Presented By:William F. McMurry
WILLIAM F. MCMURRY & ASSOCIATES
The practice of law, as with most professions, has become increasingly
specialized—in tandem with the growing complexity of society and commerce.1
I. INTRODUCTION
We all learn in law school that the necessary elements for an actionable legal
malpractice claim are: (1) the duty of the attorney to use such skill, prudence
and diligence as members of the profession commonly possess; (2) a breach of
that duty; (3) a proximate causal connection between the breach and the resulting
injury; and (4) actual loss or damage.2 Often the most challenging element is
proving damages in the legal malpractice case. That challenge is twofold when
the underlying case involves allegations of medical malpractice.
This work will address some of the common issues in the legal malpractice setting
and examine just what is the case within a case method of proving damages and
how courts apply the rule. This work will also look at what consequential and
other damages are available in a legal malpractice case. Next, this work will
look at common ethical pitfalls that arise in the legal malpractice setting,
particularly when the underlying case is specialized in nature such as medical
malpractice. Finally, this work will address a common procedural maneuver, a
motion to bifurcate, and how it affects your legal malpractice case.
II. PROVING DAMAGES AND THE CASE WITHIN THE CASE
In a legal malpractice action, compensatory damages can be classified as either
direct or consequential.3 Direct damages are compensation for the loss of the
expected benefits from the attorney’s services and any expenses incurred
due to the attorney’s failure to achieve those benefits. The direct damage
usually is the value of the lost benefit or of the detriment. The value of that
benefit is based on the circumstances existing at the time of the wrongful act
or omission. If the injury occurred because of negligence in handling litigation,
the measure of direct damages is the difference between the amount actually
recovered or paid and the amount that should have been recovered or paid. The
legal interest that was, or that should have been, awarded on the judgment also
may be part of the direct damages. The measure of direct damages can be exemplary
damages that were not recovered or awarded. The direct damages may be the value
of a lost settlement opportunity or the cost of a disadvantageous settlement.
Additional elements of direct damages can be the legal fees paid to the defendant
attorney and expenses incurred to mitigate the loss of the intended benefit.4
As a New Jersey Court summarized, “damages are generally shown by introducing
evidence establishing the viability and worth of the claim that was irredeemably
lost. This procedure has been termed a ‘suit within a suit.’”5
Proving damages in the case within a case arena is often challenging, and logically,
any proof or other difficulties in the underlying case are not to be escaped
in the legal malpractice case. Depending on the nature of the attorney’s
negligent act, proving the underlying case can become next to impossible.
Courts apply the case within a case rule with varying degrees of rigidity. For
example, as the New Jersey Court points out, some courts require the plaintiff
to prove by a preponderance of the evidence that “(1) he would have recovered
a judgment in the action against the main defendant, (2) the amount of that
judgment, and (3) the degree of collectability of that judgment.”6 However,
this approach fails to take into consideration the possibility of settlement.
Also, it can be difficult to present an accurate evidential picture of the original
action and the passage of time works against the case within a case approach.7
New Jersey has adopted a more flexible rule than the rigid case within a case
rule finding that “it should be within the discretion of the trial judge
as to the manner in which the plaintiff may proceed to prove his claim for damages....”8
A recent decision out of the Court of Appeals in Ohio has also rejected the
case within a case approach. The Court stated that Ohio precedent rejected a
“blanket requirement that plaintiffs in a legal malpractice case always
had to prove their ‘case within a case,’ the court favored a case-by-case
analysis of the causation and damages element of the claim.” 9 The Court
analyzed the shortcomings of the case within a case method approach of proving
damages in a legal malpractice case:
[W]e reject any finding that the element of causation in the context of a
legal malpractice action can be replaced or supplemented with a rule of thumb
requiring that a plaintiff, in order to establish damage or loss, prove in every
instance that he or she would have been successful in the underlying matter(s)
giving rise to the complaint. This should be true regardless of the type of
representation involved.
