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Lawyers Weekly

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MAY 3, 1999 99 LWUSA 414

Related stories in this issue: New York Couple Devotes Entire Practice to Suing Lawyers Defending Lawyers Is Stimulating Work By Elaine McArdle Since he began suing his colleagues 12 years ago, Miami solo Warren Trazenfeld has been threatened so often that it no longer bothers him. "One defendant said, and I'll never forget it, 'I'd like to jump across the table and rip your face off!'" recalls Trazenfeld, who has sued more than 70 lawyers for malpractice and landed a number of seven-figure awards in the process. Steven Zukoff, who devotes 50 percent of his practice to plaintiffs' legal malpractice, and W. Robert Curtis, who handles nothing but plaintiffs' legal malpractice cases, know the feeling. "I was once quoted in the paper as saying I don't sue my friends, but I don't have many friends," says Zukoff, a well-known Miami lawyer whose non-malpractice clients have included Manuel Noriega. These lawyers may not be the most popular folks at the annual bar meetings. But they say plaintiffs' legal malpractice is a burgeoning practice area and an extremely lucrative one, despite a host of difficulties associated with the work. In 1992, insurance companies paid out $4 billion in legal malpractice claims, according to a 1996 article in the Tulane Law Review. And the numbers keep growing. Last year was a banner year for legal malpractice cases including a $225 million award to a securities broker who sued his lawyer for missing the deadline to opt out of a class-action lawsuit. The verdict included $221 million in punitive damages. Other recent malpractice verdicts include: $108 million, including $75.3 million in punitive damages, against a sole practitioner for mishandling a divorce case; $55.2 million against a firm for bad advice on a bond deal; $18 million, including $16.4 million in punitive damages, against a lawyer who advised two sisters they did not owe taxes on an inheritance.
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And those are just the cases that went to trial. Lawyers say the vast majority of suits upwards of 95 percent never make it to the courtroom because defendant-lawyers are so eager to make the bad publicity disappear. Trazenfeld says he hasn't had to try a case in more than five years. While most settlements are confidential, lawyers say they often top $1 million, especially in corporate and transactional matters. These big numbers are drawing more and better lawyers into the niche, who file better cases which in turn spurns big awards. "It's become a cottage industry," says Robert Klein, a malpractice defense lawyer in Miami who's faced off against both Zukoff and Trazenfeld. "I'd say we take in eight to 10 new cases a month. I don't see any sign of it dissipating." Naturally, that means there are more defense lawyers doing this work now, too. "Ten years ago, we were one of only two or three firms that handled these cases at a national level," says Klein. "Now, because everyone's realized it's a cottage industry, there are all kinds of firms defending legal malpractice." Money is fueling the growth, many say. "I could stand up on a soap box and say I'm the Ralph Nader of the legal profession. But no, I'm not," says Zukoff. "I try to do cases where I think it's clear an error was made and the client is entitled to collect. It's interesting, it's challenging, and it pays some bills." But this is not an easy niche, lawyers emphasize. While suits routinely settle if the plaintiff gets past summary judgment, the cases are defended tooth-and-nail, and they're expensive to prosecute. And there's always the popularity issue. (It's worth noting that plaintiff's lawyers don't suffer alone in this regard. Defense lawyers say their clients, while grateful, don't even want to admit they know them once the malpractice case is over.) "Do I get insulted? Sure, all the time and nothing you could print in the paper," says Trazenfeld. But while their colleagues may hate them, clients see them as heroes. "I can't tell you how many clients have come up to me and said, 'It's so difficult to find someone to sue lawyers.' One client said to me, 'God delivered me into your arms,'" Trazenfeld adds. "Good lawyers always want to police their profession," notes Trazenfeld. "They believe that lawyers who have damaged their clients should be held accountable." Defense lawyers see it differently. "I have great respect for Warren, but he's a private practitioner pursuing money damages. It's not about policing the profession," says Jim Kaplan, a defense lawyer in Miami. Big Verdicts Drawing Lawyers
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Until about 15 years ago, lawyers were largely immune from malpractice suits because few lawyers were willing to risk the enmity that such work would engender among their peers. It's a different environment today. "The frequency of claims has been increasing over the years because lawyers are no longer treated with kid gloves, and the stigma is no longer there for a plaintiffs' lawyer," says Michael Flaherty, a malpractice defense lawyer in Chicago and the secretary of the Association of Professional Responsibility Lawyers (APRL), which represents ethics and malpractice lawyers on both sides of the bar. In fact, this growth has changed the composition of APRL members in the last few years, Flaherty says; where the majority of members used to be involved in legal ethics, more and more are handling malpractice cases. The growth is partly due to changes in the law; for example, it's become easier in some jurisdictions to establish that the client was damaged by the lawyer's conduct, Flaherty says. And many states are allowing ethics rules to be used to establish the standard of care required of a lawyer. "So now you have some professor or ethicist coming on the stand and testifying that the lawyer didn't comply with the ethics rules, when in fact these rules weren't meant to be standards for malpractice cases," he adds. As the legal climate changes, more lawyers are drawn to this niche, although there still are few who devote all or most of their practice to it. And there's still no organized national bar group devoted to plaintiffs' legal malpractice lawyers. Manny Ramos, who has worked on about 900 legal malpractice cases over the past 15 years, used to