 F.R.D. 560 (E.D. Pa. 1989); Bank Brussels Lambert v. Credit Lyonnais (Suisse), S.A., 220 F.Supp.2d 283 (S.D.N.Y. 2002); Koen Book Distributors, Inc. v. Powell, Trachtman, Logan, Carrle, Bowman & Lombardo, P.C., 212 F.R.D. 283 (E.D. Pa. 2002).
This view, sometimes referred to as the “fiduciary exception” to the attorney-client privilege, was adopted by Judge Gorton of the District of Massachusetts in a 2007 ruling in Burns v. Hale & Dorr LLP, 242 F.R.D. 170, and by Judge Stearns in a brief 2011 decision in Cold Spring Harbor Laboratory v. Ropes & Gray LLP, 2011 WL 2884893.
The RFF Family Partnership Case
In a November 2012 decision, however, Massachusetts Superior Court Judge Thomas Billings joined what may now be a counter-trend in favor of recognizing a privilege for in-firm communications on current-client matters, at least under certain conditions. RFF Family Partnership, LP v. Burns & Levinson, LLP, 30 Mass. L. Rptr. 502 (Mass. Super. Ct. Nov. 20, 2012). See also, e.g., TattleTale Alarm Systems, Inc. v. Calfee, Halter & Griswold, LLP, 2011 WL 382627 (S.D. Ohio Feb. 3, 2011); Hunter, MacLean, Exley & Dunn, P.C. v. St. Simons Waterfront, LLC, 730 S.E.2d 608 (Ga. App. 2012).
Judge Billings’s decision produced an interlocutory appeal which the Supreme Judicial Court has taken for itself to decide (the case is SJC-11371) which as of this writing has been briefed and argued, and is under advisement. As we discuss below, Massachusetts lawyers will watch with interest to see whether the SJC uses this occasion to announce general rules on the subject of in-firm communications. Whether or not the Court does so, lawyers and firms may want to examine their procedures for responding to client disputes.
In RFF Family Partnership, the law firm handled a real estate loan foreclosure that produced a dispute over lienholder priority. The client retained a second lawyer, who sent a malpractice claim letter and draft complaint to the law firm, and demanded indemnification from any loss the client might suffer due to the firm’s alleged failure to detect, report and address the competing liens. The letter prompted an internal meeting at the firm between the lawyers involved in the matter and the firm’s managing partner.
When a malpractice suit was filed more than a year later, the firm took the position in discovery that the in-firm meeting was for the purpose of seeking the managing partner’s legal advice on how to respond to the potential malpractice claim. The plaintiff-client argued that even if this was so, the meeting occurred at a time when the law firm owed the client a fiduciary duty of disclosure as to facts material to the client’s interests, and that this fiduciary duty precluded the firm’s invocation of the attorney-client privilege.
Judge Billings’s Decision
In his November decision, however, Judge Billings observed that the fiduciary exception was originally developed to address situations in which a trustee sought legal advice, at the expense of trust beneficiaries, to guide the administration of a trust. Here, by contrast, the lawyers obtained legal advice at the firm’s own expense and solely for the firm’s protection.
Further, Judge Billings did not see any inherent inconsistency between a lawyer’s ongoing duty to disclose facts affecting the client’s interests—a duty that exists regardless of the lawyer’s decision as to whom, if anyone, to consult—and the reasons for encouraging a lawyer faced with a malpractice claim to seek the advice of another lawyer about how to evaluate and respond to the claim. Judge Billings reasoned that unless facilitating such advice-seeking is somehow perceived as likely to result in the involved lawyer’s deciding to conceal something from the client that he has a duty to disclose, there is no good reason to deny protection to the advice-seeking communications. Indeed, he suggested, it may be in the interests of the client as well as the lawyer that the latter be free to explore issues freely with competent ethics or professional-liability counsel, without the cloud of potential future disclosure.
Thus, the judge upheld in principle the law firm’s invocation of the privilege as to the in-firm communications to the extent they sought or gave legal or ethical advice. However, he found the firm’s discovery responses inadequately detailed and ultimately held that the firm had partially waived the privilege.
