Today’s blog entry returns us back to the world of legal malpractice. You simply do not see a lot of legal malpractice with respect to ADA matters, and I have always wondered why. We have discussed legal malpractice with respect to ADA matters before, such as here. The case of the day is Suburban Real Estate Services, Inc. v. Carlson decided by the Illinois Supreme Court on January 21, 2022, which can be found here. As usual, the blog entry is divided into categories and they are: facts; court’s reasoning; and what does this have to do with the ADA-thoughts/takeaways. Of course, the reader is free to concentrate on any or all of the categories. Before moving into the blog entry, a note about what you see when you pull up the case. Illinois some years ago adopted an Internet-based citation format. The paragraph symbols in the opinion essentially substitute for what you would usually think of page numbers. Illinois also doesn’t deal with the published/unpublished distinction.
In May 2010, Barus retained William Roger Carlson Jr. and his law firm Carlson Partners, Ltd., (collectively defendants) for legal advice in unwinding Suburban’s relationship with ROC/Suburban. After obtaining defendants’ assistance, Barus sent a “break-up” letter to Siurek, notifying him of the steps he planned to take to terminate Suburban’s relationship with ROC/Suburban. In August 2010, ROC sued Suburban, alleging that the actions taken by Suburban, by and through Barus, pursuant to the “break-up” letter constituted a breach of fiduciary duty owed to ROC/Suburban. In October 2010, Barus retained the law firm of Gaspero & Gaspero, Attorneys at Law, P.C. (Gaspero Law Firm), to defend Suburban in the ROC litigation. In June 2015, after a bench trial, the trial court entered judgment for ROC. The court found that Suburban, through Barus, had breached its fiduciary duties and ordered it to pay ROC 50% of the fair value of the assets that Barus had improperly transferred out of ROC/Suburban. The court awarded damages against Suburban in the amount of $336,652.26. Thereafter, in May 2016, plaintiffs filed a legal malpractice action against defendants. In their first amended complaint, they alleged that defendants were negligent in that they failed to properly advise plaintiffs of the proper steps to obtain – 2 – a judicial dissolution of ROC/Suburban, recommended and/or approved the selfhelp actions that resulted in plaintiffs breaching fiduciary duties owed to ROC/Suburban, and failed to advise them of the consequences of these actions. They further alleged that, as a direct and proximate cause of defendants’ negligence, they suffered damages in excess of $600,000.
Defendants moved for summary judgment pursuant to section 2-1005 of the Code of Civil Procedure (735 ILCS 5/2-1005 (West 2018)), asserting that the legal malpractice claim was barred by the two-year statute of limitations (735 ILCS 5/13- 214.3(b) (West 2018)). They argued that the plaintiffs sustained an injury resulting from defendants’ alleged negligence beginning in November 2010, when they retained new counsel and began paying them attorney fees. Defendants argued plaintiffs knew they were injured in April 2013 at the latest, when the trial judge in the underlying action told plaintiffs’ new counsel that a malpractice action was a certainty and when plaintiffs sought advice about whether a malpractice claim should be filed. In support, defendants attached various exhibits, including the deposition testimony of both Carmen and Lisa Gaspero of the Gaspero Law Firm. According to their testimony, at a pretrial settlement conference in April 2013, the trial judge made it clear to Carmen and Lisa Gaspero that he would likely find Barus liable for breach of fiduciary duty if the ROC lawsuit went to trial. The court also voiced its belief that the attorney representing Barus in June 2010 “one hundred percent” committed malpractice. After the pretrial conference, the Gasperos consulted with a lawyer specializing in legal malpractice claims to evaluate a potential claim against defendants. That lawyer advised them to wait until the ROC litigation was resolved to file a claim.
The trial court granted summary judgment in favor of defendants, finding that plaintiffs had notice of the malpractice claim as early as 2010, when ROC filed the underlying lawsuit, and no later than April 2013, when the trial judge told counsel that plaintiffs’ malpractice action was a certainty and when counsel sought advice as to when a malpractice action should be filed. The appellate court reversed and remanded, finding that plaintiffs timely filed their legal malpractice claim. The court reasoned that plaintiffs did not suffer a realized injury until the trial court found a breach of fiduciary duty and entered a judgment against them in June 2015. The court further rejected defendants’ theory that plaintiffs’ payment of attorney fees purportedly related to defendants’ negligent advice constituted an injury, triggering the statute of limitations.
- A legal malpractice claim accrues when the client knows or reasonably should have known of the injury for which damages are sought.
- To figure out when a claim for legal malpractice accrues, you have to identify the injury and then determine when the injury was discovered or should have been discovered.
- The injury in a legal malpractice claim is not a personal injury or the attorney’s negligent act. Instead, it is a pecuniary injury to an intangible property interest caused by the lawyer’s negligent act or omission.
