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Legal Malpractice Liability For Settlement Counseling and Decision Errors

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Abstract

An increasing number of legal malpractice claims relate to settlement counseling and decisions about whether to settle or try a case. Nearly one-half of all malpractice claims allege errors relating to the professional skills required in pre-trial case evaluations, negotiations and settlements. This chapter describes the circumstances in which legal malpractice liability may be imposed for settlements later deemed to be improvident and trials considered, in retrospect, to be unduly risky and ill-advised. It also discusses how attorneys may avoid malpractice claims and the legal defenses commonly asserted against clients’ legal malpractice claims.

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Notes

  1. 1.

    See Copeland Lumber Yards v. Kincaid, 69 Or. App. 35, 38, 684 P.2d 13, review denied 298 Or. 37 (1984).

  2. 2.

    American Bar Association Standing Committee on Lawyers Professional Liability. (2008). Profile of Legal Malpractice Claims 2004–2007. Chicago, IL: American Bar Association. American Bar Association Standing Committee on Lawyers Professional Liability. (2005). Profile of Legal Malpractice Claims 2000–2003. Chicago:, IL: American Bar Association.

  3. 3.

    MacKillop, K. & Vidmar, N. (2006). Legal Malpractice: A Preliminary Inquiry. Available at SSRN: http://ssrn.com/abstract=912963.

  4. 4.

    Ibid., 19.

  5. 5.

    The win rates varied slightly based on whether the case type search was coded as “Legal Profession: Malpractice” or “Professional Negligence: Attorney.” Win rates, of course, pertain only to cases that proceed to trial or arbitration. Data compiled by the American Bar Association indicate that only 34% of all legal malpractice claims result in a payment by a malpractice insurance company.

  6. 6.

    Shestowsky, D., & Brett, J. (2008). Disputants’ Perceptions of Dispute Resolution Procedures: An Ex Ante and Ex Post Longitudinal Empirical Study. Connecticut Law Review, 41(1), 39, 90–91.

  7. 7.

    These studies are discussed in Galanter, M., and Cahill, M. (1994). “Most Cases Settle:” Judicial Promotion and Regulation of Settlements. Stanford Law Review, 46, 1353–1356.

  8. 8.

    A.2d 1346, 1349 (Pa. 1991).

  9. 9.

    A.2d 1298, 1304 (N.J. 1992).

  10. 10.

    A.2d at 1349.

  11. 11.

    Id. at 1348.

  12. 12.

    Id. at 1304.

  13. 13.

    Id. at 1303.

  14. 14.

    Id. at 1305.

  15. 15.

    Mallen, R., & Smith, J. (2007). Legal Malpractice §18:12, p. 1137 St. Paul, Minnesota: Thompson West.

  16. 16.

    Gorovitz, S. & MacIntyre, A. (1976). Toward A Theory of Medical Fallibility. Journal of Medicine and Philosophy 1, 51.

  17. 17.

    For law review articles regarding attorneys’ malpractice liability, see: Cooney, M. (2006). Benching the Monday-Morning Quarterback: The “Attorney Judgment” Defense to Legal Malpractice Claims. Wayne Law Review, 52(3), 1051; (1994). Lawyers’ Responsibilities and Lawyers’ Responses. Harvard Law Review, 107, 1547; Thomas, M. (1998). When Is an Attorney’s Breach of Fiduciary Duty in Missouri Not Legal Malpractice? Missouri Law Review, 63, 600–601; Leubsdorf, J. (1995). Legal Malpractice and Professional Responsibility. Rutgers Law Review, 48. 148–150; Lord, P. (1986). Loss of Chance in Legal Malpractice. Washington Law Review, 61, 1480–1485; Spiegel, M. (1979). Lawyering and Client Decisionmaking: Informed Consent and the Legal Profession. University of Pennsylvania Law Review, 128(1), 41–140; Munneke, G., & Davis, A. (1998). The Standard of Care in Legal Malpractice: Do The Model Rules of Professional Conduct Define It? Journal of the Legal Profession, 22, 33.

  18. 18.

    Ziegelheim v. Apollo, 607 A.2d 1298, 1303, 1304 (N.J. 1992).

  19. 19.

    Thomas v. Bethea, 718 A.2d 1187, 1195 (Md. 1998).

  20. 20.

    Prande v. Bell, 660 A.2d 1055, 1065 (Md. Ct. Spec. App. 1995).

  21. 21.

    Ishmael v. Millington, 50 Cal. Rptr. 592. 598 (Cal. Ct. App. 1966).

  22. 22.

    Nichols v. Keller, 19 Cal. Rptr. 2d 601, 608 (Cal. Ct. App. 1993).

  23. 23.

    Nichols v. Keller, supra, at 608. See Janik v. Rudy, Exelrod & Zieff, 14 Cal. Rptr. 3d 751 (Cal. Ct. App. 2004) (class counsel’s representation extends beyond claims described in class certification order).

  24. 24.

    Meagher v. Kavli, 97 N.W.2d 370, 374 (Minn. 1959).

  25. 25.

    G. Heileman Brewing Co, Inc. v. Joseph Oat Corp., 848 F.2d 1415, 1422 (7th Cir. 1988).

  26. 26.

    Hesselbacher, R. “Attorney Liability for Negligent Settlement Advice.” St. Paul, Minnesota: The Harmonie Group.

  27. 27.

    See Mason v. State, 712 S.W.2d 275 (Ark. 1986) (court must avoid hindsight bias and judge attorney’s performance based on facts and circumstances existing at the time).

  28. 28.

    Grayson v. Wofsey, Rosen, Kewskin & Kuriansky, 646 A.2d 195, 201 (Conn. 1994), quoting Ziegelheim v. Apollo, supra n. 18, at 1298.

  29. 29.

    Gans v. Mundy, 762 F.2d 338, 340 (3d Cir.), cert. denied, 474 U.S. 1010, 106 S. Ct. 537, 88 L. Ed. 2d 467 (1985), quoting Mazer v. Sec. Ins. Group, 368 F. Supp. 418, 422 (E.D. Pa.1973), aff’d mem., 507 F.2d 1338 (3d Cir. 1975).

