Confidential
Settlement – $300,000Facts
At the beginning of the 1990s, the defendant law firm began acting for the plaintiff in a series of disputes arising
from the dissolution of a medical practice in which the plaintiff was a fifty-percent shareholder. A number of
the disputes involved the plaintiff's claim for reimbursement from the other 50-percent shareholder.
During the spring of 1996, the plaintiff and the defendant were themselves involved in a dispute concerning
outstanding legal bills and the quality of the legal services that the defendants had provided to the plaintiff. In
an attempt to resolve their differences, the parties conducted a series of meetings and telephone conversations.
The plaintiff had concerns about the status of his litigation involving the dissolution of the medical practice and
his attempts to obtain reimbursement stemming from the dissolution of the clinic.
On at least two occasions the defendants stated to the plaintiff that, as to the ongoing matters, the plaintiff's
claims were viable and that they were confident about a successful outcome and that the claims were, and
would continue to be, diligently pursued. The plaintiff requested that the defendants afford him access to his
files and the defendants responded that access would be granted but that this was not possible at that specific
time.
Notwithstanding numerous subsequent requests by the plaintiff and repeated assurances from the defendants,
the plaintiff was never given access to his files. By the spring of 1996, the plaintiff had paid the defendants
approximately $300,000 in legal fees. The matters in dispute were complex and the trial in the dissolution case
was set within 60 days.
On or about June 3, 1996 the plaintiff and the defendant executed a release of claims and superseding retainer
agreement that the defendants had prepared and had presented to the plaintiff. The release purported to release
the defendants from all liability including ongoing matters such as the dissolution action. The plaintiff still,
despite the defendant's repeated assurances, had not been afforded access to his files.
On Oct. 2 1997, the plaintiff examined the file for the dissolution action. At that point, for the first time, the
plaintiff learned that the defendants had misrepresented the true status of the case and the amount of work that
they had performed on the plaintiff's behalf.
On May 20, 1998, the underlying trial court dismissed the dissolution action on the grounds of res judicata and
collateral estoppel.
Subsequently, the plaintiff filed his action for legal malpractice, breach of fiduciary duty and rescission against
the defendant.
The action was dismissed by way of demurrer, motion to strike and motion for summary judgment on the
grounds that the release was valid and that it barred any claims streaming from the pre-release conduct of the
defendants.
The plaintiff appealed the matter and the California Court of Appeals overturned the trial
court decision and remanded the entire matter back to the trial court.
Settlement Discussions
The plaintiff claimed $1 million for the loss of value of the underlying matters and for attorney fees paid to the defendants.
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