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When you hire an attorney, you expect them to act in your best interest and provide the strongest advice possible. But what happens when professional negligence occurs and deadlines are missed, serious errors are made, communication breaks down, or your attorney just doesn’t show up for court? It could be attorney malpractice.

Legal malpractice is complex issue, and it isn’t as simple as whether or not you lose your case. Just because you lost the case doesn’t mean you can sue your attorney; there are many other factors to consider.

What are common types of attorney malpractice? 

While cases vary based on individual circumstances, the most common types of legal malpractice include attorney negligence, breach of fiduciary duty, breach of contract, or intentional wrongdoing.  

Conflict of interest is one of the top reasons clients sue attorneys for malpractice. Common conflicts of interest include:

  • An attorney representing a client with adverse interests to another client;
  • The lawyer has a personal or material interest in the case;
  • An attorney has private information from one client that could affect another client.

Keep in mind that if one attorney at a law firm is prevented from representing a client, it can mean the entire firm is prevented from participating in the case. This can be particularly challenging for law firms with hundreds of lawyers. Sometimes firms can create rules and boundaries to prevent information sharing in the event of a conflict, but they must handle the case cautiously.

Another example is “failure to calendar,” meaning the attorney doesn’t accurately keep track of the dates and deadlines associated with the case. Courts and legal disputes are incredibly deadline-driven, so missing a deadline could result in financial penalties or case dismissal. If a client suffers losses due to their attorney’s failure to meet a deadline, they may have an attorney malpractice suit. 

How do you successfully prove a legal malpractice claim?

Proving attorney malpractice isn’t a simple matter. First, you’ll need to hire a new attorney to review your case and determine if there is enough evidence to pursue a claim.

You must provide significant evidence that tangibly demonstrates your attorney’s failures, including:

  • The existence of an attorney-client relationship
  • Evidence of the attorney’s negligence in the legal representation and that the negligence caused an injury (which could be considered a financial loss)
  • Proof of the nature and extent of the injury

These types of cases can be intricate in nature, potentially requiring expert witnesses and detailed levels of proof. Working with an attorney who is well-versed in malpractice cases can help streamline the process and ensure you have an appropriate strategy for negotiating an out-of-court settlement or going to trial. 

Are attorney fee disputes considered malpractice?

Attorneys who pad their time, overcharge, charge for incomplete work, or use unclear billing practices are subject to malpractice claims. 

In California, the Rule of Professional Conduct 4-200 prohibits attorneys from charging an “unconscionable fee.” Who decides what is deemed unconscionable? It’s a variety of factors that depend on each case. Navigating attorney fee disputes can be complex, as the attorney in question can sue the client for unpaid fees even if a dispute is underway. 

What are some examples of attorney malpractice? 

While attorney malpractice claims have leveled out over the last few years, claims payouts are skyrocketing. Our team has handled many attorney malpractice cases, and we continue to advocate aggressively for our clients when attorneys fail to uphold their required duty of care.

Our office settled a case involving an attorney’s failure to properly advise a client and errors in the trial of an underlying case for $2.6 million.  

Our office also represented an automotive design and manufacturing company in a legal malpractice suit against its former counsel, a prominent intellectual property firm. The case arose from a class action against the company where the law firm improperly settled with the plaintiff, failing to appropriately defend the action in the client’s best interest. A jury awarded the company $700,000 at trial.

We also received an award of $323,069 in favor of a homeowner who sued her former attorney for failing to properly litigate a previous case. Because of her attorney’s failure to represent her best interests, the homeowner was forced to pay $174,000 to a contractor who sued her for breach of contract. Our team was proud to support this client and help her receive a favorable settlement. 

If you need help dealing with attorney malpractice, reach out to our team

 

The information contained herein is for general purposes only and does not constitute legal advice.

We recently shared an introduction to a case that could change the course of how businesses leverage their insurance coverage in the United States. Businesses and insurance companies are struggling to come to an agreement on what constitutes a covered loss in relation to COVID-19. Our current case, as well as other cases currently moving through the courts, are determining an answer to that crucial question.
Collaboration between Covington and McGonigle Law may revolutionize COVID-19 Insurance Coverage
We are pleased to share that Covington & Burling LLP, one of the nation’s leading law firms, is teaming up with our office on Tarrar Enterprises, Inc. v. Associated Indemnity Corp., a pioneering case in determining whether insurance companies must cover business losses related to COVID-19 and subsequent shutdowns.

