Also known as: professional malpractices · malpractice · professional negligence
Written by attorneys — see sources below.
A tort claim arising when a licensed professional breaches the duty of care owed to a client or patient by failing to meet the standard of skill and diligence expected in the profession and proximately causing harm.
Penelope Price retained Pierce Patterson to handle a personal injury suit. Patterson asked her to sign an agreement capping his liability for any future errors at the amount of his fee. Price had no separate lawyer review the document before signing. When Patterson later missed a key deadline and the claim was lost, the agreement provided no protection against her malpractice suit.
Paige Porter missed the statute of limitations on Preston Pratt's contract claim. She paid Pratt from her own funds to hide the error and never told him he might have a malpractice claim or suggested he consult independent counsel. The disciplinary board found the concealment and conflict of interest warranted sanctions beyond ordinary negligence.
Prime Logistics hired Perry Pratt to file a cargo-damage suit. Pratt miscalculated the limitations period and the claim was barred. The client sued for malpractice and recovered damages. The bar declined to impose discipline because the single miscalculation did not demonstrate unfitness to practice.
Pinnacle Holdings sued its former law firm for overbilling and inadequate representation in a merger. The firm obtained and used the client's discovery responses and internal instructions to defend the malpractice claim. The court permitted the disclosure under the self-defense exception because the client had placed the representation at issue.
Pierre Poulin met with Prism Analytics' counsel for an initial consultation about a potential trade-secret claim. The lawyer evaluated the facts, gave advice on next steps, and never followed up. The statute of limitations expired without warning. Poulin sued for malpractice and the court held that the consultation created an attorney-client relationship and duty of care.
Pacific Bank relied on an audit report prepared by an accounting firm for a borrower. The report contained errors that the bank claimed caused it to extend a bad loan. The court held that the auditors owed no duty of care to the bank as a nonclient absent a direct relationship or known intended reliance.
Osborne Computer Corporation was founded in 1980 by entrepreneur Adam Osborne and began manufacturing the Osborne I portable personal computer for the mass market, with shipments starting in 1981. By fall 1982, sales of the company's sole product had reached $10 million per month, making the company one of the fastest growing enterprises in the history of American business. In 1981 and again in 1982, the company retained Arthur Young & Company to audit its financial statements and issue audit reports. Arthur Young issued unqualified audit opinions on the company's 1981 and 1982 financial statements. The 1982 opinion was issued on February 11, 1983, appeared on Arthur Young's letterhead addressed to the company, and 100 copies of the professionally printed opinion were personally delivered to the company. The 1982 financial statements reported a modest net operating profit of $69,000 on sales of more than $68 million. In late 1982 the company postponed a planned initial public offering and instead issued warrants to investors in exchange for bridge financing loans or letters of credit. Plaintiffs, a group that included individuals as well as pension and venture capital funds, invested in the company in early 1983; one plaintiff, Robert Bily, purchased 37,500 shares of stock from Adam Osborne for $1.5 million. With one exception, plaintiffs testified that they made their investments in reliance on Arthur Young's unqualified 1982 audit opinion. After the warrant transaction closed on April 8, 1983, sales declined sharply because of manufacturing problems with the company's new Executive model computer, the public offering never occurred, and the company filed for bankruptcy on September 13, 1983, causing plaintiffs to lose their investments. Plaintiffs brought separate lawsuits against Arthur Young in Santa Clara County Superior Court that were consolidated for trial. Plaintiffs' expert witness identified more than 40 deficiencies in the 1982 audit amounting to gross professional negligence, including an understatement of liabilities by approximately $3 million that turned the reported $69,000 profit into a loss of more than $3 million, and testified that Arthur Young had discovered but failed to disclose material weaknesses in the company's internal accounting controls. After a 13-week trial the jury returned a verdict for plaintiffs on the professional negligence claim and awarded approximately $4.3 million in compensatory damages, but found for Arthur Young on the fraud and negligent misrepresentation claims. The trial court granted Arthur Young's motion for judgment notwithstanding the verdict on the negligence claim. The Court of Appeal reversed the judgment in favor of Arthur Young. The Supreme Court of California granted review.
View caseA single negligent act such as missing a deadline may support a civil malpractice claim but does not by itself warrant discipline unless the conduct is so gross as to show unfitness to practice.
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An attorney-client relationship and duty of care can arise from an initial consultation where the lawyer gives legal advice and the prospective client reasonably relies on it, even without a formal retainer.
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A lawyer may not make an agreement prospectively limiting liability to a client for malpractice unless the client is independently represented in making the agreement.
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The self-defense exception permits a firm to obtain and use client communications and work product necessary to defend itself when the client has placed the representation at issue by alleging malpractice or overbilling.
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