Expert Witness in Malpractice Litigation Doesn’t Always Need to Know Local Practice

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Nov. 3 — An expert witness in a malpractice action needn't be familiar with local custom and practice unless they constitute “a factor or special circumstance” in the case, “such as where local rules, practices or customs are relevant to a claimed breach of duty,” a divided South Dakota Supreme Court held Oct. 29.

Justice Lori Scully Wilbur spoke for four of the five justices in concluding that the trial court should not have rejected an expert who was highly qualified to testify about the issues in a malpractice case—a law firm's alleged conflict of interest in multiple representation and its supposedly deficient investigation of insurance coverage—without any showing that local practice was a relevant factor in the case.

In a lengthy dissent, Chief Justice David E. Gilbertson argued that “retention of the locality rule is the correct approach, rather than adopting a state or national standard.”

On a separate issue, the court held that collateral estoppel bars the plaintiff in the malpractice action from relitigating the trial court's finding in the underlying action that the plaintiff consented to the firm's representation of multiple clients. However, the trial court's finding of consent does not resolve the separate question of whether the conflict of interest was nonconsentable, Wilbur said.

Restatement's Take on Relevant Community

According to the Restatement (Third) of the Law Governing Lawyers §52 cmt. b (2000), the professional community whose practices and standards are relevant on the standard of care for malpractice liability purposes “is ordinarily that of lawyers undertaking similar matters in the relevant jurisdiction (typically, a state).”

“The narrower ‘locality test,' under which the standards of a local community governed, has seldom been recognized for lawyers” and “is now generally rejected for all professionals,” the comment states.

Moreover, according to the comment “there exists a national practice with national standards” in many fields of legal practice, such as the preparation of securities-registration statements or the representation of clients in federal litigation involving federal laws.

‘Locality' Usually Means ‘State.'

In reviewing the admissibility of a lawyer's opinion based on a national standard of care, the court reviewed a variety of sources including a leading malpractice treatise, cases from other states and the Restatement (Third) of the Law Governing Lawyers §52 (2000).

“Depending on the facts of the case, locality may or may not be one of the considerations of the court in determining duty as a matter of law,” Wilbur stated.

Moreover, the court said “locality can also be considered as a factor or special circumstance when determining whether an attorney has met the standard, in an appropriate case, such as where local rules, practices or customs are relevant to claimed breach of duty.”

But Wilbur stressed that locality is not relevant to the application of the standard of care in many cases. “The application of the locality rule is fact specific and will not be an issue in every case,” she said, citing Dwain E. Fagerlund, Legal Malpractice: The Locality Rule and Other Limitations of the Standard of Care: Should Rural and Metropolitan Lawyers Be Held to the Same Standard of Care?, 64 N.D. L. Rev. 661, 686-87 (1988).

In cases where locality may be relevant to a client's expectations of his lawyer, “a statewide focus would usually be appropriate,” the court said. “However, there may be cases where it is not appropriate to apply a statewide standard, and we should not limit ourselves to only using a statewide approach,” it said.

Not Dakota-Specific

In this case, beekeeper Roger Hamilton claims that Bantz, Gosch & Cremer PLLC had a conflict of interest in representing him and two other beekeepers in litigation over their right to use certain beehive locations. Hamilton also alleges the Bantz firm inadequately investigated whether he had insurance coverage for the litigation.

The trial court dismissed Hamilton's malpractice case because his out-of-state expert offered an opinion on a national standard of care.

The supreme court said that for the two issues presented in this case—conflict of interest and investigation of insurance coverage—“there was no showing that locality was a relevant factor.”

The plaintiff's expert—David Lillehaug, now a justice on the Minnesota Supreme Court—was highly qualified to testify about the standard of care for lawyers, and his testimony should not have been stricken because it failed to meet the locality standard, Wilbur said.

By assisting the trier of fact to understand a fact in issue, Lillehaug's proposed testimony met the requirements for admitting expert testimony, the court said.

“Striking his testimony is illustrative of a glaring problem in applying the locality rule to all attorney malpractice actions, as there was no showing that locality unique to the jurisdiction had any impact on the standard of care in this case,” Wilbur wrote.

Different View

In his dissenting opinion, Gilbertson argued that Lenius v. King, 294 N.W.2d 912 (S.D. 1980), adopted the locality rule for defining the standard of care for lawyers in South Dakota, and that Wilbur offered no good reason to retreat from that approach.

In response, the majority denied that Lenius adopted the locality rule. Although the trial court in that case gave a jury instruction that included locality, that part of the instruction was not appealed and thus was not analyzed by the supreme court, Wilbur said. She also noted that after Lenius the court adopted a national standard of care for medical specialists.

Consentable Conflict?

The trial court in the beehive litigation found that Hamilton actually did sign a conflict waiver at the outset of the representation, although Hamilton denied he ever received the letter or signed it.

In the malpractice action, the lower court said that finding precluded Hamilton from relitigating the consent issue.

The supreme court said that wasn't entirely accurate. Collateral estoppel applies to the limited issue of whether Hamilton signed a conflict of interest waiver, it said. But Wilbur stressed that the doctrine “does not apply to the broader question of whether Appellees engaged in a nonconsentable, conflicted representation of Hamilton.”

Dan Rasmus, Minneapolis, and Timothy L. James, Yankton, S.D., represented Hamilton. Thomas J. Welk, Jason R. Sutton and Meghan K. Woster of Boyce, Greenfield, Pashby & Welk LLP, Sioux Falls, S.D., represented the lawyers and their firm.

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