Gena L. Sluga
Douglas L. Christian
I.
Introduction[1]
For lawyers, the relationship between
professional responsibility and professional liability is both unsettled and
unsettling. As lawyers receive
increasingly critical public scrutiny, the lines between attorney disciplinary
systems and the civil justice system have become blurred. Clients expect and deserve accountability --
accountability not only for professional negligence but also for the way
attorneys behave.
The two systems that regulate lawyer conduct,
discipline and civil justice, actually encompass three distinct concepts of
accountability: aspirational standards,
professional self-regulation, and a standard of care for providing legal
services. Aspirational goals
historically have been codified alongside mandatory rules of professional
conduct. Consequently, what attorneys
regard as a “lawyer code” is really an eclectic collection of pronouncements on
everything from competence to civility.
None of these rules was intended to serve as a basis for imposing civil
liability upon a lawyer for its violation.
Explicit contrary admonitions notwithstanding, these rules of conduct
have been used by lawyers and courts as a springboard for establishing, or at
least analyzing, the standard of care for lawyers in malpractice cases. The rationale for the evidentiary
admissibility of professional conduct rules and the circumstances under which
they are admissible form the subject of this article.
A. Malpractice
Civil redress for legal malpractice
has existed in the United States for over two hundred years.[2] In recent years, malpractice claims have
proliferated, perhaps due to changing client attitudes, complexity of practice,
willingness of lawyers to sue other lawyers, and the existence of lawyer errors
and omissions insurance.[3] The total awards for compensatory and
punitive damages in legal malpractice cases approaches 5.4 billion dollars each
year.[4]
Lawyer malpractice actions most
commonly arise from allegations that a lawyer negligently handled a client's
legal matter.[5] To establish a claim for legal malpractice, a
client must establish: (1) a duty owed by the lawyer to the client; (2) breach
of the duty; (3) damage to the client, and (4) causation between the breach and
the damages.[6] To establish that a duty was breached,
a plaintiff must establish the relevant standard of care. Since the promulgation of ethics rules,
plaintiffs have offered those rules as evidence of the applicable standard of
care.[7] An important issue in many of these cases is
whether the failure to comply with ethics rules should be admissible evidence
against a lawyer.
B. The Ethics Rules
The American Bar Association has promulgated
three successive sets of rules regulating professional conduct for
lawyers. In 1908, the ABA established
the Canons of Professional Ethics. The
Canons were prescriptively general and served a largely symbolic function. Recognizing the need for more effective
discipline, the ABA adopted the Code of Professional Responsibility in
1969. Most states quickly followed,
adopting a version of the Code. Finally,
the ABA adopted the Model Rules of Professional Conduct in 1983. The Model Rules articulated an expanded and
more comprehensive set of rules. Most
states have adopted some version of the Model Rules of Professional Conduct,
although some states maintain a version of the older Model Code of Professional
Responsibility.[8] For simplicity, this article will reference
applicable state rules as "ethics rules,” and the Model Rules of
Professional Conduct as the “Model Rules."
C. Relationship Between Malpractice and Ethics Rules
It is generally understood that
ethics rules are adopted to guide lawyers in their professional conduct; they
provide a benchmark for disciplining those lawyers who behave improperly. By contrast, the language prefacing the Model
Rules indicates that they are not to be used to impose civil liability.[9]
1. Arguments Against Use of Ethics
Rules as Evidence of Malpractice
The Model Rules state:
Violation of a Rule should not give rise to a
cause of action nor should it create any presumption that a legal duty has been
breached. The Rules are designed to provide guidance to lawyers and to provide
a structure for regulating conduct through disciplinary agencies. They are not
designed to be a basis for civil liability. Furthermore, the purpose of the
Rules can be subverted when they are invoked by opposing parties as procedural weapons.
The fact that a Rule is a just basis for a lawyer's self-assessment, or for
sanctioning a lawyer under the administration of a disciplinary authority, does
not imply that an antagonist in a collateral proceeding or transaction has
standing to seek enforcement of the Rule.
Accordingly, nothing in the Rules should be deemed to augment any
substantive legal duty of lawyers or the extra-disciplinary consequences of
violating such a duty.[10]
Courts have offered several other arguments
against the evidentiary receipt of ethics rules in malpractice cases. For example, it has
been suggested that the rules were designed for use in disciplinary
proceedings, not in malpractice actions.[11] This dichotomy makes some sense since the two
different types of proceedings impose different evidentiary burdens. In a disciplinary proceeding, for example, a
lawyer can be sanctioned even if the ethics violation caused no damage to the client and would not
support a civil action.[12] Because a rule violation is arguably demonstrated
more easily in a disciplinary proceeding, it is inappropriate to use the ethics
rules, or evidence of their breach in a civil proceeding.
There also is concern over increased
litigation against lawyers resulting from the use of ethics rules to establish
malpractice more easily. Yet another
argument against using the rules as evidence of malpractice suggests that
disciplinary bodies may hesitate to enforce the rules if enforcement will also
result in civil penalties. Additionally,
it may be unfair to exact civil penalties when the ethics rules were not
enacted by a legislative body, but were adopted instead by state bar
associations.[13]
Courts also have observed that clients have
access to adequate remedies without resort to ethics rule violations.[14] Some have held that the existing common law
malpractice cause of action provides sufficient redress, and that an expanded
use of the ethics rules is unnecessary.
Others suggest that companion remedies, including actions for malicious
prosecution, adequately protect the public from unprofessional conduct.
a. Nature
of the Rules
Judicial reluctance to cite ethics rules when
determining the standard of care in malpractice actions arises from the concern
that such a role is precluded by the nature and purpose of the rules
themselves. The prefatory language of
both the Model Rules and the Model Code provide the substance for this
argument: “Violation of a Rule should not give rise to a cause of action nor
should it create any presumption that a legal duty has been breached. . . .
