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M ICHAEL J. F ARRELL F ARRELL, W HITE & L EGG PLLC H UNTINGTON, W EST V IRGINIA Legal Malpractice, Lawyer Disciplinary Committee & You.

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Presentation on theme: "M ICHAEL J. F ARRELL F ARRELL, W HITE & L EGG PLLC H UNTINGTON, W EST V IRGINIA Legal Malpractice, Lawyer Disciplinary Committee & You."— Presentation transcript:

1 M ICHAEL J. F ARRELL F ARRELL, W HITE & L EGG PLLC H UNTINGTON, W EST V IRGINIA Legal Malpractice, Lawyer Disciplinary Committee & You


3 Wrong Place—Wrong Time!

4 Malpractice—What size Firm is at risk? Number of Attorneys in the Firm Number of total claims (1999-2011) Percentage of total claims (1999-2011) 118,70633.93% 2-517,69332.09% 6-105,52210.01% 11-396,26811.37% 40-992,2634.10% 100+4,6768.48%

5 Malpractice—what types of practice get sued? Nature of the legal practice2011 Percentage of claims per ABA Real Estate20.33% Personal Injury—Plaintiff15.59% Family Law12.14% Estate, Trust and Probate10.67% Collections and Bankruptcy9.20% Corporate/Business Organization6.79% Criminal5.65% Business Transactions & Commercial Law 4.11% Personal injury—Defense3.26% All other12.26%

6 Preamble to the Fundamentals Purchase legal malpractice insurance. Designate the correct name of the Firm as the named insured under the policy. Purchase sufficient primary limits of coverage to cover the exposures presented by your practice. Purchase as large an aggregate coverage as you can afford. Purchase umbrella legal malpractice coverage above the primary if available and affordable. Answer the questions in the insurance application truthfully.

7 The Fundamentals Read the Code of Professional Conduct annually. Establish a Code of Professional Conduct compliance monitoring system within your Firm. Establish a mandatory preparation, sign-off and transmittal of the representation letter and contingent fee agreement. If multiple law firms are involved, confirm the responsibility of each Firm/lawyer in a writing. When a matter concludes, prepare, sign and transmit the disengagement letter.

8 Understand The Professional Liability Insurance Policy The “Retro Date” “Claims Made and Reported” Does Scope of Coverage include defense of an Ethics Complaint filed with the Lawyer Disciplinary Committee Policy Period: Beware of gaps between Policy periods Deductible: The higher the deductible, the lower the premium Choose a reputable insurer that will be solvent and responsible if you are sued Tail Coverage: If you plan to retire, you must have Tail Coverage

9 Duty, Breach & Causation x 2 Legal malpractice cases trigger the same analysis as any other negligence or intentional misconduct case: What was the DUTY owed to the client or third party? Did you BREACH a DUTY owed to the client or third party? Assuming that a BREACH of a DUTY occurred, was it A PROXIMATE CAUSE of the alleged DAMAGES? x 2 ── Then, you have to defend the case within the case.

10 Case Within a Case Doctrine The jury will instructed that it can find you liable if it determines by a preponderance of the evidence, your actions or failure to act breached the standard of care and proximately caused the client to suffer damages. When considering proximate causation, it is “a” proximate cause not “the” proximate cause. If the jury reaches the “breach of the standard of care threshold, then it must also find proximate cause i.e. that the underlying case would have resulted in a more favorable outcome for the client but for your negligence.

11 Recent Legal Malpractice Jury Charge “Negligence is the failure to use reasonable care. Reasonable care in a legal negligence case such as this is that degree of care which a reasonably careful attorney would use under like circumstances. Negligence may consist of doing something that a reasonably careful attorney would not do under like circumstances or in failing to do something that a reasonably careful attorney would do under like circumstances.” (Actual names omitted.)

12 Case Within the Case Jury Charge “Even if you find that plaintiffs have proven by a preponderance of the evidence that defendant was negligent in not discussing or recommending irrevocable life insurance trusts (ILITs) to the clients in 1991, you must still determine whether, had the advice or discussion of ILITs been had, a different outcome would have resulted. In other words, you must determine if Plaintiffs have proven by a preponderance of the evidence that the clients would have included ILITs into their respective estate plans, in 1991, had defendant recommended or discussed ILITs with them.” (Actual names omitted.)

