Ch. 6 Remedies for Legal Malpractice. Compensatory Damages can be direct or consequential. Direct & Consequential Damages Defined Mallen & Smith §21:1.
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Compensatory Damages can be direct or consequential
Direct damages are those damages for injuries that are the immediate, natural & anticipated consequences of the wrong, e.g., compensation for the loss of expected benefits from L’s services and expenses incurred due to L’s failure to achieve those benefits.
Consequential damages are compensation for injuries that proximately result from the negligence, but do not flow directly from or concern the objective of representation, e.g., mental distress & related personal injuries to body or reputation, economic losses and expenses incurred in bringing malpractice suit.
·Unsuccessful in underlying litigation
-Losing P, now LM P must re-try underlying case to prove that but for LM, would have recovered $X, which amount would have been collectable from original D.
-Losing D, now LM P must also retry underlying case, prove that but for LM, verdict would have been for $ (Y-Z) (amount by which judgment exceeded correct amount)
·loss of control damages (where P lost control of closely-held corp. because of D’s LM)
Reasonable expenses incurred to mitigate the adverse effects of D’s LM
Must be incurred in good faith, with reasonable care and bear reasonable relation to damages sought to be avoided or mitigated
May recover attorney’s fees incurred in mitigation
Facts: Mr. & Mrs. Worsham retained L to stop alleged workplace harassment of Mr., paid $650 nonrefundable retainer, $75 ct costs & signed contingent fee agreement. Tho complaint prepared & verified by Mr., suit not filed, nor formal notice to employer of problem for 5 months. Mr. committed suicide, allegedly as consequence of workplace stress. Mrs./administratrix sued L for wrongful death of Mr., and for his & her emotional distress, and other claims. Tr. Ct.: at non-jury trial, after P’s case-in-chief, granted sum. jdgmt for D.
L in p.i. action advised C to enter $3M structured settlement using UKR. Not disclosed that UKR owned by close friend of L’s or that payments not secured by collateral or insurance. 5 years later, UKR went bust.
What are C’s damages in malpractice action v. L?
a. Prejudgment interest for monthly payments accrued to time of trial.
b. Discount to present value all sums that were not accrued by time of trial.
1. Substantive state law variations; “tort reforms”
See, e.g., Okla. Stat. Ann., tit. 23 §23 9.1: requires “clear & convincing” evidence. Relevant factors: seriousness of public hazard; profitability of misconduct to D; duration & concealment; D’s awareness of hazard; D’s attitude & conduct after discovery; number & level of corp. employees that caused or concealed; D’s financial condition
Category I: reckless disregard, greater of $100K or amount of actual damages;
Category II: intentional & malicious, greater of $500K or 2x actual damages or increased $ benefit derived by D from conduct injuring P and others; determined after jury fixed actual damages
Category III: Intentional & malicious, but not in Category II: bifurcated proceeding after jury fixed actual damages
a. 14th Amendment Due Process Clause
State Farm v. Campbell (U.S. 2003), and BMW v. Gore (U.S.) (1996) Guideposts:
Philip Morris USA v. Williams (U.S. 2007): State forbidden from allowing punitive damages based in any part on desire to punish for harming nonparties.
Breyer, J.: no opportunity for D to defend against; “near standardless dimension”; no state power authorizes.
States must avoid procedure that “unnecessarily deprives juries of proper legal guidance…assurance that …are not asking the wrong question”
respondeat superior: Pacific Mutual v. Haslip (U.S. 1991)(comports with 14th Am., D.P.; incentive-based policy rationale)
Partnership law (each partner vicariously responsible for acts, omissions of all others within scope of partnership activities) N.B. Chapter 8
Amount of compensatory damages to C?
Relevance of damage to other firm clients?
How much ($$$$) is “too much” – Due Process?
Majority rule, per Tri-G., Inc. v. Burke et al. (Ill. 2006), Ferguson (Cal. 2003), NY and Rstmt § 53, cmt. h: Not recoverable. Policy reasons:
Minority view would allow, based on “make whole” remedy, deter legal malpractice.
Facts distinguishable from Tri-G?
Intentional breach of duty? Identify
Election of remedy: distinguish claims based on
Fraud (punitive damages)
Negligence (compensatory damages, possibility of “lost punitive damages”
Other possible recourse? (Discipline; fee forfeiture)