  30. 30.

    Crosby v. Jones , 705 So. 2d 1356, 1358 (Fla. 1998).

  31. 31.

    Ramp v. St. Paul Fire & Marine Ins. Co., 269 So. 2d 239, 244 (La. 1972).

  32. 32.

    Cooney, M. (2006). Benching the Monday-Morning Quarterback: The “Attorney Judgment” Defense to Legal Malpractice Claims. Wayne Law Review, 52(3), 1051.

  33. 33.

    Prande v. Bell, supra n.20, at 1065.

  34. 34.

    Royal Ins. Co. of Am. v. Miles & Stockbridge, P.C., 138 F. Supp. 2d695, 704 (D. Md. 2001), amended in part on other grounds, 142 F. Supp.2d 676 (D. Md. 2001).

  35. 35.

    Ziegelheim v. Apollo, supra n. 18, at 1306 (“attorneys who pursue reasonable strategies in handling their cases and who render reasonable advice to their clients cannot be held liable for the failure of their strategies or for any unprofitable outcomes that result because their clients took their advice”); Cook v. Connolly, 366 N.W.2d 287, 299-291 (Minn. 1985) (a proposed settlement “represents the best judgment of counsel on what is attainable for his or her client based on a wide variety of considerations, each of which some other attorney might weigh differently; and counsel’s good faith judgment, even if in error, is not deemed to be malpractice”); Meir v. Kirk, Pinkerton, McClelland, Savary & Carr, P.A., 561 So. 2d 399, 402 (Fla. Dist. Ct. App. 1990) (“good faith exercise of professional judgment is protected and no claim of negligence may be premised thereon”); Crosby v. Jones, supra n. 30, at 1358 (no liability for good faith tactical decisions); Oakes & Kanatz v. Schmidt, 391 N.W.2d 51, 53–54 (Minn. Ct. App. 1986) (distinguishing non-actionable client dissatisfaction with purportedly “inequitable” settlement from actionable negligence of attorney during pre-settlement representation); Woodruff v. Tomlin, 616 F.2d 924, 930 (6th Cir. 1980) (attorney not liable for litigation strategy decisions based on honest exercise of professional judgment); Kirsch v. Duryea, 578 P.2d 935, 939 (Cal. 1978) (“we have recently recognized a latitude granted the attorney engaged in litigation in choosing between alternative tactical strategies”); Glenna v. Sullivan, 245 N.W.2d 869, 872–873 (Minn. 1976) (attorney not liable for error or mistake in judgment provided he acts with honest belief his advice is well-founded and in client’s best interests); Rorrer v. Cooke, 329 S.E.2d 355, 367 (N.C. 1985) (“law is not an exact science” and attorney’s differences in opinion about appropriate action “are consistent with the exercise of due care”); Hudson v. Windholz, 416 S.E.2d 120, 124 (Ga. Ct. App. 1992) (no liability where attorney “assessed the relative strengths and weaknesses of the plaintiffs’ claims... and exercised his best, informed judgment prior to recommending that plaintiffs execute the release”); Bernstein v. Oppenheim & Co. 554 N.Y.S.2d 487, 489 (N.Y. App. Div. 1990) (attorney may select one among several reasonable courses of action and is not liable for “an honest mistake of judgment”); McKnight v. Dean, 270 F.3d 513 (7th Cir. 2001) (“not the office of malpractice litigation to second guess unless unreasonable”).

  36. 36.

    F.2d 369, 372 (9th Cir. 1970).

  37. 37.

    Aloy v. Mash, 38 Cal. 3d 413, 419 (1985).

  38. 38.

    Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686, 693 (Minn. 1980).

  39. 39.

    Hipwell v. Sharp, 858 P.2d 987 (Utah 1993). See Glenna v. Sullivan, supra n. 35, 245 N.W.2d at 873 (Justice Todd concurring specially) (“defendant did little or nothing to accumulate all of the pertinent facts necessary to make an evaluation of plaintiff’s claim”); Goebel v. Lauderdale, 263 Cal. Rptr. 275 (Cal. Ct. App. 1989) (“total failure to perform even the most perfunctory research”).

  40. 40.

    Prande v. Bell, supra n.20, at 1065.

  41. 41.

    Id. at 1067.

  42. 42.

    Id. at 1065.

  43. 43.

    Lowman v. Karp, 476 N.W.2d 428, 429 (Mich. Ct. App. 1991).

  44. 44.

    Norton v. Superior Court, 30 Cal. Rptr. 2d 217 (Cal. Ct. App. 1994).

  45. 45.

    Manatee Cablevision Corp. v. Pierson , 433 F. Supp. 571, 572 (D.D.C. 1977).

  46. 46.

    Broad v. Conway, 675 F. Supp. 768, 770 (N.D.N.Y. 1987).

  47. 47.

    A.2d 873, 877 (Md. Ct. Spec. App. 1997).

  48. 48.

    Id. at 874.

  49. 49.

    F.3d 513, 519 (7th Cir. 2001)

  50. 50.

    Id. at 517.

  51. 51.

    Id. at 517. See King v. Bishop, 879 S.W.2d 222, 224 (Tex. App. 1994).

  52. 52.

    Geiger, J. (2005). Settlement and the Client: Considerations When You Are The Target of a Professional Malpractice Claim. Retrieved June 18, 2005 from http://www.sandsanderson.com/PressRelease/settlement.htm. See Geiger, J. (2000). Client’s Unhappy Hindsights: When a Settlement Leads to a Malpractice Claim. For the Defense 60.

  53. 53.

    A.2d 1187, 1191 (Md. 1998).

  54. 54.

    Id. at 1192.

  55. 55.

    F.3d 443, 445 (3d Cir. 1996).

  56. 56.

    So. 2d 741, 744 (Fla. Dist. Ct. App. 1989)

  57. 57.