The Outside-Counsel Option
If the SJC decides to explore the boundaries of the in-firm privilege in the RFF Family Partnership case, the Court might, of course, adopt the absolutist view exemplified by the two federal decisions cited above, and hold that a firm’s obligations to its client simply bar any potential in-firm privilege. In that event, it will become critical for a firm faced with a potential malpractice lawsuit by a current client to consult with a specialist lawyer outside the firm, and to ensure that the firm’s lawyers understand when such consultation should supplant internal communications among colleagues. Engaging an outside lawyer provides a basis for clearly distinguishing between actually seeking legal advice about the threatened claim and merely discussing the matter as part of the business of running the firm. And since the outside specialist clearly owes no direct or imputed duty to the client, a claim of privilege will not be in tension with such competing obligations.
Establishing an In-House Counsel Role
If the SJC were to uphold Judge Billings’s decision, there may still be many situations in which, for the reasons given above, consultation with outside counsel is the more sensible response to a malpractice threat from a client. But assuming this is not an option for a firm, either in general or in a particular matter, then it will be critically important (under a regime in which in-firm communications may be protected) that the role of the in-house advisor or advisors be clearly pre-established and defined. The firm’s goal should be to give itself a solid basis for arguing that any potential conflict of interests for the lawyers involved in representing the client alleging malpractice should not automatically be imputed to the in-house lawyer or lawyers from whom the involved lawyers seek advice. Rather, the in-house lawyer should be treated as the functional equivalent of an outside attorney for the firm, with whom confidential communications would undoubtedly be privileged.
Large firms may have the ability to create a full-time in-house counsel position and to appoint in that role a lawyer who has no involvement whatsoever in representing the firm’s clients. Smaller firms may be able to establish the role only on a part-time basis, but should do so with similar formality, so that when the in-house lawyer is consulted about the threat of a malpractice claim, it is clear in what capacity her advice is being sought. Choosing a lawyer with particular experience and expertise in professional-liability or ethics matters, and/or providing opportunities for the lawyer to seek special training on such issues, may help to distinguish the role. Referring to the position on the firm’s website will also help to establish it as a matter of record.
Further Issues and Options
It may be useful, if it can be done gracefully, to refer to the in-house counsel role in a firm’s standard engagement letter, and to explain that lawyers in the firm may from time to time seek internal legal or ethical advice on a confidential basis. The in-house lawyer should have a designated matter number for recording her time spent on consultations and investigations, and no such activity should be recorded or billed by anyone to the client’s matter. Likewise, e-mail and other documents should, when created, clearly signal that they relate to the internal consultation or investigation rather than to the client’s matter itself, and strict segregation between the files should be maintained.
Mere creation of an in-house counsel position will not prevent practical difficulties; they are inevitable. For example, in the part-time arrangement likely to be suitable to smaller firms, since the in-house lawyer cannot be consulted as such where she herself is involved in representing the client alleging malpractice, one or more backup lawyers may need to be designated for such contingencies. And judgments will still have to be made as to when a particular issue leaves the realm of everyday conversation between colleagues, and graduates to the actual seeking of legal advice from in-house counsel.
Finally, whether consultation about a potential malpractice claim occurs within a firm or with outside counsel, the lawyer or lawyers involved in the ongoing representation of the client have an ongoing duty—one not altered by the fact of the consultation, or by whether or not it may ultimately be deemed privileged—to provide the client with information known by the involved lawyers that affects the client’s interests. The involved lawyers must also fairly assess and communicate with the client about whether and how they can continue with the representation given the threatened malpractice claim. Here again, this obligation is unaffected by whether or with whom the involved lawyers have consulted about the potential claim.
Yet despite these complications, and while Massachusetts lawyers will watch with interest to see whether the SJC uses the RFF Family Partnership case to provide guidance on this topic, it seems likely that attention to the concepts and formalities described in this article will continue to be important in ensuring that a lawyer threatened with a malpractice claim has an opportunity to seek advice about the threat, and to do so on a confidential and protected basis.
