Ethics in Brief

Ethics in Brief is designed to present ethical issues that practitioners might well face on a daily basis. It is a service of the Legal Ethics Committee of the San Diego County Bar Association.


Legal Malpractice May Not be Legal Malpractice for Statute of Limitations Purposes

When is a legal malpractice claim potentially not a legal malpractice claim for statute of limitations purposes? The California Supreme Court recently addressed this issue in Lee v. Hanley (2015) 61 Cal. 4th 1225.

In Lee, the Plaintiff had advanced her lawyer fees and costs in connection with the litigation. Once the matter was concluded and the relationship terminated, the Plaintiff demanded the return of what was alleged to be a remaining balance of the unused fees and costs. When the money was not returned, the Plaintiff filed suit asserting, among other things, breach of contract, unjust enrichment, and breach of fiduciary duties. The suit was filed more than one year after the representation ended, and the attorney demurred arguing the Plaintiff’s claims were barred by the one-year statute of limitations set forth in Code of Civil Procedure section 340.6. The trial court sustained the demurrer, finding that “the funds were advanced in connection with the performance of professional services….”

The court of appeal reversed, concluding that the complaint “could be construed to advance a claim for conversion, and a claim for conversion is not relevantly different from a claim for garden-variety theft…[thus] section 340.6(a) might not bar Lee's lawsuit.” The court of appeal further explained it did not “know whether, on remand, the facts as ultimately developed will show a theft of funds, an accounting error, or something else. While a cause of action based on the theft or conversion of client funds, for example, would not be subject to the section 340.6 statute of limitations, a cause of action predicated on an accounting error could be.” (Lee, at 1232.)

On review, the California Supreme Court acknowledged at the outset that Section 340.6 was ambiguous as to whether it might apply only to strict legal malpractice claims, or perhaps cover “a broader range of wrongful acts or omissions that might arise during the attorney-client relationship.” (Id. at 1233.) The Court explained the “attorney-client relationship often requires attorneys to provide nonlegal professional services such as accounting, bookkeeping, and holding property in trust….[i]ndeed, the training and regulation that make the practice of law a profession, as well as the grounds on which an attorney may be disciplined as an attorney, include professional obligations that go beyond duties of competence associated with dispensing legal advice or advocating for clients in dispute resolution.”

While acknowledging that Section 340.6 applies to claims other than strictly professional negligence claims however, it focused on the proof required to prevail on the claim as a method of distinguishing what may or may not fall within the scope of Section 340.6. The Court ultimately agreed with the court of appeal that the Plaintiff’s claims could be construed as one for conversion, and held that “section 340.6(a) applies to a claim when the merits of the claim will necessarily depend on proof that an attorney violated a professional obligation—that is, an obligation the attorney has by virtue of being an attorney—in the course of providing professional services.”

Thus, for purposes of section 340.6(a), the question is not simply whether a claim alleges misconduct that entails the violation of a professional obligation; but rather, whether the claim, in order to succeed, necessarily depends on proof that an attorney violated a professional obligation as opposed to some generally applicable nonprofessional obligation. (Lee at 1238.)

For more analysis of the Lee v. Hanley case, as well as many other recent cases involving issues of legal ethics, be sure to check the SDCBA’s “Legal Ethics Quarterly” publication available at www.sdcba.org under the “Legal Ethics” Tab.

– Patrick Kearns
 

**No portion of this summary 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.**