Professional Liability Matters

They say that a truly good settlement is one that leaves everyone unhappy. There is plenty of truth here. But some settling parties take their unhappiness to a new level by filing a malpractice claim. Whether it be buyer’s remorse, doubt, or the opportunity to reconsider the settlement without the distraction of active litigation, some settling parties determine that they took too little or gave too much away. This may be a part of the uncertainty of compromise and often dissipates over time without much fanfare. But sometimes it does not; some settling parties point fingers at their former counsel claiming that bad advice led to an unjust settlement. The result can be the “settle and sue” malpractice claim, which applies differently from jurisdiction to jurisdiction.

A modern-day offshoot of the contingency fee arrangement is “alternative litigation financing.” Also known as third-party litigation financing, A.L.F. is the practice of making cash advances, usually to a litigant, to be repaid from the proceeds from the litigation. There is plenty of room for debate the pros and cons of this developing trend. Supporters may argue that this practice allows an injured plaintiff to take an “advance” on an anticipated recovery to address financial hardship before reaching a settlement or verdict. This is particularly useful for injured plaintiffs who cannot return to work. But attorneys associated with litigation financing may be susceptible to claims when something goes awry.

Attorneys have an ethical duty to keep a client reasonably informed about the status of the representation. The rules of professional conduct generally require a lawyer to provide the client with sufficient information to participate intelligently in decisions concerning the objectives of the representation. Fulfilling this ethical obligation, however, may sometimes require the attorney to inform the client about personal matters that may affect the attorney’s ability to represent the client’s interest. For example, an attorney may be obligated to disclose her own health condition to a client, especially when imminent death is foreseeable.