Legal Malpractice: Are the Courts Hostile?

by David Cosgrove

It isn’t pleasant or easy to bring a professional liability claim against a fellow attorney. And even though attorneys are capable of making serious errors with dire consequences, the law affords them substantial deference. The primary causes of action at issue regarding an attorney’s representation are negligence and breach of fiduciary duty. On the other hand, there may be an actual fraud or conspiracy claim to pursue.

“The relation between attorney and client is fiduciary and binds the attorney to a scrupulous fidelity to the cause of the client which precludes the attorney from any personal advantage from the abuse of that reposed confidence.” Shaffer v. Terrydale Management Corp., 648 S.W.2d 595, 605 (Mo. App. 1983). An attorney’s fiduciary duties equate specifically to client loyalty and confidentiality. Costa v. Allen, 274 S.W.3d 461, 462 (Mo. banc 2008).

The elements of a breach of fiduciary duty claim against an attorney are: (1) an attorney-client relationship; (2) breach of a fiduciary obligation by the attorney; (3) proximate causation; (4) damages to the client; (5) no other recognized tort encompasses the facts alleged. Klemme v. Best, 941 S.W.2d 493, 496 (Mo. banc 1997). Proof of an attorney’s intent is not required to establish a breach of fiduciary duty. Id.

The elements of a legal malpractice action, on the other hand, are: (1) an attorney-client relationship; (2) negligence or breach of contract by the defendant; (3) proximate causation of plaintiff’s damages; (4) damages to the plaintiff. Id. “An attorney-client relationship might be found to exist if there is evidence to support findings that the ‘client’ sought and received legal advice and assistance and the ‘attorney’ intended to undertake to give such advice and assistance on the ‘client’s’ behalf.” World Resources, Ltd. v. Utterback, 943 S.W.2d 269, 270 (Mo. App. 1997). The creation of the attorney-client relationship is sufficiently established when it is shown that the advice and assistance of the attorney are sought and received in matters pertinent to his profession. Erickson v. Civic Plaza Nat. Bank of Kansas City, 422 S.W.2d 373, 378 (Mo. App. 1967).

Klemme v. Best is the leading Missouri case instructing upon the difference between an attorney’s breach of fiduciary duty and legal malpractice. In Klemme, Byron Klemme sued his attorney, Robert Best, for breach of fiduciary duty and constructive fraud. Id. at 494. Klemme alleged that before the filing of a federal complaint relating to a police shooting, Best discussed with opposing counsel the identity of each officer involved in the shooting. Id. at 495. Opposing counsel presented Best a draft copy of the complaint which named “Officer Klemme” as a defendant despite Best’s knowledge to the contrary. Id. Best did not inform opposing counsel of this mistake, allegedly to advance Best’s own interests. Id. Best did, however, inform opposing counsel that another officer named in the draft complaint did not participate in the shooting, and opposing counsel eliminated him as a defendant in the filed complaint. Klemme, 941 S.W.2d at 495. Klemme alleged that “Best violated the fiduciary duties of fidelity, loyalty, devotion, and good faith.” Id. Best argued that the claims should be characterized as legal malpractice. Id.

The court in Klemme found that a legal malpractice claim “is founded on an attorney’s duty to exercise due care or to honor express contract commitments.” Id. In addition to this standard duty of care “an attorney has the basic fiduciary obligations of undivided loyalty and confidentiality.” Id. (citing Gardine v. Cottey, 360 Mo. 681, 695, 230 S.W.2d 731, 739 (Mo. banc 1950)(“The relation between attorney and client is highly fiduciary and of very delicate, exacting and confidential character, requiring very high degree of fidelity and good faith on attorney’s part.”)). In distinguishing breach of fiduciary duty from legal malpractice, the Missouri Supreme Court explained:

“The second and fifth elements distinguish this claim from a legal malpractice action. The rationale for the second element is clear: “[A] breach of the standard of care is negligence, and a breach of a fiduciary obligation is constructive fraud.” LEGAL MALPRACTICE, § 8.10 at 600, citing Gardine v. Cottey, supra. The fifth element flows from Donahue. Because the alleged breach of fiduciary duty in Donahue was ‘dependent on’ the existence of attorney negligence, this Court held that the alleged breach was “no more than an action for attorney malpractice.” Donahue, 900 S.W.2d at 629–30. If the alleged breach can be characterized as both a breach of the standard of care (legal malpractice based on negligence) and a breach of a fiduciary obligation (constructive fraud), then the sole claim is legal malpractice. See Donahue, 900 S.W.2d at 630. Donahue does not, however, preclude an action for breach of fiduciary duty or constructive fraud where the alleged breach is independent of any legal malpractice.”

Klemme, 941 S.W.2d at 496. Thus, the court held that Klemme’s petition adequately stated a claim for breach of fiduciary duty because the allegations were independent of the attorney’s negligent performance of duties. Id.

