Florida has been a hotbed of foreclosure activty, consistently ranking among the top states for numbers of homes taken back on defaulted mortgage loans. As a result, Florida homeowners have fallen victim to a variety of mortgage relief fraud scams, including fraud and abuse by some members of the Florida Bar. According to a recent article in the Orlando Sentinel, the Florida bar has opened 202 foreclosure-fraud grievance investigations since November, with a total of 226 now pending. According to this article, 46 fraud related cases have been investigated and closed, without any findings of attorney misconduct. However, sanctions have been assessed against 53 attorneys involed in 145 foreclousre-related complaints not involving fraud.
While this Orlando Sentinel article is focused on lawyer abuse comitted by attorneys representing mortgage lenders, many home owners and property owners have been victims of legal malpractice from their own attorneys. Many attorneys and law firms have engaged in aggressive marketing campaigns to property owners, taking fees in exchange for empty promises and false hope. Lawyers with little or no experience in foreclosure litigation have represented themselves as having special expertise or inside information to help property owners in foreclosure.
Unfortunately, legal malpractice intakes in my office have increased during the last two years, as vicitms of this kind of legal malpractice are looking for compensation. Most of these property owners will have difficulty demonstrating damages if they were unable to keep their property regardless of how poorly their attoneys represented them. Homeowners will probably have monetary losses that are too small to justify a time consuming and expensive legal malpratice law suit. Their sole remedy may be a complaint with the Florida Bar, or to seek compensation from the Clients' Security Fund. However, legal malpractice in representing clients going through foreclosure may result in demonstrable economic harm. This may be true particularly for commerical property owners. Incompetent representation may deprive the owner of a meaningful settlement opportunity, time to resolve financial disputes with lenders and creditors, or the ability to avoid personal exposure on deficiency judgments. If the property owner can demonstrate economic harm that could have been avoided with competent representation, then a legal malpractice claim may be pursued to compensate the property owner. It is likely that as the foreclosure crisis deepens, and unethical and incompetent lawyers take advantage of distressed property owners, complaints for legal malpratice by mortgage foreclosure clients will continue to increase.
Sunday, May 22, 2011
Tuesday, May 10, 2011
Bankruptcy and Legal Malpractice
With a plummeting economy, bankruptcies are on the rise. This means more individuals interacting with attorneys who undertake to assist them with their legal needs. Fortunately, most lawyers are doing a good job of assisting financially distressed families and individuals with discharging their debts and using the bankruptcy laws to preserve their assets. However, even individuals at the lowest point in their financial life may suffer significant economic losses when the bankruptcy lawyers they seek help from fail to do their job.
In the case of In re: Pullen, 2009 Lexis 2935 (N.D. Ga. 2009) a bankruptcy court awarded damages to a homeowner who was harmed by the bad advice of his bankruptcy lawyers. The homeowner consulted the attorneys for advice on how to prevent his home from being sold in a foreclosure sale. The attorneys erroneously advised the homeowner that he could re-open an old bankruptcy case to stop the foreclosure sale. In fact, the correct procedure would have been to file a new bankruptcy action, which would have immediately halted the foreclosure sale. As a result of the bad advise, the homeowner's home was sold at foreclosure. The homeowner incurred significant legal fees to invalidate the foreclosure sale and regain homeownership. This was accomplished in a second bankruptcy case, by the use of what is known as an adversary proceeding in the bankruptcy court.
In the new bankruptcy case, the court found that the homeowner's attorneys had given bad advice. It held the negligent attorneys responsible for paying their former client the legal fees he had incurred in having to correct the foreclosure sale:
"...Defendants' decision to preoceed with a motion to re-open the 1998 case was based upon a faulty understanding of bankruptcy law and did not accomplish the express purpose sought by Plaintiffs...Because Defendants failed to prevent the Sale, Plaintiffs have incurred substantial legal fees to pursue unwinding the sale in an adversary proceeding in their [second]bankruptcy case..."
This case demonstrates that lawyers in every specialty can cause harm to their clients if they fail to properly advise them. Courts will help these clients if it can be shown that the bad advise resulted in a discernible economic loss directly caused by the bad advise.
In the case of In re: Pullen, 2009 Lexis 2935 (N.D. Ga. 2009) a bankruptcy court awarded damages to a homeowner who was harmed by the bad advice of his bankruptcy lawyers. The homeowner consulted the attorneys for advice on how to prevent his home from being sold in a foreclosure sale. The attorneys erroneously advised the homeowner that he could re-open an old bankruptcy case to stop the foreclosure sale. In fact, the correct procedure would have been to file a new bankruptcy action, which would have immediately halted the foreclosure sale. As a result of the bad advise, the homeowner's home was sold at foreclosure. The homeowner incurred significant legal fees to invalidate the foreclosure sale and regain homeownership. This was accomplished in a second bankruptcy case, by the use of what is known as an adversary proceeding in the bankruptcy court.