defend lawyers before he switched to the plaintiffs' side. "I think a lot of people from the defense side, having the knowledge of the extent of the problem and how lucrative it could be, have switched sides," says Ramos, who teaches full-time at Tulane Law School as well as practicing law. "It's very, very lucrative," he says. How much are these cases worth? "The sky's the limit," says Klein, the Miami defense lawyer. "If you're sued for blowing a large commercial transaction where the client is out millions of dollars, that's what you, the lawyer, are in for." Last year, Gardere & Wynne, a prestigious firm in Houston, lost $59 million in a malpractice suit by a Russian inventor who claimed the firm represented both him and a group of investors in a soured business deal. This case, which involved both a conflict-of-interest claim and a major business transaction, is typical of the types of cases being pursued today by malpractice lawyers. But not all good cases are transactional in nature. Trazenfeld recently filed suit against a prominent
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Miami firm on behalf of a man who was severely beaten at a gas station in 1992, and was awarded nothing because his lawyers failed to sue all of the liable parties. He estimates the case is worth at least $1 million. Conversely, cases involving minor damages aren't worth pursuing, they say. The average client, whose lawyer didn't file an auto suit within the statute, for example, is going to find it almost impossible to get someone to take his malpractice case. "Your case must be worth more than $500,000 in damages to make it worthwhile to litigate, because these cases are vigorously defended. Every single fact is in contention," says Curtis, the Manhattan lawyer. "It costs between $150,000 and $200,000 to get [the case] to a jury. [As a result], 99 percent of cases are turned away. We just can't take them, there's no way we'd survive." Trazenfeld says he turns down any case that doesn't have at least $100,000 in damages because it costs him at least $25,000 to litigate. Ramos, who associates with lawyers across the country, has even tougher standards. "I don't take a case unless it's over $1 million in damages," he says. A Tough Practice Area Although the potential for huge verdicts is enticing, plaintiffs' lawyers warn that there are a host of obstacles. They include: Lawyers don't like you (but everyone else does). "It takes a lawyer with a very tough skin to be comfortable in this practice," says Trazenfeld, for whom legal malpractice is 80 percent of his work. "Other lawyers are naturally antagonistic toward lawyers who sue lawyers." Klein, the Miami defense lawyer, concurs. "Warren will tell you himself that he's not popular," says Klein. "If you promote yourself as a lawyer who sues lawyers, you're not endearing yourself to your colleagues. "Will you become a pariah? No, I don't think so. And frankly, some of these guys don't care," Klein continues. "It's become a very lucrative part of their practice because these lawyers know we're not popular with juries. And it's gotten to the point where in every business deal that goes bad, someone wants to sue the lawyer." Kaplan, who has also defended cases against Trazenfeld, says the social opprobrium is less than one might expect. "I've never heard anything bad said about him," says Kaplan. "I think there's a certain amount of either maturity or cynicism, depending on your point of view, that has grown over the years that if doctors are going to be sued by their patients then only someone who's naive would think that lawyers aren't going to be sued by dissatisfied clients."
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In fact, as Trazenfeld notes, he gets most of his cases on referral from other lawyers. And Zukoff's even gotten referrals from lawyers he's sued. "I'm not the most popular person with the people I've sued, but some of them have sent me work later on," he says. Besides, they say what's important isn't what other lawyers think."I don't mind the part about lawyers disliking me," says Ramos. "I have doctor friends who love what I'm doing. And most people who aren't lawyers admire what I'm doing. They feel somebody has to keep lawyers in check. "Lawyers aren't very well liked. So if you start a conversation at a cocktail party with, 'I sue lawyers for a living,' people applaud you." You have to battle the best. "The lawyers who get sued generally know or have access to good litigators," says Trazenfeld. "They want experienced malpractice lawyers defending them. That's what makes this practice difficult you'll be up against the best lawyers." These defense lawyers are innovative and driven, their opponents say. Klein has prevailed in a number of cases by pushing the defense of "judgment immunity," which asserts that a lawyer isn't liable for an honest exercise of his or her professional judgment as long as the lawyer was properly educated in the law. "We've been very successful in getting courts to rule that you shouldn't be able to sue a lawyer for the knowing exercise of their professional judgment, where 15 years ago, there was no law to that effect," says Klein. Klein also developed the "abandonment defense," which is currently available only in Florida, according to Ramos. It holds that a client must exhaust his remedies in an underlying case before pursuing a malpractice case against the lawyer. For example, the client can't "abandon" or decline to pursue an appeal in his case and then later sue the lawyer for not handling all aspects of the trial well. It's the very rare occasion when the defendant-lawyer doesn't fight back. But Zukoff recalls one such instance involving a lawyer whose client was found liable for fraudulent conveyance. "The lawyer didn't understand the law of fraudulent conveyance and he didn't put in the proper defenses," Zukoff recalls. During his deposition of the lawyer, Zukoff was surprised to encounter no resistance whatsoever. "After I finished the deposition, I shook his hand and said, 'Nothing personal." He says, 'Naw, I hope you collect. I have insurance,'" says Zukoff, who got a six-figure settlement in the case. "I think he wasn't much in love with the practice of law and was going to retire anyway." But most lawyers given the fact that their reputations are at stake fight hard. "Most of us would rather have a root canal than be sued," Zukoff says.