[The Rules] are not designed to be a basis for civil liability.”[15] The Code makes no attempt to prescribe either
disciplinary procedures or penalties for violation of a Disciplinary Rule, nor
does it define standards for imposing civil liability upon lawyers.[16] Many courts have cited this prefatory
language in rejecting attempts to establish a cause of action based solely on a
lawyer's violation of the ethics rules.[17] Other courts have gone farther, noting that
although the ethics rules are not irrelevant to the lawyer’s standard of care,
this language precludes their admission into evidence.[18]
Courts also have refused to admit the ethics
rules into evidence by reason of their underlying purpose. Of particular note, the rules are not statutes
or administrative regulations; they are court-adopted rules of lawyer
discipline.[19] As such, the rules arguably should not be
elevated to the status of implicating civil liability.
b. Application Difficulties
Courts have expressed practical concerns about
applying certain ethics rules to malpractice suits. Ethics rules may offer such vague
prescriptions that any standard of care derived from the rules would be too
broad to provide the finder of fact with meaningful guidance.[20] Some rules are simply too broad to guide the
fact finder to a fact-specific determination. For example, Model Rule 2.1 states: “In representing a client, a lawyer
shall exercise independent professional judgment and render candid advice.”[21] Reference to these rules arguably could
precipitate a finding of liability as to any violation of the rules, regardless
of whether another standard of care would apply under the specific
circumstances of the case.[22]
c. Fear of
Adverse Consequences
Judicial reluctance to expand application of the
ethics rules emanates in part from concern over the future viability of the
rules and their impact on the legal system.
First of all, use of the ethics rules in malpractice actions could lead
to a stratification of the rules based on their applicability to civil
suits. As discussed above, only some of
the rules are specific enough to be useful in the malpractice context. Other rules, however, remain important in
guiding lawyer conduct.[23] In addition, use of the ethics rules to
impose civil liability could upset the balance among the courts, lawyers, and
clients, as established by these same rules.
Specifically, lawyers may begin emphasizing lawyer-client rules over
those that address a lawyer’s obligations to, and relations with, the court.[24] Finally, there is fear that using the rules
to define malpractice may cause the organized bar to dilute those ethical
standards.[25]
Reluctance to expand the role of ethics rules in
malpractice lawsuits also reflects the concern over possible adverse
consequences to the court system. One
such consequence anticipates that use of the ethics rules in malpractice
lawsuits would encourage litigation.[26] There also exists a concern that recognizing
an independent cause of action based upon violation of the ethics rules would
detrimentally affect the relationship between the lawyer and the client,
inhibiting lawyers from fully advocating their clients' interests.[27]
2. Arguments in Favor of Accepting
the Ethics Rules as Evidence
Despite the many concerns regarding
precipitous expansion of the role of ethics rules in lawyer malpractice suits,
there remains articulated the belief that the rules prescribe a minimum
standard of competence for lawyers.
Accordingly, the breach of an ethics rule should constitute evidence
that a lawyer was negligent.
Most of the arguments that favor using the
ethics rules as evidence are based largely on notions of fairness and public
policy. For instance, professional rules
of conduct are relevant to establish the standard of care in negligence suits
against other professionals.[28] In addition, use of the rules as evidence of
the standard of care, rather than as the basis for an independent cause of
action, might serve as a deterrent to malpractice. At least one judge has recognized: "the
application of codified ethical standards in legal malpractice proceedings may
be an additional deterrent against unethical conduct. . . . [A] monetary
penalty in civil litigation may be a more meaningful sanction than a private
admonition or reprimand in the disciplinary system."[29] According to another court, "[h]olding a
specific client unable to rely on the [ethical] standards in his professional
relations with his own attorney would be patently unfair."[30]
II.
Evidence of
Ethics Violations Is Frequently Admissible
Lawyers who still believe that the
violation of an ethics rule may only be used against them in a disciplinary
proceeding are sadly mistaken. Among the
courts that have addressed this issue, the overwhelming majority hold that evidence
of an ethics violation is admissible in a malpractice action.[31] The rationale that underlies admission of
this evidence derives from the idea that the rules are designed to establish a
minimum level of competence.
Consequently, when a lawyer’s conduct does not conform to the rules, the
lawyer is negligent. Assuming
admissibility, the next logical inquiry concerns the weight of such evidence.
A. Majority Rule: Violation Admissible as Some Evidence of Breached
Standard of Care
A majority of courts that considered
this issue have held that ethics rules may be used to establish the standard of
care for lawyers. Thus, if a lawyer
fails to meet the standard, it is evidence that the lawyer breached the
applicable standard of care owed to the client.[32] Typically, however, these cases also hold
that the breach of a rule is not independently actionable; breach of the rule
is relevant only to breach of the lawyer’s duty.
For example, in Allen v. Lefkorr, Duncan, Grimes & Dermer, P.C.,[33] a Georgia court reversed
an earlier appellate court decision that disallowed evidence of the lawyer's
breach of ethics standards. The court
first determined that a violation of ethics standards, by itself, does not
support a malpractice action. Such
transgressions, however, are relevant evidence of a breach of the standard of
care because it would be unreasonable to suggest that the rules do not play
some role in shaping the care and skill ordinarily exercised by lawyers.
The Allen court further observed that laws intended to protect
individuals may create norms of behavior, the violation of which may be
actionable upon the theory that the violator has not acted with due care. Although the court stated that failure to
comply with the ethics rules will not ordinarily constitute negligence per se,
the failure to comply can be considered along with other evidence to determine
whether a lawyer acted properly.
Similarly, an Ohio court in Krishbaum v. Dillon[34] held that the ethics
rules were relevant to the reasonableness of a lawyer’s behavior. Faced with a malpractice action involving a
lawyer who named himself as a beneficiary in his client's will, the court held
that the rules, along with other facts and circumstances, could be considered
to determine whether the lawyer breached his duty of care.
Consequently, most courts accept
evidence of a lawyer's failure to comply with an ethics standard as "some
evidence" of malpractice. While
this evidence does not establish a cause of action by itself, such evidence is
valuable for two reasons. First, it
often allows a client to establish that the lawyer owed her a duty. Secondly,
it tends to illustrate the standard of care required of all lawyers, and helps
to prove that a lawyer did not act competently in situations where the lawyer’s
conduct fell below that standard.
B. Violation Creates Presumption of Malpractice
Decisional authority exists that the
breach of an ethics rule is presumptive legal malpractice.[35] These decisions have analogized the violation
of an ethics rule to the violation
of a statute or ordinance.
