New Malpractice Analysis for Transactional Lawyers

Frederick v. Wallerich, ___ N.W.2d ___ (Minn. 2018). A lawyer wrote an ante nuptial agreement for a client that was not properly executed (it did not have two witnesses). About 1 year later that same lawyer wrote a will for the client that incorporated the ante nuptial agreement by reference. When the client later divorced, the 6 year statutory period for a malpractice claim had run, but six years had not run since the lawyer wrote the will. So the general issue was, did the faulty ante nuptial agreement constitute the malpractice and the subsequent facts were all premised upon the original malpractice, or, are there separate causes of malpractice that stem from the original claim? This also begged the question of the “continuous representation” theory, namely, if you continue to represent a client after committing malpractice, does that continual representation extend the statute of limitations?

Let’s start with the continuous representation theory. The Supreme Court effectively dismissed this theory or argument as unworkable. But the context is key. As the court put it: “Lawyers must, based upon context, discern whether the client simply wants reassurance that the project was completed, a reminder of the outcome, assurance that the outcome was favorable, or additional legal research on the question.” In other words, if additional legal work is required then new malpractice may arise, but a mere review or discussion of the original malpractice matter does not give rise to a new claim.  The Supreme Court believes this “…leaves room for clients and lawyers to revisit completed projects and re-establish confidence in previous work through a variety of approaches without resulting in additional liability for the attorney.”

In this case, the new legal work, drafting of a new will, combined with the failure to determine if the ante nuptial agreement that is incorporated into the will is still valid, combined with the lost opportunity to prevent additional damages from occurring (some damage), can start a new legal malpractice claim. (The court did not address the question whether a second lawyer would be automatically subject to malpractice for not verifying whether the ante nuptial agreement was valid.)

The Supreme Court affirmed the general malpractice rule that a claim accrues when “some damage” accrues. In these facts, the some damage rule was triggered because the client, had he known of the invalid ante nuptial agreement, could have immediately sought a revised agreement or filed for divorce thereby preventing the additional $1,000,000 of damages allegedly occurring after the will was written. The Court affirmed the four factor test for malpractice: 1) an attorney-client relationship, 2) acts constituting negligence or breach of contract, 3) that such acts are the proximate cause of the client’s damages, and 4) whether the attorney’s conduct was the “sole” “but for” cause of the failure to obtain a more favorable result. It is important to note that this Court found that the plaintiff here must prove that the damages were “solely attributable” to the will drafting and not the ante nuptial agreement.

The Court then set down 5 factual factors to determine if new malpractice can spring from an original malpractice. (1) Is the plaintiff’s position significantly worsened? (2) Are the lawyer’s subsequent acts the same type of acts as the original malpractice, (3) Did the acts occur at different times and during different transactions? (4)Was the subsequent act not connected by a causal link to the first act of malpractice? (5) Did the subsequent act specifically rely upon and incorporate the validity prior act? Because each of these elements were met in one way or another based on the pleadings (which may be disproved in trial), the Court found a minimal showing of negligence separate from the prior act to allow the case to proceed. Although the prior act was incorporated into the subsequent act, the prior act did not prevent the lawyer from exercising a proper standard of care in the subsequent act. The lawyer had a duty of care to determine whether the ante nuptial agreement was valid before incorporating it into the new will. The client did not ask for verification that the ante nuptial agreement was valid. The client asked for a new will. The new will improperly incorporated a defective document. Therefore a new cause of action arose.

The dissent was critical of the majority opinion and argued that this new analysis deviates from the bright line Antone rule and will create more uncertainty instead of creating clarity.

About Robert McLeod

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