A standard of proof that requires a plaintiff to prove to a virtual certainty
that, but for the defendant's negligence, the plaintiff would have prevailed
in the underlying action, in effect immunizes most negligent attorneys from
liability. No matter how outrageous and morally reprehensible the attorney's
behavior may have been, if minimal doubt exists as to the outcome in the original
action, the plaintiff may not recover in the malpractice action. Except in those
rare instances where the initial action was a ‘sure thing,’ the
certainty requirement protects attorneys from liability for their negligence.
A strict ‘but for’ test also ignores settlement opportunities lost
due to the attorney's negligence. The test focuses on whether the client would
have won in the original action. A high standard of proof of causation encourages
courts' tendencies to exclude evidence about settlement as too remote and speculative.
The standard therefore excludes consideration of the most common form of client
recovery.
In addition, stringent standards of proving ‘but for’ require the
plaintiff to conduct a ‘trial within a trial’ to show the validity
of his underlying claim. A full, theoretically complete reconstruction of the
original trial would require evidence about such matters as the size of jury
verdicts in the original jurisdiction. For example, an experienced attorney
could testify that juries in that jurisdiction typically award verdicts of x
dollars in similar cases. But such evidence is too remote and speculative; the
new fact finder must try the merits of both the malpractice suit and the underlying
claim to make an independent determination of the damage award. The cost and
complexity of such a proceeding may well discourage the few plaintiffs otherwise
willing to pursue the slim chance of success.
Other problems await those who do proceed with the ‘trial within a trial.’
For example, the attorney in the original action may have negligently failed
to pursue the discovery that would have insured success. If the results of that
same discovery are now necessary to prove the merit of the underlying claim-and
the passage of time has precluded obtaining that information-the attorney by
his own negligence will have protected himself from liability. In such a case,
the more negligent the attorney, the more difficult is the plaintiff's task
of proving causation.10
The other component of damages in legal malpractice cases are consequential
damages. “Consequential damages are compensation for those additional
injuries that are a proximate result of the attorney’s negligence, which
do not flow directly from or concern the objective of the intended benefit of
the attorney’s services but damages that occurred because the benefit
was lost. Such injuries may include damages for mental distress and related
personal injuries, injuries to reputation, economic losses, and expenses incurred
in suing the attorney for legal malpractice.”11
Looking at the issue of emotional damages, courts across the country have fallen
on both sides of the fence on whether or not emotional damages are recoverable,
with an increasing number of courts allowing plaintiffs to recover for emotional
damages in a legal malpractice case, separately from the underlying claim.12
Within your state, there may be statutory remedies that would allow recovery
for emotional damages. In Kentucky, the legislature has defined the damages
allowable for legal malpractice in K.R.S § 411.165(1) as follows: “If
any attorney employed to attend to professional business neglects to attend
to the business, after being paid anything for his services, or attends to the
business negligently, he shall be liable to the client for all damages and costs
sustained by reason thereof.”13 (emphasis supplied). The defense bar has
argued that in a legal malpractice case since plaintiff’s claims of emotional
distress do not derive from any “affirmative or intentional wrongdoing”
on the part of the defendant that such damages should not be recoverable. The
Kentucky Supreme Court has never reached the issue of whether emotional damages
are recoverable, however for the words “all damages” to be given
any meaning at all, the statute must mean that a negligent or grossly negligent
attorney is liable for the derivative damages stemming from the underlying case
and all resultant damages that have a direct causal link to the misconduct,
such as those recoverable for emotional distress. Both types of damages are
inarguably “sustained by reason” of the attorney’s wrongful
conduct.
