Illinois Legal Malpractice Blog

An Article posted today on Law.com written by Charles Toutant discusses an interesting and potentially huge declaratory judgment suit filed last week in federal court in Trenton, New Jersey.  A legal malpractice insurance carrier is sending up red flags on the level of client grumbling that puts a lawyer on notice of a claim that the lawyer must then report to the insurance carrier.  If the carrier prevails, the decision could lead to many sleepless nights for lawyers who become aware that their client has some disappointment in the outcome of his or her underlying case. 

The insurance carrier is seeking for the court to find it has no obligation to defend or indemnify the lawyers in their malpractice suit.  The carrier argues a lawyer's silence about a client's displeasure over the size of a settlement and her threat to consult with separate counsel because of her displeasure is enough to void the lawyers' malpractice coverage.  In defending its position, the carrier cites language very commonplace in legal malpractice insurance policies.  The dec. action claims the lawyers "knew or had a reasonable basis to believe that an act, error or omission committed by them during their representation of the client might be expected to result in a claim or suit."  See, General Star National Ins. Co. v. Law Offices of Robert A. Olkowitz, P.C.

Generally, settlements are inherently unpopular on both sides - that is why they are "settlements".  If the carrier is successful here it would most likely lead to a slew of notices by attorneys of possible causes of action which would be unduly burdensome on the carriers and a huge pain for lawyers, as well.  Also, how are lawyers supposed to define a client's "displeasure" - is a client's off-the-cuff comment on her displeasure with a settlement enough to trigger the notice requirement or is the threat to go to another lawyer the trigger? 

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Yesterday, Carolyn Elefant had an interesting posting entitled: "Who's More Ethical: the Lawyer With the Client Who Lied or the Lawyer Who Withheld Evidence of the Lie?".  The post centers around a medical malpractice case where defense lawyers obtained video evidence that the plaintiff who was claiming to be paralyzed from a doctor's negligence could walk.  The defense attorneys made the tactical decision to withhold disclosure of the tape for 21 months - which leads to the question - is this strategic decision ethical?  Plaintiff's attorneys argued if the defendant's had shown the video earlier, they wouldn't have invested 21 months worth of litigation time, cost, doctors fees and judicial resources (that would have also been the case if their client hadn't perpetrated a fraud).  However, is the withholding of this key evidence ethical if the defense lawyers immediately disclosed it's existence to their clients and the client made the decision to proceed for 21 months incurring additional costs and legal fees in its defense? (Ms. Elefant's posting relies in great part on another posting by Mike Cernovich, here).  It is an interesting question to ponder.

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Check out this comical video clip from Overlawyered, that shows a marketing campaign developed by Coca-Cola where the company pranked its own in-house counsel by sending actors portraying brand manager employees to attorneys to inquire if they could sue Coke Zero for tasting so much like Coca-Cola. 

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Yesterday, the New York Legal Malpractice Blog had an interesting post about a decision from the Court of Appeals of Indiana called Querrey & Harrow Ltd., et al.v. Transcontinental Insurance Co. which addresses the question, "can an excess insurer bring a legal malpractice action against an insureds attorneys?"  The decision addresses issues of equitable subrogation and attorney-client privilege (to name a few), looking at the law in Indiana and other jurisdictions (including Illinois).  It is definitely a case legal malpractice lawyers should take the few minutes to read.

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Well, it seems Michael Jackson has entered the realm of legal malpractice litigation.  According to the Starpulse News Blog, Jackson is suing the LA firm Ayscough & Marar, accusing his former attorneys of trying to force him into bankruptcy.  According to the post, Jackson claims his attorneys conspired with other lawyers, threatened to expose confidential information to the press, violated rules of professional conduct and committed both negligence and malpractice.

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Today, the Day On Torts Law Blog has a post that elaborates on the  the important question, "whose burden of proof is it in a legal malpractice case to prove collectibility of the underlying judgment?" This issue was discussed in my Sept. 1st post on the Clary decision which addressed the side of the argument in favor of laying the burden with the defendant.  Todays Day On Torts post  focuses on the contrary position of having the plaintiff bear the burden.  It is an interesting and important issue that has the courts split and is one I will continue to follow.

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A fellow blogger recently raised my curiosity in the infamous Vickie Marshall (Anna Nicole Smith) v. Pierce Marshall legal entanglement. According to the blog Hoops and Other Pop Culture, as a result of the recent U.S. Supreme Court Decision Pierce Marshall (the son of Vickie's deceased husband J. Howard) may have a legal malpractice claim against the attorney(s) who represented him in Vickie’s Chapter 11 bankruptcy proceeding. Here is how the potential legal malpractice claim arose: When J. Howard Marshall died in 1995, his will did not provide for his surviving widow (Vickie) and she now alleges that J. Howard intended to provide her with a gift in the form of a “catch-all” trust. J. Howard’s son Pierce was the ultimate beneficiary of J. Howard’s estate. In 1996, while the estate was being handled in the probate court in Texas, Vickie filed for bankruptcy in California. Later that same year, Pierce (it would appear out of spite since Vickie had no money at the time and Pierce was walking away from the Texas Probate Court an extremely wealthy man) filed a proof of claim in Vickie’s federal bankruptcy proceeding alleging that his step-mother had defamed him when, shortly after J. Howard’s death, her lawyers told members of the press that Pierce had engaged in forgery, fraud, and overreaching to gain control of his father’s assets (the federal courts have seemed to find some truth in these accusations). Why Pierce’s attorneys (according to my colleague Steve Jakubowski’s bankruptcy litigation blog - see comment 4, on Pierce’s proof of claim Texas lawyer John Melko was listed as his counsel) would counsel Pierce to file such a claim is baffling. By doing so Pierce who appeared to be free and clear in the Texas Probate Court and sought to gain very little from the claim subjected himself to the jurisdiction of the federal courts which have not been kind to him.