In the new bankruptcy case, the court found that the homeowner's attorneys had given bad advice. It held the negligent attorneys responsible for paying their former client the legal fees he had incurred in having to correct the foreclosure sale:
"...Defendants' decision to preoceed with a motion to re-open the 1998 case was based upon a faulty understanding of bankruptcy law and did not accomplish the express purpose sought by Plaintiffs...Because Defendants failed to prevent the Sale, Plaintiffs have incurred substantial legal fees to pursue unwinding the sale in an adversary proceeding in their [second]bankruptcy case..."
This case demonstrates that lawyers in every specialty can cause harm to their clients if they fail to properly advise them. Courts will help these clients if it can be shown that the bad advise resulted in a discernible economic loss directly caused by the bad advise.
Wednesday, March 30, 2011
Legal Representation and Arbitration for Florida Lawyers and their Clients
As a client, you should insist on a written contract with your lawyer that clearly defines the agreement for representation. Any responsible lawyer will ensure that this is done. But read the contract carefully. Many lawyers are aware of the pitfalls of having to defend a legal malpractice case before a jury. A recent trend among some lawyers is to include an arbitration provision in their engagement contracts. A typical clause will require the client to settle their dispute with the lawyer before one or more arbitrators, in what is essentially a private proceeding. The idea is to completely bypass the court system, including the constitutionally protected right to a jury trial. Some engagement contracts limit the use of arbitration to settle disputes relating to fees. Other contracts contain very comprehensive arbitration provisions that attempt to preempt the court process for any dispute with the attorney, including a claim for legal malpractice.
This has become an issue of controversy in many states, including Florida. An American Bar Association ethics opinion supports the use of such agreement, provided that the attorney properly advises the client. ABA Formal Ethics Opinion 02-425. In Florida, the issue has never been addressed by the Florida Supreme court. However, two rules of Professional Conduct for Florida lawyers do potentially regulate such agreements. Rule 4-1.8(h) of the Florida Rules of Professional Conduct provides: “Limiting Liability for Malpractice. A lawyer shall not make an agreement prospectively limiting the lawyer’s liability to a client for malpractice unless permitted by law and the client is independently represented in making the agreement. A lawyer shall not settle a claim for such liability with an unrepresented client or former client without first advising that person in writing that independent representation is appropriate in connection therewith.” This rule raises the question of whether an agreement to arbitrate is a "limitation of the lawyer's liability." To the extent that such an agreement is interpreted to limit liability, it must comply with this rule. Another rule, Rule 4-1.5(i), directly addresses arbitration agreements between lawyers and their clients, but it is limited to agreements to arbitrate fee disputes. Like Rule 4-1.8(h), it requires that the lawyer advise the client to seek independent counsel before entering into the agreement:
“Arbitration Clauses. A lawyer shall not make an agreement with a potential client prospectively providing for mandatory arbitration of fee disputes without first advising that person in writing that the potential client should consider obtaining independent legal advice as to the advisability of entering into an agreement containing such mandatory arbitration provisions. A lawyer shall not make an agreement containing such mandatory arbitration provisions unless the agreement contains the following language in bold print: Notice: This agreement contains provisions requiring arbitration of fee disputes. Before you sign this agreement you should consider consulting with another lawyer about the advisability of making an agreement with mandatory arbitration requirements. Arbitration proceedings are ways to resolve disputes without use of the court system. By entering into agreements that require arbitration as the way to resolve fee disputes, you give up (waive) your right to go to court to resolve those disputes by a judge or jury. These are important rights that should not be given up without careful consideration.”
The recent decision of a Florida district appeal court appears to affirm the legitimacy of the use of arbitration to settle a legal malpractice dispute between a law firm and its client. See Mintze & Fraade, P.C. v. Beta Drywall Acquisition, LLC, 2911 WL 1004591 (Fla. 4th DCA, March 23, 2011). The opinion does not contain an analysis of the ethical rules in Florida that apply to such an agreement, and it is not clear whether those arguments were raised as a defense to enforcement of the arbitration provision in the engagement contract.
At this time, the enforceability of a contract that requires a client to arbitrate their legal malpractice claim against their Florida lawyer remains an open question. For an interesting review of this issue in the Florida Bar Journal, see Spector, Predispute Agreements to Arbitrate Legal Malpractice Claims: Skating on Thin Ice in Florida's Ethcal Twilight Zone?, The Florida Bar Journal, Volume 82, No. 4 (April, 2008).