In Lipton v. Boesky,[36] a lawyer’s
representation of a client in connection with construction of an office
building gave rise to an action for legal malpractice. The Michigan appellate court held that, as
with statutes, the violation of an ethics rule creates a rebuttable presumption
of malpractice. The court analogized to
other codified rules, including regulatory statutes, the violation of which
occasions civil liability. The court
noted that the same wrongful act may harm a private individual as well as the
public at large. The Lipton case thus suggests that the
ethics rules are standards of practice for lawyers that express norms of
professional conduct for interacting with the public, the legal system, and the
legal profession. Furthermore, it would
be unfair to preclude a client’s reliance on her lawyer’s responsibility to
abide by those standards.
New Jersey courts consider that the
violation of an ethics standard legally infers malpractice, shifting the burden
of persuasion from the plaintiff/client to the defendant/lawyer. In Albright
v. Burns,[37]
a malpractice action resulted from the lawyer’s management of a testator’s
assets both before and after the testator’s death. The court admitted applicable ethics rules
into evidence and held that the defendant’s violation of those rules created a
presumption of negligence. The court
noted that the failure to meet the minimum level of competency established by
the profession should be admissible as evidence of malpractice.
C. Violation as Conclusive Evidence of Malpractice
Only a few courts have found that
the violation of an ethics standard is conclusive evidence that a lawyer
breached the standard of care to her client.[38] In Ishmael
v. Millington,[39] the plaintiff/client
alleged that the defendant/lawyer had a conflict of interest. The lawyer had represented both husband and
wife in a divorce proceeding. The
California District Court of Appeal found the common law duty of care an
inadequate measure of a lawyer's duty, and held that the standard of care for
disclosing conflicts was that required by the ethics rules. The Ishmael
court effectively determined that failure to meet the standards imposed by the
ethics rules was conclusive evidence of malpractice. Subsequently, in Day v. Rosenthal,[40] the California Court of
Appeal held that the state ethics rules conclusively established the lawyer's
duty of care, and that any expert testimony to the contrary would be
disregarded.
Most recently, in Mirabito v. Liccardo,[41] the California Court of
Appeal admitted evidence that a lawyer had violated ethics standards by
breaching a fiduciary duty to his client.
The lawyer had advised the client to invest substantial amounts of money
in enterprises in which the lawyer held a personal interest. The Mirabito
court determined that the ethics rules defined a lawyer's duties to his
client and, therefore, could properly be used by the jury to measure whether he
had breached a fiduciary duty.[42] The lawyer had argued that the rules could
not be used to establish civil liability, and that the ethics breach therefore
should be inadmissible in a civil case.
The court rejected his argument, however, explaining that, although
California law recognized no independent cause of action for violation of an
ethics rule, such a violation could be used as conclusive evidence of a breach
of duty. Beyond California, no state has
expressly held that violation of an ethics rule is conclusive evidence of
negligence. A few other courts, however,
appear interested in doing so.[43]
D. Violation Inadmissible in Malpractice Action
A minority of courts have held that
the violation of an ethics rule is inadmissible in a lawyer malpractice action.[44] In Orsini
v. Larry Moyer Trucking, Inc.,[45] the Supreme Court of
Arkansas upheld the trial court’s exclusion of the ethics rules without
extensive discussion. The court simply
stated that the rules were designed for discipline and not civil
liability. The court in Hizey v. Carpenter,[46] however, provided a more detailed rationale.
In Hizey, a lawyer was sued for negligence involving a real estate
transaction. The plaintiffs claimed that
the lawyer represented both the buyers and sellers in the transaction. At trial, the lawyer moved to exclude
testimony of the plaintiffs' expert witness, arguing the impropriety of
admitting evidence regarding the professional ethics standards that govern
lawyers. The trial court granted the
lawyer's motion and, on appeal, the Washington Supreme Court unanimously upheld
the trial court’s determination. It held that a plaintiff may not inform the
jury of the existence of the ethics rules in a legal malpractice action, either
directly through jury instruction or by expert testimony.
The court relied on public policy in
its determination. The court observed that the plaintiffs had access to other
common law remedies and could support a malpractice action without relying on
the ethics rules as evidence. The use of
the rules as a basis for civil liability would defeat the purpose of the rules,
whose aim was to aid the legal system as a whole by protecting the public and
the integrity of the profession. The
court expressed concern that use of the ethics rules as a basis for civil
liability would dilute the motivating force behind them.
The court also examined the analogy
between ethical standards and statutes or administrative regulations. In many jurisdictions the violation of a
statute or administrative rule is admissible as evidence of negligence, and is sometimes
admissible as negligence per se. The
court distinguished statutes as created through the legislative rather than the
judicial process. Consequently, since
the ethics rules did not bear legislative imprimatur, they were too vague to
establish the standard of care in a professionalism action. The Hizey
and Orsini decisions stand alone,
however, as the only reported decisions that preclude this evidence.
E. The Restatement View
The recently promulgated Restatement Third of
the Law Governing Lawyers acknowledges that, “the legal effect of officially
adopted lawyer codes is fundamental and diverse.”[47] Restatement Section 48 establishes the
elements of a claim for professional negligence and observes that the claim has
characteristics of both a tort action for negligence and an action for breach
of the client-lawyer contract.
Restatement Section 52 establishes the applicable standard of care and
addresses the significance of a rule regulating lawyer conduct. Section 52, comment f states: “A rule or statute
regulating the conduct of lawyers but not providing a damages remedy does not
give rise to an implied cause of action for lack of care or fiduciary
breach.” Consequently, the Restatement
does not regard the violation of a rule of professional conduct as separately
actionable. However, the Restatement
does recognize the admissibility of ethics rules under appropriate
circumstances: “[T]he trier of fact may
consider the content and construction of a relevant statute or rule, for
example a statute or a rule of professional conduct (see §1, comment b) designed for the protection of
persons in the position of the claimant. . . . The use of the rules in
malpractice litigation can also protect lawyers, for example when showing that
a lawyer was compelled by rule to act in the way challenged by the plaintiff. .
. .”[48]
III.
Related
Issues
A. Violation of Ethics Rule Not Actionable Independently
Most judicial discussion surrounding
the admissibility of an ethics violation involves malpractice. Occasionally, a lawyer may be sued, not for
common law negligence, but for violating an ethics rule. The question then becomes whether the
violation of an ethics rule, by itself, can provide the basis for a lawsuit.