    Id. at 745, 746. See California State Auto. Assn. Inter-Ins. Bureau v. Parichan, Renberg, Crossman & Harvey, 101 Cal. Rptr. 2d 72, 80 (Cal. Ct. App. 2000) (client reasonably mitigated damages by $850,000 settlement payment where attorney’s negligence caused client’s exposure to potential bad faith action); Supik v. Bodie, Nagle, Dolina, Smith & Hobbs, P.A., 834 A.2d 170, 181 (Md. Ct. Spec. App. 2003) (malpractice liability may be imposed “when a lawyer’s general deficiencies have compromised the opportunity to receive more at trial (or a favorable outcome for that matter), such that the client is essentially forced to settle”); Titsworth v. Mondo, 407 N.Y.S.2d 793, 796 (N.Y. Sup. Ct. 1978) (prior settlement does not bar malpractice action where client’s assent to the settlement “was compelled because prior misfeasance or nonfeasance by the attorneys left no other resource”); Prospect Rehabilitation Servs., Inc. v. Squitieri, 920 A.2d 135 (N.J. Super. Ct. App. Div. 2007) (issue of fact as to whether client took reasonable steps to mitigate effect of attorneys’ negligence by settling underlying action); Huntington v. Fishman, 441 S.E.2d 444, 446 (Ga. Ct. App. 1994) (client allegedly agreed to inadequate settlement because attorney failed to timely serve defendant); Schaefer v. Manfredi, 549 N.Y.S. 2d 59, 60 (N.Y. App. Div. 1989) (“a cause of action for malpractice is viable despite the plaintiff’s settlement of the underlying action where such settlement was compelled because of the mistakes of the defendant”); White v. Kreithen, 644 A.2d 1262, 1265 (Pa. Super. Ct. 1994), alloc. denied, 652 A.2d 1324 (Pa. 1994) (client forced to accept judge’s proposed settlement figure because she could not retain substitute counsel after discharging attorney who allegedly failed to conduct proper investigation and trial preparation); Lowman v. Karp. 476 N.W.2d 428, 431 (Mich. Ct. App. 1991) (“settlement remains the prudent option for both attorney and client where the chances of recovery at trial have been diminished because of the negligence of the attorney”); Edmonson v. Dressman, 469 So. 2d 571, 574 (Ala. 1985) (malpractice adequately pled where plaintiff claimed attorney’s negligent investigation and advice caused her to accept “substantially less than the amount to which she was entitled”).

  58. 58.

    Supik v. Bodie, Nagle, Dolina, Smith & Hobbs, P.A., supra n.57, 834 A.2d at 177.

  59. 59.

    A.2d 963, 977 (Md. 2000).

  60. 60.

    Id.

  61. 61.

    F.3d at 447, 450.

  62. 62.

    N.W.2d 399, 402 (Wis. 1992).

  63. 63.

    Id. at 402. See Thompson v. Halvonik, 43 Cal. Rptr. 2d 142, 144 (Cal. Ct. App. 1995) (affirming summary judgment on ground “appellant’s evidence that he would have obtained a better settlement had respondents [attorneys] proceeded more diligently was too speculative to support his claim for damages”); DiPalma v. Seldman, 27 Cal. App. 4th 1499, 1506–1507 (1994) (trial court erred in granting nonsuit but client must prove that “careful management” of a claim “would have resulted in a favorable judgment and collection”); Campbell v. Magana 184 Cal. App. 2d 751, 758 (1960) (action not brought to trial within mandatory five-year period but plaintiff “had no good cause of action” and case had no settlement value because highest offer was $350 and plaintiff refused to settle for less than $100,000); Becker v. Julien, Blitz & Schlesinger, P.C., 406 N.Y.S.2d 412, 414-415 (N.Y. Sup. Ct. 1977) (no malpractice liability where value of client’s claim did not exceed settlement amount even if client could show attorney was lax or dilatory).

  64. 64.

    See A.B.A. Model Rules Prof’l Conduct R. 1.7, and Cal. Rules of Prof’l Conduct R. 3-310.

  65. 65.

    P. 788, 790 (Cal. 1931).

  66. 66.

    A.B.A. Model Rules of Prof’l Conduct R. 1.7 Comment 8.

  67. 67.

    Day v. Rosenthal, 217 Cal. Rptr. 89, 99 (Cal. Ct. App. 1985).

  68. 68.

    Id. at 100.

  69. 69.

    See Allstate Ins. Co. v. Keller, 149 N.E.2d 482, 486 (Ill. App. Ct. 1958).

  70. 70.

    Lysick v. Walcom, 65 Cal. Rptr. 406, 414 (Cal. Ct. App. 1968).

  71. 71.

    Ishmael v. Millington, 50 Cal. Rptr. 592, 598 (Cal. Ct. App. 1966). Cf. Blecher v. Collins, P.C. v. Northwestern Airlines, Inc. 858 F. Supp. 1442, 1457 (C.D. Cal. 1994) (if actual conflict exists, attorney must refund fees received after the conflict arose but is not liable for other damages unless client can prove the failure to disclose the conflict of interest caused it to lose the trial and/or obtain a “disappointing” settlement).

  72. 72.

    Section of Litigation, American Bar Association. (2002). Ethical Guidelines for Settlement Negotiations. Chicago, IL: American Bar Association.

  73. 73.

    See Karpman, D. (2007, August). Multiple Clients May Present Multiple Conflicts. California Bar Journal 16, citing ABA Formal Opinion 06-438. See also Arce v. Burrow, 958 S.W. 2d 239 (Tex. App. 1997), reh’g overruled, (Jan. 15, 1998) and writ granted (Aug. 25, 1998), and judgment aff’d in part, rev’d in part on other grounds, 997 S.W.2d 229 (Tex. 1999).

  74. 74.