As mentioned above, in pursuing claims for damages, be mindful of specific state
statutory remedies for additional damages such as trebled awards, specific penalties,
punitive damages, etc. Finally, the defendant attorney can make a variety of
arguments for a reduction in the ultimate award. For example, “the attorney
usually can set off the fees that would have been received for the services
necessary to secure the intended benefit for the client. An attorney also can
reduce damages by sums recovered by the client from a tortfeasor in an underlying
action. If the client was a defendant in the underlying action, the attorney
may claim the benefit of payments made by a joint tortfeasor or the client’s
liability insurer. Finally, an attorney can diminish the award by those damages
that are attributable to the plaintiff or which the plaintiff should have mitigated
or avoided. The amount of a lien that would have attached to the client’s
recovery also may be subtracted.”14
III. ETHICAL PITFALLS A. COMPETENCE, DILIGENCE AND THE STANDARD OF CARE
“With few exceptions, the courts agree that the violation of an ethics
rule alone does not create a cause of action, constitute legal malpractice per
se or necessarily create a duty.”15 In the 2002 Amendments to the Model
Rules, the ABA clarified their position on the scope of the ethic rules and
how they related to civil liability:
Violation of a Rule should not itself give rise to a cause of action against
a lawyer nor should it create any presumption in such a case that a legal duty
has been breached…Nevertheless, since the Rules do establish standards
of conduct by lawyers, a lawyer’s violation of a Rule may be evidence
of breach of the applicable standard of conduct.16
Furthermore, ethics rules do not necessarily set legal standards, but they
do have relevance.17 “The issue, however, is not whether the lawyer was
“unethical,” but whether the lawyer deviated from the governing
standard.”18 Two ethical rules that are clearly intertwined with the standard
of care in a legal malpractice case are the rules regarding competence and diligence.
The very first Model Rule of Professional Conduct by the American Bar Association
is Rule 1.1 regarding Competence. Rule 1.1 states:
A lawyer shall provide competent representation to a client. Competent representation
requires the legal knowledge, skill, thoroughness and preparation reasonably
necessary for the representation.19
As the Comments to the rule above suggest, “a lawyer can provide adequate
representation in a wholly novel field through necessary study. Competent representation
can also be provided through the association of a lawyer of established competence
in the field in question.”20 Where lawyers run into problems, is attempting
to handle a mater in a novel field without the association of a lawyer who has
established competence in the field or by failing to thoroughly commit the time
to becoming competent themselves in the novel field.
Another familiar rule of professional conduct, Rule 1.3 (Diligence) states:
“A lawyer shall act with reasonable diligence and promptness in representing
a client.”21 As the comments state, diligence requires an attorney to
“pursue a matter on behalf of a client despite opposition, obstruction
or personal inconvenience to the lawyer, and take whatever lawful and ethical
measures are required to vindicate a client's cause or endeavor. A lawyer must
also act with commitment and dedication to the interests of the client and with
zeal in advocacy upon the client's behalf.”22
Courts and commentators long have recognized that lawyers’ dilatory tactics
impede the administration of justice and that such delay is a burden upon opposing
parties and a waste of public resources.23 Rule 3.2 (Expediting Litigation),
as well as Rule 1.3 (Diligence), attempt to address this issue. While Rule 1.3
sets forth the general requirement that lawyers “act with reasonable diligence
and promptness in representing a client,” Rule 3.2 specifically requires
lawyers to attempt to “expedite litigation.” Lawyers who fail to
make “reasonable efforts” to do so are subject to discipline. The
comments to the rule point out that “dilatory practices bring the administration
of justice into disrepute.”24
The landmark legal malpractice case in Kentucky, Daugherty v. Runner, 581 S.W.2d
12 (Ky. App. 1978), is a prime example of how an attorney’s violation
of the above ethics rules can lead to a malpractice suit. As the Court stated,
“the standard of care is generally composed of two elements care and skill.
The first has to do with care and diligence which the attorney must exercise.
