Many legal malpractice cases present challenges in terms of collectable damages. In particular, admitted liability claims raise additional challenges, because often times plaintiffs will seek a windfall in admitted liability malpractice actions notwithstanding the absence of large damages from the underlying case. This is due to the fact that the attorney’s error may have been egregious, or the plaintiff believes that the element of attorney malpractice exacerbates the otherwise pedestrian claim. Either way, good litigators from the plaintiff’s bar are always looking for ways to extrapolate additional damages. Such was the scenario in the recently decided case Moore v. Michalski, 2018-Ohio-3021, 107 N.E.3d 228 (5th Dist.), where the plaintiffs took a relatively run-of-the mill malpractice claim and attempted to recover their attorney fees in the prosecution of the legal malpractice action.
The Moore case involved a law firm and attorney who prepared a will for a client which was intended to leave a 3.5-acre farm to his two children. However, the firm’s assistant made a revision to the will which accidentally left the farm to the client’s estranged second wife. The transaction was ultimately unwound in the probate court, but at a cost to the decedent’s children who had to pay some of the proceeds of the sale to the estranged wife and incurred attorney fees in the process. When this admitted-liability case went to trial, the plaintiffs sought not only their fees in probate court to correct or remedy the error, but also fees in the prosecution of the claim for legal malpractice.
In reality, the damages caused by the error were relatively nominal. To that end, at trial the jury awarded $8,375.00 for economic loss, $7,000.00 in non-economic loss, and $5,125.00 in attorney fees incurred in the probate litigation with the decedent’s estranged wife. The kicker was a jury award of $70,000 in attorney fees incurred in the prosecution of the malpractice action. Although other issues were appealed, the law firm appealed the award of attorney fees in the prosecution of the legal malpractice claim.
On appeal, the firm raised six assignments of error. The first and most significant was that the trial court had erred in instructing the jury that they could consider attorney’s fees incurred in the prosecution of the legal malpractice case as damages. The Fifth District Court of Appeals examined the damages recoverable when an attorney commits malpractice. In a malpractice action the largest portion of damages usually arises from the value of the lost claim, however, plaintiffs may also recover consequential damages such as attorney’s fees. Citing the American rule on attorney’s fees, the court held that each party is responsible for their own attorney fees in the absence of bad faith or oppressive conduct. Moreover, the court evaluated the three categories of fees incurred when malpractice ensues: (1) ‘initial fees’ a plaintiff pays or agrees to pay an attorney for legal services that were negligently performed, (2) ‘corrective fees’ incurred by the plaintiff for work performed to correct the problem caused by the negligent lawyer, and (3) ‘litigation fees,’ which are legal fees paid by the plaintiff to prosecute the malpractice action against the offending lawyer. Id. citing John Kohl & Co. v Dearborn & Ewing, 977 S.W.2d 528, 534 (Tenn. Sup. Ct.1998).
Regarding the third type of attorney’s fees, “litigation fees” from the prosecution of the malpractice action, the court concluded that such damages violate the American Rule absent statutory authorization or agreement between the parties. Therefore, in an admitted liability claim for legal malpractice, absent statutory authorization, agreement of the parties, or a finding that the attorney acted in bad faith, damages for attorney’s fees incurred in the prosecution of the legal malpractice case are not proper. The jury’s award of $70,000 in fees to prosecute the malpractice claim was therefore reversed.
The ultimate outcome in Moore is unfortunate for the plaintiffs in that case. The ball was certainly dropped. The underlying claim had a value just a little north of $25,000 (which includes economic, non-economic damages, and fees incurred to remedy the error). Ultimately, we know that the plaintiffs spent $70,000 to get their day in court and ultimately recover $25,000. Had the claim been resolved early in the litigation for the true value of the case, as opposed to the exacerbated and inflated inclusion of fees in prosecuting the case, all parties would have benefited. The decision in Moore should make one issue relatively clear: even in a case of admitted liability, the plaintiff in a malpractice action will not be able to collect attorney fees in the prosecution of the case. This is a good rule – it incentivizes the parties early to evaluate and determine a value of the lost underlying claim, and then work toward resolution of the case on that premise.
If there are any further questions about the Moore decision, or any other issues relative to lawyer liability claims, please contact a member of our Legal Professional Liability Practice Group.
This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.
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