One way to determine whether a breach of fiduciary duty is independent from legal malpractice is to look to the damages claimed by a plaintiff. In a legal malpractice action, “[t]o prove damages and causation, the plaintiff must prove that, but for the attorney’s negligence, the result of the underlying proceeding would have been different.” Collins v. Missouri Bar Plan, 157 S.W.3d 726, 732 (Mo. App. 2005). This requirement is not present in breach of fiduciary duty cases. See Klemme, 941 S.W.2d at 496. Indeed, an attorney can breach his fiduciary duties of loyalty and confidentiality to a client and the harm caused by those breaches can have nothing to do with whether an “underlying proceeding” would have been different. In Klemme for instance, the fact that an attorney knowingly allowed his client to be wrongfully named in a lawsuit would not turn on the success of the underlying proceeding to determine if a breach of loyalty was committed. This is precisely what distinguishes breach of fiduciary duty and legal malpractice and thus separates Appellant’s breach of fiduciary duty claim in this case from any legal malpractice claim.

For example, in Shaffer v. Terrydale Management Corp., 648 S.W.2d 595 (Mo. App. 1983), an attorney, Shaffer, drafted a real estate trust for his client and also become a minority shareholder in that trust. Id. at 598. The client instructed Shaffer to draft the trust in such a way that would allow the client to redeem the shares of any inactive shareholder. Id. Years later, after Shaffer was no longer active in the trust affairs, the client attempted to redeem his shares. Id. Shaffer refused because in drafting the trust, he made it such that Shaffer would not qualify under the class of people whose shares the client could redeem. Id. at 603. The court analyzed Shaffer’s conduct under breach of fiduciary duty. Id. at 605. The court found, “the stringency of the standard that an attorney may not obtain a self-advantage from subject-matter committed to him by the client, except with the knowledge and consent of the client serves to ensure the integrity of that relationship.” Shaffer, 648 S.W.2d at 605. “The transcendent duty of loyalty, therefore, that unless otherwise agreed, the agent acts solely for the benefit of the principal and may not act in competition by acquisition of interests adverse to the principal, governs the attorney and client relationship.” Id. In Shaffer, the attorney’s breach of loyalty caused harm to his client outside of any legal proceeding. Thus, as demonstrated by Shaffer, in breach of fiduciary duty cases it is not necessary to prove a case within a case to establish damages.

In contrast, in Donahue v. Shugart, Thomson & Kilroy, P.C., 900 S.W.2d 624 (Mo. banc 1995), the intended beneficiaries of a decedent’s trust that was declared invalid brought a legal malpractice and breach of fiduciary duty claim against the decedent’s attorneys. Id. at 626. Prior to the decedent Gerald Stockton’s death he directed Stamper, his attorney, to ensure that a specified sum of monies from his trust account be paid to Mary Donahue and Sundy McClung upon his death. Id. at 625. Donahue and McClung were not beneficiaries of Stockton’s trust. Id. Stockton also directed Stamper to prepare a deed to his home transferring a fifty percent interest in the home to Mary Donahue, effective on Stockton’s death. Id. Upon learning that Stockton’s death was imminent, Stamper sought advice from others in his law firm on how to make the checks and deed effective in accordance with Stockton’s wishes. Id.

Stamper and other law firm attorneys attempted to effectuate the transfers but they were later declared to be invalid by the Missouri Court of Appeals. Donahue, 900 S.W.2d at 625. The Court determined that the plaintiff’s breach of fiduciary duty claim was properly dismissed as being “dependent on the existence of attorney negligence, not on the breach of trust” because the conduct complained of was merely negligence in the performance of legal services. Id. at 630.

On the other hand, intentional conduct or conduct that fails to put a client’s interest first cannot serve as the basis for a negligence claim. See Brand v. Kansas City Gastroenterology & Hepatology, LLC, 414 S.W.3d 546, 555 (Mo. App. W.D. 2013) (“The concepts of negligence and intentional conduct ‘are contradictory and mutually exclusive.’”). Thus, when an alleged breach of fiduciary duty does amount to intentional conduct, it cannot also constitute negligence. “Evidence of an act purposely done negates negligence.” Jones v. Marshall, 750 S.W.2d 727, 728 (Mo. App. E.D. 1988)(dismissing plaintiff’s negligence against police officer where the evidence showed the officer deliberately injured the plaintiff). “A plaintiff cannot recover under a negligence theory if the only evidence is that of an intentional tort.” Id. Thus, while intent is not a required element of breach of fiduciary duty, intentionally tortious conduct can certainly serve as the basis for a breach of fiduciary duty. However, it’s a legal impossibility for such intentional conduct to also serve as the basis of a negligence claim. See also Comment 1 to Missouri Rule of Professional Conduct 4-1.9 (“After termination of a client-lawyer relationship, a lawyer has certain continuing duties with respect to confidentiality and conflicts of interest.”); see, e.g., Restatement of the Law Governing Lawyers §§ 31 cmt. e, 33, and 60 (2000)(discussing attorney’s fiduciaries duties continuing after termination of the attorney-client relationship).