The second is concerned with the minimum degree of skill and knowledge which
the attorney must display.”25 In Daugherty, “the basis for the legal
malpractice claim is that appellee Runner, while representing the deceased Roach
for injuries sustained in an automobile accident, failed to pursue a medical
malpractice claim by the estate of Roach against the hospital where Roach was
treated for her injuries after her accident and against the doctors who treated
her, until her claim was barred by the statute of limitations.”26 A jury
found Runner not liable for malpracticing the medical malpractice case. While
affirming the lower court’s jury instructions, the Court refused to hold
that simply because Mr. Runner did not have competence, as he alleged, in handling
medical malpractice suits, this did not remove his duty to his client. The Court
reasoned: “An attorney cannot completely disregard matters coming to his
attention which should reasonably put him on notice that his client may have
legal problems or remedies that are not precisely or totally within the scope
of the task being performed by the attorney.”27
A lack of diligence can hurt any case, as well as a lack of competence. “Concern
about the competence of attorneys has resulted in certification of legal specialists.”28
According to Mallen in his treatise, Legal Malpractice, “[s]pecialization
raises the question whether the standard of care devised for the “ordinary”
attorney suffices for the practice of law today. The answer, with increasing
frequency, is that an attorney undertaking a task in a specialized area of the
law must exercise the degree of skill and knowledge possessed by those attorneys,
who practice in that specialty.”29
B. CLIENT COMMUNICATIONS
In legal malpractice cases, common ethical pitfalls often involve the malpracticing
attorney’s failure to communicate properly with their client. Below are
some of the ethical rules concerning a lawyer’s communications with their
clients:
Rule 1.4 (Communication):
(a) A lawyer shall:
(1) promptly inform the client of any decision or circumstance with respect
to which the client's informed consent, as defined in Rule 1.0(e), is required
by these Rules;
(2) reasonably consult with the client about the means by which the client's
objectives are to be accomplished;
(3) keep the client reasonably informed about the status of the matter;
(4) promptly comply with reasonable requests for information; and
(5) consult with the client about any relevant limitation on the lawyer's conduct
when the lawyer knows that the client expects assistance not permitted by the
Rules of Professional Conduct or other law.
(b) A lawyer should explain a matter to the extent reasonably necessary to permit
the client to make informed decisions regarding the representation.30
Rule 1.16 (Declining or Terminating Representation):
(d) Upon termination of representation, a lawyer shall take steps to the extent
reasonably practicable to protect a client's interests, such as giving reasonable
notice to the client, allowing time for employment of other counsel, surrendering
papers and property to which the client is entitled and refunding any advance
payment of fee or expense that has not been earned or incurred. The lawyer may
retain papers relating to the client to the extent permitted by other law.31
Rule 1.2 (Scope of Representation and Allocation of Authority Between Client
and Lawyer):
(c) A lawyer may limit the scope of the representation if the limitation is
reasonable under the circumstances and the client gives informed consent.32
Rule 7.1 (Communications Concerning a Lawyer’s Service):
A lawyer shall not make a false, deceptive or misleading communication about
the lawyer or the lawyer’s service. A communication is false or misleading if
it contains a material misrepresentation of fact or law, or omits a fact necessary
to make the statement considered as a whole not materially misleading.33
Rule 1.4 is the general rule regarding communications, while the remaining rules
deal with specific problem areas that arise in communicating with clients. For
example, Rule 1.16 would include advising a client of any applicable statute
of limitations and also would include as in the above Daugherty case, advising
of any other potential claims a client may have regardless of what the attorney
has agreed to litigate. The Daugherty dilemma also involves Rule 1.2, which
allows a lawyer to limit the objectives of representation, but such limitation
must be done properly. Finally, of course, a lawyer should not make a false,
deceptive or misleading communication to a client. For example, an attorney
who has never handled a medical
malpractice case should not represent that he has any special knowledge in such
matters.
IV. CASE WITHIN A CASE: MOTIONS TO BIFURCATE
It is common in legal malpractice cases for the defense to move to bifurcate
the underlying action from the legal malpractice claims. Under Federal Rule
of Civil Procedure Rule 42, courts have the discretion to order separate trials.
FRCP Rule 42 states:
For convenience, to avoid prejudice, or to expedite and economize, the court
may order a separate trial of one or more separate issues, claims, crossclaims,
counterclaims, or third party claims. When ordering a separate trial, the court
must preserve any federal right to a jury trial.
