Dumping Your Client Could Get You Sued

Abandoning your client in the middle of litigation is a good way to get sued for malpractice.

It happened recently in Texas, where a lawyer is defending a malpractice claim that alleges he dumped his client when an insurance suit turned sour.

The plaintiff was the owner of a small business (Rankin Road) that suffered property losses during Hurricane Ike. Before hiring counsel, the owner tried handling an insurance claim against Underwriters at Lloyds of London by himself. He asked for $120,000 in damages. But the company agreed to pay only $33,000, contending the remaining losses were either pre-existing or unrelated to the storm.

So he got a lawyer, and things got steadily worse.

Trying to Reason With Hurricane Season

It is important to point out that this lawyer was no rookie. His firm had represented other claimants in the wake of Hurricane Ike. He had won hundreds of millions of dollars for his clients.

In fact, the plaintiff found him through an advertisement and hired him in hopes of a speedy settlement.

Those hopes quickly evaporated when, prior to filing suit, the lawyer fired off an initial demand letter seeking $3.2 million. The client says this was not his idea. According to the Southeast Texas Record: “The $3.2 million claim was entirely a creation of [the lawyer], made without Rankin Road’s knowledge, input or consent.”

When the client asked why they were seeking more than $3 million for repairs to a building that had only cost $850,000, he says his lawyer replied, in effect: don’t worry, just trust us.

Lloyd’s and the other defendants dug in their heels. In a counterclaim, they called the demand fraudulent, groundless and brought in bad faith or for the purpose of harassment. They sought court costs and attorney’s fees.

The case dragged on for a year, at which time the lawyer filed a Motion to Withdraw, citing a conflict of interest. The client says his lawyer was abandoning him.

Lack of Communication

The malpractice complaint alleges negligence and breach of fiduciary duty. Specifically, it says the lawyer:

• Failed to inform his client of the possible consequences of their actions;
• Provided very little communication throughout the litigation process;
• Failed to adequately explain what was going on in the case;
• Instructed the client not to talk with experts who had been sent to inspect the property, but then submitted an inspection report that erroneously stated they had actually met to go over the storm damage;
• Submitted expert reports that contained boilerplate language and identified the client as the “homeowner” even though it was a commercial building;
• Sought damages that had already been paid in a separate claim;
• Continued to press for millions of dollars without the client’s informed consent.

NC Rules of Professional Conduct

Abandoning a client can also result in professional discipline. Consider the following pair of NC ethics rules:

• Rule 1.3 Diligence [4]: Unless the relationship is terminated as provided in Rule 1.16, a lawyer should carry through to conclusion all matters undertaken for a client. If a lawyer’s employment is limited to a specific matter, the relationship terminates when the matter has been resolved…. Doubt about whether a client-lawyer relationship still exists should be clarified by the lawyer, preferably in writing, so that the client will not mistakenly suppose the lawyer is looking after the client’s affairs when the lawyer has ceased to do so.

• Rule 1.5 Fees [5]: Once a fee agreement has been reached between attorney and client, the attorney has an ethical obligation to fulfill the contract and represent the client’s best interests regardless of whether the lawyer has struck an unfavorable bargain. An attorney may seek to renegotiate the fee agreement in light of changed circumstances or for other good cause, but the attorney may not abandon or threaten to abandon the client to cut the attorney’s losses or to coerce an additional or higher fee. Any fee contract made or remade during the existence of the attorney-client relationship must be reasonable and freely and fairly made by the client having full knowledge of all material circumstances incident to the agreement.

 Sources:

• Southeast Texas Record http://setexasrecord.com/stories/510659966-mostyn-law-firm-answers-legal-malpractice-claim-judge-declines-to-sever-and-abate
• NC Rules of Professional Conduct http://www.ncbar.com/rules/rpcsearch.asp