Legal Malpractice, Lawyer
Disciplinary Committee & You
M ICHAEL J. F ARRELL
F ARRELL , W HITE & L EGG PLLC
H UNTINGTON , W EST V IRGINIA
Irish Toast
“MAY THE ROOF ABOVE US NEVER FALL IN AND MAY WE
FRIENDS GATHERED BELOW NEVER FALL OUT.”
TRANSLATION:
WHEN AN ATTORNEY CLIENT RELATIONSHIP BEGINS IT IS
ROSY AND OPTIMISTIC BECAUSE BOTH THE ATTORNEY
AND CLIENT HAVE A SHARED AND CONSISTENT
EXPECTATION AS TO THE OUTCOME.
WHEN AN UNEXPECTED OUTCOME RESULTS, A
LEGAL MALPRACTICE CLAIM WILL OFTEN FOLLOW
AS THE “FRIENDS GATHERED BELOW FALL OUT.”
Wrong Place—Wrong Time!
Malpractice—What size Firm is at risk?
Number of Attorneys
in the Firm
Number of total
claims (1999-2011)
Percentage of total
claims (1999-2011)
1
18,706
33.93%
2-5
17,693
32.09%
6-10
5,522
10.01%
11-39
6,268
11.37%
40-99
2,263
4.10%
100+
4,676
8.48%
Malpractice—what types of practice get sued?
Nature of the legal practice
2011 Percentage of claims per
ABA
Real Estate
20.33%
Personal Injury—Plaintiff
15.59%
Family Law
12.14%
Estate, Trust and Probate
10.67%
Collections and Bankruptcy
9.20%
Corporate/Business Organization
6.79%
Criminal
5.65%
Business Transactions & Commercial
Law
4.11%
Personal injury—Defense
3.26%
All other
12.26%
Preamble to the Fundamentals
 Purchase legal malpractice insurance.
 Designate the correct name of the Firm as the named
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insured under the policy.
Purchase sufficient primary limits of coverage to cover
the exposures presented by your practice.
Purchase as large an aggregate coverage as you can
afford.
Purchase umbrella legal malpractice coverage above the
primary if available and affordable.
Answer the questions in the insurance application
truthfully.
The Fundamentals
 Read the Code of Professional Conduct annually.
 Establish a Code of Professional Conduct compliance
monitoring system within your Firm.
 Establish a mandatory preparation, sign-off and
transmittal of the representation letter and
contingent fee agreement.
 If multiple law firms are involved, confirm the
responsibility of each Firm/lawyer in a writing.
 When a matter concludes, prepare, sign and transmit
the disengagement letter.
Understand The Professional
Liability Insurance Policy
 The “Retro Date”
 “Claims Made and Reported”
 Does Scope of Coverage include defense of an Ethics
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Complaint filed with the Lawyer Disciplinary Committee
Policy Period: Beware of gaps between Policy periods
Deductible: The higher the deductible, the lower the
premium
Choose a reputable insurer that will be solvent and
responsible if you are sued
Tail Coverage: If you plan to retire, you must have Tail
Coverage
Duty, Breach & Causation x
2
 Legal malpractice cases trigger the same analysis as any
other negligence or intentional misconduct case:
 What was the DUTY owed to the client or third party?
 Did you BREACH a DUTY owed to the client or third
party?
 Assuming that a BREACH of a DUTY occurred, was it
A PROXIMATE CAUSE of the alleged DAMAGES?
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2 ──Then, you have to defend the case within the
case.
Case Within a Case Doctrine
 The jury will instructed that it can find you liable if it
determines by a preponderance of the evidence, your
actions or failure to act breached the standard of care
and proximately caused the client to suffer damages.
 When considering proximate causation, it is “a”
proximate cause not “the” proximate cause.
 If the jury reaches the “breach of the standard of care
threshold, then it must also find proximate cause i.e.
that the underlying case would have resulted in a
more favorable outcome for the client but for your
negligence.