13 The Legal Ethics Intersection Official endorsement by West Virginia State Bar. “Lawyers handling legal malpractice and breach of fiduciary duty claims should also have a firm grounding in the ethical rules governing lawyers’ conduct since such claims often arise from alleged violation of those rules and their assertion may implicate a lawyer’s ethical obligations.” malpractice/

14 Rule 3.16 of the West Virginia Rules of Lawyer Disciplinary Procedure (1) whether the lawyer has violated a duty owed to a client, to the public, to the legal system, or to the profession; (2) whether the lawyer acted intentionally, knowingly, or negligently; (3) the amount of the actual or potential injury caused by the lawyer’s misconduct; and (4) the existence of any aggravating or mitigating factors.’” Syllabus point 4, Office of Lawyer Disciplinary Counsel v. Jordan, 204 W. Va. 495, 513 S.E.2d 722 (1998).


16 February 5, 2013—LDB v. Busch “Ethical violations by a lawyer holding a public office are viewed as more egregious because of the betrayal of the public trust attached to the office.” Three (3) year suspension of license that arose from false statements to the Court about discovery issues in two criminal cases. Syllabus point 3, Committee on Legal Ethics v. Roark, 181 W. Va. 260, 382 S.E.2d 313 (1989).

17 Rule 1.1 --Competence (or the Lack Thereof) Rule 1.1 identifies the components of competence:  Legal Knowledge  Complexity and specialized nature of the matter  Lawyer’s general experience  Lawyer’s specific training and experience in the field in question  Feasibility of associating with a more competent lawyer  Skill  Defining the dispositive legal and factual issues presented  Thoroughness  Identifying, investigating and proving the essential elements of the cause of action or the affirmative defense  Preparation

18 Rule 1.2—Scope of the Representation Defining the scope of the representation is normally an evolving process that requires confirmation through multiple written communications during the various stages of the professional relationship. Think of a medical malpractice case—the most persuasive evidence (or lack thereof) is often found in the Hospital Records and Office Chart. True or False: “If it is not in the records, then it did not happen.” You have the opportunity to define the relationship and write a contemporaneous record—do it!!!

19 Rule 1.3—Reasonable Diligence and Promptness True or False: The pace of a representation is proportional to the effort invested by the lawyer. What is “reasonable diligence and promptness”?  Ask the competing expert witnesses.  They will evaluate the (1) complexity of the issues, (2) the number and location of the witnesses, the volume of documents, the access to the client, the filing of the pleadings, the duration and scope of discovery, the retention and presentation of experts, the pretrial motion practice, the Court and its Docket and the money (or lack thereof) invested in the case. (Under-funding a case is hazardous.) Experience teaches that it is the failure by the lawyer to act and/or communicate that is more difficult to explain/defend.

20 Rule 1.4—Keep Client Reasonably Informed # 1 Root Cause of Ethics Complaints and Malpractice Claims Frequency and quality of communications required. Bi-lateral communications required  Lawyer must communicate sufficiently to keep the client “reasonably informed about the status of the matter” and  Lawyer must “promptly comply with reasonable requests for information.”  Legal Informed Consent Standard: Client must receive communications sufficient “to make an informed decision....”

21 Rule 1.5--Fees Legal fee disputes can be adjudicated by the Lawyer Disciplinary Board particularly when fees are excessive or client taken advantage of. Legal fee disputes are not normally covered by a legal malpractice insurance policy. Legal fee disputes are avoidable if the lawyer and client have a clear and unambiguous fee agreement (contingent, flat or hourly rate). Legal fee disputes can be very troublesome and expensive. Fee splitting disputes with co-counsel

22 Innovative Legal Fee Discount Incentive 20% Discounted Legal Fees For WVU, WVUH, Mylan & Mon General Hospital Employees We value our Morgantown WV community and the support of all of our patrons. As a reflection of our thanks to some of the largest employers in the area and their employees, we are currently offering a discount on our legal fees to employees of WVU, WVUH, Mylan, and Mon General Hospital. Through the end of 2012 employees of these companies can claim a 20% discount on all legal services offered, including contingent fee cases! In order to claim this offer, please visit our law-firm listing on one of our local-listing sites, and look for a 'coupon' or 'special offers' link, where you can then print the appropriate coupon. Our listings with coupons can be found on the following sites: Merchant Circle, Hotfrog, ShowMeLocal, or Insider Pages (WVU/WVUH coupon only).Merchant CircleHotfrogShowMeLocalInsider Pages (WVU/WVUH coupon only) Conditions: Must present a current WVU, WVUH, Mylan, or Mon General Hospital employee badge, as proof of employment, along with a coupon, at the time of initially retaining this law firm, in order to claim this offer. Discount applies only to hourly attorney fees and does not apply to filing fees or other expenses or costs. This offer applies to all legal services offered. In contingent fee cases, the contingent fee percentage will be reduced and the discount reflected in a signed retainer agreement. F REE C ONSULTATION Initial consultations are free. We also offer variable fee arrangements and can take most personal injury cases on a contingent fee basis, which means that you don’t pay us unless we get money for you. Family law and Criminal law matters are typically taken on a retainer or flat-fee basis.

