Attorney's Failure to Join Essential Party May Be Malpractice
By Angela Foster, Litigation News Contributing Editor – February 27, 2013

An attorney may be liable for legal malpractice for failure to join a party, even when the law was unsettled as to the viability of such a claim. The Supreme Court of Alaska recently reached that conclusion after analyzing both whether the underlying law was unsettled and how the attorney should have presented that issue to his client. L.D.G, Inc. v. Robinson.

Malpractice Case Begins with $1 million Award Against Client
In L.D.G., Inc. v. Robinson, staff at a bar owned by L.D.G., Inc. (LDG) served a man alcohol while he was visibly intoxicated. Later that night, the man shot and killed a woman. The estate for the deceased woman filed a wrongful death action against the bar, alleging the establishment violated Alaska’s dram shop act when it served alcohol to the patron, proximately causing the woman’s death. The estate did not sue the shooter, and more importantly for this case, the attorney representing LDG did not make any attempt to join the shooter or assert a third-party claim against him for allocation of fault. He later alleged the reason he did not attempt such joinder was because the Alaska law was unsettled as to whether a defendant-licensee could join a minor or intoxicated person for fault allocation purposes, and thus, he did not see joinder as a logical or viable option.

Although the jury found no liability against LDG, the court reversed the jury verdict after consideration of the plaintiff’s motion for judgment notwithstanding the verdict. The court attributed 100 percent liability to LDG and awarded approximately $1 million in damages against the bar.

Legal Malpractice or Attorney’s Error in Judgment?
Following this $1 million judgment, LDG brought a legal malpractice action against its attorney for failure to join the shooter in the wrongful death action. LDG claimed that if the attorney had made a joinder or cross-claim, allocation of fault would have also been apportioned to the shooter, and the bar would not have been considered 100 percent liable.

On a motion to dismiss, the attorney argued the “attorney judgment defense” should govern, and where the case law is unsettled, as it was here, an attorney cannot be held liable for an error in judgment. The attorney judgment defense, also known as the judgmental immunity doctrine, provides that an attorney is not liable for errors in judgment regarding an unsettled point of law provided the attorney acted in good faith and exercised reasonable care, skill, and diligence. Courts, however, distinguish between “negligence” and “mere error in judgment.”

The attorney argued that the cases of Loeb v. Rasmussen and Sowinski v. Walker—two cases that reached entirely different results with regard to the question of whether alcohol sellers could apportion fault to consumers under Alaska law—proved that the law was “unsettled.” In Loeb,the court had found that a liquor licensee who violates the Alaska dram shop act is not entitled to assert the comparative fault of the underage drinker. In contrast, the court in Sowinski hadheld that the adoption of pure several liability in the tort reform legislation meant a liquor licensee is liable only for its own negligence as allocated by the jury.

Thus, the attorney argued, because the law was unsettled, he could not be liable for his error in judgment in deciding not to join the shooter, pursuant to the attorney judgment defense. The lower court agreed with the attorney and granted the attorney’s motion to dismiss. LDG appealed.

Unsettled Law not an Absolute Defense
On appeal, the Alaska appellate court acknowledged that at the time, the attorney represented LDG, the issue of whether a defendant-licensee could join a minor or intoxicated person for fault allocation purpose was, indeed, unsettled. The appellate court found, however, that the inquiry did not stop there. Instead, it found that although a different standard of care might exist for those situations where the law was unsettled, it did not automatically absolve the attorney from liability.

The court found that where the law is unsettled, the standard of care requires the attorney to advise a client to follow the reasonably prudent course of action in light of the uncertainty. The court reversed the matter and remanded for proceedings to determine if the attorney had, indeed, advised his client of the reasonably prudent course of action in light of the unsettled case law. The case is currently still pending with a September 2013 trial date set.

A Tough Pill for Lawyers to Swallow
“At first blush, the decision looks like it’s taking a tough line on lawyers because it seemed aggressive for an attorney to be potentially liable for an error of judgment,” says Neil Lloyd, Chicago, cochair of the Legislation and Rules Subcommittee of the ABA Section of Litigation’s Ethics and Professionalism Committee. At the end of the day, says Lloyd, the ruling is actually pretty consistent with other legal principles already in place. “The ABA Model Rule 1.4 requires that an attorney expressly advise the client about the strengths and weaknesses of the case so the client can make an informed decision about how to proceed. The client needs to know the risk, including the risk presented by an unsettled question of law—what could happen, and how it will affect them,” he says.

The “attorney judgment rule,” relied upon by the attorney in the LDG case, is intended to provide some protection for attorneys, but it is not an absolute defense and does not shield an attorney from a viable malpractice claim, explains Scott F. Bertschi, Atlanta, cochair of the Section of Litigation’s Professional Liability Committee. Indeed, “an unsettled issue of law is not a silver bullet against inaction,” he cautions. Bertschi also believes attorneys have an affirmative obligation to “advise” so that an attorney is not absolved of liability merely because he “informed” the client or allowed the client to decide.

Avoiding Legal Malpractice
So what are attorneys to do when a similar situation arises? “An attorney must first determine whether the law is unsettled,” says Ronald L. Kammer, Coral Gables, FL, cochair of the Section’s Insurance Coverage Litigation Committee. Unsettled law is, for example, when there is no case on point, a disagreement among state appellate courts, or no ruling from the highest court in the jurisdiction, explains Kammer. “If the law is truly unsettled and the lawyer explains that to his or her client, then the lawyer should not be liable for making a good faith tactical decision on a fairly debatable point of law," offers Kammer. Bertschi agrees with such a premise, adding that on remand, liability will ultimately “depend on whether the attorney exercises professional judgment in making strategic decisions—did the attorney think about joining the murderer and did he weigh the pros and cons with the client?”

When there is any doubt, attorneys should add the claim or party and make the judge rule on the unsettled issue, suggests Phillip A. Cole, Minneapolis, cochair of the Attorneys Liability Subcommittee of the Section’s Professional Liability Committee. “If the attorney had added the murderer and the court disagreed, the bar would have been restored to defending its singular fault as it had to do if nothing was attempted.”

Keywords: attorney malpractice, joinder of parties, allocation of fault, Model Rule 1.4

 

 
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