By Nick Smith
Gongwer News Service
The Court of Appeals erred when it affirmed a trial court’s granting of summary disposition in favor of the defendants in a case involving efforts to recover attorney fees in a case of alleged legal malpractice, the Michigan Supreme Court ruled in a Monday opinion.
The high court, in an opinion written by Justice Brian Zahra, unanimously held in Hark Orchids LP vs. Buie (MSC Docket No. 165761) that the plaintiff sufficiently pleaded the damages element to its claim, that being the attorney fees reasonably incurred to mitigate the defendant’s alleged malpractice.
Before the high court was a case that originated in the Kalamazoo Circuit Court filed by Hank Orchids, LP against William Buie and Conklin Benham, PC, in which it was claimed that the Buie firm had committed legal malpractice in their prior representation of the plaintiff.
In 2015, the defendants represented the plaintiff in a workers’ compensation lawsuit brought forward by a former employee, who informed the defendants that in addition to a workers’ compensation claim she had other claims against the plaintiff.
The former employee offered a global settlement for all claims totaling $125,000. The defendants did not notify the plaintiff of the offer and instead settled only the workers’ compensation claim for $35,823.84. Following this, the former employee brought a second lawsuit against the plaintiff, asserting claims of retaliation for the workers’ compensation claim as well as racial discrimination and intentional infliction of emotional distress.
In its malpractice case, the plaintiffs alleged that the claims would have been considered in negotiations if the plaintiff had known about the claims and settlement offer.
Because of this, the plaintiffs said they had to defend themselves against the second lawsuit from the former employee which required significant pretrial motions. During this time, the plaintiffs learned of the former employee’s offer to settle the remaining claims.
During the second lawsuit, the trial court granted summary disposition in favor of the plaintiff, the Court of Appeals affirmed the decision, and the Supreme Court denied the former employee’s application for leave to appeal.
The plaintiffs asserted during the case that the defendants had committed malpractice, and that the plaintiff had incurred more than $300,000 in additional attorney fees that would have been unnecessary if the defendants had performed to the applicable standard of care.
To this, the defendants moved for summary disposition, which was granted by the trial court, stating that the plaintiff could not recover attorney fees as damages under the American rule. The Court of Appeals affirmed the trial court ruling.
“The American rule does not bar plaintiff’s claim for damages,” Zahra wrote. “The American rule generally requires parties to shoulder the cost of hiring their own attorneys to assert their legal positions, claims, and defenses. … But that principle is not implicated in the context of negligent performance of legal services.”
The court disagreed with the defendant’s claim that legal malpractice plaintiffs are barred from recovering attorney fees incurred to mitigate the harm of the malpractice underlying the case.
Zahra wrote that legal malpractice claims provide direct relief to clients to rectify wrongful acts of their attorneys and that the right to recovery for legal malpractice is a well-established right for clients to be made whole.
“Without compensation of attorney fees paid by the client as a result of legal malpractice, clients will often be left without a remedy and full compensation for the professional wrongs done by their attorneys,” Zahra wrote. “In many circumstances, clients engage in extended and complex legal proceedings to protect their legal position and to sustain a claim or defense that was detrimentally affected by their attorney’s malpractice.”
He wrote that this was the case in the matter before the high court. Zahra further wrote that if such clients were denied the ability to recover the attorney fees incurred to limit the harm done by their attorneys, they would be detrimentally affected or even completely denied relief.
“We hold that a client who suffers legal malpractice can recover reasonable and necessary attorney fees that are incurred to correct harms caused by the malpractice,” Zahra wrote. “The American rule for the assessment of legal fees stemming from litigation prohibits plaintiffs from recovering attorney fees incurred in the suit brought to recover damages. But the American rule does not prohibit the recovery of legal fees that are damages resulting from the underlying malpractice.”
The court reversed the Court of Appeals judgment and remanded the case to the trial court for further proceedings.