    See Ishmael v. Millington, 50 Cal. Rptr. 592 (Cal. Ct. App. 1966) (summary judgment in favor of attorney reversed, the court citing Rules 6 and 7 of California Rules of Professional Conduct); Lysick v. Walcom, 65 Cal Rptr. 406 (Cal. Ct. App. 1968), (judgment for attorney reversed and case remanded, negligence established as matter of law by “the general standards of professional care”); Lieberman v. Employers Ins. of Wausau, 419 A.2d 417, 425 (N.J. 1980) (defendant breached a duty “inherent in their attorney-client relationship”); Mirabito v. Liccardo, 5 Cal. Rptr. 2d 571 (Cal. Ct. App. 1992) (ethics standards may be admitted as evidence of breach of fiduciary duty but standards do not create independent ground for malpractice action); Baxt v. Lilioa, 714 A.2d 271 (N.J. 1998) (violation of ethical rules does not give rise to a cause of action for legal malpractice); Wright v. Williams, 121 Cal. Rptr 194, 200 (Cal. Ct. App. 1975) (“in some circumstances the failure of attorney performance may be so clear that a trier of fact may find professional negligence unaided by the testimony of experts”).

  75. 75.

    Cal. Rptr. 89 (Cal. Ct. App. 1985), cert. denied, 475 U.S. 1048 (1986).

  76. 76.

    Id. at 94.

  77. 77.

    Id. at 102.

  78. 78.

    Id.

  79. 79.

    Sluga, G. & Christian, D. (2001, Summer). Playing by the Rules: Violations of Ethics Rules as Evidence of Legal Malpractice. FICC Quarterly.

  80. 80.

    Munneke, G., & Davis, A. (1998). The Standard of Care in Legal Malpractice: Do The Model Rules of Professional Conduct Define It? Journal of the Legal Profession, 22, 59.

  81. 81.

    See Stanley v. Richmond, 41 Cal. Rptr. 2d 768 (Cal. Ct. App. 1995), Mirabito v. Liccardo, 5 Cal. Rptr. 2d 571, (Cal. Ct. App. 1992). See also Hatcher v. Roberts, 478 So. 2d 1083, 1087 (Fla. Dist. Ct. App. 1985), review denied, 488 So. 2d 68 (Fla. 1986).

  82. 82.

    Sluga, G. & Christian, D. (2001, Summer). Playing by the Rules: Violations of Ethics Rules as Evidence of Legal Malpractice. FICC Quarterly.

  83. 83.

    F.2d 1105, 1107 (1st Cir. 1987),

  84. 84.

    N.Y.S. 2d 726 (N.Y. App. Div. 2003), leave to appeal denied, 798 N.E.2d 349 (N.Y. 2003).

  85. 85.

    N.Y.S.2d 876, 877 (N.Y. App. Div. 1968).

  86. 86.

    See Miller v. Byrne, 916 P.2d 566, 574 (Colo. Ct. App. 1995) (attorney required to advise clients of settlement negotiations and their ramifications “regardless of whether they were bona fide”); Builders Square v. Saraco (868 F. Supp. 748, 749 (E.D. Pa. 1994) (attorney “has duty to explore and timely communicate to his client settlement offers”); Rizzo v. Haines, 555 A.2d 58, 64 (Pa. 1989) (attorney has duty to explore and elicit settlement offers, investigate settlement inquiries and offers and ascertain “how much more” defendant was willing to pay after defendant’s counsel commented “I can get you more than $550,000”); Keller v. Barry, 443 N.Y.S.2d 436, 437 (N.Y. App. Div. 1981) (summary judgment precluded by triable issues of fact “regarding the reasonableness and the adequacy of the advice” given regarding a settlement offer); Dorf v. Relles, 355 F.2d 488 (7th Cir. 1966) (directed verdict proper where attorney allegedly failed to disclose and discuss adversary’s settlement offer with client but client failed to present expert testimony to establish standard of care); Joos v. Auto-Owners Ins. Co., 288 N.W.2d 443 (Mich. Ct. App. 1979) (because attorney, as a matter of law, is required to disclose and discuss settlement offers, expert testimony not required to prove breach of duty where attorney failed to inform client of pre-trial settlement offers within policy limits); Mc Conwell v. FMG of Kansas City, Inc., 861 P.2d 830, 839 (Kan. Ct. App. 1993), rev. denied, 254 Kan. 1077 (1994) (absent evidence regarding “desire or ability to settle” no liability for alleged failure to transmit settlement offers and pursue settlement); Cannistra v. O’Connor, Mc Guinness, Conte, Doyle, Oleson & Collins, 286 A.D.2d 314 (N.Y. App. Div. 2001) (clients must prove they would have accepted settlement offer if attorney had transmitted it); Dykema v. Godfrey, 467 So. 2d 824, 825 (Fla. Dist. Ct. App. 1985) (fact that client had no defense to foreclosure action did not relieve attorney of duty to inform client of status of settlement negotiations).

  87. 87.

    N.E.2d 1377, 1380 (Mass. 1986).

  88. 88.

    N.W. 2d 108, 113 (Minn. 1992).

  89. 89.

    Thomas v. Bethea, supra n. 19, at 1192.

  90. 90.

    Id. at 1192.

  91. 91.

    A.2d 1055, 1065 (Md. Ct. Spec. App. 1995).

  92. 92.

    Id. at 1065.

  93. 93.

    Collins v. Perrine, 778 P.2d 912, 915 (N.M. Ct. App. 1989) (defendant attorney “did not have sufficient information about the facts and law involved” when he recommended settlement and “settled the case without performing even the minimum level of discovery necessary in such a complex case”); Ziegelheim v. Apollo, supra n.18, 607 A.2d at 1305 (attorney’s failure to conduct discovery allegedly “led to improvident acceptance of the settlement”); Grayson v. Wofsey, Rosen, Kewskin and Kuriansky, supra, n. 28, 646 A.2d at 202 (information obtained by attorneys insufficient “to permit them to responsibly recommend settlement to the plaintiff”); Brizak v. Needle 571 A.2d 975, 983 (N.J. Super. Ct. App. Div. 1990) (attorney is required to conduct diligent investigation regarding material claims in client’s case). Cf. Sukoff v. Lemkin, 202 Cal. App. 3d 740, 745 (Cal. Ct. App. 1988) (malpractice award against attorney for failure to investigate reversed, the court stating that plaintiff client had the “burden to establish that additional discovery would have resulted in a higher award to her.”)

  94. 94.

