Legal Malpractice - San Francisco County. March, 2004
Confidential Settlement: $700,000

This was a case in which the legal malpractice of one negligent attorney was compounded by the negligence of a second attorney. The case concerned a dispute that a San Francisco physician had with his medical practice management company. In the underlying case, the doctor sought to terminate his agreements with the management company which he claimed was not living up to its obligations. The doctor had certain rescission rights under the agreements, but those rights were based on complicated financial calculations which were not necessarily favorable to the doctor. Nevertheless, the doctors first attorney (a solo transactional attorney), gave the doctor a favorable written opinion on the merits of his claims and, after the doctor decided to proceed on the case, this attorney terminated the doctors agreements with the management company which had three more years to run. The solo practitioner then turned the matter over to a second, larger law firm and one of its litigation partners.

In the ensuing arbitration against the management company (handled by both the solo lawyer and the law firm who was brought in to handle the arbitration), the doctor lost on his claims. Additionally, the arbitrator found that the doctor had unilaterally and wrongfully terminated the agreements and awarded the management company one million dollars in damages, plus costs and attorneys fees totaling nearly $300,000.

The basis of the legal malpractice claims against the two sets of lawyers was three-fold: First, we claimed that the solo practitioner did not have the experience to provide the kind of risk evaluation and litigation opinion he gave, and that the successor law firm should have cleared the doctors misconception when it read the first attorneys opinion letter. Secondly, because the question of whether the company was in breach of the agreements was so close, we claimed the dispute was negligently strategized, and that rather than terminating the agreements, the dispute should have proceeded as a declaratory relief action. If it had gone forward on as a “dec relief” action, and the doctor had lost, he would have been only liable for attorneys fees and costs, but avoided exposure to the larger damages caused by what was ultimately held to be his wrongful termination. As a declaratory relief action, the doctor could have simply completed his contracts with the management company in the event he had lost and not been liable for the wrongful termination damages. Finally, we contended that the case and in particular the arbitration was poorly prepared and mishandled. Despite sophisticated and somewhat complicated financial analyses, including damage calculations being involved in the case, the negligent lawyers (which included the transactional lawyer coming back to handle parts of the arbitration) failed to retain or use any expert witnesses.

The case was aggressively defended and settled less than two weeks before trial after two mediations.