Recent Legal Malpractice Jury Charge
 “Negligence is the failure to use reasonable care.
Reasonable care in a legal negligence case such as
this is that degree of care which a reasonably careful
attorney would use under like circumstances.
Negligence may consist of doing something that a
reasonably careful attorney would not do under like
circumstances or in failing to do something that a
reasonably careful attorney would do under like
circumstances.” (Actual names omitted.)
Case Within the Case Jury Charge
“Even if you find that plaintiffs have proven by a
preponderance of the evidence that defendant was
negligent in not discussing or recommending
irrevocable life insurance trusts (ILITs) to the clients
in 1991, you must still determine whether, had the
advice or discussion of ILITs been had, a different
outcome would have resulted. In other words, you
must determine if Plaintiffs have proven by a
preponderance of the evidence that the clients would
have included ILITs into their respective estate
plans, in 1991, had defendant recommended or
discussed ILITs with them.” (Actual names omitted.)
The Legal Ethics Intersection
 Official endorsement by West Virginia State Bar.
 “Lawyers handling legal malpractice and breach of
fiduciary duty claims should also have a firm
grounding in the ethical rules governing lawyers’
conduct since such claims often arise from alleged
violation of those rules and their assertion may
implicate a lawyer’s ethical obligations.”
www.wvlawyerreferral.org/areas-of-practice/legal
malpractice/
Rule 3.16 of the West Virginia
Rules of Lawyer Disciplinary Procedure
 (1) whether the lawyer has violated a duty owed to a
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client, to the public, to the legal system, or to the
profession;
(2) whether the lawyer acted intentionally, knowingly, or
negligently;
(3) the amount of the actual or potential injury
caused by the lawyer’s misconduct; and
(4) the existence of any aggravating or mitigating
factors.’”
Syllabus point 4, Office of Lawyer Disciplinary Counsel
v. Jordan, 204 W. Va. 495, 513 S.E.2d 722 (1998).
February 5, 2013—LDB v. Busch
 “Ethical violations by a lawyer holding a public office
are viewed as more egregious because of the betrayal
of the public trust attached to the office.”
 Three (3) year suspension of license that arose from
false statements to the Court about discovery issues
in two criminal cases.
 Syllabus point 3, Committee on Legal Ethics v.
Roark, 181 W. Va. 260, 382 S.E.2d 313 (1989).
Rule 1.1 --Competence (or the Lack Thereof)
 Rule 1.1 identifies the components of competence:
 Legal Knowledge
Complexity and specialized nature of the matter
 Lawyer’s general experience
 Lawyer’s specific training and experience in the field in question
 Feasibility of associating with a more competent lawyer
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Skill
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Thoroughness
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Defining the dispositive legal and factual issues presented
Identifying, investigating and proving the essential elements of the
cause of action or the affirmative defense
Preparation
Rule 1.2—Scope of the Representation
 Defining the scope of the representation is normally
an evolving process that requires confirmation
through multiple written communications during the
various stages of the professional relationship.
 Think of a medical malpractice case—the most
persuasive evidence (or lack thereof) is often found
in the Hospital Records and Office Chart.
 True or False: “If it is not in the records, then it
did not happen.”
 You have the opportunity to define the relationship
and write a contemporaneous record—do it!!!
Rule 1.3—Reasonable Diligence and Promptness
 True or False: The pace of a representation is
proportional to the effort invested by the lawyer. What is
“reasonable diligence and promptness”?
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Ask the competing expert witnesses.
They will evaluate the (1) complexity of the issues, (2) the number
and location of the witnesses, the volume of documents, the access to
the client, the filing of the pleadings, the duration and scope of
discovery, the retention and presentation of experts, the pretrial
motion practice, the Court and its Docket and the money (or lack
thereof) invested in the case. (Under-funding a case is hazardous.)
 Experience teaches that it is the failure by the lawyer to
act and/or communicate that is more difficult to
explain/defend.
Rule 1.4—Keep Client Reasonably Informed
 # 1 Root Cause of Ethics
Complaints and Malpractice Claims
 Frequency and quality of communications required.