    S.W.2d 947 (Mo. Ct. App. 1994)

  95. 95.

    Id. at 956.

  96. 96.

    Id. at 956.

  97. 97.

    Id. at 954.

  98. 98.

    P.2d 912 (N.M. Ct. App. 1989).

  99. 99.

    Id. at 915.

  100. 100.

    Id. at 914.

  101. 101.

    Id. at 912.

  102. 102.

    Id. at 917.

  103. 103.

    Ziegelheim v. Apollo, supra n. 18, at 1303.

  104. 104.

    Id. at 1301, 1305.

  105. 105.

    A.2d 195 (Conn. 1994).

  106. 106.

    See Callahan v. Clark, 901 S.W.2d 842 (Ark. 1995) ($248,000 award affirmed where defendant attorney negligently advised client to sign property settlement agreement); Stanley v. Richmond, 41 Cal. Rptr. 2d 768 (Cal. Ct. App. 1995) (“testimony of a family law expert was not necessary to establish whether respondent was negligent by failing to perform a simple research task, and by responding to a client's request for advice about the ‘pluses and minuses’ of a decision without the benefit of valuable, and readily available, information”).

  107. 107.

    See Findley v. Garrett, 240 P.2d 421, 427 (Cal. Ct. App. 1952) (business judgment rule); Gossman v. Gossman, 126 P.2d 178 (Cal. Ct. App. 1942) (judicial discretion)

  108. 108.

    Collins, n. 98 supra, 778 P.2d at 915.

  109. 109.

    See Hirsch v. Weisman, 592 N.Y.S.2d 337 (N.Y. App. Div. 1993) (settlement based on allegedly mistaken belief that defendants had coverage in the amount of $100,000 instead of $500,000) and Shaya B. Pacific, LLC v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 A.D. 34 (N.Y. App. Div. 2006) (defense counsel may have duty to ascertain existence of excess coverage). Cf. Blackwell v. Eckman, 410 N.W.2d 390 (Minn. Ct. App. 1987) (summary judgment in action based on failure to discover defendant’s insurance coverage properly dismissed where evidence of coverage was hearsay).

  110. 110.

    N.E.2d 1377, 1379 (Mass. 1986).

  111. 111.

    Id. at 1379.

  112. 112.

    Id. at 1380.

  113. 113.

    Turner v. Burlington N. R.R. Co., 771 F.2d 341, 345 (8th Cir. 1985), quoting Thomas v. Colorado Trust Deed Funds, Inc., 366 F.2d 136, 139 (10th Cir. 1966).

  114. 114.

    Blanton v. Womancare, Inc., 696 P.2d 645, 650 (Cal. 1985), quoting Whittier Union High School Dist. v. Superior Court, 136 Cal. Rptr. 86 (Cal. Ct. App. 1977).

  115. 115.

    See Linsk v. Linsk, 70 Cal. 2d 272 (1969) (attorney not authorized to “impair the client’s substantial rights or the cause of action itself”); Cook v. Sur. Life Ins. Co., 903 P.2d 708, 714 (Haw. Ct. App. 1995) (attorney not authorized to settle without special authority in writing); Levy v Superior Court, 10 Cal. 4th 578, 583 (1995) (to be enforceable, settlement agreement requires client’s knowledge and express consent); Clark v. Burden, 917 S.W.2d 574, 576 (Ky. 1996) (settlement agreement not binding unless attorney has express or actual authority); Luethke v. Suhr, 650 N.W. 2d 220 (Neb. 2002) (“lawyer’s execution of a settlement agreement without a client’s knowledge or consent constitutes a breach of duty to the client; and it may constitute a fraud upon the court”).

  116. 116.

    Lewis v. Uselton, 480 S.E.2d 856, 860 (Ga. Ct. App. 1997).

  117. 117.

    Coon v. Ginsberg, 509 P.2d 1293, 1296 (Colo. Ct. App. 1973).

  118. 118.

    F.3d 336, 338 (7th Cir. 2000).

  119. 119.

    Id. at 339.

  120. 120.

    Cal. Rptr. 2d 264, 267 (Cal. Ct. App. 1996). Emphasis in original.

  121. 121.

    Commercial Union Ass. Cos. v. Safeway Stores, Inc., 26 Cal. 3d 912, 919 (1980). Accord New Plumbing Contractors v. Edwards, Sooy & Byron, 121 Cal. Rptr. 472 (Cal. Ct. App. 2002) (insured has no cause of action for business reputation damage and payment of deductible where policy grants insurer discretion to settle). Cf. Ivy v Pac. Auto. Ins. Co., 156 Cal. App. 2d 652, 660 (1958) (insurer, through its attorney, “clearly violated” its duties by stipulating to a judgment in excess of the policy limits without insured’s knowledge or consent).

  122. 122.

    N.Y.S.2d 688 (N.Y. Ct. App. 2001)

  123. 123.

    Id. at 691.

  124. 124.

    See, e.g., Schneider, Smeltz, Ranney & LaFond, P.L.L. v. Kedia, 796 N.E.2d 553, 556 (Ohio Ct. App. 2003) (no malpractice liability where client signed settlement agreement with integration clause and later claimed settlement terms were “less advantageous” than settlement terms client had authorized); Hunzinger Constr. Corp. v. Quarles & Brady, 735 So. 2d 589, 597 (Fla. Dist. Ct. App. 1999) (damages recoverable where negligent drafting error resulted in judgment against client); Orrick Herrington & Sutcliffe v. Superior Court (Malcolm), 132 Cal. Rptr. 2d 658 (Cal. Ct. App. 2003) (attorneys fees spent on unsuccessful motion to set aside settlement not recoverable despite allegation that lawyers prepared “horribly defective” agreement); Ziegelheim v. Apollo, supra n. 18, at 1306 (summary judgment improper where client alleged attorney “negligently delayed in finalizing the settlement” and the written settlement agreement ultimately prepared differed from the settlement terms recited in court).

  125. 125.

    N.E.2d 1188 (Ill. App. Ct. 1994).

  126. 126.

    S.W.3d 227 (Tex. App. 2006, pet. denied).

