What Can a Lawyer Be Sued For?

An attorney is not liable to his client simply because he does not obtain a favorable result. To prevail, the client must show the attorney acted improperly in one of the following ways.

Negligence

The most common cause of action presented in legal malpractice claims is a negligence claim. To prevail on a negligence claim, the client must prove that the attorney did not use a reasonable degree of care. In other words, the client must prove that the attorney took some action that a prudent attorney would not have taken or that the attorney failed to take some action that a prudent attorney would have taken.

There are many ways an attorney may be negligent. For example, if an attorney gives wrong advice to the client, the attorney may be negligent. If an attorney fails to file public documents, such as a lawsuit or a deed, on time or in the right place, the attorney may be negligent. Or, if the attorney acts to create a conflict between him and his client, the attorney may be negligent.

In Texas, a client must use expert witnesses to establish the reasonable degree of care the attorney should have used. Generally, the expert witness must be an attorney practicing in the same practice area and same locale as the attorney being sued.

Breach of Fiduciary Duty

An attorney is a fiduciary of his client, and the attorney owes the client a duty of utmost good faith. As part of this duty, the attorney has several obligations to the client. For example, the attorney must place the interests of the client above the interests of the attorney; the attorney must make full and fair disclosure about the representation; and the attorney cannot take advantage of his position to gain a profit at the expense of his client.

Fiduciary duty cases arise in several situations, but are most common in cases where there may be a conflict of interest involving the attorney and client. These potential conflicts arise in numerous ways. For example, in one leading case, an attorney represented several clients who were injured in one incident. The case eventually settled. After settlement, the clients claimed that while the settlement was in the attorney’s best interest (who represented the clients on a contingent fee basis) and the interest of some of the clients, it was not in the interest of all the clients. The Texas Supreme Court allowed the clients to sue the attorney for his breach of fiduciary duties.

Breaches of fiduciary duty also arise in business transactions. These may arise when an attorney has a history with one of the parties in the transaction. For example, when a corporation or partnership needs advice from an attorney, the principals often choose an attorney who one of the partners or officers knows or has used before. In this case, the attorney has the utmost duty to do what is right for the company, even if it is against the interests of the person who has had the personal relationship with the attorney.

A growing area of concern is attorneys or law firms who invest in the business of their clients. In such a situation, the attorney has the obligation to put the interest of the business first, even if it means prejudicing the attorney’s investment. As you might expect, it could be difficult for an attorney to recommend that a business file bankruptcy knowing that it could cost the attorney all of his investment in the company.

Deceptive Trade Practices Act

The Texas Deceptive Trade Practices Act regulates most business activities in Texas, including the conduct of attorneys. For a client to prevail on a DTPA claim, the client must prove (1) that he was a “consumer” as defined in the DTPA and (2) that the attorney took some action that violated the statute and caused the client damage.

To prove that he was a “consumer,” the client must prove that he sought or acquired the attorney’s services through a purchase. Obviously, any person or company directly hiring an attorney or firm qualifies as a consumer. However, even if a person or company does not purchase the services, they may still be consumers if they receive legal advice that was paid for by someone else. For example, Texas courts have held that a partner may be a consumer of legal services purchased by a partnership, an employee may be a consumer of legal services purchased by an employer, and a wife may be a consumer of legal services purchased by her husband. On the other hand, Texas courts have also been clear that the beneficiaries under a will are not consumers under the DTPA.

To be a consumer, the client (or someone) must purchase the services of the attorney. As a result, while a client may pursue a negligence claim against an attorney that gives him wrong free advice, the same client could not pursue a DTPA claim.

Once the client proves he is a consumer, he must also prove that he was harmed by an attorney’s violation of the DTPA. The DTPA provides a list of over twenty types of conduct that are forbidden. The items most applicable to claims against attorneys are the prohibitions against (1) making statements that the attorney’s services may have benefits that they do not have; (2) making statements that the attorney’s services are of a particular quality or standard when they are not; (3) representing that an agreement has rights, remedies, or obligations when it does not; (4) failing to disclose information concerning the services which was known at the time of the services if the failure was intended to induce the client into entering a transaction he would not have entered had the information been disclosed; and (5) engaging in any action that is unconscionable.

DTPA cases most often arise when an attorney is overstating his abilities to his client. For example, an attorney may be liable for telling the client he is board certified in a specialty, when in fact he is not. Similarly, an attorney may be liable for telling the client he had handled certain types of claims when he had not. Or, an attorney’s conduct may be unconscionable if he tells the client he had taken some action, such as filing a lawsuit, when he had not.

In 1995, the Texas legislature amended the DTPA to say that clients could not sue under the DTPA for misrepresentations or other conduct that can be characterized as the advice, judgment or opinion of the attorney. What constitutes advice and opinion is still being determined by the courts. Clearly, an attorney could still be sued for the actions described above, but there are still questions about how much further the exemptions extend.

Fraud

Attorneys may also be sued for committing fraud on their clients. An attorney commits fraud if he makes a misrepresentation that he knows is false with the intent that the client act on it and the client eventually acts on it. An attorney may also commit fraud by failing to disclose or concealing facts if the attorney knows the client is unaware of the facts and the attorney intends to induce the client into taking some action by concealing the facts. When an attorney breaches his fiduciary duty or violates the Deceptive Trade Practices Act, the attorney’s conduct often constitutes fraud.

Negligent Misrepresentation

Attorneys may occasionally be liable to non-clients if the attorney makes a false misrepresentation that the attorney knows will be relied upon by the non-client. These claims are discussed in more detail in the section of the site relating to who may sue attorneys.

Perlmutter & Schuelke, LLP maintains offices in Austin, Texas. However, our attorneys and lawyers represent clients throughout the state of Texas, including Dallas, Houston, San Antonio, Forth Worth, El Paso, New Braunfels, San Marcos, Kyle, Buda, Round Rock, Georgetown, Lockhart, Bastrop, Elgin, Manor, Brenham, Cedar Park, Burnet, Marble Falls, Temple and Killeen. By Brooks Schuelke

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