David A. Barry is a partner at Sugarman, Rogers, Barshak & Cohen, P.C., where he focuses his practice on complex litigation, including the defense of professional and products-liability cases. William L. Boesch is also a partner at Sugarman, Rogers. He represents lawyers and other professionals in malpractice cases and other matters, and litigates insurance and intellectual-property disputes.
By Robert L. Ullmann and Jonathan L. Kotlier
Every law firm—no matter its size, reputation, or practice area—will someday face the specter of a legal malpractice claim. No firm is immune. However, there are steps attorneys and their firms can take to minimize the risk of a claim and to maximize their ability to defend themselves. The authors have handled several legal malpractice cases and in all these cases there have been aggravating factors that have made the case much more difficult to defend and increased the settlement value of the case. Despite lawyer jokes, we are actually human and we do make mistakes. However, what we do not want to do is to exacerbate those mistakes through ancillary errors that put the lawyer or firm in a bad light. By avoiding such errors, the law firm will decrease its exposure and will be in a position to contest the claims, rather than having to capitulate to avoid negative publicity. This article will identify some of those ancillary errors and suggest ways to avoid them.
The following fictionalized scenario illustrates several possible errors: A senior associate in a multi-national law firm is approached by a former colleague and now in-house attorney with an opportunity to defend his company in a litigation matter. The case involves a former employee who sued the company for millions of dollars alleging wrongful termination. The senior associate has never handled this type of matter before and, in fact, has never before tried a case. However, he figures that the case is sufficiently similar to other cases on which he has helped partners that he believes he could represent the client effectively and, really, what are the chances the case will actually go to trial? In his pitch to in-house counsel, the senior associate represents he is an experienced litigator (but does not mention that he has never before tried a case) and promises that the case will be overseen by a very experienced senior partner. He crafts a proposed litigation budget for the client and, in his enthusiasm to win the client, produces a budget that is unrealistically low, far below those of the other firms in the mix. The client is pleased with the pitch and the budget and retains the attorney and his firm. The senior associate is pleased with himself, because he is up for partner within the year.
Their pleasure is short-lived. The in-house counsel sees himself as an active participant in the litigation team. He raises concerns about strategy decisions and legal arguments. The senior associate ignores the client’s request to advance certain defenses and proceeds with the litigation without addressing the client’s concerns. In doing so, just in the discovery phase alone, the senior associate and his cadre of more junior associates rack up legal fees more than ten times what he had estimated the fees would be through trial. This helps his bid to become partner, but does not endear him to the client.
The case eventually proceeds to trial and the senior associate, now a new partner, takes on the role of lead trial counsel even though he has never taken a case to trial. He does not bring in a senior partner to help try the case. At trial, the attorney continues to ignore the questions and suggestions of the client. In so doing, he fails to make a legal argument that has merit and could have significantly impacted the result. The jury verdict is a disaster for the client, with damages exponentially greater than the attorney or the client ever expected. After all appeals are exhausted, the client brings a malpractice action against the firm.
The demand letter’s main claim is that the senior associate failed to make a legal argument that a reasonable attorney would have made in the case. This is a standard malpractice claim based on the negligence standard articulated by the courts. To prevail, the client must show that the senior associate failed to “exercise the degree of care and skill of the average qualified petitioner.” Fishman v. Brooks, 396 Mass. 643, 646 (1986). On this standard, the firm has some quite plausible defenses to the claims.
Moreover, the client will face the hurdle of providing adequate expert testimony to prove the senior associate’s negligence. In Pongonis v. Saab, 396 Mass. 1005 (1985), the Supreme Judicial Court explained that expert testimony is required to demonstrate an attorney’s negligence unless “the claimed legal malpractice is so gross or obvious that laymen can rely on their common knowledge to recognize or infer negligence.” This is not an easy hurdle to clear. The Appeals Court, in Colucci v. Rosen, Goldberg, Slavet, Levenson & Wekstein, P.C., 25 Mass. App. Ct. 107, 111 (1987), required a client to demonstrate through expert testimony that the attorney’s failure to learn about and comply with a procedural statute, which was both crucial to the client’s case and widely known within that field of law, was negligent. If the client in this fact pattern wants to challenge the senior associate’s trial strategy and legal arguments, it will need to prepare itself for a battle of the experts.