Any lawyer including an arbitration provision in their agreements for legal representation in Florida should comply with Rules 4-1.8(h) and 4-1.5(i). Any client presented with such an agreement should seek independent counsel for legal advise regarding whether it is in the client's best interest to agree to such a provision.
This has become an issue of controversy in many states, including Florida. An American Bar Association ethics opinion supports the use of such agreement, provided that the attorney properly advises the client. ABA Formal Ethics Opinion 02-425. In Florida, the issue has never been addressed by the Florida Supreme court. However, two rules of Professional Conduct for Florida lawyers do potentially regulate such agreements. Rule 4-1.8(h) of the Florida Rules of Professional Conduct provides: “Limiting Liability for Malpractice. A lawyer shall not make an agreement prospectively limiting the lawyer’s liability to a client for malpractice unless permitted by law and the client is independently represented in making the agreement. A lawyer shall not settle a claim for such liability with an unrepresented client or former client without first advising that person in writing that independent representation is appropriate in connection therewith.” This rule raises the question of whether an agreement to arbitrate is a "limitation of the lawyer's liability." To the extent that such an agreement is interpreted to limit liability, it must comply with this rule. Another rule, Rule 4-1.5(i), directly addresses arbitration agreements between lawyers and their clients, but it is limited to agreements to arbitrate fee disputes. Like Rule 4-1.8(h), it requires that the lawyer advise the client to seek independent counsel before entering into the agreement:
“Arbitration Clauses. A lawyer shall not make an agreement with a potential client prospectively providing for mandatory arbitration of fee disputes without first advising that person in writing that the potential client should consider obtaining independent legal advice as to the advisability of entering into an agreement containing such mandatory arbitration provisions. A lawyer shall not make an agreement containing such mandatory arbitration provisions unless the agreement contains the following language in bold print: Notice: This agreement contains provisions requiring arbitration of fee disputes. Before you sign this agreement you should consider consulting with another lawyer about the advisability of making an agreement with mandatory arbitration requirements. Arbitration proceedings are ways to resolve disputes without use of the court system. By entering into agreements that require arbitration as the way to resolve fee disputes, you give up (waive) your right to go to court to resolve those disputes by a judge or jury. These are important rights that should not be given up without careful consideration.”
The recent decision of a Florida district appeal court appears to affirm the legitimacy of the use of arbitration to settle a legal malpractice dispute between a law firm and its client. See Mintze & Fraade, P.C. v. Beta Drywall Acquisition, LLC, 2911 WL 1004591 (Fla. 4th DCA, March 23, 2011). The opinion does not contain an analysis of the ethical rules in Florida that apply to such an agreement, and it is not clear whether those arguments were raised as a defense to enforcement of the arbitration provision in the engagement contract.
At this time, the enforceability of a contract that requires a client to arbitrate their legal malpractice claim against their Florida lawyer remains an open question. For an interesting review of this issue in the Florida Bar Journal, see Spector, Predispute Agreements to Arbitrate Legal Malpractice Claims: Skating on Thin Ice in Florida's Ethcal Twilight Zone?, The Florida Bar Journal, Volume 82, No. 4 (April, 2008).
Any lawyer including an arbitration provision in their agreements for legal representation in Florida should comply with Rules 4-1.8(h) and 4-1.5(i). Any client presented with such an agreement should seek independent counsel for legal advise regarding whether it is in the client's best interest to agree to such a provision.
Wednesday, April 21, 2010
Can I get a copy of my file?
Florida courts have stated that the file of a client is considered the personal property of the lawyer. Unless the client's contract with the lawyer provides otherwise, the lawyer has no obligation to provide the client their file. As stated by the court in Donahue v. Vaughn, 721 So.2d 356 (Fla. 5th DCA 1998):
[T]here is no duty upon a private attorney to give any of his files to a client, save documents which are solely those of the client and held by the lawyer. Pleadings, investigative reports, subpoena copies, reports and other case preparation documents are property of the lawyer."
As stated by this court, a lawyer must return to the client any original documents that are property of the client. However, if the client owes a fee to the lawyer, the lawyer may retain the client's documents and other property until the fee is paid. If the client disputes that the lawyer is entitled to the fee, the dispute must be resolved in court. Also, there may be some circumstances where the lawyers office file may contain information about a client's affairs concerning which attorney may have an ethical duty to communicate to a successor counsel. See Dowda & Fields, P.A. v. Cobb, 452 So.2d 1140 (Fla. 5th DCA 1984).