 Bi-lateral communications required
 Lawyer must communicate sufficiently to keep the client
“reasonably informed about the status of the matter” and
 Lawyer must “promptly comply with reasonable requests for
information.”
 Legal Informed Consent Standard: Client must receive
communications sufficient “to make an informed decision. . . .”
Rule 1.5--Fees
 Legal fee disputes can be adjudicated by the Lawyer
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Disciplinary Board particularly when fees are
excessive or client taken advantage of.
Legal fee disputes are not normally covered by a legal
malpractice insurance policy.
Legal fee disputes are avoidable if the lawyer and
client have a clear and unambiguous fee agreement
(contingent, flat or hourly rate).
Legal fee disputes can be very troublesome and
expensive.
Fee splitting disputes with co-counsel
Innovative Legal Fee Discount Incentive
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20% Discounted Legal Fees For WVU, WVUH, Mylan & Mon General Hospital
Employees
We value our Morgantown WV community and the support of all of our patrons. As a reflection of our
thanks to some of the largest employers in the area and their employees, we are currently offering a
discount on our legal fees to employees of WVU, WVUH, Mylan, and Mon General Hospital. Through
the end of 2012 employees of these companies can claim a 20% discount on all legal services offered,
including contingent fee cases!
In order to claim this offer, please visit our law-firm listing on one of our local-listing sites, and look
for a 'coupon' or 'special offers' link, where you can then print the appropriate coupon. Our listings
with coupons can be found on the following sites: Merchant Circle, Hotfrog, ShowMeLocal, or Insider
Pages (WVU/WVUH coupon only).
Conditions: Must present a current WVU, WVUH, Mylan, or Mon General Hospital employee badge,
as proof of employment, along with a coupon, at the time of initially retaining this law firm, in order to
claim this offer. Discount applies only to hourly attorney fees and does not apply to filing fees or other
expenses or costs. This offer applies to all legal services offered. In contingent fee cases, the
contingent fee percentage will be reduced and the discount reflected in a signed retainer agreement.
FREE
CONSULTATION
Initial consultations are free.
We also offer variable fee arrangements and can take most personal injury cases on a contingent fee
basis, which means that you don’t pay us unless we get money for you. Family law and Criminal law
matters are typically taken on a retainer or flat-fee basis.
Fee Disputes Can Lead to License Annulment
 Shortly before the statute of limitations ran, the lawyer told a client he would
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not file her case until she paid the filing fee; the statute expired.
Lawyer failed to respond to investigators about the matter. The Board found
this conduct W. Va. R. Prof. Conduct 1.3; 1.4(a), (b); 1.16(d), and 8.1.(b).
Lawyer agreed to share fees with a non-lawyer, in violation of W. Va. R. Prof.
Conduct 5.4.(a).
Lawyer withheld expenses from a client's settlement that were not due, thus
violating W. Va. R. Prof. Conduct 8.4(a), (c); 1.5(a).
Lawyer deposited a client's settlement check in his personal account, used the
funds for his own expenses, and lied to the Board about this, thus violating W.
Va. R. Prof. Conduct 1.15(a),(b); 8.1(a); 8.4(a), (c), (d).
Lawyer withheld a portion of a client's settlement funds and the client's file,
thus violating W. Va. R. Prof. Conduct 1.4(a-b); 1.5(b); 1.15(c); 1.16(d).
Court rejected claim that a chemical dependency caused his misconduct.
Lawyer Disciplinary Bd. v. Duty, 2008 W. Va. LEXIS 5 (2008)
Rule 5—Law Firms & Associations
 Be aware that other lawyers can involuntarily insinuate you
into their legal obligations to their client by their affirmative
conduct and your acquiescence.
 "As soon as a client has expressed a desire to employ an
attorney and there has been a corresponding consent on the
part of the attorney to act for him in a professional capacity,
the relation of attorney and client has been established; and
all dealings thereafter between them relating to the subject of
the employment will be governed by the rules applicable to
such relation." Syl. pt. 1, Keenan v. Scott, 64 W. Va. 137, 61
S.E. 806 (1908). Note the date for this legal malpractice case.
