June 12, 2017

Background:

  • Client was seriously injured in an accident in 2008; hires Attorney #1 who failed to file the Complaint within the required time frame.
  • Client then hires Attorney #2 to file a malpractice claim against Attorney #1.
  • Attorney #2 did not file the malpractice case within the required time frame and client’s case was dismissed.
  • December 2011, Attorney #2 met with his client after she assured him that she would not hire a 3rd attorney to file malpractice against him.
  • Attorney #2 advised that he had no malpractice insurance and had no money; he offered the client a promissory note in the amount of $275,000 plus attorney’s fees of up to 25% of the value of the note.
  • Attorney #2 advised that one of his cases was paying out shortly; she had 5 years to collect on the note.
  • Client accepted the “deal”.
  • June 2012, client filed a disciplinary action against Attorney #2.
  • November 2013, client sued Attorney #2 to collect on the note.
  • February 2014, Attorney #2 filed for a Chapter 7 bankruptcy and client filed an adversary proceeding for the note to be non-dischargeable.

Court Ruling:

  • Bankruptcy Court ruled the debt was non-dischargeable. District Court affirmed as did the Circuit Court.
  • Attorney argued that the client had the option of suing him for malpractice within one year or suing him for nonpayment of the note within 5 years.
  • Court deemed that Attorney #2’s motivation was to stop any malpractice suit against him and that the offer of his “deal” was fraudulent.
  • Court clearly ruled that a lawyer cannot “settle” an actual or potential malpractice claim “with an unrepresented client or former client unless that person is advised in writing of the opportunity to seek the advice of independent legal counsel.
  • Attorney never gave his client any written document advising her of the ability to seek other counsel; although he advised the Court that he did verbally.
  • Court found that the possibility of payment from the attorney was remote at best taking into account his cases. The loss of the client’s right to sue for malpractice was the result of the attorney’s deception.
  • Client’s claim was non-dischargeable.

No wonder some attorneys get a bad name – Worm could not wiggle out of this.