Although the language prefacing the Model
Rules states that their purpose is not to impose civil liability, courts
overwhelmingly allow their admission in malpractice suits. When admitted, however, violations are
restricted to demonstrating substandard care.
No court has found an ethics violation itself to support an independent
cause of action.[49]
While relevant case law is limited,
the court in Baxt v. Lilioa[50] squarely addressed
whether violation of an ethics rule was actionable outside a malpractice
action. In Baxt, the plaintiffs were unable to bring a malpractice action
since the lawyers who violated the rules were representing their adversary in
the underlying lawsuit. Instead, they
sued opposing counsel for willfully obstructing discovery and acting
dishonestly. The plaintiffs asked the
court to recognize a cause of action premised upon a breach of the ethics
rules. They claimed, among other things,
that the lawyers were liable for breaching the duty of candor to the tribunal,
the duty to act fairly toward other parties, and the duty to make truthful
statements to others.
The New Jersey Supreme Court rejected the
plaintiffs’ claims and held that a violation of the rules could not form the
basis for a cause of action. In its
holding, the court acknowledged that the ethics rules could be used to show
that a lawyer breached a duty, but declined to adopt a new cause of action
based solely on the violation itself.
The court also noted that the ethics rules were designed to be
aspirational and to discipline lawyers, not to impose liability.
The court highlighted the
differences between violating ethics rules and committing a civil wrong, citing
a hypothetical situation where a lawyer breached the duty to treat a third
party with courtesy and consideration.
While agreeing that the lawyer’s conduct would be reprehensible, the
court stated that this violation would be an inappropriate civil cause of
action.
B. Compliance with Ethics Rules as a Defense
Moving beyond whether violations of
the ethics rules are actionable as malpractice is the question whether lawyers
may use compliance with ethics rules as a defense to malpractice. In Kirsch
v. Duryea,[51]
the California Supreme Court stated:
An attorney has an obligation not only to
protect his client’s interests but also to respect the legitimate interests of
fellow members of the bar, the judiciary, and the administration of justice. .
. .
.
. . .
When apparent conflict exists
between the attorney’s duty to his client on the one hand and his public
obligation on the other, it is not sufficient to show that some or many prudent
attorneys would not have made the mistake.
The attorney’s choice to honor the public obligation must be shown to
have been so manifestly erroneous that no prudent attorney would have done so.[52]
In some cases, courts have confirmed
this principle and allowed the ethics rules to be used as a defense to
malpractice claims. The case of Nix. v. Whiteside[53] involved a lawyer who complied with the ethics rules and refused
to allow his client to offer false testimony.
The client was subsequently convicted of perjury and appealed based on
ineffective assistance of counsel. The
Supreme Court discussed the lawyer's duty to a client and held that the duty is
"limited by an equally solemn duty to comply with the law and standards of professional conduct."[54]
Nix
did not involve a civil malpractice action; it involved a criminal appeal for
ineffective assistance of counsel. While
not directly on point, the inference to be drawn from Nix is that a lawyer is justified in following the ethics rules,
even if his or her client seeks a different end.
The decision in Flatt v. Superior Court [55] is more directly on point.
In Flatt, the California
Supreme Court considered the scope of an attorney’s duty to provide advice when
severing a relationship with a new or prospective client after learning that
such representation would conflict with the attorney’s duties to an existing
client. After learning of a conflict,
the defendant lawyer in Flatt
informed his prospective client that he could not represent the client in
filing a lawsuit. When doing so, the
lawyer neglected to inform the prospective client of the statute of limitation
applicable to the lawsuit or the advisability of seeking alternate
counsel. Nevertheless, the Flatt court held that the ethical duty
of undivided loyalty to the original client, articulated in the California
Rules of Professional Conduct, negated any duty to provide legal advice to the
prospective client.[56] Observing ethical obligations to the original
client provided a critical defense to lawyer conduct that otherwise might have
been malpractice.
IV.
Use
of Ethics Rules in Cases Filed by Non-Clients
A developing area of
malpractice law has emerged from lawsuits filed by persons other than a lawyer’s
client. Traditionally, only a lawyer’s
client could bring a legal malpractice claim against the attorney, but a trend
has developed that allows certain other classes of persons to sue an attorney
for negligence. California first
developed the multi-criteria balancing test used by many courts in determining
whether a non-client can sue an attorney for negligence. [57] Those criteria are: (1)
the extent to which the lawyer’s work was intended to benefit the plaintiffs;
(2) the foreseeability of harm to plaintiffs; (3) the degree of certainty that
plaintiffs suffered injury; (4) the closeness of the connection between the
attorney’s conduct and the injury; (5) the policy of preventing future harm;
and (6) the burden on the profession of recognizing liability under the
circumstances. Although the preamble to the ABA Model Rules specifically
cautions against the use of the ethics rules by non-clients, [58]courts have cited these
rules in certain cases.
When applying the foregoing
six-part test, at least one court has also considered the implications of Model
Rule 2.3 and its comments. In Bank IV Wichita v. Arn, Mullins, Unruh, Kuhn
& Wilson,[59]
the Kansas Supreme Court upheld the award of summary judgment in favor of the
defendant law firm, holding that the firm owed no duties to the non-client
bank. The bank had been a creditor of
the firm’s client to whom the firm had given an “opinion of counsel” letter as
part of the client’s request for credit.
After applying the six-part balancing test, the court cited to Model
Rule 2.3, which expressly authorizes a lawyer to evaluate a matter affecting
the client for use by someone other than the client.[60] Recognizing that the comment to Rule 2.3
suggests that such an evaluation need not necessarily create a duty owing to
the third-party, the court declined to impose such a duty.
A. The
Tripartite Relationship Between Insurer, Insured and Defense Counsel
The most common situation in which a non-traditional
client sues a lawyer for negligence occurs in the context of the tripartite
relationship between an insurer, its insured, and the defense counsel retained
by the insurer. In the seminal case, Atlanta International Insurance Co. v. Bell,[61]
the Michigan Supreme Court held that the insurer can sue the insured’s defense
counsel for malpractice, absent a conflict of interest, even though the insurer
retained counsel for the insured.
