The California Supreme Court held yesterday that a plaintiff in a legal malpractice action may not recover lost punitive damages as compensatory damages from the lawyer. The full opinion in the case of Ferguson v. Lieff, Cabraser, Heimann & Bernstein (S10444, 6/9/03) can be found at this link (provided by How Appealing). Three judges who concurred with the opinion’s application of the new rule in the class action setting dissented to its application to all cases. Writing in her concurring and dissenting opinion, Justice Joyce Kennard said the following about clients outside the class action context: “[T]he majority effectively denies such injured clients anything but a nominal recovery of compensatory damages, insulating the attorneys while failing to fully compensate the clients for the loss caused by the malpractice.” According to Justice Kennard, just one other state completely insulates attorneys from liability for lost punitive damages in malpractice suits. Therefore, since insurance companies and lawyers have been living with that exposure, she says there is no need to go this far to prevent a malpractice crisis. [The Justice cites to 3 Mallen & Smith, Legal Malpractice (5th ed. 2000) Damages, Sec. 20.7, for the general rule imposing the liability for lost punitive damages on lawyers.] Justice Kennard argues that “If the attorney has not performed competently, the attorney is liable for the client’s injury, including punitive damages lost to the client because of the attorney’s deficient performance.” Law.com has an article today on Ferguson, as well as an article from 2001 about a California appellate court that reached a contrary conclusion. An earlier piece on Ferguson (March 7, 2003) notes that Ferguson’s lawyer in the malpractice suit, David Becht, “knows he’s not popular with his fellow lawyers on this issue. Not a single person or agency weighed in on his side in the form of an amicus, he said.” It adds: “His opponents would say that’s because the harm of allowing punitive damages for legal malpractice far outweighs any good.”
Plaintiffs’ personal injury lawyers and malpractice insurance companies (interesting bedfellows?) are breathing a big sigh of relief today. But, this is a perfect “ethicalEsq? Moment” — a chance to ask, not whether the decision makes life easier for lawyers, but whether it jibes with an attorney’s professional and fiduciary obligations to the client, and with basic fairness.
In an article that will soon be published by the University of Illinois Law Review, Cardozo Law Professor Lester Brickman argues that lawyers qua judges have been busy insulating attorneys from fiduciary and professional obligations, while developing and applying such norms to other professions. Indeed, Brickman compares attorney efforts to obtain punitive damages from others (including professionals such as medical doctors), with cases that came to a result similar to yesterday’s Ferguson opinion and give lawyers immunity.
What do you think? Please tell us with a Comment.
Two Cents from Jack Cliente: Isn’t the chance of getting big punitive damages a major part of the services and sales pitch of many lawyers? (It plays a big part in the career choice of more than a few attorneys, doesn’t it?) When a lawyer’s malpractice destroys that chance, why shouldn’t the client have a chance to prove a real loss and be compensated? What’s so different about lawyers as defendants that warrants that protection — other than the fact that lawyers make the rules?
ethicalEsq?ethicalEsq?
Several thanks to The Southern California Law Blog for mentioning us several times over the past few days.
Great new site David.
I agree with the majority in Ferguson. The lengthy discussion in the majority opinion as to policy considerations as to why punitive damages are awarded and why they should not be shifted to a negligent attorney are sound. A negligent attorney still remains on the hook for compensatory damages “lost” in the underlying action, as well as any other claim for damages that a malpractice attorney can dream up. The marginal protection afforded to lawyers by yesterdays decision will only impact those few instances of malpractice where the “lost punitive damages” is the only damages caused by the malpractice. How often does such a scenario come up? Does the number of such instances warrant making a lawyer essentially the insurer for punitive damages claims? I say no.
I also agree with yesterday’s decision by Justice Sills in California insulating an attorney from malpractice for bad tax advice as to the handling of settlement proceeds (see http://caselaw.lp.findlaw.com/data2/californiastatecases/g029474.pdf) and http://www.socallawblog.com/archives/000321.html.)
I commend the California Court of Appeal for reigning in some of these ridiculous malpractice cases.
Comment by Jeff — June 10, 2003 @ 1:54 pm
Great new site David.
I agree with the majority in Ferguson. The lengthy discussion in the majority opinion as to policy considerations as to why punitive damages are awarded and why they should not be shifted to a negligent attorney are sound. A negligent attorney still remains on the hook for compensatory damages “lost” in the underlying action, as well as any other claim for damages that a malpractice attorney can dream up. The marginal protection afforded to lawyers by yesterdays decision will only impact those few instances of malpractice where the “lost punitive damages” is the only damages caused by the malpractice. How often does such a scenario come up? Does the number of such instances warrant making a lawyer essentially the insurer for punitive damages claims? I say no.