  127. 127.

    See Berman v. Rubin, 227 S.E.2d 802 (Ga. Ct. App. 1976) (attorney not liable for negligent misrepresentation regarding meaning of settlement terms where agreement is clear, client is well-educated and client read and signed the agreement). Cf. Paul v. Smith, Gambrell & Russell, 642 S.E.2d 217 (Ga. Ct. App. 2007).

  128. 128.

    So. 2d 1243, 1245 (La. Ct. App. 1981).

  129. 129.

    Id. at 1245.

  130. 130.

    Smith v. Lewis, 530 P.2d 589, 595 (Cal. 1975), overruled on other grounds by In re Marriage of Brown, 544 P.2d 561 (Cal. 1976).

  131. 131.

    Davis v. Damrell, 174 Cal. Rptr. 257, 260–261 (Cal. Ct. App. 1981). See Village Nurseries, L.P. v. Greenbaum, 123 Cal. Rptr. 555, 562 (Cal. Ct. App. 2002) (judgmental immunity defense requires proof law was unsettled and advice was based upon the exercise of informed judgment); Gimbel v. Waldman, 84 N.Y.S.2d 888, 891–892 (N.Y. Sup. Ct. 1948) (where court opinions are “in hopeless conflict,” attorney not liable for allegedly erroneous advice on which client relied in accepting settlement).

  132. 132.

    Spiegel, M. (1979). Lawyers and Client Decisionmaking: Informed Consent and the Legal Profession. University of Pennsylvania Law Review, 128, 70.

  133. 133.

    Spiegel, M. (1979). Lawyers and Client Decisionmaking: Informed Consent and the Legal Profession. University of Pennsylvania Law Review, 128, 70, fn. 107.

  134. 134.

    N.W.2d 103 (Neb. 1999).

  135. 135.

    Cal. Rptr. 257 (Cal. Ct. App. 1981).

  136. 136.

    Wood, supra n. 134, at 108.

  137. 137.

    Cal. Rptr. 2d 691(Cal. Ct. App. 2001).

  138. 138.

    Id. at 697.

  139. 139.

    Id. at 700–701.

  140. 140.

    P.2d 192, 198 (Colo. Ct. App. 1992).

  141. 141.

    Temple Hoyne Buell Foundaton also was cited in First Interstate Bank of Denver v. Berenbaum, 872 P.2d 1297 (Colo. Ct. App. 1993), cert. granted, May 2, 1994, stip. for dismissal granted, Aug. 15, 1994 (contract language that leads to litigation, even if resolved in client’s favor, could be basis of malpractice action, as reasonably prudent attorney might foresee that language could cause litigation).

  142. 142.

    Lombardo, supra n. 137, at 667.

  143. 143.

    Cal. Rptr. 98, 108 (Cal. Ct. App. 1960).

  144. 144.

    F.R.D. 147, 161-62 (D.N.J. 1999) (quoting Thomason v. Norman E. Leher, P.C., 182 F.R.D. 121, 123 (D.N.J. 1998)).

  145. 145.

    Builders Square, Inc. v. Saraco, supra n. 86, 868 F. Supp. at 749.

  146. 146.

    Thomas v. Bethea, supra n. 19, at 1195.

  147. 147.

    Smiley v. Manchester Ins. & Indem. Co., 375 N.E.2d 118, 124 (Ill. 1978). See Lysick v. Walcom, 258 Cal. App. 2d 136, 151 (1968) (attorney's duty to a client includes "the obligation to attempt to effectuate a reasonable settlement of the... action where the general standards of professional care exacted of him required that the most reasonable manner of disposing of the action was by settlement"); Bonha v. Hughes, Thorsness, Gantz, Powell & Brundin, 828 P.2d 745, 761 (Alaska 1992) (attorney liable for excess judgment when he fails to settle case within authorization); Scognamillo v. Olsen, 795 P.2d 1357, 1361 (Colo. Ct. App. 1990) (plaintiff clients entitled to recover damages, including punitive damages assessed against clients in underlying action, upon proof that clients would have settled their case absent defendant’s attorney’s negligence); Mutuelles Unies v. Kroll & Linstrom, 957 F.2d 707 (9th Cir. 1992) (because attorneys’ duties include an obligation to attempt to effectuate a settlement, a law firm may be liable for the difference between the amount paid to settle after verdict and the amount for which case could have settled before verdict); G. Heileman Brewing Co., Inc. v. Joseph Oat Corp., supra n. 25, at 1423 (trials are appropriate “only after possibility of settlement has been exhausted”); Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566, 573 (1973) (failure to settle action sounds in tort and contract). Cf. Whiteacker v. State, 382 N.W.2d 112, 116 (Iowa 1986) (in action for loss of settlement opportunity client must prove the parties would have reached a settlement in an ascertainable amount and adversary would have paid the settlement sum).

  148. 148.

    Blumberg, J. (1997, October 17). Settlement Malpractice: The Duty to Give ADR Advice. Los Angeles Daily Journal, Verdicts and Settlements.

  149. 149.

    Blumberg, J. (1997, October 17). Settlement Malpractice: The Duty to Give ADR Advice. Los Angeles Daily Journal, Verdicts and Settlements.

  150. 150.

    F. Supp. 464 (E.D. Pa. 1994).

  151. 151.

    Id. at 472.

  152. 152.

    Breger, M. (2000). Should An Attorney Be Required To Advise a Client of ADR Options? Georgetown Journal of Legal Ethics, 13, 427. See Fortin, K. (2008). The Servant Leader Where the Modern Lawyer Should Be and How the Modern Lawyer Can Get There: How the Professionalism Paradigm Fueled by a Lawyer's Ethical Obligation to Inform Clients about Alternative Dispute Resolution Can Revive the Lawyer's Sense of Self, Sense of Vocation, and Sense of Service. Georgetown Journal of Legal Ethics, 22. http://ssrn.com/abstract=1208642.

  153. 153.

    Breger, M. (2000). Should An Attorney Be Required To Advise a Client of ADR Options? Georgetown Journal of Legal Ethics, 13, 427.