An additional hurdle for the client in this fact pattern is the element of causation. To prove causation on a litigation malpractice claim, a client must present a “trial within a trial” and show that he would have “probably” prevailed in the underlying case but for the attorney’s negligence. Fishman, 396 Mass. at 647. For the most part, this hurdle also requires expert testimony that establishes a link between the attorney’s negligence and the bad outcome for the client. See Frullo v. Landenberger, 61 Mass. App. Ct. 814, 818 (2004).
The hurdles for the plaintiff are high, but what makes the case highly risky to defend are the attendant embarrassing and aggravating factors—the legal fees so far exceeding the proposal, the senior associate not being forthcoming about his lack of trial experience, the failure to address the client’s concerns that actually had merit, and the failure to bring in a senior attorney who had significant trial experience. The risk that such embarrassing allegations would become public make it impossible for the firm to defend. It has to settle.
As you read this sample fact pattern, you probably think to yourself that this example is exaggerated and that there is no way I or my firm would make similar mistakes. Think again—this example is a disguised, real life situation involving a prestigious law firm (not based in Massachusetts), and as lawyers we all face at least some of the pressures that led the lawyer and firm astray. What follows is a discussion of the errors cited above and how firms and individual attorneys can take steps to avoid these pitfalls.
1. Always be objective and straightforward with a client
Nothing exacerbates the damage in a legal malpractice case more than the plaintiff being able to allege that his lawyer or law firm was not straight with him. What lawyer or firm would want to litigate a legal malpractice case in which their honesty and credibility are questioned? In addition to reputational damage, the lawyer and law firm are now at risk of greater liability. The Appeals Court, in Frullo v. Landenberger, 61 Mass. App. Ct. at 822, has signaled that a client can bring Chapter 93A claims in cases of alleged deceit or dishonesty. “There is no doubt that the provisions of G.L. c. 93A apply to attorneys.” Id. Not only does this create exposure to multiple damages and attorney’s fees, but it also gives the opportunity for the client to avoid the hurdle of expert testimony on negligence. Claims grounded in allegations of dishonesty, fraud, deceit, and misrepresentation are not subject to the same expert testimony requirement applied to professional negligence claims. See Brown v. Gerstein, 17 Mass. App. Ct. 558, 566-67 (1984). Resist the temptation to puff or exaggerate. The resulting leverage to settle (especially with the possibility of multiple damages) will be difficult to withstand.
2. Puffing during the pitch
Being straightforward applies as much to the pitch as it does to the post-engagement work. Competition for work can be very intense and you might be tempted to exaggerate your qualifications and minimize your estimate of projected cost. Again, resist the temptation. Any statement the lawyer or law firm makes regarding its experience and expertise is bound to become part of a disgruntled client’s complaint in a legal malpractice action. One recent and sensational example is the complaint filed by infamous UBS whistleblower Bradley Birkenfeld against Schertler & Onorato, LLP, the firm that represented him in his whistleblower suit. Birkenfeld now alleges that the firm and its attorneys “falsely represented themselves to [Birkenfeld] as experienced in and knowledgeable about federal whistleblowing laws and procedures” when, in reality, they had “very limited experience in the area.” Complaint at ¶ 14, Birkenfeld v. Schertler & Onorato, LLP, Civil Action No. 0008397-12 (D.C. Super. Ct. Oct. 31, 2012). There are few better ways to undermine the defense of a legal malpractice claim than to have misrepresented to the client your familiarity with a particular type of transaction, your expertise in a particular area, or your trial experience. It will magnify any error the attorney may have made. Again, you and your firm will pay a premium for not wanting this case to be litigated in the public eye.
3. Maintain clear lines of communication with clients
Almost every malpractice claim arises out of a client feeling personally wronged by the attorney. This is why client communication is so important. Whenever an attorney receives client complaints about a lawyer’s strategic decision, the quality of work, or an unfortunate event, the attorney should respond in a way that both alleviates the concern and affirms to the client that you are on the same team. Not only will the attorney be fulfilling his ethical obligations under Rule of Professional Conduct 1.4, but he will also build a stronger rapport with the client and earn the client’s loyalty. A client pleased with a law firm’s responsiveness and care will be more understanding in the event that the matter sours.