I also agree with yesterday’s decision by Justice Sills in California insulating an attorney from malpractice for bad tax advice as to the handling of settlement proceeds (see http://caselaw.lp.findlaw.com/data2/californiastatecases/g029474.pdf) and http://www.socallawblog.com/archives/000321.html.)
I commend the California Court of Appeal for reigning in some of these ridiculous malpractice cases.
Comment by Jeff — June 10, 2003 @ 1:54 pm
I guess we are covering the same beat – I just posted on these cases here http://myshingle.com/article.pl?sid=03/06/11/0459252&mode=thread and agree with Jeff, above. It is interesting (but not surprising) that both cases arose in the context of contingency actions where the plaintiffs don’t have their own money on the table. If the plaintiffs in both cases had been footing the bill, I would imagine that as a matter of business judgment, they would have accepted those settlements without question and gone home. (Of course, if I had been the attorney in Jalili, I would have just paid the client the extra $310,000 and been done with it – not sure how that case went as far as it did)
Comment by Carolyn Elefant — June 11, 2003 @ 2:27 am
I guess we are covering the same beat – I just posted on these cases here http://myshingle.com/article.pl?sid=03/06/11/0459252&mode=thread and agree with Jeff, above. It is interesting (but not surprising) that both cases arose in the context of contingency actions where the plaintiffs don’t have their own money on the table. If the plaintiffs in both cases had been footing the bill, I would imagine that as a matter of business judgment, they would have accepted those settlements without question and gone home. (Of course, if I had been the attorney in Jalili, I would have just paid the client the extra $310,000 and been done with it – not sure how that case went as far as it did)
Comment by Carolyn Elefant — June 11, 2003 @ 2:27 am
As a client plaintiff in a legal malpractice suit I can speak with certainty as to how horrid and wrong that decision is in providing a shield for attorneys. I have been in litigation for nearly 11 years now. the first case was settled by my former attorney when he pulled the hot potato manuever, and abandoned my claim in favor of his other clients (that he himself testifys had no real damages) to bring in a lump sum settlement of over 1.4 million dollars, against my protest, as he said each of us would receive about 15K. I never agreed nor signed the settlement agreement…but he resigns as my attorney and quickly seeks to bind me by court order. Next he forces arbitration on me even though there was no arbitration clause in my contract, then he took a position in the arbitration that was adverse to me….yes he participated and spoke his position!!! I sued him and went to trial, and prevailed, and now he appeals. Of course I again have no attorney because i cannot afford one. So they send me threatening letters, highlighting that they realize there is now way I can afford a new attorney, and suggesting that I just walk away, as they believe they will prevail (because they are attorneys, and I am without one), and that I should over turn the prior decision, and just walk away with nothing… or they will come after me for 40K or more for costs, after they win, and I lose. And some one has nerve enough to say “Well she hasn’nt put any money down on the table??? What a joke!! This person does not realize how sick a plaintiff gets as their case heads to the jury and they stress over how much they will have to pay of they lose? And then there is the case within the case…oh yes…but to discuss what occurred earlier is argued as collateral estoppel. What cruel punishment. I am doubting that there is accountability in our system…that there is justice…that our system is to protect the innocent…that people should be fair, and honest, and just.The attorney has insurance…not his money….I do not. The other party that sued these attorneys with me did not prevail…they have filed for bankrupcy to overt the defendant attorneys taxation of costs. These attorneys after costs brought in over 460,000 for their fees…. My claim was for approximately $150,000.00 actual damages (without punitive damages) against the developers. I was the minority in the group that had real damages… but my claim by itself was not big enough to bring him the 460,000. so the majority that had no real damage was where his loyalty lied!!!!$7500.00 was crammed down my throat in the underlying matter. All I can say is “it’s kind of like losing a loved one tragically…no one really knows what it feels like until it happens to them”. But when attorney’s burn their clients they further victimize them…and harm them further…they should not be cushioned and protected while they beat the hell out of their clients.