  154. 154.

    Cal. Rptr. 2d 601 (Cal. Ct. App. 1993).

  155. 155.

    See In re Consupak, Inc. 87 B.R. 529 (Bankr. N.D. Ill. 1988) (attorney may need to proffer advice because client may be unaware of ramifications of intended procedure).

  156. 156.

    So. 2d 1079 (Fla. Dist. Ct. App. 2000).

  157. 157.

    Cal. Rptr. 3d 471 (Cal. Ct. App. 2006).

  158. 158.

    As the court notes, attorneys fees “are not included in the $25,000 ceiling for limited civil actions.” 51 Cal. Rptr. 3d, at n.10.

  159. 159.

    Id. at 478.

  160. 160.

    See Hold v. Manzini, 736 So. 2d 138 (Fla. Dist. Ct. App. 1999); Scognamillo v. Olsen, supra, n. 147.

  161. 161.

    Numerous other defenses, of course, have been invoked in legal malpractice actions. Other defenses include release, waiver, the absence of an attorney-client relationship, comparative negligence, lack of standing and the statute of limitations.

  162. 162.

    See Jackson v. Los Angeles, 70 Cal. Rptr. 2d 96 (Cal. Ct. App. 1997).

  163. 163.

    Ziegelheim, supra n. 18, at 1305. See Bruning v. Law Offices of Ronald J. Palagi, P.C., 551 N.W.2d 266 (Neb. 1996); Edmondson v. Dressman, 469 So. 2d 571 (Ala. 1985); McCarthy v. Pedersen & Houpt, 621 N.E.2d 97 (Ill. App. Ct. 1993); Thomas v. Bethea, supra, n. 19; Baldridge v. Lacks, 883 S.W.2d 947 (Mo. Ct. App. 1994); Grayson v. Wofsey, Rosen, Kweskin & Kuriansky, supra n. 28, 646 A.2d at 199; Martin v. Burns, 429 P.2d 660 (Ariz. 1967); Davis v. Damrell, 174 Cal. Rptr. 257, (Cal. Ct. App. 1981); Berman v. Rubin, 227 S.E.2d 802 (Ga. Ct. App. 1976); Muse v. St. Paul Fire & Marine Ins. Co., 328 So. 2d 698 (La. Ct. App. 1976); Meagher v. Kavli, 97 N.W.2d 370 (Minn. 1959); Gimbel v. Waldman, supra n. 131; Hodges v. Carter, 80 S.E.2d 144 (N.C. 1954); Bill Ranch Chevrolet, Inc. v. Burnett, 555 So. 2d 455 (Fla. Dist. Ct. App. 1990); White v. Jungbauer, 128 P.3d 263 (Colo. Ct. App. 2005).

  164. 164.

    McMahon v. Shea, 688 A.2d 1179, 1181 (Pa. 1997).

  165. 165.

    P.2d 1222, 1226 (Idaho 1997).

  166. 166.

    Id. at 1230.

  167. 167.

    S.E.2d 84, 86 (N.C. Ct. App. 1984).

  168. 168.

    See also Irby v. Richardson, 298 S.E.2d 452, 454 (S.C. 1982) (where client “had a full and fair opportunity to litigate the question of an attorney’s negligence or effectiveness in a particular case, he should be collaterally estopped to adjudicate the same issue in a subsequent legal malpractice action.”).

  169. 169.

    Grayson, supra n. 28, 646 A.2d at 200.

  170. 170.

    Cook v. Connolly, 36 N.W.2d 287 (Minn. 1985); Bruning v. Law Offices of Palagi, P.C., 551 N.W.2d 266 (Neb. 1996).

  171. 171.

    See L.F.S. Corp. v. Kennedy, 337 S.E.2d 209, 210 (S.C. 1985) (motion for non-suit properly granted in attorney malpractice action where client ratified disputed settlement by accepting financial benefits of settlement and seeking legal advice regarding enforcement of the court order confirming the settlement terms); Cook v. Sur. Life Ins., supra n. 115, 903 P.2d at 716 (client’s failure to object to attorney’s action in settlement negotiations “within a reasonable time after becoming aware of it will be construed as a ratification of it”); Brady v. Bryant, 894 S.W.2d 144 (Ark. 1995) (client’s continued acceptance of payments tendered in accordance with settlement agreement constitutes ratification). Cf. Crowley v. Harvey & Battey, P.A., 488 S.E.2d 334 (S.C. 1997) (client’s enforcement of settlement no bar to malpractice claim alleging negligence in advising client rather than attorney’s lack of authority to settle case).

  172. 172.

    Grayson, supra n. 28, 646 A.2d at 199.

  173. 173.

    Thomas v. Bethea, supra n. 19, at 1195.

  174. 174.

    Baldridge v. Lacks, supra n. 163, 883 S.W.2d at 954.

  175. 175.

    Cal. Rptr. 592, 598 (Cal. Ct. App. 1966).

  176. 176.

    Cooney, M. (2006). Benching the Monday-Morning Quarterback: The “Attorney Judgment” Defense to Legal Malpractice Claims. Wayne Law Review, 52(3), 1057.

  177. 177.

    Cal. Rptr. 2d 555 (Cal. Ct. App. 2002).

  178. 178.

    Id. at 562.

  179. 179.

    Cooney, M. (2006). Benching the Monday-Morning Quarterback: The “Attorney Judgment” Defense to Legal Malpractice Claims. Wayne Law Review, 52(3), 1058.

  180. 180.

    Ibid., 1100.

  181. 181.

    Cal. Rptr. 2d 791, 795 (Cal. Ct. App. 1996).

  182. 182.

    Cal. Rptr. 3d 175, 182 (Cal. Ct. App. 2003).

  183. 183.

    Id. at 182.

  184. 184.