After Pierce filed his proof of claim, Vickie filed counterclaims against him. One of the claims alleged Pierce had tortiously interfered with the gift she expected from J. Howard. The bankruptcy court hammered Pierce, granting summary judgment for Vickie on Pierce’s claim and after a trial on the merits, ruling for Vickie on her counterclaim and finding that the objection and counterclaim were “core” proceedings – which meant that the court had authority to enter final judgment disposing of those claims and awarding compensatory and punitive damages just under $475 million.

Pierce then filed a motion to dismiss for lack of subject matter jurisdiction – claiming Vickie’s tortiuous interference claim could only be tried in the Texas Probate Proceeding – but the bankruptcy court denied the motion (relying on the famous Markham case), finding federal courts have jurisdiction to adjudicate rights in probate, as long as its final judgment does not interfere with the state courts possession of the property. After the bankruptcy court’s decision, the Texas probate court declared J. Howard’s estate plan valid.

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Last week Peter Lattman posted an interesting article on The Wall Street Journal Law Blog, here, about some high profile Los Angeles lawyers who are facing the prospect of criminal charges relating to a private investigator, Anthony Pellicano's wiretapping indictment. Those same lawyers' firms are facing the threat of professional malpractice suits that could drive the law firms out of business because illegal activity such as wiretapping isn't covered by malpractice insurance.

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Ben Cowgill’s Blog on Legal Ethics reported on an interesting ethical issue yesterday, here. According to the post, an e-mail newsletter published by the law firm of Hinshaw & Culbertson talked about the recent decision Crowe v. Tull, 126 P.3d 196 (Col. 2006) in which the Colorado Supreme Court held that the state’s Consumer Protection Act (CCPA) applies to lawyer advertising, after a client filed an action under the CCPA against his former attorneys because of their deceptive television ads. In so holding, the court found that the CCPA was intended to apply to all deceptive marketing practices and fraudulent advertising without regard for the defendant’s profession. The court went on to state that the Act does not create liability for those who intend to live up to the pronouncements of their ads, but innocently or negligently fail to conform their conduct to their words. However, in the instant case the court found there was sufficient evidence that the defendant/attorneys knowingly engaged in deceptive trade practices.

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Andrew Lavott Bluestone posted an interesting article on the New York Attorney Malpractice Blog today. The article here (which according to Bluestone came from a structured company's website) argues that the legal malpractice case Grillo v. Pettiete, which settled before a judge rendered an opinion, demonstrates a new area of legal malpractice litigation. According to the article, the case exemplifies that there can be legal malpractice when an attorney fails to advise a client on the positive aspects of a structured settlement over a lump sum settlement for a personal injury plaintiff.

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Peter Lattman of the Wall Street Journal Law Blog here recently gave a run down of the Top Ten Jury Verdicts awarded to Individual Plaintiffs in 2005 from a Lawyers Weekly USA list and one case in particular caught my attention, Callioux v. Baker Botts. In February, a Texas jury awarded an elderly wealthy woman who is suffering from Alzeherimer’s Disease $65.5 million after she sued both Baker Botts and Wells Fargo Bank claiming they conspired to persuade her to move her inheritance from her recently deceased husband into a foundation without advising her of any other alternatives.

The jury found that Baker Botts breached its fiduciary duty to the widow by failing to disclose “all important information” while doing the estate planning work, and that Wells Fargo also breached its fiduciary duty. There are a couple interesting twists worth pointing out in this case. First, according to an article about the case in Lawyers Weekly USA, there were conflict issues between the firm and the bank. Wells Fargo – which served as executor of the husband’s estate – was also a client of Baker Botts. In the Lawyers Weekly article, one of the widow’s attorneys is quoted saying, “ Baker Botts gave advice that took $65 million from one client and directed it to another client.” The second twist is how the judge handled the multi-million dollar verdict. After adding additional damages raising the verdict to $71 million, the court ordered the defendant’s to pay the money into a new court-created trust, allowing the widow to use the interest from the trust and giving her the ability to withdraw up to 5 percent of the principal yearly. The defendants are appealing the decision and I plan on tracking any new developments if they occur.

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Kevin O'Keefe of LexBlog wrote today, here, on how the New Jersey Supreme Court's Committee on Attorney Advertising is trying to adopt regulation to fit the new internet advertising medium. According to the post, the committee's most recent opinion says that lawyer listings or ads must include wording that they were paid for and that the host is not acting as a referral service.

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