April 2000

Washington Law of Lawyer Liability

by Mark Johnson

In the early 1890s, Walla Walla County attorney A. E. Isham sued his client Mr. H. Parker for unpaid fees. Mr. Parker (the ingrate) counterclaimed for malpractice against counselor Isham. Thus, lawyer Isham became the first Washington state attorney to have his name in a reported decision addressing the issue of attorney malpractice. See Isham v. Parker, 3 Wash. 755 (1892). In the opinion, the Isham Court approved the following jury instruction:

An attorney at law, when he enters into the employ of another person as such, undertakes that he possess a reasonable amount of skill and knowledge as an attorney, and that he will exercise a reasonable amount of skill in the course of his employment, but he is not guarantor of results and is not liable for the loss of such case or cases, unless such loss occurred by reason of his failure to posses a reasonable amount of skill or knowledge, or by reason of his negligence or failure to exercise a reasonable amount of skill and knowledge as an attorney at law. Id. at 778-779.

Today, there are more "Parkers" than ever. Clients have greater expectations of their attorneys and are much more likely to seek redress in a malpractice action if those expectations are not met.

Therefore, no matter what our area of practice, the law of lawyer liability is a body of law of which we need to have a basic understanding. What follows is a summary of the law.

The statute of limitations for malpractice actions against attorneys in Washington is three years from the date the client discovers, or in the exercise of reasonable diligence should have discovered, the facts which give rise to a cause of action. Peters v. Simmons, 87 Wn.2d 400, 403-406 (1976). While the determination of whether a plaintiff has exercised the requisite diligence is generally a question of fact for the jury, a court may decide the issue where there are no genuine issues of material fact. Pepper v. J. J. Welcome, 73 Wn. App. 523, 539 (1994). If a legal malpractice claim is based on errors or omissions during the course of litigation, a client is charged with knowledge as a matter of law that malpractice may have been committed by virtue of an adverse judgment, and the claim begins to accrue on the date of entry of the judgment. Richardson v. Denend, 59 Wn. App. 92, 95-97 (1990).

The elements of a legal malpractice claim are those four associated with all negligence claims: 1) the existence of a duty; 2) failure to perform the duty by conduct deficient relative to the applicable standard of care; 3) proximate cause; and 4) damage. Hansen v. Wightman, 14 Wn. App. 78, 88 (1975).

The determination of the existence of an attorney-client relationship is a question of fact. Bohn v. Cody, 119 Wn.2d 357, 363 (1992). The attorney-client relationship does not require payment of a formal retainer, but may be implied by the conduct of the parties. The existence of the relationship "turns largely" on the client’s subjective belief or intention that such a relationship exists and that the attorney is protecting the client’s interests, if that belief is "reasonably formed based on the attending circumstances, including the attorney’s words or actions." Id. (emphasis added). Once an attorney-client relationship has been established, an attorney owes a duty of care to his or her client.

The duty owed by an attorney to his client is circumscribed by the scope of the representation. An attorney is obligated to provide only those services he or she was hired to perform. However, an attorney also has a duty to discuss the possible consequences of the limitations on the scope of representation. Oklahoma Bar Association v. Green, 936 P.2d 947 (1997). Washington courts apply the same test to determine scope of representation as is used in determining the existence of the attorney-client relationship (subjective belief of the client if confirmed by surrounding acts and circumstances). See Leipham v. Adams, 77 Wn. App. 827, 833-834 (1995), citing Bohn v. Cody, 119 Wn.2d 357, 363 (1992).

Washington is among the overwhelming majority of jurisdictions that do not require an attorney-client relationship for the imposition of a duty of care, although plaintiffs in such cases "must show that there is some other basis upon which (the attorney) owed them a duty." Strangland v. Brock, 109 Wn.2d 675, 679-682 (1987).

Under Washington law there can be no duty to a non-client absent a threshold finding that the attorney’s services were intended to benefit the plaintiff. Task v. Butler, 123 Wn.2d 835 (1992). Thereafter, Washington applies a "modified multifactor balancing test" to determine whether a duty is owed. The elements of the test are: 1) the extent to which the transaction was intended to benefit the plaintiff; 2) the foreseeability of harm to the plaintiff; 3) the degree of certainty that the plaintiff suffered injuries; 4) the closeness of the connection between the defendant’s conduct and the injury; 5) the policy of preventing future harm; and 6) the extent to which the profession would be unduly burdened by a finding of liability. Id. at 842-843.

