Ethics

Now taking nominations.  

Near the top of my list is the rule that malpractice claims are not assignable, a rule recently affirmed by the Kentucky Court of Appeals in a case showing how unsound the rule is (2009 WL 367219)

Client signs a noncompete with firm Z that prohibits him from soliciting firm X.  X sells its assets to Y. Client asks lawyer whether the noncompete covers Y; lawyer, let us assume, gives incorrect advice.  (Liability is not clear from the facts.)

Z sues client for violation of the noncompete and they settle for money plus an agreement that client assign to Z 80% of any malpractice recovery against lawyer. Client (guided and perhaps controlled, it seems, by firm Z) files malpractice claim.  Trial court dismisses it with prejudice because of the assignment and the appellate court affirms.

Two basic reasons are often given for the rule, and are repeated in this case. They are: (1) the personal and confidential nature of legal services and (2) assignability would imply a market for malpractice claims that would force lawyers to litigate with strangers and would "debase the legal profession."

The diffuseness of the adjective in the second reason signals the shallowness of the reasoning.  Such dignity as the profession has rests in part on its ability to compensate those harmed by its members. Where advice deprives a third party of a contractual right, there is nothing wrong with that party seeking redress, even if indirectly, as in this case.  It is perverse to treat the assumption of responsibility for one's acts as debasing.  If that word means anything in this context it is far better applied to the result in this case, which lets a lawyer off the hook because the client sought to avoid responsibility for some of the harm the client caused based on the lawyer's advice (again, by hypothesis) by arranging to pass that liability through to the lawyer.  

As to the first reason, personal and confidential the relationship may be, but nothing about incurring costs (even opportunity costs) follows from that.  As to confidences, the client owns those and can sell them in other contexts (as with the sale of a company).  And clients would always be part of the litigation (assignees would insist) so the notion of forcing lawyers to litigate with strangers is a bit overstated. 

No doubt the lawyer in question disagrees with the charge of incompetence, and perhaps might have won on the merits at trial.   One might extend this idea generally to the proposition that allowing assignment will spur "frivolous" lawsuits. That is a general argument against assignability, however, which has no particular resonance in this context.  And even if it did it is simply answered: The remedy for frivolous suits is to punish frivolous suits, not try to limit clients from ameliorating the harm they may have suffered.

Lawyer protectionism of this type is worse than silly, but I'll leave the description there. 

To borrow from Alice, rant over.

DM