To establish a claim for civil conspiracy, some Missouri cases state that the plaintiff must plead sufficient facts to support the following elements: “(1) two or more persons; (2) an object to be accomplished; (3) a meeting of minds on the object or course of action; (4) one or more unlawful acts; and, (5) damages.” Envirotech, Inc. v. Thomas, 259 S.W.3d 577, 586 (Mo. App. E.D. 2008) (citing Lyn–Flex West, Inc. v. Dieckhaus, 24 S.W.3d 693, 700 (Mo. App. E.D.1999)). Other cases state the elements of civil conspiracy as: “(1) two or more persons; (2) with an unlawful objective; (3) after a meeting of the minds; (4) committed at least one act in furtherance of the conspiracy; and, (5) the plaintiff was thereby damaged.” Id. (citing Creative Walking, Inc. v. American States Ins. Co., 25 S.W.3d 682, 688 (Mo. App. E.D. 2000)).

“Since the primary purpose of a civil conspiracy is to cause injury to another, the gist of the action is not the conspiracy, but the wrong done by acts in furtherance of the conspiracy or concerted design resulting in damage to plaintiff.” Gettings v. Farr, 41 S.W.3d 539, 541 (Mo. App. E.D. 2001). But a conspiracy does not give rise to a civil action unless something is done pursuant to which, absent the conspiracy, would create a right of action against one of the defendants, if sued alone. Id. at 541-42; see also Envirotech, 259 S.W.3d at 586 (“Strictly speaking, the fact of conspiracy is not actionable, but the action sounds in tort and is in the nature of an action on the case upon the wrong done under the conspiracy alleged.”). “In Missouri, if tortious acts alleged as elements of a civil conspiracy claim fail to state a cause of action, then the conspiracy claim fails as well.” Western Blue Print Co., LLC v. Roberts, 367 S.W.3d 7, 22 (Mo. banc 2012)(emphasis added). Plaintiff need not be the object of the conspiracy but “must allege and prove he was damaged as a result of the tortious act of one or more of the alleged conspirators and that the tortious act occurred in pursuance of the conspiracy.” Envirotech, 259 S.W.3d at 586-87.

Finally, an attorney might engage in outright fraud. The party alleging fraud bears the burden of proof and must satisfy that burden with clear and convincing evidence. Citizens Bank of Appleton City v. Schapeler, 869 S.W.2d 120, 127 (Mo. App. W.D. 1993). Fraud cannot be presumed, but it may be inferred and shown by circumstantial evidence. Id. “If the proof, however, is such that it is as consistent with honesty and good faith as with a fraudulent purpose it will be referred to the better motive.” National Rejectors, Inc. v. Trieman, 409 S.W.2d 1, 50 (Mo. Banc 1996).

There has been much written about “the case within the case” hurdle in legal malpractice cases. A malpractice plaintiff must prove that it had a valid claim in the underlying action in order to recover. Day Advertising Inc. v. Deveries & Ass., P.C., 217 S.W.3d 362, 367 (Mo. App. W.D. 2007) (emphasis added). Many lay persons believe their new counsel must simply establish that the former attorney failed to meet the applicable standard of care. This hurdle, however, is the first and simplest to surmount. The plaintiff must also prove that they would have obtained a recovery from the court or jury but for that failure. Moreover, the lost “but-for” recovery must be substantial to finance the litigation, including, but not limited to, the cost for the mandatory and rare industry standard expert witness.

If you are still not deterred, there are a couple of additional, albeit nuanced, hurdles between the plaintiff and recovery. First, there is a chance that the attorney who erred did not have malpractice insurance, or that his or her conduct fell beyond the parameters of the policy. Most policies will not cover an intentional tort, such as fraud, or punitive damages. As such, there may be no source of recovery for the most egregious attorney misconduct. Finally, it has been my experience that judges do not welcome malpractice cases with open arms. Most judges are former private practice attorneys that perhaps cannot help but think “but for the grace of God.”

Despite all of these hurdles, my law firm is (unfortunately) unique in that it is willing to prosecute malpractice claims. An outright refusal to do so is wrong, if not unethical, in my humble opinion. But we do not accept any case that does not have a decent chance of surmounting all of the aforementioned hurdles. And those cases, perhaps by the grace of God, are unusual. Food for thought.

Mr. Cosgrove has been a trial attorney for over 25 years. He accepts cases against attorneys if they involve gross negligence, a breach of loyalty, or fraud.