Much of the "third-party duty" case law in Washington state (and elsewhere) relates to wills, trusts, estates and real estate escrows. In Trask, the Washington Supreme Court held that an attorney hired by the personal representative of an estate did not owe a duty to the estate or the beneficiaries of the estate because: 1) the estate and its beneficiaries are the incidental, not intended, beneficiaries of the attorney-client relationship; 2) the estate heirs may bring a direct cause of action against the personal representative for breach of fiduciary duty; and 3) the unresolvable conflict of interest an estate attorney encounters in deciding whether to represent the personal representative, the estate or the estate heirs unduly burdens the legal profession. Id. at 845. However, beneficiaries of a will may have a claim for legal negligence against an attorney who has drafted a will that fails to effect the testator’s intent. Strangland, 109 Wn.2d at 681.

A duty to a non-client does not require the non-client to be a third-party beneficiary of an established client relationship. Hetzel v. Parks, 93 Wn. App. 929, 937 (1999). In Hetzel, attorney Brouner deposited settlement funds of a non-client (Hetzel) into his trust account as a favor to attorney Parks, and immediately issued a check payable solely to Parks. Parks did not utilize the funds on behalf of Hetzel, but instead invested them in a banking venture. Because Hetzel could prove a set of facts to satisfy the elements of the Trask test, the Court of Appeals concluded that Brouner owed him a duty to protect the funds on deposit in his trust account, the same as if Hetzel had been his own client. Id. at 939.

The standard of care to which a Washington lawyer is held is that degree of care, skill, diligence and knowledge commonly possessed and exercised by a reasonable, careful and prudent lawyer in the practice of law in the state of Washington. Walker v. Bangs, 92 Wn.2d 854, 859 (1979). There is no "locality" rule — a solo practitioner in a small, rural community is held to the same standard as a partner in a large Seattle firm. Cook, Flanagan and Berst v. Clausing, 73 Wn.2d 393, 395 (1968). An attorney is expected to know the law or to research and determine the applicable law to avoid falling below the standard of care. Bush v. O’Connor, 58 Wn. App. 138, 148 (1990). The standard of care that should have been exercised and the scope of the attorney’s duty to the client are determined as of the time the services are rendered. Martin v. Northwest Washington Legal Services, 43 Wn. App. 405, 408 (1986).

Fiduciary duties are a component of the standard of care required of attorneys. As a matter of law, a fiduciary relationship exists between an attorney and a client. The fiduciary relationship is one of special trust and confidence, and bestows upon an attorney the "highest" duty of fidelity, good faith and undivided loyalty. In the Matter of the Estate of Larson, 103 Wn.2d 517, 520 (1985); Perez v. Pappas, 98 Wn.2d 835, 839-840 (1983); Liebergesell v. Evans, 93 Wn.2d 881, 890 (1980); Transcontinental v. Faler, 9 Wn. App. 610, 612 (1973). As stated in Van Dyke v. White, 55 Wn.2d 601, 612-613 (1960), "The standards of the legal profession require undeviating fidelity of the lawyer to the client. No exceptions can be tolerated."

An attorney has a duty to disclose to his or her client all facts material to the representation. A fact is material if its "existence or nonexistence is a matter to which a reasonable man would attach importance in determining his choice of action in the transaction in question or the maker of the representation knows that its recipient is likely to regard the fact as important, although a reasonable man would not so regard it." State v. O’Connell, 83 Wn.2d 797, 815 (1974); Transcontinental v. Faler, 9 Wn. App. 610, 612-613 (1973); Bowers v. Transamerica Title, 100 Wn.2d 581, 588-590 (1983).

