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By Samson Habte
Dechert LLP is on the hook for millions of dollars that a client purportedly lost because of an erroneous judicial ruling that Dechert had argued against, the Massachusetts Supreme Court held Oct. 11 ( Kiribati Seafood Co. v. Dechert LLP , 2017 BL 363529, Mass., No. SJC-12287, 10/11/17 ).
The decision resolved a vigorously litigated case against Dechert that raised a complex legal malpractice question: who caused the client to suffer a litigation loss that was attributable to both judicial error and attorney negligence?
Voting unanimously, the justices said even if the Tahitian court made a legal error, Dechert didn’t marshal all of the facts that it could have to secure a win under the Tahitian court’s purportedly erroneous view of the law.
“Stated simply, where an attorney will foreseeably lose on the law but can still win on the facts, an attorney is negligent if he or she forgoes the opportunity to win on the facts,” Chief Justice Ralph D. Gants wrote.
The malpractice plaintiff was a former Dechert client that won a $4.3 million trial judgment in a Tahitian case and then blamed Dechert for an appellate ruling that lopped $1.67 million off that award. A trial judge dismissed the malpractice case after concluding that the Tahitian appeals court that reduced the award made an error of law, and that judicial error—not attorney negligence—was the cause of the client’s injury.
But the Massachusetts Supreme Court—which reached out for this case on its own motion, assuming jurisdiction before an intermediate appeals court could decide it—said Dechert was liable even if the Tahitian appeals court misinterpreted the law in reaching its decision to reduce the client’s trial judgment by 40 percent.
The court said its reasoning was summarized in an aphorism attributed to the (nonlawyer) poet-novelist Carl Sandburg:
The plaintiff, Kiribati Seafood Co., hired two Paris-based Dechert lawyers—then at Coudert Brothers LLP—after a fishing vessel that it owned was destroyed in Tahiti, where it was docked. The company sued the shipyard and won a $4.3 million verdict, but it later blamed Dechert for a Tahitian appellate ruling that shaved $1.76 million off the verdict.
The Tahitian court said French law, which governs in Tahiti, required that reduction because the $1.76 million represented a invalidly assigned subrogation claim that Kiribati obtained from its “port risk” insurer.
Kiribati obtained those subrogation rights after a dispute arose over whether the insurer was paying its share of Dechert’s fees. The Tahitian court said allowing Kiribati to collect on the claim would constitute “double compensation,” which the court said was prohibited under French law.
Kiribati subsequently alleged that the Tahitian appeals court was wrong on the law. The company said that although Dechert argued against that erroneous interpretation, it was negligent for failing to respond to the court’s allegedly mistaken view of the law by providing evidence of the consideration Kiribati had paid to its insurer to acquire the subrogation rights.
The Tahitian appeals court—which unlike American appellate courts is allowed to consider new evidence—had indicated that it would rule for Kiribati, and allow the company to collect the full $4.3 million judgment, if the company provided that evidence.
The Massachusetts opinion says lawyers for Kiribati twice gave Dechert documents that could have enabled Kiribati to prevail under the Tahitian court’s view of the law. Dechert failed to submit those documents.
The Massachusetts Supreme Court said that was negligent, and that Dechert couldn’t avoid liability by pointing to judicial error as the cause of Kiribati’s injury.
“Proximate cause in an attorney malpractice case is more complicated where the defendant attorney contends that the adverse outcome was the product of the court’s legal error,” the Massachusetts Supreme Court acknowledged.
But the court said it didn’t have much difficulty finding that Kiribati established that Dechert’s negligence, and not the Tahitian court’s allegedly erroneous legal ruling, was the cause of the injury.
The decision offers lessons on how litigators should react, in real time, when a court indicates that it will rule in a way that could doom a client’s case or greatly reduce the potential recovery.
"[W]here the judicial error is foreseeable, such as where a judge or an appellate court has indicated an intention to rule in a manner that the attorney believes to be an error of law, then an attorney has an obligation to take reasonable and prudent steps to prevent or mitigate that error,” Gants wrote.
The justices said that in this case, Dechert’s mistake was not changing its game plan after the Tahitian court deferred its ruling on the validity of the subrogation assignment and suggested that Kiribati could prevail if it could produce evidence of consideration it had paid to its insurer in exchange for subrogation rights.
According to the opinion, Dechert argued that “where a court rules against a client based on a foreseeable error of law, the client’s attorney cannot be liable for failing to take reasonable steps to prevent or mitigate the consequences of that error by offering evidence that would enable the client to prevail.”
Dechert‘s argument was that in such a situation, the “legal error will always be the proximate cause of the adverse judicial decision,” the opinion said.
The high court disagreed. “Stated simply, where an attorney will foreseeably lose on the law but can still win on the facts, an attorney is negligent if he or she forgoes the opportunity to win on the facts,” the court said.
Goulston & Storrs P.C. represented Dechert LLP. Kiribati Seafood Company LLC was represented by Todd & Weld LLP and Lane Powell P.C.
Olympic Parker LLC was represented by Stephen A. Ross of Natick, Mass, and Arnold E. Cohen of Sharon, Mass.
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