Judge Chafin’s Bifurcated Trial Plan
“Which, if any, of the defendants named in the actions had a
relationship with the respective plaintiffs or with one
another at the times relevant to each underlying claim so
as to permit exposure of any or all such defendants to a claim
of legal malpractice.”
“If any or all of the defendants are found so exposed, are any
such claims in either action barred by the applicable statute of
limitations.”
Rule 5.7—Limited Liability Legal Practice
 Read the Limited Liability Partnership Act—W. Va.
Code § 31B-1-1-1 et seq.
 Read the Uniform Partnership Act—W. Va. Code §
47B-1-1.
 Do NOT assume that because you have a
friendship or a handshake agreement with a cocounsel or a working relationship with co-tenant or a
landlord that a CYA posture will not be advanced
when the legal malpractice suits get filed.
 Protection from such suits requires that you be
proactive.
The Nace & Burke 10 Year Misadventure
 Two successful, high profile lawyers.
 One who is nationally prominent.
 Co-counsel in a medical 2003 malpractice case for
plaintiff in which the client files bankruptcy in 2005
before adjudication.
 Trustee in bankruptcy hires both lawyers to
represent the Bankruptcy Estate in 2005.
 Both lawyers sign a written Agreement/Affidavit to
represent the Bankruptcy Estate in 2005.
The Nace & Burke 10 Year Misadventure
 WV attorney withdraws from malpractice case
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without notice to Trustee in Bankruptcy.
Partial settlement of the malpractice case in 2006—
not disclosed by Nace to Trustee in Bankruptcy.
Nace denies that a partial settlement occurred.
Trial verdict for plaintiff in 2007.
Nace distributes verdict proceeds to debtor/plaintiff
in 2008.
Nace fails to notify Trustee of verdict and/or
distribution of proceeds to debtor/plaintiff.
Rule 8.4—Dishonesty, Fraud,
Deceit and Misrepresentation
“The record reflects that Mr. Nace was dishonest with
Mr. Trumble regarding the proceeds of the partial
settlement. Mr. Trumble, in his November 14, 2008,
letter, requested settlement documents. Mr. Nace's
response letter stated more than once that there was
no settlement. We will not parse semantics; a partial
settlement is a settlement, and Mr. Nace was
knowingly untruthful about the settlement with Mr.
Trumble. This is a violation of Rule 8.4(c), which
states that it is professional misconduct for an
attorney to "engage in conduct involving dishonesty,
fraud, deceit or misrepresentation."
Rule 8.3--Duty to Report Ethical Violation
 “As an attorney in West Virginia, Mr. Trumble had an
affirmative duty to inform the ODC of his belief that Mr.
Nace had committed violations of the Rules of
Professional Conduct. Rule 8.3(a) states, ‘A lawyer
having knowledge that another lawyer has committed a
violation of the Rules of Professional Conduct that raises
a substantial question as to that lawyer’s honest, trustworthiness or fitness as a lawyer in other respects, shall
inform the appropriate professional authority. The duty
to report is independent of Mr. Trumble’s position as
trustee; the duty arises from his membership in the West
Virginia bar.”
Supreme Court Rejects Client
Comparative Misconduct Defense
 “In his brief to this Court, Mr. Nace writes
extensively on Mr. Trumble's duties as trustee and
how Mr. Trumble did not fulfill his responsibilities as
trustee. While this Court is not in any position to
evaluate Mr. Trumble's responsibilities as trustee—
the matter is not properly before this Court —there is
ample evidence that Mr. Nace, as Mr. Trumble's
attorney, had his own set of duties and
responsibilities that he failed to perform. Mr.
Trumble is Mr. Nace's client, not the other way
around.” (Footnote omitted.)
