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Litigation Privilege Doesn’t Shield Lawyers From Malpractice Suits by Unhappy Clients

Wednesday, October 24, 2012

By Joan C. Rogers  

 

The privilege that generally shields lawyers from liability for statements made in the course of litigation does not apply when clients sue their lawyers for malpractice, the New Jersey Superior Court, Appellate Division, held Oct. 9 on a question of first impression (Buchanan v. Leonard, N.J. Super. Ct. App. Div., No. A-2243-11T4, 10/9/12).

To stretch the litigation privilege to cover clients' malpractice claims against their lawyers would be contrary to New Jersey's commitment to ensure that lawyers adhere to accepted standards of legal practice, Judge Joseph L. Yannotti reasoned in his opinion for the court.

Contents of Settlement Memo.

When former clients sued William C. Buchanan for allegedly bungling their bankruptcy proceeding, Buchanan's insurer retained the law firm now known as Morgan Melhuish Arbrutsyn to defend him, and attorney Jeffrey Leonard of that firm handled the matter.

Shortly before trial, Leonard asked the insurer for authority to settle; in doing so, he asserted in a letter that Buchanan had committed bankruptcy fraud in representing the clients and would have been subject to criminal prosecution if the statute on limitations on the offense had not expired.

That assertion allegedly prompted the insurer to deny coverage of the clients' claim. After winning a court battle over the coverage issue, Buchanan sued Leonard and Morgan Melhuish for malpractice and other alleged wrongs. Leonard breached his professional duties by stating as a fact that Buchanan had committed a criminal offense, Buchanan contended.


“[T]he litigation privilege should not be extended to protect an attorney from civil liability where his or her client claims that the attorney's representation did not meet the applicable standards for legal practice.”
New Jersey Superior Court, Appellate Division

The trial court found that Buchanan's defamation claim was time-barred and that his other claims failed as a matter of law because they were based on Leonard's statements in the settlement memo, which were covered by the litigation privilege.

The appellate court agreed that the defamation claim was untimely, but concluded that the litigation privilege did not bar the malpractice claim.

Privilege Inapplicable.

Citing Loigman v. Twp. Comm. of Middletown, 889 A.2d 426, 22 Law. Man. Prof. Conduct 51 (N.J. 2006), the court acknowledged that the litigation privilege generally protects an attorney from civil liability arising from statements he has made in the course of judicial proceedings. New Jersey courts have not specifically addressed whether the litigation privilege protects a lawyer from claims by his client, Yannotti said.

Yannotti pointed out that in Loigman, the state supreme court said the litigation privilege does not protect lawyers from discipline for violating professional conduct rules, and the court declared its commitment to ensuring that lawyers comply with accepted professional standards.

Looking outside New Jersey, the court discussed two California cases: Kolar v. Donahue, McIntosh & Hammerton, 52 Cal. Rptr.3d 712 (Cal. Ct. App. 2006), which found “no sound reason” for extending the litigation privilege to bar malpractice claims based on a litigator's failure to provide competent representation in a lawsuit, and Mattco Forge Inc. v. Arthur Young & Co., 6 Cal. Rptr.2d 781 (Cal. Ct. App. 1992), which held that the policies underlying the litigation privilege do not support its use to protect a negligent expert witness from liability to the party who hired that witness.

Yannotti described the reasoning of those courts as “persuasive and in line with this State's commitment to ensure that attorneys adhere to accepted standards of practice.”

Although lawyers must be free to represent their clients vigorously without fear of being ensnared in costly civil suits, “the litigation privilege should not be extended to protect an attorney from civil liability where his or her client claims that the attorney's representation did not meet the applicable standards for legal practice,” Yannotti wrote.

Other Claims.

Saying that it construed Buchanan's other claims (which included breach of contract and breach of fiduciary duty) as restatements of his malpractice claim, the court expressly declined to consider whether the litigation privilege bars a client's causes of action against his attorney other than malpractice. The trial court will have to address that issue on remand if Buchanan wishes to pursue those claims, the court directed.

Gary E. Stern, Hackensack, N.J., argued for Buchanan. Marshall D. Bilder of Sterns & Weinroth, Trenton, N.J., argued for Leonard and Morgan Melhuish.


Full text at http://op.bna.com/mopc.nsf/r?Open=kswn-8yyn26.

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