An attorney may not escape liability for negligence by attempting to delegate responsibilities mandated by the canons of professional ethics or his duty of care. In In Re Droker and Mulholland, 59 Wn.2d 707, 370 P.2d 242 (1962), the Washington State Supreme Court upheld the one-year suspension of two attorneys who were majority shareholders in an escrow company and who operated the company out of the law offices of the firm. Among the cited offenses were that the lawyers "allowed their services to be exploited by a lay agency" and, further, "acted below standards of the profession in delegating to lay personnel the responsibility of interviewing the client and selecting, preparing, and supervising execution of documents, where the lawyers did not meet with the clients. . ." Id. at 716, 718.

Expert testimony is necessary in an action for legal negligence, unless the negligence is within the common knowledge of lay persons or the negligence is "obvious." Walker v. Bangs, 92 Wn.2d 854, 858 (1979); Bowers v. Transamerica Title, 100 Wn.2d 581, 587 (1983). An action for legal malpractice regarding the preparation and conduct of litigation involves matters of special skill or knowledge, which are proper subjects for expert testimony. Walker, 92 Wn.2d at 858. Whether an expert witness is qualified to testify on a particular subject is within the sound discretion of the trial court. Id. An attorney who is not licensed to practice law in the state of Washington is not, per se, unqualified to testify as an expert witness in a Washington legal malpractice action. Id. at 859.

A trial judge may take judicial notice of what constitutes a reasonable standard of care. As stated in Hecomovich v. Nielson, 10 Wn. App. 563, 572 (1974), "[a] lawyer does not expunge his legal training and experience upon ascending the bench."

Finally, it is black letter law that expert testimony is not admissible on issues of law. Note Expert Legal Testimony, 97 Harvard L. Rev. 797, 811 (1984). It is the court’s function to determine the law and the court is presumed to be an expert in the law.

The Preliminary Statement to the Rules of Professional Conduct (RPCs) states that the RPCs do not "undertake to define standards of civil liability of lawyers for professional conduct." In Hizey v. Carpenter, 119 Wn.2d 251 (1992), the Supreme Court held that the RPCs and/or CPRs may not be explicitly referred to by experts in a legal malpractice case, nor do they necessarily set the standard of practice. The expert may testify generally to ethical requirements, but must avoid specific reference to the CPRs and RPCs. Id. at 265. An expert may base his or her opinions on "an attorney’s failure to conform to ethical rules." However, the testimony must address the breach of the legal duty of care, not the supposed breach of the ethical rules. Further, jury instructions may not incorporate the CPRs or RPCs. Id.

Legal malpractice cases often require the finder of fact and/or the judge to decide or rule on issues as they should have been decided in the underlying action. Chocktoot v. Smith, 571 P.2d 1255, 1258 (Or. App. 1977). In Daugert v. Pappas, 104 Wn.2d 254, 257 (1985), the Washington Supreme Court followed the weight of authority nationwide and held that an issue which presented a question of law in the underlying action retained its character in the legal malpractice case and was, therefore, for the Court to decide.

In a legal malpractice action, as in most negligence cases, causation is usually an issue for the trier of fact. Halverson v. Ferguson, 46 Wn. App. 708, 712-713 (1986). Where facts are undisputed, however, and inferences therefrom are plain and incapable of reasonable doubt or difference of opinion, causation is a question of law for the Court. Daugert v. Pappas, 104 Wn.2d 254, 257 (1985); Bowers v. Transamerica Title, 100 Wn.2d. 581, 590 (1983).

In Martin v. Northwest Washington Legal Services, 43 Wn. App. 405 (1986), the Court of Appeals affirmed a judgment against a legal services organization finding that the organization had negligently failed to seek a division of a military pension in a dissolution action and that such failure resulted in monetary damages to the client. The defendant alleged that its negligence was not a proximate cause of loss to the client insofar as the client failed to seek relief under the Uniform Services Former Spouse’s Protection Act (USFSPA) causing or aggravating her own damages. The Martin Court held that the client proved her burden of causation by establishing that she "would have prevailed or achieved a better result" if her attorney had performed competently, that there was substantial evidence in the record to support the finding of proximate cause, and that the client’s conduct did not "rise to the level of a superseding cause." Id. at 410.

As in other negligence cases, "the law does not require that negligence of the defendant must be the sole cause of the injury complained of in order to entitle the plaintiffs to damages therefor." Ward v. Arnold, 52 Wn.2d 581, 584 (1958).

