Louisville lawyer Hans Poppe reports today on a Louisville lawyer that has been accused of stealing from his clients.  Most notably, a $1 million estate seems to have disappeared.  Unfortunately, Mr. Poppe appears to think the case may be an example of what we consider the #1 rule of legal malpractice cases:  the attorney's culpability is inversely related to his or her ability to pay a judgment.  There are exceptions to this, of course, but as long as bar associations don't require attorneys to either (1) carry malpractice insurance or (2) disclose to clients that they don't carry insurance, then unwitting consumers will always be faced with the prospect that they'll be stuck when they are the victims of legal malpractice.

I know some lawyers disagree, but I strongly believe that lawyers have an obligation to their clients to carry malpractice insurance in case the lawyer makes an error.

In New York, a legal malpractice lawsuit is proceeding against mega-firm Paul Hastings. In the suit, an investor hired attorneys from the firm to conduct the due diligence in a $3 million investment.  The is now suing alleging that the firm committed legal malpractice by failing to ensure that the investor obtained all the mineral rights he understood he was receiving in the deal and for failing to ensure that other assets that secured the transaction were not encumbered.

We had a similar case several years ago against a local law firm.  An associate in the law firm failed to properly perfect the plaintiff's security interest in the collateral securing the transaction.  The remarkable thing about the case was that the lawyer admitted he had made a mistake and actually referred the client to us.  Much to the chagrin of his carrier, he was very cooperative with us in making sure that his client was protected.

I have often said that people often come to me not because they were harmed, but because of the way they were treated after they harmed. For example, a medical malpractice client may come because they can't get a straight answer from the doctor.  Or a person injured in an accident may come because they are treated poorly by the insurance adjuster. 

The same holds true for legal malpractice cases.  If a lawyer is upfront about his errors, then clients are often forgiving of errors.  This week's issue of the Massachusetts Lawyers Weekly has advice on what to do when one commits legal malpractice, and the article confirms my advice.  The article writes:

Notify your client — While failing to report a potential claim to your carrier may result in a denial of coverage, failing to notify your client may subject you to bar discipline. Further, legal-malpractice statistics consistently confirm that former clients are less inclined to sue their lawyers over bad news if the lawyers come right out and share that bad news.

 I guess it's good for us that many lawyers refuse to do the right thing.

To win a legal malpractice claim, a plaintiff must prove that the attorney’s negligence was a proximate cause of the plaintiff’s injuries. For over 15 years, it has been the law in Texas that legal malpractice plaintiffs who have been convicted of a criminal offense cannot establish the proximate cause element unless the plaintiff is later exonerated on direct appeal, through post-conviction relief, or through other measures.

The rule was the subject of Martinez v. Alvarenga, a decision handed down by the San Antonio Court of Appeals last week. In that case, the plaintiff plead nolo contendere to a charge of arson, and then sued his lawyer for malpractice. The plaintiff tried to distinguish his claim from the long-standing proximate cause rule by arguing that he did not plead guilty. The San Antonio court said, "no dice." As long as the criminal defendant is found guilty in some sense, then the rule applies.

This rule explains why it is almost impossible to bring a legal malpractice claim based upon an underlying criminal charge. Generally, if the representation results in a "not guilty" finding, then the plaintiff is not damaged no matter how poorly the attorney performed. On the other hand, if there is a "guilty" finding, then the rule prevents the plaintiff from bringing suit unless he’s later exonerated (a rare occurrence, particularly here in Texas).

In Philadelphia, mega-law firm Duane Morris has found itself as the defendant in a legal malpractice case.  In the case, the plaintiff has alleged that Duane Morris negotiated a settlement agreement on the plaintiff's behalf, but failed to make sure that the payments were secured.  According to the plaintiff, he received approximately $200,000 of a $1.8 million settlement, and most, if not all, of that $200,000went to pay the esccalating Duane Morris legal fees.

The trial of the case began on February 4, and yesterday the case went to the jury.  According to many, sparks were flying during the closing arguments.  We'll try and keep you posted on the results.