However, the court specifically noted that the insurer was not the
defendant attorney’s client; the suit could only be brought under the doctrine
of equitable subrogation.[62]
Notwithstanding the Bell determination, other courts recently have held that in the
context of the tripartite relationship, absent a conflict of interest, the
attorney has two clients and owes duties to both the insurer and the insured.[63] An analysis of the ethics rules factored in
at least two judicial decisions to allow an insurance company to sue retained
counsel for malpractice. In Home Indemnity Co. v. Lane, Powell, Moss
& Miller,[64]
the Ninth Circuit applied Alaska law and held that the comments to Ethical Rule
1.7(b) expressly contemplate the representation of more than one client in
potential conflict situations. The
comments state that “[a] possible conflict does not itself preclude the
representation,” and “common representation of persons having similar interests
is proper if the risk of adverse effect is minimal.”[65] The court cited this language to support its
ruling that, in the absence of a conflict of interest, the defense attorney
represents both the insured and the insurer and can be sued for malpractice by
either.
Likewise, in Paradigm
Insurance Co. v. Langerman Law Offices,[66]
the Arizona Supreme Court held that an attorney retained to defend an insured
may be sued for malpractice by the insurer, whether the insurer is a client or
not. Citing Ethical Rule 1.7(b), the
defendant lawyer in Paradigm argued
that an attorney may not undertake dual representation absent the informed
consent of both clients. The lawyer
further argued that because she had not obtained the express consent of both
clients, she did not represent both the insurer and the insured. If the insurer
thus did not hold client status, it could not sue her for negligence.
The Paradigm
decision is among the first to predicate its determination upon the revised
language of Restatement Third of the Law Governing Lawyers. Although the actionable conduct of the
defendant-lawyer did not implicate an ethics rule nor require proof of its
violation, Paradigm is noteworthy for
the court’s use of both the Restatement and the Rules of Professional Conduct
to shape retained counsel’s duty to the insurer. However, the court declined to establish a
bright line rule for determining when an insurer held client status. It
de-emphasized the importance of such a determination, focusing instead upon a
lawyer’s duty to a non-client. Citing to
Restatement Section 51(3) for authority regarding a lawyer’s duty to a
non-client, the Arizona Supreme Court held that:
. . . when an insurer assigns an attorney to
represent an insured, the lawyer has a duty to the insurer arising from the
understanding that the lawyer’s services are ordinarily intended to benefit
both the insurer and the insured when their interests coincide. This duty exists even if the insurer is a
non-client.[67]
Just as the defendant attorney in Paradigm attempted to deny the existence
of an attorney-client relationship with the insurer, citing her failure to
obtain an express client consent to dual-representation, the defendant lawyers
in Gulf Insurance Co. v. Berger, Kahn,
Shafton, Moss, Figler, Simon & Gladstone[68]
attempted a similar denial to defend against their malpractice suit. They
claimed that a previously undisclosed conflict of interest between the insurer
and the insured precluded an attorney-client relationship between the firm and
the plaintiff carrier. In response to
this defense, the court observed that attorneys are obligated under the ethics
rules to both avoid and disclose conflicts between clients. The court stated that if a conflict of
interest did exist between the insurer and the insured, Berger Kahn was obliged
ethically to disclose the conflict to both the insurer and the insured, and
either to obtain written waivers of the conflict or withdraw. Because the defendant law firm never
disclosed the conflict to either of its clients, the court refused to allow the
firm to escape malpractice liability by failing to fulfill its other ethical
responsibilities.[69]
B. Relationship
Between Estate's Counsel and Estate Beneficiaries
The ethics rules also played a critical role in
the recent Arizona Court of Appeals decision in In re Estate of Fogleman.[70] Fogleman involved a suit against the
attorney for a personal representative of an estate, brought by beneficiaries
of the estate. The personal
representative for the Fogleman estate and his attorney were partners in the
defendant law firm. A potential conflict
existed because the firm also represented certain creditors of the estate.
The primary question presented on appeal in Fogleman was whether the beneficiaries
of the estate had standing to sue the individual attorneys, and therefore the
law firm. Under Ethics Rule 1.10(a), no member of the firm could represent the
estate creditors if it would have been a conflict of interest for the personal
representative or his attorney do to so in an individual capacity.[71] The beneficiaries argued that the firm had
breached Ethical Rules 1.7 (conflict of interest) and 2.2 (service as
intermediary between clients). The
appellate court disagreed, however, noting that while the personal
representative of the estate was a client of the firm, the beneficiaries were
not. Instead, the court recognized that
attorneys for an estate representative owe a duty of undivided loyalty to their
client (the representative), but owe only a lesser duty of “fairness and
impartiality” to estate beneficiaries.[72] Because the beneficiaries were not clients,
the appellate court reversed the trial court’s ruling that the defendant
lawyers had violated Ethics Rules 1.7 and 2.2.
It is important to note, however, that while the court did not confer
“client” status upon the estate beneficiaries in that case, it did allow them
to sue for breach of the “lesser” duties that were owed to them.[73] The court’s determination regarding the
breach of fiduciary duty claim was based largely upon the language of Ethics
Rule 1.7(b), which states: "A lawyer shall not represent a client if the
representation of that client may be materially limited by the attorney’s
responsibility to another client or to a third person, or by the lawyer’s own
interests. . . . "[74] Because the firm owed certain duties to the
non-client estate beneficiaries, the simultaneous representation of estate creditors
violated this rule and provided the basis for a breach of fiduciary duty
lawsuit by the beneficiaries.
V.
General
Pitfalls and Warnings
While discussing what evidence may be offered in a legal malpractice
case, it also makes sense to discuss what evidence must be offered. As a
general rule, expert testimony is required to establish a prima facie case of
lawyer malpractice.[75] In fact, it may be malpractice to try such a
case without expert testimony.[76] An exception occurs when the alleged act of
malpractice is clear and obvious, exceptionally egregious, or so easily
understandable that laypersons can determine for themselves whether the lawyer
breached the relevant standard of care.[77]
Expert testimony may be critical,
especially in the context of allegations that a lawyer has violated an ethics
rule. In Kubik v. Burk, [78]
the court held that the allegation that a lawyer violated the Code of
Professional Responsibility required expert testimony to demonstrate a
deviation from the standard of care. Similarly, in Carlson v. Morton,[79] the court held that in cases where specialized knowledge was
required, expert testimony must establish the violation of any ethics rule that
resulted in the alleged negligence.
