April 2017

Statute of Limitations on Legal Malpractice –
“Hot Potato”

By Deborah Wolfe

Wolfe Legal Group, PC

The determination of when the statute of limitation begins to run in an attorney malpractice case is not as simple as consulting Code of Civil Procedure section 340.6, which states an action “shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission….” The question to ponder is: “One year from what?”

Consider the following scenario: A client consults an attorney for advice in a situation where that client has been previously represented by other counsel in a litigation matter. The new attorney reviews the client’s file received from prior counsel and discovers what she believes to be malpractice or a breach of fiduciary duty by prior counsel to the client, such that it may adversely affect the outcome of the client’s matter in the litigation.

The new lawyer believes there is a chance she can still prevail on the client’s case, and figures she will do her best to “fix” the problem. If she is unable to do so and the client loses at trial, she will send the client to a legal malpractice attorney to bring a claim against the prior lawyer.

Despite her best efforts, the new attorney is unable to overcome the malpractice caused by prior counsel and the client does not prevail at trial. The new attorney then refers the client to malpractice counsel to evaluate whether or not there is a claim.

Unfortunately for the new attorney, the lawsuit ended more than one year after she was retained. This reality results in a rude awakening for the new lawyer: Once she discovered the facts constituting the wrongful act or omission, the statute of limitation began to run on the legal malpractice action. The new attorney was in a position to advise the client about those facts and was also in a position to direct the client to malpractice counsel. Since she did not do so, and the statute of limitation on the client’s potential claim ran on her watch, the new attorney is now in the position of holding the “hot potato” and being held responsible for the prior lawyer’s malpractice.

“But wait!” she says. “My client wasn’t damaged until the lawsuit was over. Isn’t the statute of limitation tolled until he lost the case or sustained actual injury, as provided for in C.C.P. § 340.6(a)(1)?”

It is true Code of Civil Procedure section 340.6340.6(a)(1) provides the one year statute of limitations is tolled until the plaintiff has “sustained actual injury.” However, the next question one must ask is: “What constitutes actual injury?” And there is the rub.

The California Supreme Court case of Jordache Enterprises, Inc. v. Brobeck Phleger & Harrison (1998)18 Cal.4th 739 held that “a cause of action for legal malpractice accrues when the client sustains actual injury and discovers, or reasonably should have discovered, his or her cause of action.” The court essentially found the new attorney is responsible for communicating to the client the facts constituting the cause of action against the prior attorney. 

The Jordache case also holds that the statute of limitation for malpractice commences when the client incurs attorney fees to a new lawyer, since those fees constitute “damages” for purpose of the statute of limitation. Uncertainty as to the total amount of damages does not toll the limitation period.

Best practice and warning: A client should NOT wait to either file a malpractice suit or to consult with independent counsel about the possibility of a prior attorney’s negligence. If a subsequent attorney doesn’t raise the potential issue to his or her client, the subsequent attorney could be held responsible for the prior attorney’s negligence. 

**No portion of this article is intended to constitute legal advice. Be sure to perform independent research and analysis. Any views expressed are those of the author only and not of the SDCBA or its Legal Ethics Committee.**