Traditionally, a malpractice action against a lawyer arising out of litigation was thought to require trial of both the underlying action and the malpractice case (the "case within the case"). Daugert v. Pappas, 104 Wn.2d 254, 257 (1985). The rule may (and I believe should) be that proof of causation in a legal malpractice case arising out of litigation does not require a complete retrial of the underlying action. Since the vast majority of civil cases settle, requiring a legal malpractice plaintiff to prove two cases is extremely harsh and not reflective of reality. Since causation requires that the client prove that he or she would have achieved a better result if the attorney had performed competently, expert opinion testimony on the reasonable settlement value and/or the probable chance of success of the underlying claim may be admissible. In the case of Fishman v. Brooks, 487 N.E.2d 1377 (Mass. 1986), the appellate court permitted expert testimony from an experienced tort lawyer and claims adjuster as to the reasonable settlement value of an underlying claim. A more sensible and equitable rule would be to require the plaintiff to put on a prima facie underlying case and malpractice case, permit testimony by experienced lawyers and/or claims representatives regarding the settlement value of the claim if it had been properly prepared, and allow the jury to decide whether the case would have been settled (and for what amount) or would have been tried to verdict. The transcript of the underlying action is admissible in the legal malpractice case arising out of litigation. Walker v. Bangs, 92 Wn.2d 854, 861 (1979).

An attorney may be subject to liability under the Consumer Protection Act (CPA). Short v. Demopolis, 103 Wn.2d 52, 65 (1984). The CPA makes it unlawful to engage in "unfair or deceptive acts or practices in the conduct of any trade or commerce…." RCW 19.86.020. In Short, the Washington Supreme Court held that the entrepreneurial aspects of the practice of law fell within the sphere of "trade or commerce" under RCW 19.86.010(2) and 19.86.020 of the CPA. Claims regarding the competence and strategy employed by attorneys involve allegations of professional negligence and are not actionable under the CPA. Id. at 61.

A plaintiff’s contributory negligence is a defense to a legal malpractice action. Hansen v. Wightman, 14 Wn. App. 78, 86 (1975). The contributory negligence may consist of a client failing to exercise reasonable care in providing information to the attorney or in other matters where responsibility is assumed by the client. Id. at 86-87. In Horn v. Moberg, 68 Wn. App. 551 (1993), the defense of "voluntary exercise of independent judgment" was applied to bar a legal malpractice action as a matter of law. In Horn, the attorney withdrew from representing his clients during the pendency of a summary judgment action. Id. The attorney’s withdrawal left his clients in a precarious position and, in the face of sanctions, the clients agreed to dismiss their action. Id. The clients subsequently sued the attorney for malpractice for the loss of their claim. Id. The court of appeals reversed a jury verdict for the clients and directed a verdict for the attorney, holding that the clients had made an independent decision to dismiss the underlying action and, therefore, the attorney’s negligence could not be a proximate cause of the loss of their claim. Id. To the extent that it permitted the independent business judgment rule to be used to extinguish proximate cause and bar the claim, Horn was overruled by the Supreme Court in Seattle v. Blume, 134 Wn.2d 243 (1997). The defense should now be more correctly characterized as one of contributory negligence or failure to mitigate.

Finally, there is the defense of judgmental immunity. There is uniformity that an attorney is not liable for good faith errors in tactical decision-making (such as which witnesses to call, what evidence to present and how to present it), nor is an attorney liable for failing to pursue an unsettled area of the law. Halvorsen v. Ferguson, 26 Wn. App. 708, 717 (1986); Cook, Flanagan and Berst v. Clausing, 73 Wn.2d 393 394 (1968). However, there are many other acts for which the defense has been asserted and the defense has been met with "mixed reviews." The result is an expanding, unsettled and amorphous area of the law, a discussion of which is beyond the scope of this article (or at least, in my judgment, it is).

Mark Johnson is the current Chair of the Washington State Trial Lawyers’ Professional Negligence Section and is a member of the WSBA’s Character and Fitness Committee. He has represented plaintiffs in medical and legal malpractice cases in six states.

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