Though they may not require expert testimony, other courts permit and
consider such testimony regarding alleged violations of the ethics rules.[80] At least one court, however, has determined
that expert testimony concerning an
ethics violation was not appropriate, any more than expert testimony concerning
violation of a municipal building code, because jurors required no expert
testimony on legal ethics to assess whether a disciplinary rule was violated. [81] The court noted instead that an expert
properly may base his opinion regarding malpractice on a lawyer’s failure to
conform to a disciplinary rule.
B. Releases
and Disclaimers
In trying to avoid or settle a malpractice
claim, lawyers occasionally have considered the use of a release or
disclaimer. The Model Rules of
Professional Conduct place strict limits on the use of these contractual tools:
A lawyer shall not
make an agreement prospectively limiting the lawyer’s liability to a client for
malpractice unless permitted by law and the client is independently represented
in making the agreement, or settle a claim for such liability with an
unrepresented client or former client without first advising that person in
writing that independent representation is appropriate in connection therewith.[82]
Consequently, a lawyer may not
include a malpractice disclaimer in a retainer agreement. Failure to obey this rule itself may occasion
disciplinary penalties.[83] Courts also have strictly limited a lawyer’s
use of releases to preclude malpractice actions. Releases may, however, be used in certain
situations to settle existing malpractice claims. To be effective, the release must be
supported by consideration and the lawyer must advise the client in writing
that independent representation should be sought before settling the claim and
signing the release.[84] Additionally, the lawyer is responsible to
prove the validity of the release by showing that it was fair and reasonable.[85]
V.
Conclusion
Self-regulation is a cornerstone of
the legal profession. Ethics rules not
only guide the lawyer’s behavior, they also shape the role of lawyers in
society to some extent. Since ethics
rules have contributed to the public’s perception of proper lawyer conduct, it
stands to reason that these rules also may be perceived as the standard by
which legal services are measured.
Although ethics rules were
promulgated for regulatory purposes, they increasingly are admitted by courts
as evidence of the standard of care in lawyer malpractice cases. Cumbersome and intentionally imprecise, these
rules do not lend themselves readily to the kind of analysis that can discern a
breach of duty. Regardless, their
acceptance for that purpose grows and, for better or worse, lawyers should
expect that their clients will ask them to play by the rules they themselves
have created.
ENDNOTES
[1] Earlier versions of
this article have been published by the American Bar Association. See
Douglas L. Christian & Michael Christian, Twice Bitten: Violations of Ethical Rules as Evidence of Legal
Malpractice, The Brief,
Spring 1999, at 62; Douglas L. Christian & Michael Christian, Twice Bitten: Violations of Ethical Rules
as Evidence of Legal Malpractice, GP Solo,
March 2000, at 28. The authors are indebted to their colleague Michael
Christian of Pillsbury, Madison & Sutro in San Francisco for his valuable
research and writing on the previous drafts.
[2] Ann Peters, Note, The Model Rules as a Guide for Legal
Malpractice, 6 Geo. J. Legal Ethics
609 (1993).
[3] Laura Callaway Hart
et al., From Offense to Defense: Defending Legal Malpractice Claims, 45
S.C.L. Rev. 771, 772 (1994).
[4] Joseph Wharton et
al., Figuratively Speaking, 81
A.B.A.J. 12 (October 1995).
[5] Peters, supra note 2, at 612. See also Hart et al., supra note 3, at 778.
[6] Peters, supra note 2, at 612.
[7] Criton A.
Constantinides, Note, Professional Ethics
Codes in Court: Redefining the Social
Contract Between the Public and the Professions, 25 Ga. L. Rev. 1327 (1991).
[8] Kathleen J. McKee,
Annotation, Admissibility and Effect of
Evidence of Professional Ethics Rules in Legal Malpractice Action, 50
A.L.R. 5th 301 (1997).
[9] Model Rules of Prof’l Conduct Scope
(1992); Model Code Of Prof’l
Responsibility Preliminary Statement (1983).
[10] Model
Rules of Prof’l Conduct Scope (1995).
[11] Peters, supra note 2, at 611.
[12] Id. at 611-12.
[13] Id. at 623.
[14] See Hizey v. Carpenter, 830 P.2d 646, 653 (Wash. 1992) (en
banc).
[15] Model Rules of Prof’l Conduct Scope
(1983).
[16] Model Code of Prof’l Responsibility Preliminary
Statement (1970).
[17] See, e.g., Terry Cove North, Inc. v.
Marr & Friedlander, P.C., 521 So. 2d 22, 23 (Ala. 1988) ("The Code . . . is designed not to create a private cause of
action for infractions of disciplinary rules, but to establish a remedy solely
disciplinary in nature."); Mozzochi v. Beck,
529 A.2d 171, 176 (Conn. 1987); Helmbrecht v. St.
Paul Ins. Co., 362 N.W.2d 118, 128 (Wis. 1985).
[18] See, e.g., Lazy Seven Coal
Sales, Inc. v. Stone & Hinds, P.C., 813 S.W.2d 400, 403 (Tenn. 1991)
("The initial inquiry, whether the Code is the standard of care in an
action based on negligence, is answered by the Code itself."). See also id. at 405 (“The standards
stated in the Code are not irrelevant in determining the standard of care in
certain actions for malpractice.”).
[19] Hizey, 830 P.2d at 652.
[20] Id.
[21] Model Rules of Prof’l Conduct Rule 2.1
(1983).
[22] See, e.g., Lazy Seven Coal Sales, 813 S.W.2d at 405-07.
[23] Troubled
by his court's ruling, one judge concurred:
The majority has begun the descent
of the slippery slope of legislating civility and courtesy. In the future, this
Court no doubt will have to classify some professionalism standards as more
important than others, some transgressions as more unprofessional than others,
and some standards as appropriate weapons in the litigation arena and others
only as guides for regulating conduct through our attorney disciplinary
agencies.
Allen v. Lefkoff,
Duncan, Grimes & Dermer, P.C., 453 S.E.2d 719, 723 (Ga. 1995)
(Benham, P.J., concurring) (quoting Green v. Green, 437 S.E.2d 457, 462 (Ga.
