A spotlight on a legal malpractice claim against a personal injury lawyer that started as an ethical grievance.
Fact Scenario:
Attorney Smith represented Driver, Driver’s Minor Child and Passenger in an automobile accident with another vehicle driven by Defendant. Attorney Smith had consulted with both Driver and Passenger and knew what each would testify to about the accident. Both Passenger and Driver’s Minor Child had significantly more serious injuries than Driver who suffered minimal injuries. Passenger Minor Child’s claims were anticipated to be worth far more than Driver’s claim.
Prior to the case going to trial, Defendant found a witness who claimed Driver failed to stop for a stop sign and was the cause of the accident. Defendant’s attorney filed a counter-claim against Driver. Attorney Smith told Driver that he could no longer represent Driver due to conflict of interest, but promised to obtain a “good settlement” for Driver’s Minor Child. Attorney Smith then filed a motion to withdraw on behalf of Driver based upon “failure to cooperate.” Attorney Smith also filed a counter-claim against his former client Driver.
Driver’s insurance company assigned Driver’s Attorney to defend Driver in the counter-claims. On the eve of trial, Defendant’s Attorney and Driver’s Attorney filed motions to disqualify Attorney Smith from representing any parties in the case.
The motion alleged that Attorney Smith had an unwaivable conflict of interest in that Attorney
Smith had consulted with Driver and Passenger and Attorney Smith knew details that could be used to Driver’s disadvantage. Attorney Smith denied that there was any ongoing conflict of interest and defended himself on the basis that he “withdrew” from representing Driver when he learned about the conflict.
The judge disagreed and disqualified Attorney Smith from representing any party in the case. Both Passenger and Driver’s Minor Child scrambled to find new counsel just days before trial. The New Attorney quickly settled both cases for minimal settlements and for amounts considered far lower than Attorney Smith had discussed with Passenger and Driver’s Minor Child.
Ethical Grievance:
At the urging of New Attorney, who also was a legal malpractice attorney, Driver and Passenger filed an ethical grievance with the State Bar against Attorney Smith. Attorney Smith did not report the grievance to his malpractice carrier and answered the grievance himself without consultation with an attorney experienced in ethical matters. Attorney Smith was forced to provide discovery and over five hours of sworn testimony in the matter.
The State Bar filed a formal ethical complaint against Attorney Smith alleging conflicts of interest including putting his interests ahead of the interests of his clients and representing clients directly adverse to another client. Attorney Smith went to hearing in the ethical complaint matter and was suspended a month from the practice of law.
Legal Malpractice Claim:
As soon as the ethical complaint was completed, New Attorney filed a legal malpractice claim against Attorney Smith on behalf of Driver, Passenger and Driver’s Minor Child.
The legal malpractice complaint alleged negligence and a breach of fiduciary duty for each client leading to their detriment and damages in having to accept smaller settlements than they might have absent the conflicts of interest.
New Attorney used the unrepresented discovery Attorney Smith provided in the ethical matter and all of his sworn testimony. Several potential defenses were not able to be asserted due to the discovery obtained by New Attorney in the ethical matter.
New Attorney was able to obtain a larger civil settlement for his clients due to the additional cause of action for breach of fiduciary duty.
Result:
The underlying conflict of interest issues were going to be present in both the ethical grievance and the legal malpractice claim. However, Attorney Smith might have fared better in the ethical grievance and legal malpractice matter had he recognized his potential jeopardy for both his license to practice law and a legal malpractice claim. Attorney Smith should have also sought
the advice of counsel initially for the ethical grievance, not just the civil matter.
New Attorney knew that he could obtain discovery in the disciplinary matter that he may not be able to obtain in the civil courts. In addition, New Attorney was able to recover more damages in the civil claim due to the additional fiduciary duty claim.
It is not uncommon for legal malpractice claims to begin as ethical grievances. This can lead to additional discovery for the civil claim and additional causes of action such as a breach of fiduciary duty. This can in turn lead to increased damages.
Best Risk Management Practices:
Attorneys should treat ethical grievances as seriously as legal malpractice claims. Attorneys should consult with ethics attorneys before responding to all ethics grievances.
This may help protect attorneys in any subsequent legal malpractice claims. Many carriers offer disciplinary coverage and attorneys should check with
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