Nace’s License Suspended
 The Court concluded that Nace violated the following
Rules of Professional Conduct: 1.1 (Competence); 1.3
(Diligence); 1.4(a) and (b) (Communication); 1.15(b)
(Safekeeping Property); 8.4(c) (Misconduct involving
dishonest, fraud, deceit, or misrepresentation); and
8.4(d) (Engaging in conduct that is prejudicial to the
administration of justice). In terms of aggravating
factors, the Court found “most notable is Mr. Nace’s
refusal to accept any hint of responsibility for the harm
caused by his failure to properly represent Mr. Trumble,
for this dishonest conduct, or for obscuring a full
investigation by the LDB.”
Trustee v. Nace & Burke Malpractice Case
 Filed in Northern District Bankruptcy Court
 Collateral Estoppel and Res Judicata Doctrines raised
 “Notably, regarding the Defendant’s attorney-client
relationship with the Trustee, the West Virginia Supreme
Court found that such a relationship, and the duties that
naturally flow there form, existed in Nace’s case even in
the absence of this court’s order authorizing his
employment by the bankruptcy case. . . . The court
accepts, as it must, the findings of the Supreme Court in
that regard; however, the court does not rely on the
Supreme Court’s finding in reaching its disposition
regarding the challenged order of employment in this
case. “
New Collateral Estoppel Law Review Article
 Abbye Lawrence, “Collateral Estoppel in Attorney
Disciplinary Proceedings: A Hobson’s Choice,”
 81 Defense Counsel Journal 58 (January, 2014)
Burnworth v. George (2013)
“. . . he essentially has forgiven all of the collateral initially
pledged as security for the promissory note, including the
Colby deed of trust, by accepting a judgment in its stead.
... Without proof of damages, Mr. Burnworth also cannot
show that the respondents’ actions caused him harm.
And, without proof of both damages and the
respondents’ liability therefore, Mr. Burnworth cannot
prevail upon his claim of legal malpractice. . . .Because
Mr. Burnworth failed to prove an essential element of his
legal malpractice claim, the circuit court correctly
granted the respondents’ motion for summary
judgment.”
READ the Judicial Estoppel discussion.
Holmes v. Manford (2013)
 Criminal Defense Counsel
 The Supreme Court of Appeals upheld the lower
court’s decision to dismiss Holmes pro se legal
malpractice action against his criminal defense
attorney. Holmes claimed that Manford was
negligent in allowing him to plead guilty to three
counts of first degree sexual abuse and in failing to
challenge the indictment as void for not identifying
or describing the sexual acts he allegedly committed.
 Could not prove “actual innocence.”
 See also Kanode v. Czarnik, ___ W. Va. ___, ___
S.E.2d ___ (2013 W. Va. LEXIS 387)
Lawyer Disciplinary Board v. Elswick
 Two year suspension of her license.
 Elswick, a public defender:
 1) knowingly and intentionally directed or permitted her paralegal
to elicit a known false statement from a potential witness, a death
row inmate, in her client’s habeas proceeding, in which the witness
confessed to the murders her client was convicted for but asked no
questions regarding his prior interactions with her client which he
had revealed in a previous interview;
 2) knowingly and intentionally attached the potential witness’ false
statement to a motion filed with the Court; and
 3) engaged in a pen-pal relationship with the potential witness
which proved harmful to her client’s objectives, as the witness
withdrew his confession when she ceased the relationship.
 The Hearing Panel Subcommittee found that Elswick violated Rules
of Professional Conduct 5.3; 3.3; 8.4(c) and (d); 3.4(b); and 1.7(b).
ABA Standing Comm. On Prof. Liability
 “In the 2007 Study, Client Relations problems were
the root of 11.22% of claims, 3.35% from the 2003
Study (14.57%) Client relations errors are back up [in
2011] providing the basis for 14.61% of claims.
Together, Client Relations and Intentional Wrongs
account for a quarter of all claims through these
errors seem entirely within lawyers’ power and
control to avoid. Perhaps the message here is
that solid ethics are critical, as is patience
and clear communications with clients.”