1993) (Sears-Collins, J., concurring)) (alteration in original).
[24] Jean E. Faure &
R. Keith Strong, The Model Rules of
Professional Conduct: No Standard for Malpractice, 47 Mont. L. Rev. 363, 375 (1986).
[25] See Allen, 453 S.E.2d at
725 (Benham, P.J., concurring) ("Rather than advancing ethics and
professionalism, the majority opinion may cause many professional codes to be
allowed to stagnate; others will be repealed outright to avoid their use in
malpractice actions.").
[26] See Charles W. Wolfram, The
Code of Professional Responsibility as a Measure of Attorney Liability in Civil
Litigation, 30 S.C.L. Rev.
281, 295 (1979).
[27] See, e.g, Garcia v. Rodey, Dickason,
Sloan, Akin & Robb, P.A., 750 P.2d 118, 123 (N.M. 1988); Bob Godfrey
Pontiac, Inc. v. Roloff, 630 P.2d 840, 848 (Or. 1981) ("To expose
attorneys to actions for damages for breach of ethical duties imposed by such
statutes and codes would be contrary to the obvious public interest in
affording every citizen the utmost freedom of access to the courts.")
(internal quotation marks omitted).
[28] See, e.g., Saur v. Probes, 476
N.W.2d 496, 498 (Mich. Ct. App. 1991) (noting that a psychiatrist's violation
of the profession's code of responsibility created a rebuttable presumption of
malpractice); Pittman v. Upjohn Co., 890 S.W.2d 425, 435 (Tenn. 1994)
(“Although the rules and standards of practice promulgated by the Board of
Pharmacy do not necessarily establish the duty of care owed by the pharmacy in
this case, they are relevant to the issue and may provide guidance in
determining if there is a duty of care under the circumstances."). See also Waldman v. Levine, 544 A.2d
683, 691 (D.C. 1988) (holding that use of the Code in determining the legal
malpractice standard of care is "not unlike the use of practice codes in
other negligence contexts"); 1 Ronald
E. Mallen & Jeffrey M. Smith, Legal Malpractice, § 1.1 at 2-3 (5th
ed. 2000) ("[T]here is no precise formula which can determine when an
attorney has committed malpractice.
There is agreement that attorneys, however, should not be treated
differently than other professionals, such as doctors or dentists, who are
similarly subject to a suit for malpractice." (footnotes omitted)).
[29] Brooks v. Zebre, 792
P.2d 196, 214 (Wyo. 1990) (Urbigkit,
J., dissenting) (quoting Michael J. Hoover, The
Model Rules of Professional Conduct and Lawyer Malpractice Actions: The Gap
Between Code and Common Law Narrows, 22 New
Eng. L. Rev. 595, 616 (1988)) (alteration in original) (internal
quotation marks omitted).
[30] Lipton v. Boesky, 313 N.W.2d 163, 166-67 (Mich. Ct. App.
1981).
[31] Of all reported
opinions, it appears that only two states have deemed such evidence
inadmissible. See Hizey v. Carpenter, 830 P.2d 646
(Wash. 1992) and Orsini v. Larry Moyer Trucking, Inc., 833 S.W.2d 366, 369
(Ark.), reh’g denied, 839 S.W.2d 180
(Ark. 1992).
[32] For an excellent
state-by-state survey of the existing law in this area, see McKee, supra note 8.
[33] 453 S.E.2d 719 (Ga.
1995).
[34] 567 N.E.2d 1291
(Ohio 1991).
[35] See, e.g., Hart v.
Comercia Bank, 957 F. Supp. 958 (E.D. Mich 1997); Albright v. Burns, 503 A.2d
386 (N.J. Super. App. Div. 1986); Beattie v. Firnschild, 394 N.W.2d 107 (Mich.
Ct. App. 1986); Lipton v. Boesky, 313 N.W.2d 163 (Mich. App. Ct. 1981).
[36] 313 N.W.2d 163
(Mich. Ct. App. 1981).
[37] 503 A.2d 386 (N.J.
Super App. Div.1986).
[38] Day v. Rosenthal, 217 Cal.
Rptr. 89 (Ct. App. 1985), cert. denied,
475 U.S. 1048 (1986); Ishmael v. Millington, 50 Cal. Rptr. 592 (Ct. App. 1966).
[39] 50 Cal.Rptr. 592
(Ct. App. 1966).
[40] 217 Cal. Rptr. 89
(Ct. App. 1985), cert. denied, 475
U.S. 1048 (1986).
[41] 5 Cal. Rptr. 2d 571
(Ct. App. 1992).
[42] Id. at 573.
[43] See, e.g., Hatcher v. Roberts, 478 So. 2d 1083, 1087 (Fla. Dist. Ct.
App. 1985) (holding that state ethical standards defined the standard of care
but dismissing the action for want of proximate cause), review denied, 488 So. 2d 68 (Fla. 1986); Carlson v. Morton, 745
P.2d 1133, 1137 (Mont. 1987) (violation of some ethics rules may conclusively
establish negligence, but not the rules alleged in the case at hand); O’Toole
v. Franklin, 569 P.2d 561, 566-67 (Or. 1977) (an intentional deliberate
violation of an ethical rule may alone create a cause of action, but no
independent cause of action exists for negligent violations).
[44] Hizey v. Carpenter,
830 P.2d 646 (Wash. 1992); Orsini v. Larry Moyer Trucking, Inc., 833 S.W.2d
366, 369 (Ark.), reh’g denied, 839
S.W.2d 180 (Ark. 1992).
[45] Orsini, 833 S.W.2d at 369.
[46] 830 P.2d 646 (Wash.
1992).
[47] Restatement (Third) Law of Lawyering § 1
cmt. b (2000).
[48] Id. § 52 cmt. f.
[49] See, e.g., Terry Cove,
521 So. 2d 22 (Ala. 1988) (violation of state’s legal ethics rules alone does
not create cause of action against attorney); Orsini, 833 S.W.2d 366 (Ark. 1992) (same); Allen, 453 S.E.2d 719 (Ga. 1995) (same); L&H Airco, Inc. v.
