Recent Developments in Legal Malpractice Litigation

By Elizabeth Starrs

Does a former client have to raise her claims of legal malpractice when her lawyer sues for nonpayment of fees? According to the Colorado Court of Appeals decision of Allen v. Martin on June 12, 2008, the answer to that question is "yes."

In Allen, the client was an officer of a company which hired the defendant lawyers to advise it on business matters. Neither the company nor the individual (who personally guaranteed payment of the legal fees) paid the lawyers and a collection action ensued. Neither the company nor the individual participated in the collection action and the lawyers obtained a default judgment against them.

Two years later, the individual and the company sued the lawyers for malpractice. The Colorado Court of Appeals dismissed the malpractice case against the lawyers because they did not raise the issues in the collection action and therefore were forever barred from bringing it.

People who find themselves being sued for legal fees should not ignore this but seek legal advice to evaluate their options and consider whether they can counterclaim for legal malpractice.

By Elizabeth Hyatt

In its important decision, Crowe v. Tull, the Colorado Supreme Court held that lawyers may be liable for deceptive trade practices under the Colorado Consumer Protection Act (the Act). § 6-1-105, C.R.S. Until the Crowe decision, it remained unclear whether a lawyer could be held liable under the Act. Some argued that a lawyer should never be held liable under the Act because Colorado lawyers are regulated separately by the Colorado Supreme Court. Others argued that a lawyer should be exposed to liability under the Act only for actions taken in “the business of law,” and not for actions taken during the “practice of law.” In its well-reasoned opinion, the Colorado Supreme Court rejected these arguments outright.

Lawyer liability under the Act is significant, since the Act provides for the recovery of attorneys fees and, sometimes, treble damages, which normally are not recoverable under general lawyer malpractice tort claims.

Possible claims under the Act might be based on statements by the lawyer concerning the quality of his or her legal services; a failure to disclose the lawyer’s inexperience in a certain area of law; or any false representation or over-billing. However, a client must satisfy the multiple elements of the deceptive trade practices claim, which include a showing that the unfair or deceptive trade practice significantly impacts the public as actual or potential consumers of the lawyer’s services, and a showing that the trade practice caused the client’s injury.

Although a deceptive trade practices claim against a lawyer may be difficult to prove, it is a potentially valuable claim worth considering in the face of lawyer wrong-doing.