At the James T. King Bankruptcy Inn of Court, we discussed whether certain fact patterns resulted in actual conflicts. The issues became “as clear as mud” when an attorney cited California Rules of Professional Conduct Rule 3-310.
Rule 3-310 states, in pertinent part:
(C) A member shall not, without the informed written consent of each client:
(2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict; or
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We all know the general statute of limitations for suing attorneys is within after one year of discovering the facts constituting the wrongful act or within one year of when the client should have discovered the facts constituting the wrongful act through the use of reasonable diligence but never more than four years from the date of the wrongful act or omission. See Code Civ. Proc. § 437c.
The limitations period is tolled if, among other reasons, the plaintiff has not sustained an actual injury or if the attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred. See Code Civ. Proc. § 340.6.
In the scenario discussed today, the attorney forgets the deadline to file an objection to a bogus lien. Because of the missed deadline, the client hires a different firm and ultimately agrees to accept $1.6 million less than it would otherwise have received.
The problem is even though the client knew his former attorney missed the deadline to object to the bogus lien, he waited over a year, until after the $1.6 million hit, to file a malpractice action. So is the malpractice action timely since the client had not sustained an actual injury?
For those of you who do not like analysis: lawyers cannot be held liable for malpractice if the bad advice they give leads to a result that was not foreseeable. In the case summary below, the client was given bad advice which led to her being prosecuted for forgery. Under the particular facts of the case, forgery was a legal impossibility, so the court found that the lawyer’s bad advice (to forge a signature) did not have a causal connection to the crime the client was charged with.
Those of us who are lawyers remember the Palsgraf case written by Cardozo. Guard pushes man onto train. Fireworks drop from man’s hands. The fireworks cause commotion. The commotion causes a scale on the other side of the train station to fall onto a lady. Lady sues train station. Result: lady loses lawsuit!