Rapistan Corp., 446 N.W.2d 372 (Minn. 1989) (same); Garcia, 750 P.2d 118 (N.M. 1988) (same); Lazy Seven Coal Sales, 813
S.W.2d 400 (Tenn. 1991) (same); Archuleta v. Hughes, 969 P.2d 409 (Utah 1998)
(same).
[50] 714 A.2d 271 (N.J.
1998).
[51] 578 P.2d 935 (Cal.
1978).
[52] Id. at 939.
[53] 475 U.S. 157 (1986).
[54] Id. at 168 (emphasis added).
[55] Flatt v. Superior Court,
885 P.2d 950 (Cal. 1994).
[56] California Rules of Professional Conduct 3-310.
[57] Lucas v. Hamm, 364
P.2d 685 (Cal. 1961); Biakanja v. Irving, 320 P.2d 16 (Cal. 1958); Goldberg v.
Frye, 266 Cal. Rptr. 483, 489 (Ct. App. 1990).
See also Trask v. Butler, 872
P.2d 1080 (Wash. 1994); Pizel v. Zuspann, 795 P.2d 42 (Kan. 1990); Fickett v.
Superior Court, 558 P.2d 988 (Ariz. Ct. App. 1976).
[58] The ABA Model Rules of Prof’l Conduct, Scope (1995), states:
Furthermore, the purpose of the Rules can be subverted when they are invoked by opposing parties as procedural weapons. The fact that a Rule is a just basis for a lawyer's self-assessment, or for sanctioning a lawyer under the administration of a disciplinary authority, does not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the Rule.
[59] Bank IV Wichita v.
Arn, Mullins, Unruh, Kuhn & Wilson, 827 P.2d 758 (Kan. 1992).
[60] Kansas Supreme Court
Rule 226, MRPC 2.3 (1991) states:
“(a) A lawyer may undertake an evaluation of a matter affecting a
client for the use of someone other than the client if:
(1) the lawyer reasonably believes that making the evaluation is
compatible with other aspects of the lawyer’s relationship with the client; and
(2) the client consents after consultation.
“(b) Except as disclosure is required in connection with the report
of an evaluation, information relating to the evaluation is otherwise protected
by Rule 1.6.
“The comment to MRPC 2.3 states:
“Duty to Third Person
“When the evaluation is intended for the information or use of a
third person, a legal duty to that person may or may not arise. That legal question is beyond the scope of
this Rule. However, since such an
evaluation involves a departure from the normal client-lawyer relationship,
careful analysis of the situation is required.
The lawyer must be satisfied as a matter of professional judgment that
making the evaluation is compatible with other functions undertaken in behalf
of the client.” See id. at 768.
[61] 475 N.W.2d 294
(Mich. 1991).
[62] Id. at 297.
[63] Unigard Ins. Group
v. O’Flaherty & Belgium, 45 Cal. Rptr. 2d 565 (Ct. App. 1995); Paradigm
Ins. Co. v. Langerman Law Offices, 2 P.3d 663 (Ariz. Ct. App. 1999), review pending.
[64] 43
F.3d 1322 (9th Cir. 1995).
[65] Id. at 1330.
[66] 24 P.3d 593, 249
Ariz. Adv. Rep. 11 (Ariz. 2001).
[67] Id. at 602.
[68] 93 Cal. Rptr. 2d 534
(Ct. App. 2000).
[69] Id. at 546-47.
[70] 3 P.3d 1172 (Ariz.
Ct. App. 2000).
[71] Ethical Rule 1.10(a)
states: "While lawyers are associated
in a firm, none of them shall knowingly represent a client when any one of them
practicing alone would be prohibited from doing so by ER 1.7, 1.8(c), 1.9 or
2.2."
[72] In re Estate of Fogleman, 3 P.3d at 1177.
[73] Id. at 1179.
[74] Id. at 1179-80.
75 Wilburn
Brewer, Jr., Expert Witness Testimony in
Legal Malpractice Cases, 45 S.C.L. Rev.
727, 733 (Summer 1994).
[76] Id.
[77] Id.
[78] 540 N.W.2d 60 (Iowa
Ct. App. 1995).
[79] 745 P.2d 1133 (Mont.
1987).
[80] Miami Int'l Realty
Co. v Paynter, 841 F.2d 348, 352-62
(10th Cir. 1988) (permitting expert testimony based on the Code of Professional
Responsibility, so long as the expert did not testify that the ethical
standards had the force and effect of a law and that a violation of them
constituted negligence per se); Roberts v. Langdale, 363 S.E.2d 591 (Ga. Ct.
App. 1987) (expert testimony that the defendant attorney violated one or more
provisions of the Code of Professional Responsibility was admissible but
insufficient to support finding that attorney was negligent when legal
presumption that attorney performed in an ordinarily skillful manner was
reinforced by affidavits of three other attorneys who affirmed that attorney represented client with requisite degree of skill,
prudence, and diligence); Smith v. Haynsworth, 472 S.E.2d 612 (S.C. 1996) (expert was permitted to testify
concerning Rules of Professional Conduct, violations of which plaintiffs
contended constituted legal malpractice).
[81] Fishman v. Brooks,
487 N.E.2d 1377 (Mass. 1986).
[82] Model Rules of Prof’l Conduct Rule
1.8(h) (1995).
[83] Hart et al., supra note 3, at 788.
[84] Id. at 789.
[85] Id.
(Authors'
Bios)
Gena L. Sluga is an associate in the
Arizona law firm of Christian & Mariano P.L.C. Her practice emphasizes
insurance coverage and bad faith litigation. Ms. Sluga is a summa cum laude,
Phi Beta Kappa graduate of Arizona State University. She received her J.D. from
Boalt Hall School of Law at the University of California-Berkeley.
Douglas L. Christian is the founding
partner of Christian & Mariano P.L.C. where his practice emphasizes
coverage, bad faith and professional liability litigation. He is past president
of the Arizona Association of Defense Counsel and a member of the American
Board of Trial Advocates. Mr. Christian is active in the Federation of Insurance
& Corporate Counsel and chairs its Ethics Section. He is a former member of
the Council of the Tort and Insurance Practice Section of the American Bar
Association where he also chaired the Professionalism Committee. Mr. Christian
maintains an active practice in Arizona and Nevada.