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Cases are expensive to prosecute. Due in large part to the expertise of the defense counsel, these cases are extremely expensive to litigate. "I think it's important to note that you have to be very selective in these cases because every case is vigorously defended," says Trazenfeld, who turns away 95 percent of cases that come his way. "That's why I don't send a demand letter, which is useless because no one's going to fold quickly." Instead, Trazenfeld's first step is to file suit, which impresses on the lawyer and the insurance company that he means business. Curtis can only remember one case in his 13 years of practice where the lawyer admitted to making a mistake. "And he only did so to escape more serious disciplinary sanctions," he says. In the typical case, "by the time you're done, five years later, motion after motion and appeal after appeal, you've run up a bill of $250,000. You have no choice, no alternative [but to litigate every issue]. The wrong is denied, every single fact is put in issue, so you have to develop proofs and counterproofs on every material fact." Not all lawyers have malpractice insurance. Unless the defendant-lawyer has malpractice insurance, it usually isn't worth suing him or her. Lawyers are too adept at protecting their assets from creditors, plaintiffs' lawyers say. And only about 40 percent of lawyers in the U.S. carry malpractice insurance, according to a study by the U.S. Department of Justice and the National Center for State Courts. Oregon is the only state that requires lawyers to carry insurance. "I've had 900 malpractice cases, I've never seen a lawyer pay more than their deductible on their case," says Ramos. "Going after a lawyer on the judgment isn't worth it. So if someone comes in with a good case but the lawyer has no insurance, 95 percent of the time we'll tell them there's nothing we can do." While most large firms have insurance, Ramos notes, only about 20 percent of sole practitioners do, and they comprise a large percentage of lawyers. Even so, Flaherty, the Chicago defense lawyer, says many more lawyers have insurance than 10 years ago. Must prove a 'case within a case.' "This is one of the most hyper-technical fields you could come into," warns Zukoff. To prevail in a legal malpractice case, the clients must prove they were damaged by their lawyers' conduct. That often means that if the case goes to trial the malpractice lawyer must present to the jury a facsimile of the original case upon which the malpractice claim is based.
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For example, if the client claims his lawyer failed to file a med-mal suit before the statute of limitations ran, the client must prove he would have prevailed in the med-mal case and how much money he would have gotten. "It's always two cases," says Curtis. "It's a case within a case. You have to win on the underlying case, which means you have to put that case on. You have to put on the whole trial for the [malpractice] jury, so they can determine the value of the underlying case that was lost. That's another reason you don't have a lot of people doing this work." Thus the malpractice lawyer must be a specialist in the underlying practice areas as well as in malpractice. "You have to be an expert in med mal, patents, personal injury, bankruptcy. You have to master each of these areas, along with the area we do so well: malpractice," says Curtis. "It's dangerous, very dangerous. That's one of the reasons we're working 14 hours a day, seven days a week." Adds Ramos, "It's a scary area to practice in. I've had everything from maritime to ERISA, from probate to divorce. We have to hire lawyer-experts to help us, because the law [in each area] is so specialized." Some courts are limiting the "case within a case" to the testimony of an expert who can determine how much money the plaintiff would have gotten in the underlying case. But for now, it's still expected that the underlying case will be presented. In last year's record-breaking $225 million legal malpractice verdict, a securities broker in California sued his lawyer for mishandling his claim in a massive limited-partnership scandal against Prudential Securities. The jury awarded the broker $2.4 million in compensatory and $221 million in punitive damages, after finding that the lawyer missed a deadline that would have allowed the broker to opt out of a class-action suit against Prudential where each plaintiff ended up with a small settlement and pursue a separate arbitration claim seeking millions of dollars. "This was a scary, scary case, because the jury had to decide what the underlying arbitration would have turned out to be, and in arbitration there are no rules, anything goes," says Ramos. "So the jury hit the underlying defendant, Prudential, for 10 percent of its net worth" and that's what determined the malpractice verdict. "So this poor lawyer got hit for $225 million," he continues, noting that the case is on appeal. "But there's only $5 million in insurance, so no one will get anything close to what the jury awarded. And it will probably get settled." Difficulty getting expert witnesses. Lawyers are a tight-knit professional group, and getting them to testify against a colleague can be very difficult, plaintiffs' legal mal lawyers claim. "Some lawyers will testify if they feel the facts are egregious enough," says Trazenfeld. "But unlike personal injury, there are very few experts who testify over and over, because each case is unique.
