Lawyers as defendants in 2015, Part 2

In 2015, California Courts of Appeal clarified several issues affecting attorneys as defendants.

On the one hand, a number of seemingly bright-line rules were announced: The attorney-client privilege does not protect communications between a lawyer and joint client when the other client sues for malpractice; mediation confidentiality essentially precludes negligence claims arising out of the mediation; the pre-filing requirements regarding conspiracy claims against attorneys remain viable; and, if there was any doubt, proximate causation is critical to prevail in a malpractice claim.

On the other hand, several rulings left more questions than answers. For example, the showing required to avoid an anti-SLAPP defense was called into question; the exception creating a duty to third parties may have been broadened; the favorable termination element in a malicious prosecution action remains the subject of debate; and while the reach of the legal malpractice statute of limitations was affirmed, it is also now clear that not all claims against attorneys will fall within the statute.

Here, we survey those cases involving the attorney-client privilege, mediation confidentiality, attorney-client conspiracy claims, and the anti-SLAPP statute. Next Friday, we will turn to cases addressing the statute of limitations, malicious prosecution claims, and the duty and causation elements of a malpractice claim.

Attorney-Client Privilege

Anten v. Superior Court (Weintraub Tobin), 233 Cal. App. 4th 1254 (2015), held that in a malpractice action brought by only one joint client, communications between the attorney and the other joint client made during joint representation are not privileged. Though it has been well established that the filing of a malpractice action waives the privilege as to the client filing the claim, Anten extended the scope of the waiver to joint clients even if the joint client does not pursue a malpractice claim, and does not agree to waive the privilege.

Mediation Confidentiality

In Amis v. Greenberg Traurig LLP, 235 Cal. App. 4th 331 (2015), the court essentially affirmed an absolute bar to malpractice claims arising out of an attorney's alleged misconduct during mediation. The plaintiff alleged that his attorneys committed malpractice by allowing him to enter into a settlement agreement during a mediation which he claimed was unfavorable. The attorney-defendants were granted summary judgment upon the trial court's finding that all advice dispensed regarding the settlement agreement was provided during a mediation. On appeal, while recognizing that enforcement of the mediation confidentiality statute "may hinder the client's ability to prove a legal malpractice claim against his or her lawyers," the court nevertheless concluded that strict interpretation of the mediation confidentiality statute mandated that negligence claims arising solely out of mediation activities could not be sustained.

Amis, along with other case law such as Cassel v. Superior Court, 51 Cal.4th 113 (2011), may result in legislative action (presently under consideration by the Law Revision Commission) to carve out certain instances of alleged malpractice from the reach of mediation confidentiality. But for now, an attorney cannot be held liable for malpractice during mediation.

Attorney-Client Conspiracy

Recent cases had also cast doubt on the viability of Civil Code Section 1714.10. The statute mandates that prior to filing claims for conspiracy between a lawyer and client arising from any attempt to contest or compromise a claim or dispute which is based on the attorneys' representation of that client, a plaintiff must obtain a court order assessing that there is a reasonable probability the plaintiff will prevail. This so-called attorney-client civil conspiracy statute received welcome consideration in Klotz v. Milbank, Tweed, Hadley & McCloy, 238 Cal. App. 4th 1339 (2015).

Klotz clarified that the pre-filing requirements may only be avoided where the plaintiff establishes that an attorney acted both outside of his professional capacity and for personal gain. The former requires a showing of a breach of an independent duty owed to the plaintiff, separate and apart from the attorney's provision of services to his client, and the latter cannot be premised on an attorney's receipt of fees for legal services. In other words, Section 1714.10 still applies to the most common type of conspiracy claims against an attorney - when third parties allege that the attorney conspired with a client against them.

Anti-SLAPP & Attorney Liability

Anti-SLAPP is a valuable tool for defeating claims alleged against attorneys by third parties arising out of the attorney's exercise of free speech rights, including pursuit of litigation, but not generally malpractice claims, as recounted by the court in Loanvest I LLC v. Utrecht, 235 Cal. App. 4th 496 (2015). The rationale is that, unlike claims brought by third parties against the attorney for litigation activities, a malpractice action "does not threaten to chill the exercise of protected rights" since the client wants the attorney to exercise free speech rights, just competently.

While the contrast between legal malpractice actions and actions where the attorney's free speech rights are involved is usually straightforward, the court in Sprengel v. Zbylut, 241 Cal. App. 4th 140 (2015) (petition for review pending), muddied that distinction. The majority of a divided panel held that the anti-SLAPP statute did not apply to an action brought by one member of an LLC wherein she alleged, but did not prove, she had an implied attorney-client relationship with the attorney-defendants based on her status as a 50 percent owner of the LLC, which indeed was the attorney-defendants' client.

In Sprengel, the majority essentially applied a demurrer standard to its analysis of whether the attorney-defendants were exercising their free speech rights and accepted as true that there was an attorney-client relationship between the plaintiff and attorney-defendants. That analysis seemed to fly in the face of the statute's preamble that it should be construed "broadly," and also departed from the principle that the first prong requires a fact-based analysis, rather than mere reliance on allegations. (Going a step further, Justice Dennis Perluss suggested in dissent that the anti-SLAPP statute should not only apply in Sprengel, but should extend to legal malpractice cases in general since malpractice cases do inherently involve free speech and petitioning activities.)

That fact-based analysis was borne out in two other anti-SLAPP cases in which courts held that even allegedly criminal conduct was protected absent a showing that the conduct was illegal as a matter of law. In Finton Construction Inc. v. Bidna & Keys, 238 Cal. App. 4th 200 (2015), the court rejected a purported criminal exception to the anti-SLAPP statute based on mere allegations that the attorney-defendants possessed and refused to relinquish a stolen hard drive. Not only did the court find that the plaintiff failed to conclusively establish criminal conduct, but it found that the plaintiff failed to even prove that the subject hard drive was stolen in the first place.

Bergstein v. Strook & Strook & Lavan, 236 Cal. App. 4th 793 (2015), presented a similar analysis, underscoring that "conduct that would otherwise come within the scope of the anti-SLAPP statute does not lose its coverage ... simply because it is alleged to have been unlawful or unethical." Ultimately, upon proceeding to the second prong of the anti-SLAPP statute, the Bergstein court determined that both the litigation privilege and statute of limitations barred the plaintiff's action, and affirmed the granting of the motion.

The Bergstein court's statute of limitations analysis will be our initial focus next Friday, along with a discussion of cases addressing the favorable termination element in malicious prosecution claims, and the causation and duty of care elements to a malpractice claim.