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Claim Examples

Below are a few examples of real life legal malpractice claims. Perhaps by reading these, you will be able to avoid the same mistakes that these attorneys made.

Below are brief summaries of actual claims brought against attorneys. The names and dollar amounts have been changed for privacy reasons. The material below is not intended to offer legal advice for a specific situation or establish appropriate standards of professional performance. The contents do not constitute legal opinion. Competent counsel should be consulted regarding specific concerns.

A claim involving commercial litigation…

Attorney Bob Adams was retained to represent Phil Smith in action against Smith’s partner Jim Jones. Jones and Smith formed a business entity to purchase certain equipment. The agreement called for Smith and Jones to be 50 percent owners until such time as Smith would buy out Jones. Smith invested in the business by signing a $50,000 promissory note while Jones invested cash. The agreement called for both Smith and Jones to manage the business.

The relationship between Jones and Smith deteriorated. Smith felt that Jones was freezing him out of the business and decided not to pay on the note. Smith retained Adams to defend an action brought by Jones seeking payment of the promissory note. Smith asserted that Jones mismanaged the business and did not involve him on relevant business decisions. At trial, the court precluded Smith from presenting any witness testimony (including expert testimony) because of Adam’s failure to produce a witness list. After this ruling, Smith agreed to settle the matter by paying Jones the $50,000 promissory note. Smith then brought a malpractice action against Adams asserting that the attorney committed several litigation errors including failing to introduce a witness list and filing a counter claim.

In the litigation against Adams, Smith retained an expert who asserted that, as a result of the preclusion order, credible evidence that Jones grossly mismanaged the business and breached fiduciary duty to Smith could not be presented. The expert asserted that a counterclaim against Jones would have been so successful that Smith would not have been required to pay on the $50,000 note and also would have recovered significant lost profits. Adams, in his own defense, asserted that he spoke at length with Smith about the litigation strategy. He asserted that Smith’s directive to save money on litigation expenses hampered the defense of the case. However, Adam’s file did not document the strategy discussions with Smith.

Helpful tip: If your client gives specific directions that limit your ability to proceed in the manner you recommend, make sure your file is documented. Depending on the circumstances, you may have to consider whether withdrawal from representation is necessary. Ensure you have letters to the client specifically setting forth your recommendations and confirming that the client has specifically advised you not to proceed in the manner recommended.

A claim involving a commercial transaction….

Attorney, Bob Adams represented William Charles in the sale of his company to Bill Buckley. The sale price was $500,000 with $50,000 being held back subject to the collection of certain outstanding accounts receivable. Adams drafted the purchase documents to include the provision that should the uncollectible accounts receivable be greater than $50,000, Charles would pay Buckley the difference.

Some time later, Buckley claimed that $100,000 of the receivables were uncollectible and sued Charles for the amounts in excess $50,000 based on the contract provision. Charles settled with Buckley and sued Adams. Charles asserted that he was not specifically advised of the receivable guarantee. He asserted that, had he known of the receivable guarantee, he either would have restructured the deal or not gone forward with the deal. Charles also asserted that Adams should have advised Charles to a have more detailed accounting of the accounts receivables prior to the sale. Finally, Charles asserted that Adams should have known that the accounting for the accounts receivable was sloppy, providing more reason for Charles to retain other accountants.

Adams admitted that Charles was not particularly savvy as to business agreements and completely relied on his advice throughout the deal. Adams did not recall having specific conversations with Charles about the accounts receivable provision. Adams asserted he did not think the accounts receivables would be an issue since an accountant reviewed the financial information and advised him on the amount of uncollectible accounts receivables.

Helpful tip: Clearly define the scope of retention. In the matter above, it was unclear whether Adams had a duty to advise Charles on the credibility of the accounting data. There was also no documentation on any discussions with the client or confirming letters regarding advice on fundamental contract terms.

A claim involving family law…

Carl Smith and his wife were divorced in 1994. Carl was required to make $75,000 a year in alimony payments to his wife. Sometime after the divorce was finalized, Carl retained attorney Bob Adams to modify the alimony payments. Adams was able to get the alimony reduced to $65,000 a year.

Thereafter, Carl began having trouble making the payments to his ex-wife. He also was defending several claims filed against him based on his business dealings. Carl filed a chapter 13 bankruptcy with Adam’s assistance. It was then converted to a Chapter 7. The primary creditor was Carl’s ex-wife. She moved to dismiss the bankruptcy. Adam, on behalf of Carl, negotiated a settlement with Carl’s ex-wife, in that Carl would pay his ex-wife a lump sum of $20,000, plus $60,000 per year for 10 years. The agreement did not state whether the payments could be modified at a later date. Adams incorrectly believed that the alimony amount stated in the settlement agreement could still be modified at a later date. Carl sued Adams asserting that Adams’ negligence caused him to enter into an agreement that could not be modified, thus causing him damage.

Helpful tip: Do not accept cases that are beyond your area of expertise. Reach out to specialists when you are uncertain of issues of law or procedure.

A claim involving an underlying medical malpractice matter…

The mother of a child born in a U.S. Naval Hospital retained attorney Bob Adams. During the birth, complications resulted in significant personal injuries to the child. Adams was retained to file a medical malpractice suit against the government as a result of the injuries sustained by the child. Since Adams was not completely familiar with the statutory requirements in filing a claim against the government, he referred the matter to Attorney John Murphy. Adams and Murphy agreed to a fee splitting arrangement. Murphy then failed to file the suit on time. Adams and Murphy were sued based on their negligence in filing the action on time.

Helpful tip: Upon referring a case, ensure you continue to follow up and document and diary all relevant dates. Referring a case to another attorney without formally ending your representation of the client does not insulate the referring attorney from liability. While you maintain an attorney/client relationship, you cannot delegate your duties to a referring attorney.

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