Comment by Karen Walker — October 22, 2004 @ 7:58 pm
As a client plaintiff in a legal malpractice suit I can speak with certainty as to how horrid and wrong that decision is in providing a shield for attorneys. I have been in litigation for nearly 11 years now. the first case was settled by my former attorney when he pulled the hot potato manuever, and abandoned my claim in favor of his other clients (that he himself testifys had no real damages) to bring in a lump sum settlement of over 1.4 million dollars, against my protest, as he said each of us would receive about 15K. I never agreed nor signed the settlement agreement…but he resigns as my attorney and quickly seeks to bind me by court order. Next he forces arbitration on me even though there was no arbitration clause in my contract, then he took a position in the arbitration that was adverse to me….yes he participated and spoke his position!!! I sued him and went to trial, and prevailed, and now he appeals. Of course I again have no attorney because i cannot afford one. So they send me threatening letters, highlighting that they realize there is now way I can afford a new attorney, and suggesting that I just walk away, as they believe they will prevail (because they are attorneys, and I am without one), and that I should over turn the prior decision, and just walk away with nothing… or they will come after me for 40K or more for costs, after they win, and I lose. And some one has nerve enough to say “Well she hasn’nt put any money down on the table??? What a joke!! This person does not realize how sick a plaintiff gets as their case heads to the jury and they stress over how much they will have to pay of they lose? And then there is the case within the case…oh yes…but to discuss what occurred earlier is argued as collateral estoppel. What cruel punishment. I am doubting that there is accountability in our system…that there is justice…that our system is to protect the innocent…that people should be fair, and honest, and just.The attorney has insurance…not his money….I do not. The other party that sued these attorneys with me did not prevail…they have filed for bankrupcy to overt the defendant attorneys taxation of costs. These attorneys after costs brought in over 460,000 for their fees…. My claim was for approximately $150,000.00 actual damages (without punitive damages) against the developers. I was the minority in the group that had real damages… but my claim by itself was not big enough to bring him the 460,000. so the majority that had no real damage was where his loyalty lied!!!!$7500.00 was crammed down my throat in the underlying matter. All I can say is “it’s kind of like losing a loved one tragically…no one really knows what it feels like until it happens to them”. But when attorney’s burn their clients they further victimize them…and harm them further…they should not be cushioned and protected while they beat the hell out of their clients.
Comment by Karen Walker — October 22, 2004 @ 7:58 pm
As a client plaintiff in a legal malpractice suit I can speak with certainty as to how horrid and wrong that decision is in providing a shield for attorneys. I have been in litigation for nearly 11 years now. The first case was settled by my former attorneys when they pulled the hot potato manuever, and abandoned my claim in favor of their other clients (that they themselves testify had no real damages). I protested the lump sum settlement of over 1.4 million dollars, as the attorneys indicated…epect to receive 15K. You can imagine my shock and grief after six years of litigation and being led to believe that my claims for actual damages at approx. $150,000.00 and claims for punitive damages in addition to,would be asserted.I never agreed nor signed the settlement agreement…but they resign as my attorneys and quickly seek to bind me by court order. The court does so without prejudice to me suing my attorneys. Next they force arbitration down my throat even though there was no arbitration clause in my contract,which the court allows without prejudice to me suing them. Then they take a position in the arbitration that is adverse to me….yes.. they participate and spoke their position!!! I sued them and went to trial, and prevailed, and now he appeals….so i suppose I really haven’t prevailed…least not yet. Of course I again have no attorney because i cannot afford one for the appeal process, and no one wants it on a contingency. So these former attorneys send me threatening letters, highlighting that they realize that there is no way I can afford a new attorney, and suggesting that I just walk away, as they believe they will prevail (because they are attorneys, and I am without one), and that they are certain they will over turn the prior decision. They indicate I should just walk away with nothing… or they will come after me for 40K or more for costs, after they win, and I lose. And some one has nerve enough to say “Well because the contingent clients have not put any money down on the table??? What a joke!! What about all the money they already lost that caused them to litigate? What they should just happen to have a reserve so they can sue the attorney that was supposed to protect their rights?This person does not realize how sick a plaintiff gets as their case heads to the jury and they stress over how much they will have to pay if they lose…but that’s justice right…the client has no insurance but the attorney usually does? And then there is the case within the case requirement…oh yes…but to discuss what occurred earlier in the underlying case is argued as collateral estoppel. What cruel punishment. And suddenly the attorney who took your case and had it for nearly six years says you had no case…but does not tell you this until they want to cram a settlement down your throat…..that is lucrative to them, but not you…..does this make any sense? I am doubting that there is accountability in our system…that there is justice…that our system is to protect the innocent…that people should be fair, and honest, and just….but I refuse to give up. My prayers to God help me with strength. The attorney has insurance…not his money….I do not. The other party that sued these attorneys with me did not prevail…they have filed for bankrupcy to overt the defendant attorneys taxation of costs. These attorneys after costs brought in over 460,000 for their fees…. My claim was for approximately $150,000.00 actual damages (without punitive damages) against the developers. I was the minority in the group that had real damages… but my claim by itself was not big enough to bring him the 460,000. so the majority that had no real damage was where his loyalty lied!!!!$7500.00 was crammed down my throat in the underlying matter. All I can say is “it’s kind of like losing a loved one tragically…no one really knows what it feels like until it happens to them”. But when attorney’s burn their clients they further victimize them…and harm them further…they should not be cushioned and protected while they beat they hell out of their clients. If the client prevails…after crossing all the hurdles in litigation they should be intitled to ALL of what they should have received if they had proper representation, and if it is clear by fact that they would prevailed in the underlying matter.