23 Fee Disputes Can Lead to License Annulment Shortly before the statute of limitations ran, the lawyer told a client he would not file her case until she paid the filing fee; the statute expired. Lawyer failed to respond to investigators about the matter. The Board found this conduct W. Va. R. Prof. Conduct 1.3; 1.4(a), (b); 1.16(d), and 8.1.(b). Lawyer agreed to share fees with a non-lawyer, in violation of W. Va. R. Prof. Conduct 5.4.(a). Lawyer withheld expenses from a client's settlement that were not due, thus violating W. Va. R. Prof. Conduct 8.4(a), (c); 1.5(a). Lawyer deposited a client's settlement check in his personal account, used the funds for his own expenses, and lied to the Board about this, thus violating W. Va. R. Prof. Conduct 1.15(a),(b); 8.1(a); 8.4(a), (c), (d). Lawyer withheld a portion of a client's settlement funds and the client's file, thus violating W. Va. R. Prof. Conduct 1.4(a-b); 1.5(b); 1.15(c); 1.16(d). Court rejected claim that a chemical dependency caused his misconduct. Lawyer Disciplinary Bd. v. Duty, 2008 W. Va. LEXIS 5 (2008)

24 Rule 5—Law Firms & Associations Be aware that other lawyers can involuntarily insinuate you into their legal obligations to their client by their affirmative conduct and your acquiescence. "As soon as a client has expressed a desire to employ an attorney and there has been a corresponding consent on the part of the attorney to act for him in a professional capacity, the relation of attorney and client has been established; and all dealings thereafter between them relating to the subject of the employment will be governed by the rules applicable to such relation." Syl. pt. 1, Keenan v. Scott, 64 W. Va. 137, 61 S.E. 806 (1908). Note the date for this legal malpractice case.Keenan v. Scott, 64 W. Va. 137, 61 S.E. 806 (1908)

25 Judge Chafin’s Bifurcated Trial Plan “Which, if any, of the defendants named in the actions had a relationship with the respective plaintiffs or with one another at the times relevant to each underlying claim so as to permit exposure of any or all such defendants to a claim of legal malpractice.” “If any or all of the defendants are found so exposed, are any such claims in either action barred by the applicable statute of limitations.”

26 Rule 5.7—Limited Liability Legal Practice Read the Limited Liability Partnership Act—W. Va. Code § 31B-1-1-1 et seq. Read the Uniform Partnership Act—W. Va. Code § 47B-1-1. Do NOT assume that because you have a friendship or a handshake agreement with a co- counsel or a working relationship with co-tenant or a landlord that a CYA posture will not be advanced when the legal malpractice suits get filed. Protection from such suits requires that you be proactive.

27 The Nace & Burke 10 Year Misadventure Two successful, high profile lawyers. One who is nationally prominent. Co-counsel in a medical 2003 malpractice case for plaintiff in which the client files bankruptcy in 2005 before adjudication. Trustee in bankruptcy hires both lawyers to represent the Bankruptcy Estate in 2005. Both lawyers sign a written Agreement/Affidavit to represent the Bankruptcy Estate in 2005.

28 The Nace & Burke 10 Year Misadventure WV attorney withdraws from malpractice case without notice to Trustee in Bankruptcy. Partial settlement of the malpractice case in 2006— not disclosed by Nace to Trustee in Bankruptcy. Nace denies that a partial settlement occurred. Trial verdict for plaintiff in 2007. Nace distributes verdict proceeds to debtor/plaintiff in 2008. Nace fails to notify Trustee of verdict and/or distribution of proceeds to debtor/plaintiff.

29 Rule 8.4—Dishonesty, Fraud, Deceit and Misrepresentation “The record reflects that Mr. Nace was dishonest with Mr. Trumble regarding the proceeds of the partial settlement. Mr. Trumble, in his November 14, 2008, letter, requested settlement documents. Mr. Nace's response letter stated more than once that there was no settlement. We will not parse semantics; a partial settlement is a settlement, and Mr. Nace was knowingly untruthful about the settlement with Mr. Trumble. This is a violation of Rule 8.4(c), which states that it is professional misconduct for an attorney to "engage in conduct involving dishonesty, fraud, deceit or misrepresentation."

30 Rule 8.3--Duty to Report Ethical Violation “As an attorney in West Virginia, Mr. Trumble had an affirmative duty to inform the ODC of his belief that Mr. Nace had committed violations of the Rules of Professional Conduct. Rule 8.3(a) states, ‘A lawyer having knowledge that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer’s honest, trust- worthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority. The duty to report is independent of Mr. Trumble’s position as trustee; the duty arises from his membership in the West Virginia bar.”