- In a legal malpractice action, a client is not considered injured unless and until he or she has suffered a loss for which monetary damages may be sought. No action can be sustained against the attorney unless that negligence proximately caused damage to the client.
- The existence of actual damages is essential to a viable cause of action for legal malpractice. That is, unless the client can demonstrate that he has sustained a monetary loss as a result of some negligent act on the lawyer’s part, his or her cause of action cannot succeed. Further, demonstrating the existence of damages requires more than supposition or conjecture, and where damages are speculative, no cause of action for malpractice exists.
- No injury exists and therefore no actual claim arises, unless and until the attorney’s negligence results in the loss of the underlying cause of action.
- In some cases, such as this one, the alleged negligence relates to legal advice given by a transactional attorney during his representation of a client. After allegedly following counsel’s legal advice, the client is subsequently sued by a party involved in the transaction. Thus, to determine when a legal malpractice claim accrues, you first have to figure out the alleged injury for which damages are sought.
- A variety of Illinois cases stand for the proposition that unless the client can demonstrate he or she has sustained a monetary loss as the result of some negligent act on the lawyer’s part, his or her cause of action cannot succeed. It is the realized injury to the client and not the attorney’s misapplication of expertise that marks the point in time for measuring compliance with a statute of limitation period.
- Merely hiring new counsel to defend against a lawsuit challenging the attorney’s legal advice and incurring fees does not by itself trigger a cause of action for malpractice. By providing legal representation, an attorney is not guaranteeing the client he or she represents will never be sued or agreeing to indemnify the client if it is sued.
- Even though plaintiff may have been alerted in April 2013 to the trial court’s assertion that counsel badly advised them in unwinding the company, the possibility of damages was not actionable unless and until the underlying litigation ended adversely to plaintiffs with a finding that plaintiff breached their fiduciary duties. It was not until then that plaintiffs became obligated to pay a sum that they otherwise would not of had to pay but for defendants alleged negligence. Had the action resulted in an outcome favorable to plaintiffs, no cause of action for legal malpractice would have accrued.
What Does This Have to do with the ADA-Thoughts/Takeaways
- Legal malpractice is a state law proposition. So, be sure to check your state law on the applicable rules. It is entirely possible that your State would not agree with this decision. It is also possible it will.
- In the blog entry we discussed here, we talked about the elements of the legal malpractice claim and some particular areas of the ADA that are particularly prone to legal malpractice claims. In particular, there are three areas that could be affected by a decision like the one we are discussing here. First, let’s say you have a situation where a client files for SSDI, but the attorney does not formulate the papers in such a way to make clear accommodations are not factored into the SSDI analysis in deciding whether a person can perform jobs in the economic marketplace. Further, let’s say the attorney does not advise the client of the risk of filling out and getting an SSDI award with respect to his or her ability to work in the future and be reasonably accommodated for the disability. In that situation, the statute of limitations per this decision, would not begin to run until that individual has been terminated from the job and had judicial estoppel, per the case discussed in this blog entry, applied against him or her. In such a case, it could be many years beyond the personal injury statute of limitations (most states use the personal injury statute of limitations when it comes to disability discrimination claims but not all, Virginia for example), that the SSDI applicant would have to pursue a legal malpractice claim.
- Let’s say you have an in-house counsel that insists on 100% return to work (check out this blog entry), such insistence would definitely be legal malpractice, and I have said as much for years. It would seem under this case, that the statute of limitations would begin to run at the point in time a court throws out the 100% return to work policy. Again, many years after the lawyer’s advice to insist on a 100% return to work.
- Let’s say you have licensing counsel representing a healthcare professional who is having their professional license threatened unless they work with a professional recovery program. The professional recovery programs are cash basis. We have discussed the opportunity for plaintiff lawyers when it comes to medical licensing boards and the professional recovery programs here. Let’s assume that the licensing counsel does not work the ADA into the advocacy for the client thereby subjecting the client to onerous requirements and substantial loss of funds that very well could have been partially or completely prevented with judicious use of the ADA. That system is entirely cash based and the costs are entirely imposed upon the healthcare professional. In that situation, the lack of licensing counsel not utilizing the ADA would, under this decision, give rise to legal malpractice only after thousands of dollars were incurred by the healthcare professional in the professional recovery program and/or his or her license was restricted or taken away. Again, many years after the initial legal malpractice.
- In Illinois, a legal malpractice claim must contain both the bad advice and damages from that advice or claim to move forward. This case stands for the proposition that the statute of limitation begins to run from the damages being accrued and not from the bad advice or when the individual should have discovered or knew of the bad advice.
- Did I mention that you need to be sure to check your state law on when the legal malpractice statute of limitation begins to run. It is entirely possible that your state will take a different approach from Illinois.