Because of these rules, a client who wishes to be fully informed should request to receive copies of all correspondence and other important documents that are created during the representation. Once the the attorney's representation has terminated, the lawyer is under no obligation to provide these items. If a lawyer still represents the client, the lawyer is ethically required inform the client of all significant developments that occur during the representation. However, this may not require that all matters in the file are sent to the client. Some clients may not feel the need to review each and every document generated in their case. It is the client's responsibility to request specific information regarding the file. The client and the lawyer should have an understanding of what information will be provided to the client during the representation. In most cases, once the the attorney's representation is terminated, the lawyer is under no obligation to provide contents file that do not consist of the client's original documents.
[T]here is no duty upon a private attorney to give any of his files to a client, save documents which are solely those of the client and held by the lawyer. Pleadings, investigative reports, subpoena copies, reports and other case preparation documents are property of the lawyer."
As stated by this court, a lawyer must return to the client any original documents that are property of the client. However, if the client owes a fee to the lawyer, the lawyer may retain the client's documents and other property until the fee is paid. If the client disputes that the lawyer is entitled to the fee, the dispute must be resolved in court. Also, there may be some circumstances where the lawyers office file may contain information about a client's affairs concerning which attorney may have an ethical duty to communicate to a successor counsel. See Dowda & Fields, P.A. v. Cobb, 452 So.2d 1140 (Fla. 5th DCA 1984).
Because of these rules, a client who wishes to be fully informed should request to receive copies of all correspondence and other important documents that are created during the representation. Once the the attorney's representation has terminated, the lawyer is under no obligation to provide these items. If a lawyer still represents the client, the lawyer is ethically required inform the client of all significant developments that occur during the representation. However, this may not require that all matters in the file are sent to the client. Some clients may not feel the need to review each and every document generated in their case. It is the client's responsibility to request specific information regarding the file. The client and the lawyer should have an understanding of what information will be provided to the client during the representation. In most cases, once the the attorney's representation is terminated, the lawyer is under no obligation to provide contents file that do not consist of the client's original documents.
Should I have a written agreement with my lawyer?
Every attorney client relationship should begin with a written agreement that clearly spells out the terms of representation by the lawyer. The written agreement should explain what the lawyer is hired to do. It should also explain the professional fee that will be charged by the lawyer for the representation. The written agreement should also address other issues, such as who will be responsible for the payment of certain costs associated with the case, or whether other lawyers may be working on the client's case.
The Florida Bar Rules that regulate attorneys to not require that all fee agreements between lawyers and their clients be in writing. However, if a fee is contingent on the outcome of the case, it must be in writing.
In personal injury cases where the fee is to be paid as a percentage of the client's recovery, the Florida Supreme Court requires that the fee agreement be in writing. The contingent fee agreement must explain in detail the percentage fee that the lawyer will paid. The Florida Supreme Court has specified the percentage fees for contingency personal injury cases. The amount of the fee depends upon how much the lawyer recovers for the client and when the recovery is obtained. For example, if the lawyer is able to obtain a settlement without having to prosecute a lawsuit, the lawyer's fee must be no more than 33 1/3 % of the amount recovered, exclusive of costs. If the lawyer is required to prosecute a lawsuit, then the fee may increase to 40% of the recovery. If the lawyer appeals the case, the fee may increase an additional 5%. These percentages decrease as the amounts of recovery increase, starting at recoveries in excess of one million dollars. If the lawyer and the client agree to a fee higher than these amounts, the fee agreement must be approved by the court.
Here is a link to the Florida Bar Rule regarding fee agreements between lawyers and their clients: Florida Bar Rule
A good relationship between the lawyer and client begins with a written agreement. Any one hiring a lawyer should thoroughly understand the terms of representation in that agreement
Labels: Questions about attorney-client relationship
Link: http://www.floridabar.org/divexe/rrtfb.nsf/8bf68c7a6fda323085256bc800648cce/d879f37d40cdf92485256bbc004b2fc3?
The Florida Bar Rules that regulate attorneys to not require that all fee agreements between lawyers and their clients be in writing. However, if a fee is contingent on the outcome of the case, it must be in writing.
In personal injury cases where the fee is to be paid as a percentage of the client's recovery, the Florida Supreme Court requires that the fee agreement be in writing. The contingent fee agreement must explain in detail the percentage fee that the lawyer will paid. The Florida Supreme Court has specified the percentage fees for contingency personal injury cases. The amount of the fee depends upon how much the lawyer recovers for the client and when the recovery is obtained. For example, if the lawyer is able to obtain a settlement without having to prosecute a lawsuit, the lawyer's fee must be no more than 33 1/3 % of the amount recovered, exclusive of costs. If the lawyer is required to prosecute a lawsuit, then the fee may increase to 40% of the recovery. If the lawyer appeals the case, the fee may increase an additional 5%. These percentages decrease as the amounts of recovery increase, starting at recoveries in excess of one million dollars. If the lawyer and the client agree to a fee higher than these amounts, the fee agreement must be approved by the court.
