Ch 6 remedies for legal malpractice
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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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Ch 6 remedies for legal malpractice

Ch. 6 Remedies for Legal Malpractice

Compensatory Damages can be direct or consequential

Direct consequential damages defined mallen smith 21 1
Direct & Consequential Damages Defined Mallen & Smith §21:1

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.

A compensatory damages basic rules
A. Compensatory Damages: Basic Rules

  • Fact of harm: not speculative (must have harm-in-fact)

  • Amount of damages: proved w/ “reasonable certainty” (preponderance of evidence)

  • Damages must be proximately caused by the specific breaches of duties

A compensatory damages basics
A. Compensatory Damages Basics

  • Proving proximately caused losses: what did P lose because of L’s malpractice?

    ·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)

Mitigation expenses m s 21 10
Mitigation Expenses M&S §21:10

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

Consequential damages emotional distress
Consequential Damages: Emotional Distress

  • Rstmt §53 cmt. g. (generally not recoverable b/c unforeseeable)

    • E.g., ordinary negligence

    • E.g., breach of contract (not unless accompanied by independent and willful tort)

  • But recoverable if fraud, intentional tort, willful fiduciary breach or physical contact.

    • M&S §20.11; e.g., sexual assault

Emotional distress damages worsham v nix 2006 ok 67 145 p 3d 1055 2006
Emotional Distress DamagesWorsham v. Nix, 2006 OK 67, 145 P.3d 1055 (2006)

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.

Worsham v nix 2006 ok 67 145 p 3d 1055 2006
Worsham v. Nix, 2006 OK 67, 145 P.3d 1055 (2006)

  • Wrongful death precluded by “law of case” doctrine (i.e., might be raised again in different lawsuit, where suicide is foreseeable from breach of duty)

  • Tr. Ct. d/n err in excluding P’s EW (that filing of suit would have stopped alleged harassment), Daubert/Kumho

  • Tr. Ct. erred in dismissing Widow’s claim for emotional distress damages allegedly suffered after learning of apparent fraudulent conduct concerning the legal representation.

Consequential damages harm to reputation
Consequential Damages: Harm to Reputation

  • Legal principles similar to emotional distress damages

    • E.g., recoverable if reputational harm foreseeable & probable result of LM, especially if intentional wrong by L (rarely proven).

    • But, reputational harm recoverable where L’s negligent defense of medical malpractice case

Adjustments to damage calculations
Adjustments to Damage Calculations

  • Discount future damages to present value

  • Prejudgment interest for recoverable damages accrued and fixed in amount before time of trial [Determined by state statute]

Problem 6 1 the structured settlement
Problem 6-1 The Structured Settlement

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?

  • Value of remaining 180 monthly payments of $12K + $3M lump sum payable at end of 20 years

    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.

  • Compensate for loss of tax-free nature of structured settlement.

  • Emotional distress damages? Nondisclosure of relationship willful breach of fiduciary duty?

B punitive damages a k a exemplary or enhanced compensatory text pp 188 203
B. Punitive Damages (a/k/a exemplary or “enhanced compensatory”)text pp. 188-203

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

B punitive damages 2 constitutional limitations text pp 191 99
B. Punitive Damages compensatory”)2. Constitutional Limitations text pp. 191-99

a. 14th Amendment Due Process Clause

State Farm v. Campbell (U.S. 2003), and BMW v. Gore (U.S.) (1996) Guideposts:

  • Degree of reprehensibility of D’s misconduct (factors, including V’s $ vulnerability, repeat or isolated; culpability; state’s legitimate objectives text at p. 193);

  • Disparity between actual or potential harm to P and amount of punitive damage award (ratios instructive; refused to set bright-line test; single digit multipliers);

  • Difference between instant award and that upheld in comparable cases.

B punitive damages 2 constitutional limitations text pp 191 991
B. Punitive Damages compensatory”)2. Constitutional Limitations text pp. 191-99

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”

B punitive damages 2 constitutional limitations text pp 191 992
B. Punitive Damages compensatory”)2. Constitutional Limitations text pp. 191-99

Vicarious liability

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

Problem 6 2 overbilling clients text 198 99
Problem 6-2 Overbilling Clients compensatory”)text 198-99

  • Culpability: does Lehman’s conduct support punitive damage award? What are relevant factors?

  • Firm’s vicarious liability?

  • What substantive & procedural hurdles?

    Amount of compensatory damages to C?

    Relevance of damage to other firm clients?

    How much ($$$$) is “too much” – Due Process?

3 liability for lost punitive damages
3. Liability for “Lost Punitive Damages”? compensatory”)

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:

  • Conduct of LM D bears no relationship to underlying culpable conduct giving rise to potential punitive damage liability;

  • Speculative; inherently subjective judgment;

  • Societal Cost

    Minority view would allow, based on “make whole” remedy, deter legal malpractice.

Problem 6 3 the nursing home litigation
Problem 6-3 The Nursing Home Litigation compensatory”)

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”

Strategic considerations

Other possible recourse? (Discipline; fee forfeiture)