We had previously written about Purolite Corporation’s legal malpractice claim against mega-firm Morgan, Lewis & Bockius. The case stems from the firm’s advice on whether Purolite subsidiaries could continue to do business with Cuban companies. Now, after more than two weeks of trial, the case is going to the jury. And the entire case may come down to whether Purolite filed its legal malpractice claim within the statute of limitations.

The limitations question is interesting. The company and its owners were the subject of criminal investigations about the transactions for years. But during those investigations, the firm allegedly continued to represent the company and the brothers and continued to advise the company and the brothers that the transactions were acceptable. The plaintiffs claimed that they didn't discover the advice was wrong until a judge finally rejected their defenses.

It is hard to determine how the case would turn out in Texas, which has a tolling provision for litigation that says the statute of limitations does not begin to run as long as the attorneys continue to represent the client in the litigation. The rationale behind the rule is that the client should not be forced to take inconsistent positions in the underlying case and in the legal malpractice case. As long as the underlying case is ongoing, the client must take the position that the client's contentions are correct and that the client should prevail. Forcing the client to sue his or her attorney at the same time, where the client would claim that the attorney's arguments are wrong, could force the client to take inconsistent positions. I have never researched whether such a tolling would occur if the lawyer continues to represent the client in a criminal investigation, but the rationale would certainly apply in the criminal context as well.

Late last week, Blackwater Security filed a legal malpractice claim against Wiley Rain, one of the law firms defending the company in a wrongful death suit brought by four former employees. The reports on the suit make allegations that attorneys, including current White House counsel Fred Fielding, were sloppy in their attempts to have the suit removed from state court to the Eastern District of North Carolina.  Blacwater is arguing that this change of venue is denying them the opportunity to mount a more vigorous defense.

The reports on the suit are limited so it's difficult to know the exact substance of Blackwater's claims.  But it's hard to see from the information available how Blackwater can prove that it would have prevailed on the matter in federal court but lost in state court.  The one situation I could foresee that happening is if the employees' contracts had waivers or limitations of liability that might be enforced in federal court but not in state court.  Regardless, it will be interesting to watch how this case plays out. 

Bill Childs at the TortsProf blog has additional coverage on this legal malpractice claim.

Texas appellate courts have released two new legal malpractice opinions in the last two months.  In December, the Dallas Court of Appeals issued an opinion in Murphy v. Gruber, 2007 Tex. App. Lexis 9707 (December 13, 2007).  The plaintiff alleged that the defendant law firm acted negligently and breached its fiduciary duties by representing multiple parties in a case when there was a conflict among the parties.  The key issue on appeal was whether the claims were really legal malpractice/negligence claims (which would be barred by limitations) or whether they were breach of fiduciary duty claims (which would not be barred).  Although the distinction in type of claim is critical, the Texas appellate courts have a long history of confusing and conflicting decisions on the matter.

The plaintiffs alleged that the attorneys failed to disclose the conflict of interest, made false statements about the viability of the client's claims so the client would accept a settlement, and divided the settlement proceeds 50/50 between the two underlying plaintiffs even though the strength of their cases were not equal.  The Court of Appeals waded through some of the appellate history and found that the claim was a legal malpractice claim barred by limitations.  In rejecting the argument that the claims were breach of fiduciary duty claims, the Court concluded that the client was not alleging "that the lawyers deceived them, pursued their own pecuniary interests over the [clients'] interests, or obtained any improper benefit by continuing to represent both clients."   And yet, that seems to be exactly what the client was alleging --- that the lawyers failed to disclose this conflict of interest and made these false representations so that the attorneys' could "earn" a large contingent fee even if the settlement wasn't in the best interest of both the clients.  That is a classic breach of fiduciary duty, and I think the Court of Appeals got the decision wrong.

Earlier this week, the San Antonio Court of Appeals handed down the decision of Bustos v. Schwabe, Williamson & Wyatt, PC, 2008 Tex. App. Lexis 424 (January 23, 2008).  This is a less remarkable case involving a fee dispute and legal malpractice counterclaims.  The facts and law are not interesting, but the result, a granting of the law firm's motion for summary judgment on the amount of fees it was owed and a dismissal of the client's counterclaims, shows the danger of attempting to handle a case pro se.  It appears from the limited facts of the case that the pro se client could have prevented the judgment and the dismissal of his claims if he had a lawyer there to make sure that he followed proper procedure.