Understanding what constitutes legal malpractice

The risk of a legal malpractice claim may seem like an inescapable reality of practicing law. After all, attorneys are human and certainly make mistakes on occasion. However, attorneys sometimes falsely equate a mistake in a legal representation with legal malpractice. By understanding the elements of a successful legal malpractice claim, attorneys and law firms can focus on reducing the risks that give rise to liability.

A proactive approach to preventing legal malpractice claims is especially important when considering the headaches caused by claims. Claims can be distracting for law firms and can require the expenditure of significant time and expense to investigate and defend the claim (including, sometimes, the costs of an applicable deductible under a law firm's malpractice insurance policy).

Too often, however, attorneys concede malpractice when they realize that a mistake was made, which effectively invites the client to assert a claim. Unless the client actually has a viable malpractice claim, such an admission may create liability that did not otherwise exist. A successful legal malpractice claim requires proof of the following: (1) the existence of a duty, (2) a breach of the duty, and (3) proximately caused damages. Each of these elements is discussed below.

The Scope of the Duty Owed by Attorneys

The "duty" element of a legal malpractice claim seems deceptively simple. After all, there is no doubt that attorneys owe their clients a professional duty. The uncertainty may come, though, in determining who is actually a client of the attorney. With this uncertainty comes an increased risk of malpractice claims from unexpected parties who claim that they were owed a duty by the attorney.

A common scenario that gives rise to these issues is where there is a transaction with only one attorney involved. This could be a residential real estate transaction with a single closing attorney, for example. Other common scenarios arise in the corporate context, in which there is ambiguity regarding whether an attorney represents a corporation or the executives of that company, or in trusts and estates, when a beneficiary may not understand the scope of the attorney's role. The common denominator is a misconception by non-clients that the attorney is looking out for their interests.

Many attorneys will use disclaimers, sometimes in their engagement letters, to make the identity of the client (and non-clients) unmistakably clear. Consistent use of engagement letters or disclaimers in matters will also help an attorney show a standard practice for establishing an attorney-client relationship, such that any party who does not engage in that standard process is not reasonable in believing such a relationship exists.

The use of disclaimers can help attorneys avoid the ambiguity that often leads to malpractice claims.

A Breach of Duty

Courts differ on the exact terminology used in determining whether an attorney breached the duty owed to clients, but attorneys are typically judged against how other attorneys in a given geographic area would have reasonably acted under the circumstances. In California, for example, a form jury instruction provides that the attorney is negligent if she "fails to use the skill and care that a reasonably careful [attorney] would have used in similar circumstances."

This standard (often referred to as "the standard of care") is understood to evolve as the practice of law changes. Thus, attorneys with decades of experience may find that what was acceptable when they started practicing law is no longer sufficient in light of new technologies and new expectations. Ethical rules also change as the legal profession grapples with new issues that arise in the modern practice of law.

Staying abreast of these changes (as well as changes in the law) and adapting as necessary can help attorneys reduce risks. Saying that "it is the way things have always been done" may not work as a defense to a legal malpractice claim.

Instead, attorneys may consider attending continuing legal education programs or industry conferences that address changes in the law and in the modern law practice. The time and expense incurred in attending these programs is minor when compared with the potentially severe consequences resulting from a legal malpractice claim.

Causation and Damages

In many cases, the client's legal malpractice claim falls apart when it comes to causation and damages, even where the duty and breach are very obvious. For example, an attorney who misses the statute of limitations to file a new lawsuit may conclude that the mistake constitutes malpractice. However, if the new lawsuit was without merit or would not succeed, there may not be causation for the client's claimed damages.

In such circumstances, because providing legal services in accordance with the applicable standard of care would have led to the same result (a dismissed or barred claim), the client cannot maintain a viable claim for legal malpractice. Thus, it can be important to identify what act allegedly fell below the standard of care and then determine whether any damages were proximately caused by that act.

By admitting legal malpractice without conducting this analysis, attorneys may be undertaking liability which would not otherwise exist. Further, these attorneys may even create issues with respect to the firm's insurance policy, as many policies contain a clause prohibiting attorneys from admitting liability (referred to as a "no admission" clause).

While mistakes will happen, legal malpractice does not necessarily follow. By understanding what is and what is not legal malpractice, attorneys can limit their risks.