31 Supreme Court Rejects Client Comparative Misconduct Defense “In his brief to this Court, Mr. Nace writes extensively on Mr. Trumble's duties as trustee and how Mr. Trumble did not fulfill his responsibilities as trustee. While this Court is not in any position to evaluate Mr. Trumble's responsibilities as trustee— the matter is not properly before this Court —there is ample evidence that Mr. Nace, as Mr. Trumble's attorney, had his own set of duties and responsibilities that he failed to perform. Mr. Trumble is Mr. Nace's client, not the other way around.” (Footnote omitted.)

32 Nace’s License Suspended The Court concluded that Nace violated the following Rules of Professional Conduct: 1.1 (Competence); 1.3 (Diligence); 1.4(a) and (b) (Communication); 1.15(b) (Safekeeping Property); 8.4(c) (Misconduct involving dishonest, fraud, deceit, or misrepresentation); and 8.4(d) (Engaging in conduct that is prejudicial to the administration of justice). In terms of aggravating factors, the Court found “most notable is Mr. Nace’s refusal to accept any hint of responsibility for the harm caused by his failure to properly represent Mr. Trumble, for this dishonest conduct, or for obscuring a full investigation by the LDB.”

33 Trustee v. Nace & Burke Malpractice Case Filed in Northern District Bankruptcy Court Collateral Estoppel and Res Judicata Doctrines raised “Notably, regarding the Defendant’s attorney-client relationship with the Trustee, the West Virginia Supreme Court found that such a relationship, and the duties that naturally flow there form, existed in Nace’s case even in the absence of this court’s order authorizing his employment by the bankruptcy case.... The court accepts, as it must, the findings of the Supreme Court in that regard; however, the court does not rely on the Supreme Court’s finding in reaching its disposition regarding the challenged order of employment in this case. “

34 New Collateral Estoppel Law Review Article Abbye Lawrence, “Collateral Estoppel in Attorney Disciplinary Proceedings: A Hobson’s Choice,” 81 Defense Counsel Journal 58 (January, 2014)

35 Burnworth v. George (2013) “... he essentially has forgiven all of the collateral initially pledged as security for the promissory note, including the Colby deed of trust, by accepting a judgment in its stead.... Without proof of damages, Mr. Burnworth also cannot show that the respondents’ actions caused him harm. And, without proof of both damages and the respondents’ liability therefore, Mr. Burnworth cannot prevail upon his claim of legal malpractice....Because Mr. Burnworth failed to prove an essential element of his legal malpractice claim, the circuit court correctly granted the respondents’ motion for summary judgment.” READ the Judicial Estoppel discussion.

36 Holmes v. Manford (2013) Criminal Defense Counsel The Supreme Court of Appeals upheld the lower court’s decision to dismiss Holmes pro se legal malpractice action against his criminal defense attorney. Holmes claimed that Manford was negligent in allowing him to plead guilty to three counts of first degree sexual abuse and in failing to challenge the indictment as void for not identifying or describing the sexual acts he allegedly committed. Could not prove “actual innocence.” See also Kanode v. Czarnik, ___ W. Va. ___, ___ S.E.2d ___ (2013 W. Va. LEXIS 387)

37 Lawyer Disciplinary Board v. Elswick Two year suspension of her license. Elswick, a public defender: 1) knowingly and intentionally directed or permitted her paralegal to elicit a known false statement from a potential witness, a death row inmate, in her client’s habeas proceeding, in which the witness confessed to the murders her client was convicted for but asked no questions regarding his prior interactions with her client which he had revealed in a previous interview; 2) knowingly and intentionally attached the potential witness’ false statement to a motion filed with the Court; and 3) engaged in a pen-pal relationship with the potential witness which proved harmful to her client’s objectives, as the witness withdrew his confession when she ceased the relationship. The Hearing Panel Subcommittee found that Elswick violated Rules of Professional Conduct 5.3; 3.3; 8.4(c) and (d); 3.4(b); and 1.7(b).

38 ABA Standing Comm. On Prof. Liability “In the 2007 Study, Client Relations problems were the root of 11.22% of claims, 3.35% from the 2003 Study (14.57%) Client relations errors are back up [in 2011] providing the basis for 14.61% of claims. Together, Client Relations and Intentional Wrongs account for a quarter of all claims through these errors seem entirely within lawyers’ power and control to avoid. Perhaps the message here is that solid ethics are critical, as is patience and clear communications with clients.”

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