Here is a link to the Florida Bar Rule regarding fee agreements between lawyers and their clients: Florida Bar Rule
A good relationship between the lawyer and client begins with a written agreement. Any one hiring a lawyer should thoroughly understand the terms of representation in that agreement
Labels: Questions about attorney-client relationship
Link: http://www.floridabar.org/divexe/rrtfb.nsf/8bf68c7a6fda323085256bc800648cce/d879f37d40cdf92485256bbc004b2fc3?
Monday, July 28, 2008
Is there a deadline for filing a lawsuit against a lawyer?
In Florida, there are statutes that establish deadlines for filing lawsuits. These are known as statutes of limitation. These statutes of limitations establish different deadlines for different kinds of lawsuits. Lawsuits against lawyers must be filed within a two year period. When this two year period begins is not always clear and this question has been the subject of many court decisions. In situations involving the malpractice of a lawyer representing a client in a lawsuit, the Florida Supreme Court has ruled that the two year period does not begin to run until the lawsuit has concluded. See Silvestrone v. Edell, 721 So.2d 1173 (Fla. 1998).
It is best to seek advice concerning the possibility of a legal malpractice claim early, after it has become apparent that the lawyer's conduct may have been the cause of a loss. Once the two year period passes, a lawsuit against the lawyer will be barred forever.
It is best to seek advice concerning the possibility of a legal malpractice claim early, after it has become apparent that the lawyer's conduct may have been the cause of a loss. Once the two year period passes, a lawsuit against the lawyer will be barred forever.
Saturday, July 26, 2008
What is Legal Malpractice?
The laws of our society hold individuals accountable for their actions. (There are exceptions to this, but that is the subject of another discussion.) Professionals are accountable, and this includes lawyers. When an attorney's mistake causes a loss to the client, the lawyer may be held accountable to the client in a lawsuit for legal malpractice.
Florida law requires proof of three elements to establish a lawsuit for legal malpractice: (1) The lawyer's employment by the client; (2) the lawyer's neglect of a reasonable duty; and,(3) a loss that is caused by the breach of duty. See Law Offices of David Stern, P.A. v. Security National Servicing Corporation, 969 So.2d 062 (Fla. 2007). Legal malpractice can occur in a variety of situations involving the relationship between attorneys and their clients. This can include a lost lawsuit, the loss of property or money, the loss of legal rights, or even the loss of liberty. In almost every situation involving legal malpractice, the lawyer's mistake has created a loss that would not have occurred if the lawyer had practiced the law in a careful and knowledgeable manner.
Not every mistake a lawyer makes gives the client the right to sue for malpractice. As professionals, lawyers deal with matters that are complex. They may involve factors that are not within the lawyer's control. Lawyers are entitled to exercise professional judgment, so long as they do so with their client's best interests in mind. The law does not require lawyers to guarantee or predict the outcome of a client's lawsuit or transaction. But when a lawyer's mistake is serious enough to be considered a breach of a reasonable duty of care, then the lawyer may be held accountable for the client's loss.
Florida law requires proof of three elements to establish a lawsuit for legal malpractice: (1) The lawyer's employment by the client; (2) the lawyer's neglect of a reasonable duty; and,(3) a loss that is caused by the breach of duty. See Law Offices of David Stern, P.A. v. Security National Servicing Corporation, 969 So.2d 062 (Fla. 2007). Legal malpractice can occur in a variety of situations involving the relationship between attorneys and their clients. This can include a lost lawsuit, the loss of property or money, the loss of legal rights, or even the loss of liberty. In almost every situation involving legal malpractice, the lawyer's mistake has created a loss that would not have occurred if the lawyer had practiced the law in a careful and knowledgeable manner.
Not every mistake a lawyer makes gives the client the right to sue for malpractice. As professionals, lawyers deal with matters that are complex. They may involve factors that are not within the lawyer's control. Lawyers are entitled to exercise professional judgment, so long as they do so with their client's best interests in mind. The law does not require lawyers to guarantee or predict the outcome of a client's lawsuit or transaction. But when a lawyer's mistake is serious enough to be considered a breach of a reasonable duty of care, then the lawyer may be held accountable for the client's loss.
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