Legal Ethics Corner

Ethics Corner 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 for SDCBA members.  

How Admitting a Mistake can Save you from Malpractice

    Truth be told, as much as one seeks to avoid them, we all make mistakes.  Sometimes, mistakes are compounded by attorneys not being forthcoming about admitting the error.  I recently came across a fine example of how to forthrightly address a mistake. (Poway Land, Inc. v. Hillyer & Irwin (Fourth Dist., Div. One 2002) Unpub. LEXIS 10786 (Cal. Ct. App. 2002.) (Although unpublished and therefore uncitable, the case is a primer on upstanding attorney conduct.)  Therein, the day before a settlement conference in the underlying land development dispute with the City of Poway, an attorney inadvertently faxed a confidential letter addressing settlement options to the law firm of Poway’s city attorney, although that firm was not attorney of record in the lawsuit.  The fax was misdirected because of a clerical error in the sending firm’s computer system.  The receiving attorney realized the error, contacted the sending attorney about the same, did not show it to anyone else, and mailed it back to the sending attorney.  The receiving attorney did not participate in the settlement negotiations.  The sending attorney, both in person and in writing, quickly informed the client of the error, stated his belief that the mistake did not affect the settlement negotiations, and suggested that the client consult with independent counsel or hire new counsel.  Ultimately, client followed attorney’s advice to settle at $5.7 million with two issues reserved for trial.  After trial, client recovered another $2.7 million.  Thereafter, it sued its counsel for malpractice and breach of fiduciary duty claiming injury from the misdirected fax and the alleged failure to adequately disclose and obtain a written waiver of the conflict of interest created by the misdirected fax.  The Court of Appeal affirmed the trial court’s grant of summary judgment in favor of the defendant law firm.  Claims that the firm’s conduct was “clouded by a desire to cover up their mistake and [its] personal conflict of interest” in recommending settlement at $5.7 million would not stand because the undisputed facts showed that the firm had fully disclosed the misdirected fax, gave the client the opportunity to consult with independent counsel, and that client had waived any conflict.  Also, among other things, there was no evidence that the attorney’s analysis of the settlement issues was significantly altered by the misdirected fax, and causation, a necessary element in a malpractice claim even where a breach of duty is shown, was speculative.  Generally, much of the Court of Appeal’s analysis was based on the attorney’s candor in admitting the error, fully informing the client of the same, and giving the client the opportunity to consult with and even hire new counsel.

    So here’s to being forthright about having made a mistake, to providing full disclosure, and to presenting the client with options about the same.

--Luis E. Ventura

**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.**