I support the proposed three strikes bill for bad attorneys. Caught lying three times….. and your OUT!!!!!!!!!Why would anyone argue otherwise, unless they are a lying attorney themself.
Comment by Karen Walker — October 22, 2004 @ 8:42 pm
As a client plaintiff in a legal malpractice suit I can speak with certainty as to how horrid and wrong that decision is in providing a shield for attorneys. I have been in litigation for nearly 11 years now. The first case was settled by my former attorneys when they pulled the hot potato manuever, and abandoned my claim in favor of their other clients (that they themselves testify had no real damages). I protested the lump sum settlement of over 1.4 million dollars, as the attorneys indicated…epect to receive 15K. You can imagine my shock and grief after six years of litigation and being led to believe that my claims for actual damages at approx. $150,000.00 and claims for punitive damages in addition to,would be asserted.I never agreed nor signed the settlement agreement…but they resign as my attorneys and quickly seek to bind me by court order. The court does so without prejudice to me suing my attorneys. Next they force arbitration down my throat even though there was no arbitration clause in my contract,which the court allows without prejudice to me suing them. Then they take a position in the arbitration that is adverse to me….yes.. they participate and spoke their position!!! I sued them and went to trial, and prevailed, and now he appeals….so i suppose I really haven’t prevailed…least not yet. Of course I again have no attorney because i cannot afford one for the appeal process, and no one wants it on a contingency. So these former attorneys send me threatening letters, highlighting that they realize that there is no way I can afford a new attorney, and suggesting that I just walk away, as they believe they will prevail (because they are attorneys, and I am without one), and that they are certain they will over turn the prior decision. They indicate I should just walk away with nothing… or they will come after me for 40K or more for costs, after they win, and I lose. And some one has nerve enough to say “Well because the contingent clients have not put any money down on the table??? What a joke!! What about all the money they already lost that caused them to litigate? What they should just happen to have a reserve so they can sue the attorney that was supposed to protect their rights?This person does not realize how sick a plaintiff gets as their case heads to the jury and they stress over how much they will have to pay if they lose…but that’s justice right…the client has no insurance but the attorney usually does? And then there is the case within the case requirement…oh yes…but to discuss what occurred earlier in the underlying case is argued as collateral estoppel. What cruel punishment. And suddenly the attorney who took your case and had it for nearly six years says you had no case…but does not tell you this until they want to cram a settlement down your throat…..that is lucrative to them, but not you…..does this make any sense? I am doubting that there is accountability in our system…that there is justice…that our system is to protect the innocent…that people should be fair, and honest, and just….but I refuse to give up. My prayers to God help me with strength. The attorney has insurance…not his money….I do not. The other party that sued these attorneys with me did not prevail…they have filed for bankrupcy to overt the defendant attorneys taxation of costs. These attorneys after costs brought in over 460,000 for their fees…. My claim was for approximately $150,000.00 actual damages (without punitive damages) against the developers. I was the minority in the group that had real damages… but my claim by itself was not big enough to bring him the 460,000. so the majority that had no real damage was where his loyalty lied!!!!$7500.00 was crammed down my throat in the underlying matter. All I can say is “it’s kind of like losing a loved one tragically…no one really knows what it feels like until it happens to them”. But when attorney’s burn their clients they further victimize them…and harm them further…they should not be cushioned and protected while they beat they hell out of their clients. If the client prevails…after crossing all the hurdles in litigation they should be intitled to ALL of what they should have received if they had proper representation, and if it is clear by fact that they would prevailed in the underlying matter.
I support the proposed three strikes bill for bad attorneys. Caught lying three times….. and your OUT!!!!!!!!!Why would anyone argue otherwise, unless they are a lying attorney themself.
Comment by Karen Walker — October 22, 2004 @ 8:42 pm
The text was good, but i stil cant find the play ipdates. looking for it dude.
Comment by Joe Fuentes — July 23, 2005 @ 4:28 am
The text was good, but i stil cant find the play ipdates. looking for it dude.
Comment by Joe Fuentes — July 23, 2005 @ 4:28 am