Gongwer News Service
The Court of Appeals erred when it affirmed a trial court’s granting of summary disposition in favor of the defendants in a case involving efforts to recover attorney fees in a case of alleged legal malpractice, the Michigan Supreme Court ruled in a Monday opinion.
The high court, in an opinion written by Justice Brian Zahra, unanimously held in Hark Orchids LP vs. Buie (MSC Docket No. 165761) that the plaintiff sufficiently pleaded the damages element to its claim, that being the attorney fees reasonably incurred to mitigate the defendant’s alleged malpractice.
Before the high court was a case that originated in the Kalamazoo Circuit Court filed by Hank Orchids, LP against William Buie and Conklin Benham, PC, in which it was claimed that the Buie firm had committed legal malpractice in their prior representation of the plaintiff.
In 2015, the defendants represented the plaintiff in a workers’ compensation lawsuit brought forward by a former employee, who informed the defendants that in addition to a workers’ compensation claim she had other claims against the plaintiff.
The former employee offered a global settlement for all claims totaling $125,000. The defendants did not notify the plaintiff of the offer and instead settled only the workers’ compensation claim for $35,823.84. Following this, the former employee brought a second lawsuit against the plaintiff, asserting claims of retaliation for the workers’ compensation claim as well as racial discrimination and intentional infliction of emotional distress.
In its malpractice case, the plaintiffs alleged that the claims would have been considered in negotiations if the plaintiff had known about the claims and settlement offer.
Because of this, the plaintiffs said they had to defend themselves against the second lawsuit from the former employee which required significant pretrial motions. During this time, the plaintiffs learned of the former employee’s offer to settle the remaining claims.
During the second lawsuit, the trial court granted summary disposition in favor of the plaintiff, the Court of Appeals affirmed the decision, and the Supreme Court denied the former employee’s application for leave to appeal.
The plaintiffs asserted during the case that the defendants had committed malpractice, and that the plaintiff had incurred more than $300,000 in additional attorney fees that would have been unnecessary if the defendants had performed to the applicable standard of care.
To this, the defendants moved for summary disposition, which was granted by the trial court, stating that the plaintiff could not recover attorney fees as damages under the American rule. The Court of Appeals affirmed the trial court ruling.
“The American rule does not bar plaintiff’s claim for damages,” Zahra wrote. “The American rule generally requires parties to shoulder the cost of hiring their own attorneys to assert their legal positions, claims, and defenses. … But that principle is not implicated in the context of negligent performance of legal services.”
The court disagreed with the defendant’s claim that legal malpractice plaintiffs are barred from recovering attorney fees incurred to mitigate the harm of the malpractice underlying the case.
Zahra wrote that legal malpractice claims provide direct relief to clients to rectify wrongful acts of their attorneys and that the right to recovery for legal malpractice is a well-established right for clients to be made whole.
“Without compensation of attorney fees paid by the client as a result of legal malpractice, clients will often be left without a remedy and full compensation for the professional wrongs done by their attorneys,” Zahra wrote. “In many circumstances, clients engage in extended and complex legal proceedings to protect their legal position and to sustain a claim or defense that was detrimentally affected by their attorney’s malpractice.”
He wrote that this was the case in the matter before the high court. Zahra further wrote that if such clients were denied the ability to recover the attorney fees incurred to limit the harm done by their attorneys, they would be detrimentally affected or even completely denied relief.
“We hold that a client who suffers legal malpractice can recover reasonable and necessary attorney fees that are incurred to correct harms caused by the malpractice,” Zahra wrote. “The American rule for the assessment of legal fees stemming from litigation prohibits plaintiffs from recovering attorney fees incurred in the suit brought to recover damages. But the American rule does not prohibit the recovery of legal fees that are damages resulting from the underlying malpractice.”
The court reversed the Court of Appeals judgment and remanded the case to the trial court for further proceedings.
––––––––––––––––––––
Subscribe to the Legal News!
http://legalnews.com/Home/Subscription
Full access to public notices, articles, columns, archives, statistics, calendar and more
Day Pass Only $4.95!
One-County $80/year
Three-County & Full Pass also available