    Budd v. Nixen, 491 P. 2d 433, 436 (Cal. 1971) (client must suffer “appreciable harm as a consequence of his attorney's negligence”); Sukoff v. Lemkin, 249 Cal. Rptr. 42, 45 (Cal. Ct. App. 1988) (“possibility” that client could have established a property interest is insufficient in attorney malpractice action); Smith v. Haden, 872 F. Supp. 1040, 1044 (D.D.C. 1994) (“plaintiff must show that she had a good cause of action against the party she wished to sue; otherwise the plaintiff ‘loses nothing by the conduct of [her] attorney even though the latter was guilty of gross negligence’”); Marshak v. Ballesteros, 86, Cal. Rptr. 2d 1, 4 (Cal. Ct. App. 1999) (proof of attorney negligence is insufficient, plaintiff “must also prove that his ex-wife would have settled for less than she did, or that, following trial, a judge would have entered judgment more favorable than that to which he stipulated”); Orrick Herrington & Sutcliffe v. Superior Court (Malcolm), supra n. 124, 132 Cal. Rptr. 2d 658, 661 (Cal. Ct. App. 2003) (to prevent speculation and conjecture plaintiff “must prove that, but for the negligence of the attorney, a better result could have been obtained in the underlying action”); Praxair, Inc. v. Hinshaw & Culbertson, 235 F.3d 1028, 1036 (7th Cir. 2000) (“better representation would not have saved [client] from a judgment”); Campbell v. Magana, 8 Cal. Rptr. 32, 36 (Cal. Ct. App. 1960) (alleged damage “fell in the category of speculation, conjecture, and contingency”); Anthony v. Kaplan, 918 S.W.2d 174 (Ark. 1996) (client did not prove appeal would have been successful if timely filed); Loube v. Loube, 74 Cal. Rptr. 2d 906, 909 (Cal. Ct. App. 1998) (issue is “not what might or even what would have happened absent the alleged malpractice, but what should have happened”); Carlton v. Quint, 91 Cal. Rptr. 2d 844, 849-850 (Cal. Ct. App. 2000) (“sheer speculation” that, absent attorney’s alleged negligence in failing to serve a defendant, action would have been brought to trial within five-year period mandated by statute); Jalali v. Root, 1 Cal. Rptr. 3d 689, 696 (Cal. Ct. App. 2003) (“not even possible for a court to value the loss of the intangible psychic satisfaction of public vindication”); Thompson v. Halvonik, 43 Cal. Rptr. 2d 142, 145 (Cal. Ct. App. 1995) (plaintiff must show “appreciable and actual harm,” “mere possibility or even probability that damage will result from wrongful conduct does not render it actionable”); Ross v. Adelman, 725 S.W.2d 896, 897 (Mo. Ct. App. 1987) (record “totally devoid”of proof that “result would have been any different had respondent adequately prepared their defenses”).

  185. 185.

    Garretson v. Miller, 121 Cal. Rptr. 2d 317 (Cal. Ct. App. 2002).

  186. 186.

    See Kituskie v. Corbman, 714 A.2d 1027, 1029 (Pa. 1998) and cases cited therein (“collectibility of damages in the underlying action should also be part of the analysis in a legal malpractice action”).

  187. 187.

    See Sitton v Clements, 257 F. Supp. 63 (E.D. Tenn. 1966), aff'd 385 F.2d 689 (6th Cir. 1967); Campbell v. Magana, 8 Cal. Rptr. 32 (Cal. Ct. App. 1960).

  188. 188.

    F. Supp. 1040, 1054 (D.D.C. 1994).

  189. 189.

    See Kituskie v. Corbman, supra n. 186.

  190. 190.

    P.3d 408 (Cal. 2002).

  191. 191.

    See Gursey, Schneider & Co. v. Wasser, Rosenson & Carter, 92 Cal. App. 4th 15 (2001) (“where the indemnity suit is between lawyers who concurrently represented the same client in the same matter, and neither party still represents the client at the time of the indemnity suit, an indemnity suit generally should be permitted to proceed”); Crouse v. Brobeck, Phleger & Harrison, 80 Cal. Rptr. 2d 94 (Cal. Ct. App. 1998) (indemnity action permissible by subsequent attorney against former attorney); and Parler & Wobber v. Miles & Stockbridge, P.C., 756 A.2d 526 (Md. 2000) (client’s former attorney allowed to sue client’s successor counsel). Cf. Olds v. Donnelly, 696 A.2d 633, 643 (N.J. 1997) (former attorney cannot sue successor attorney); Beck v. Wecht, 48 P.3d 417 (Cal. 2002) (no fiduciary duty owed by associated counsel to co-counsel).

  192. 192.

    So. 2d 739, 741 (La. Ct. App. 1992).

  193. 193.

    See McCafferty v. Musat, 817 P. 2d 1039, 1045 (Colo. Ct. App. 1990); Andrews v. Cain, 406 N.Y.S. 2d 168 (N.Y. App. Div. 1978); Kane, Kane & Kritzer v. Altagen, 165 Cal. Rptr. 534 (Cal. Ct. App. 1980); Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686 (Minn. 1980); Christy v. Saliterman, 179 N.W.2d 288 (Minn. 1970); Winter v. Brown, 365 A.2d 381 (D.C. 1976); Duncan v. Lord, 409 F. Supp. 687 (E.D. Pa. 1976).

  194. 194.

    Cal. Rptr. 534, 538 (Cal. Ct. App. 1980), quoting Andrews v. Cain, (1978) 406 N.Y.S.2d 168 (N.Y. App. Div. 1978). See Lewis v. Uselton, 480 S.E.2d 856 (Ga. Ct. App. 1997) (attorney who violates client’s settlement instructions not entitled to a set-off of 40% contingency fee); Campagnola v. Mulholland, Minion & Roe, 555 N.E.2d 611 (N.Y. 1990) (offset for contingent fee due under retainer agreement impermissible). Cf. Titsworth v. Mondo, supra n. 57, 407 N.Y.S.2d at 799; Moores v. Greenberg, 834 F.2d 1105 (1st Cir. 1987); Sitton v Clements, supra n. 188; McGlone v. Lacey, 288 F. Supp. 662, 665 (D.S.D. 1968).

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Kiser, R. (2010). Legal Malpractice Liability For Settlement Counseling and Decision Errors. In: Beyond Right and Wrong. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-03814-3_6

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