However, bifurcation is the exception, not the rule.34 Imagine using the defendant’s
logic in every case. Using the common defense approach, every negligence case
should be bifurcated and tried piecemeal. Such practice would create havoc in
the judicial system and cases would become extremely difficult to manage in
the best of circumstance. Potentially, every negligence case would result in
multiple trials and possibly multiple appeals. Discovery would become disjointed,
and prosecution of any negligence case would become nearly impossible. The court’s
docket would become extremely backlogged and the need for additional jurors
would increase substantially. It is the party making the motion for bifurcation’s
burden to establish that bifurcation of the issues will promote judicial economy
and expedition and avoid prejudice to any party. In exercising its discretion,
federal courts look at such relevant factors as "(1) whether separation
of the issues for trial will expedite disposition of the actions; (2) whether
such separation will conserve trial time and other judicial resources; (3) whether
such separation will avoid prejudice; (4) and whether the issues are essentially
independent of each other so that there will be no need to duplicate the presentation
of significant areas of the evidence in the separated proceedings."35 The
controlling factor in determining whether an action should be bifurcated is
"the interest of efficient judicial administration."36 As such, the
party requesting bifurcation must specifically show that “bifurcation
will promote judicial economy, and avoid inconvenience or prejudice to the parties.”37
“Because bifurcation works an infringement on such an important aspect
of the judicial process, courts are ‘cautioned that [it] is not the usual
course that should be followed.’”38 Furthermore, “A trial
may be bifurcated only when the issues are clearly distinct and the bifurcation
will not work a hardship against either party. Although bifurcation may result
in judicial economy in some cases, it often works an injustice and does not
achieve judicial economy when trials must be conducted again.... A fair trial
is often thwarted when interwoven issues are tried separately.”39 Furthermore,
“when issues are ‘so interwoven’ that their independent trial
would cause ‘confusion and uncertainty, which would amount to a denial
of a fair trial,’ they must be tried together.”40
In Mallen’s treatise, Legal Malpractice (2007), the authors take the position
that such bifurcation can “provide a cogent and clear evidentiary process,
reducing the risk of confusing a jury.”41 However from the plaintiff’s
point of view this is not always the best approach. If bifurcation is ordered,
procedurally it is favored to try the issue of the attorney’s negligence
before the issue of causation and damage in the underlying action.42 Obviously,
every defendant would love to have bifurcation of every single issue. By presenting
issues separately, it becomes more difficult for the jury to understand the
entire picture. In theory, a defendant could ask for
bifurcation of duty, causation, damages, and so on.
There is a danger that bifurcation may deprive plaintiffs of their legitimate
right to place before the jury the circumstances and atmosphere of the entire
cause of action which they have brought into the court, replacing it with a
sterile or laboratory atmosphere in which causation is parted from the reality
of injury.
Other courts have rejected the bifurcation method finding that the issues of
liability were too closely intertwined with the other issues.43 Courts have
also rejected bifurcation where the attorney’s negligent actions have
impaired the plaintiff’s evidence of damages in the underlying case. In
National Union Fire Insurance Co. v. Dowd & Dowd, P.C., 191 F.R.D. 566 (N.D.Ill.1999),
the Court refused to bifurcate the underlying case from the legal malpractice
claims because the attorney’s actions were “alleged to have directly
affected the strength and strategy of the personal outcome of the personal injury
trial.”44
Bifurcation should not create a vehicle by which the defendant attorney can
disguise their true identity. Consider a claims against the UIM carrier in an
automobile accident case. In Kentucky, the case law is clear that the UIM carrier
is the real party in interest and must be named.45 In the UIM setting, Kentucky
has found:
There is no more reason to create a legal fiction by substituting the name of
the tortfeasor for the UIM carrier, when the carrier alone is the real party
in interest in UIM cases, than there is a reason to do so when dealing with
UM coverage. The issue of permitting a “legal fiction” to be employed
has been laid to rest in an uninsured motorist claim which involves a direct
action against the UM carrier.46
There is little difference between the role of an underinsured or uninsured
motorist carrier who is represented by counsel in the bifurcated automobile
accident case and the role of the former lawyer in a legal malpractice suit.
The defendant attorney likewise should not be allowed to use bifurcation to
create a fiction in an attempt to prove to the jury that their prior client
is undeserving of damages in the underlying case. The jury should be told that
it is the plaintiff’s former attorney, who now, as a result of allegations
of malpractice, is attempting to prove to the jury that his or her own client
was not worthy of representation from the outset.
IV. CONCLUSION
In statistics released by the American Bar Association in 2003, plaintiff personal
injury work is listed as the area with the highest claims rate responsible for
almost 20% of all legal malpractice claims.47 Medical malpractice cases are
certainly a part of this group and present unique challenges to the attorney
handling any legal malpractice claims arising out of an underlying medical malpractice
case. However, with the complexity involved in handling medical malpractice
claims and a legal malpractice combined, novices be warned.