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So obtaining the right experts takes time and effort." Plaintiffs also must find a lawyer who's an expert in the underlying field, whether it's bankruptcy, probate or tax. Law professors are usually more willing than practicing lawyers to testify because they're not concerned about running into the defendant at some point in the future. "The first thing you have to do is find a lawyer that's willing to come into court and say that this lawyer fell below the standard of care required of lawyers," says Zukoff. "And a competent lawyer, before they put their neck out, wants to be sure they're absolutely correct. They want to spend time reviewing the case, reviewing the file, and that costs money." Courts favor the defendants? Plaintiffs' legal malpractice lawyers insist the deck is stacked against them when they file suit against an officer of the court. "These are hard cases in the sense that you have sympathetic judges" who tend to side with the defendant-lawyers, says Ramos, expressing a view that's widespread among plaintiffs' lawyers. "Trial judges tend to look for any excuse to protect lawyers." Defense lawyer Klein adds. "Courts are willing to grant summary judgment or a directed verdict for lawyers where they might not with other professionals. That's because the judge is sitting there saying, 'There but for the grace of God go I,'" says Klein. "I genuinely believe it's not a bias in the traditional sense," he continues. "Where the bias comes in, if you can call it that, is that they are more knowledgeable about the area than if you're representing a neurosurgeon or an accountant. They're more likely to say, 'I can't agree with this lawsuit as a matter of law,' whereas with a doctor, they'll send it to the jury. They've been there, it's their area." However, he believes judges bend over backwards to be fair because they're afraid they'll be perceived as partial to lawyers. "So that's been a problem, that plus the fact that juries hate lawyers." The good news for plaintiffs is, if they make it past summary judgment, the cases tend to settle. "If you're able to get to a jury, that's where it gets real easy because the lawyer doesn't want to go in front of a jury, and the insurance company knows juries don't like lawyers," says Ramos, who estimates that 95 percent of his cases settle. It's the juries that make things so difficult for defending these cases. "I believe we are at a tremendous disadvantage with juries unless we can get them to understand that the problem they have with lawyers is not that they hate lawyers but that they're been on the wrong side of a legal battle," says Klein. "These cases can be won and we're winning them. It's a myth that you can't win them in front of juries." To do so, Klein has honed a set of voir dire questions for malpractice cases.
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"Instead of saying, 'Have you ever had a problem with a lawyer?' I say, 'Can we all agree everybody hates lawyers?' Everybody thinks that's hysterical. Then I ask if any of them has ever met a lawyer they like. You ought to see the body language. Nobody wants to be the first one to say yes. "Gradually, someone will say that their next-door neighbor is a lawyer and he's a good guy, then you start getting good stories about lawyers," Klein continues. "Ultimately they'll concede that they like their own lawyer, that she was there when they needed to talk about their problem." The clients are difficult. When people walk into your office looking to sue their former lawyer, they're usually very angry at lawyers and the legal system. They usually don't trust you and there's a danger they'll turn on you, too. Flaherty, the Chicago defense attorney, used to handle some plaintiffs' legal mal work. He says, "You're leery of someone coming to see you when they're walking in with a pile of notebooks showing why their other lawyer was terrible." "These aren't easy clients to deal with," says Curtis, the Manhattan lawyer. "People hate lawyers, many times for good reason. And you're another lawyer." To overcome this prejudice, Curtis advises, "You have to be frank, absolutely honest. Then go to work and earn their respect. Keep them informed, send copies of everything to them. When you have an important decision you ask them to participate; when you uncover stuff they expected was there, you tell them." Once the client's trust is earned, the emotional payoff is huge, he says. "When we do good and create a remedy in these awful situations, there's a bond. It's an odd thing to say, but the clients almost become part of your family. They know that there's nobody else that could do this. It creates a respect and caring that ends up running quite deep, once we pass over being just another lawyer you can't trust." Lawyers Weekly Publications, 41 West Street, Boston, Massachusetts, 02111, (800) 444-5297 1999 Lawyers Weekly Inc., All Rights Reserved.

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