4. Listen to, and get “buy-in,” from the client
Clients can have some pretty harebrained ideas, but every now and then… Whether good or bad, all client ideas and suggestions need to be addressed. If you do not think it is a great idea and you discuss the idea with the client, you can often explain the weaknesses and get the client to agree with your view. Even if you and the client continue to disagree, you are most likely talking about a judgment call, which is a very difficult basis for a malpractice claim. If you ignore the client, you will only alienate the client, and if it turns out that you were wrong, you are not going to want a public record of the client being a better lawyer than you.
5. Establish clear email protocols for your attorneys
Although the law in this area is not absolutely clear, there is a reasonable chance that if a client sues you for malpractice he will be able to get his hands on the internal emails relevant to his case or transaction. In almost every malpractice case, the most damaging document is not the contract, the court filing in the dispute, or an internal memo, but rather the informal emails among law firm attorneys. These are the communications where the smoking gun typically lies—either in the form of an admission of a mistake from one attorney to another or an error made in a hastily drafted intra-firm email. In Vlachos v. Weil, No. 11028/2009, 2011 WL 1348397, at *2 (N.Y. Sup. Ct. Apr. 8, 2011), a New York trial court considered the admissibility of emails in which the attorney admitted that he was at fault in failing to ensure that his clients received the money they were owed as part of a stock deal. Whether those emails would come into evidence as a party admission or not, the malpractice suit caused the lawyer’s self-critique to become a matter of public record.
Finally, this probably goes without saying, but don’t say anything negative or unflattering about your client in an email–it will not reflect well on you and it will not be something you will want to see the light of day. In one federal court case, a former client of Day Pitney brought forth emails in which his lawyers demeaned him, demonstrating the lawyers’ “crude behavior.” Iannazzo v. Day Pitney LLP, No. 04 Civ. 7413(DC), 2007 WL 2020052, at *10 (S.D.N.Y. July 10, 2007). Although the client was ultimately unsuccessful in his malpractice suit, Day Pitney could not call the resolution a complete success if its attorneys were on record as antagonistic to and disrespectful of the firm’s clients.
6. Construct an oversight program for all cases.
Many malpractice claims arise from an attorney who is in over his or her head, either because the matter is outside the attorney’s area of expertise or is too complicated for less experienced attorneys. Certainly where an attorney who is out of his depth takes on a matter that does not end well, you can be sure the client will examine the situation closely. As a remedy, every law firm should consider instituting a formal program in which a senior attorney is assigned to each matter, and meets monthly with the day-to-day manager of the case, so the junior attorney can bounce ideas, issues, or concerns off of the senior attorney. Without a formal procedure in place, the junior lawyer will often feel uncomfortable raising concerns until it is too late.
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With the number of malpractice claims rising every year, most law firms will face the specter of malpractice suits. Under the legal standards applicable to malpractice claims, errors in judgment will often be quite defensible and will not be an embarrassment to the firm. The trick is to avoid exacerbating the situation by making mistakes that put the lawyer or the firm in a bad light and that make a confidential settlement the only real option.
A Word About Conflicts of Interest
Much has been written about the trouble law firms can find themselves in when they take on matters that involve a conflict of interest. Most lawyers understand the basic ethical prohibitions on being adverse to another client of the firm, having clearly divided loyalties, or disclosing confidential client information. However, there are many situations in which a client’s waiver or even simply disclosure to the client can prevent serious problems down the road. Where an undisclosed conflict exists, the client can paint almost any attorney error as being caused in part by the law firm’s conflicted loyalties. This is not where you want to be.
Robert L. Ullmann is a partner in the Litigation Department and Chair of the Government Investigations and White Collar Crime practice group at Nutter McClennen & Fish LLP.
Jonathan L. Kotlier is also a litigation partner at Nutter, where he too is a member of the Government Investigation and White Collar Crime practice group. He is a former federal prosecutor.
The authors wish to acknowledge the invaluable contribution to this article of Christopher Lindstrom and Timothy Reppucci of Nutter.