Covington is a worldwide law firm with deep expertise in navigating complex legal issues. Our office is thrilled to collaborate with the Covington team and work together to illustrate Tarrar’s clear coverage under its policy from Associated Indemnity Corp. (AIC). Covington brings a deep bench of litigation experts and a unique ability to manage high-stakes disputes; with the potential ramifications of this case, the stakes could not be higher.
New authority could steer the case’s course
More businesses are challenging insurance coverage denials and taking their cases to court. These cases forge new legal pathways for insured companies to pursue the coverage they are rightly owed under their insurance policies.

One recent case, Marina Pacific Hotel & Suites, LLC et al. v. Fireman’s Fund Insurance Company, addresses this claim. Marina Pacific owns Hotel Erwin and an adjacent restaurant, Larry’s, in Venice Beach, CA.

On July 21, 2020, just four months after COVID-19 became a household concern, the insureds filed their complaint against Fireman’s Fund.
Marina Pacific alleged that the presence of COVID-19 on portions of their property constituted “direct physical loss or damage” that should have been covered under Fireman Fund’s first-party commercial property insurance policy.

The insured’s policy included:
● Business interruption coverage (with a $22 million limit)
● Communicable disease coverage (with a $1 million limit)

The Fireman’s Fund policy contained exclusions applicable to all coverages stating that it would not pay for any loss, damage or expense caused directly or indirectly by, or resulting from, “[m]ortality, death by natural causes, disease, sickness, any condition of health, bacteria, or virus.”

Marina Pacific faced an uphill battle after the trial court sustained Fireman’s Fund’s demurrer to the insureds’ first amended complaint without leave to amend and dismissed the lawsuit. The trial court ruled the COVID-19 virus cannot cause direct physical loss or damage to property for purposes of insurance coverage. But Marina Pacific’s fight didn’t stop there.

Upon appeal, the Second Appellate District in the State of California reversed the trial court’s judgment. The cause was remanded with directions to the trial court to vacate its order sustaining the demurrer without leave to amend and to enter a new order overruling the demurrer. Marina Pacific will also recover its costs on appeal.

This victory doesn’t just affect Marina Pacific – it could potentially affect the McGonigle Firm’s client, Tarrar Enterprises. This case provides new legal groundwork for Tarrar to bolster its claims against AIC.
As the pandemic’s effects evolve, so do the legal responsibilities related to COVID-19
The Court of Appeal stated that the trial court’s decision to dismiss this case occurred far too early in the judicial process. Because Marina Pacific adequately alleged losses covered by Fireman’s Fund’s policy, they are entitled to an opportunity to present their case either at trial or in opposition to a motion for summary judgment.

We are all navigating the fallout caused by a worldwide pandemic, and the ripple effects of COVID-19 will continue for quite some time. As new legal questions arise about the pandemic’s true impact, the courts are setting critical precedent that determines the course of future legal action.

When COVID-19 struck in early 2020, businesses scrambled to stay afloat as we collectively navigated an unprecedented situation. For many individuals, pandemic-related shutdowns and stay-at-home orders affected their livelihood and the financial stability of their businesses. When some turned to their insurance company for assistance and support, they faced claim denials and uphill battles to leverage the protection that was supposed to cover their losses.

 

Tarrar Enterprises, Inc., a utility consulting company, faced this exact roadblock. When Contra Costa County ordered Tarrar to close its doors early in the pandemic, Tarrar faced devastating economic hardships. When Tarrar turned to its insurance company for assistance, it was met with a wall of refusal.  The McGonigle law firm sought to right this injustice by filing suit.

How do insurance companies classify COVID-19?

Most insurance policies contain a “total virus exclusion.”  Tarrar’s policy, in contrast, did not.  Thus, Tarrar argued that its policy should provide coverage and that because viruses spread through the air, they are akin to perils like carbon monoxide, asbestos, foul odors, or wildfire smoke. These types of perils have been covered under similar insurance policies, as these issues physically affect the air and the individuals occupying that space.

 

In the early days of the pandemic, the situation evolved quickly and we did not yet have access to testing, vaccines, and an understanding of how COVID-19 spreads. However, we quickly learned viral aerosols in the air and droplets left on surfaces put individuals in shared spaces at risk of contracting the virus.

 

The defendant, Associated Indemnity Corp. (AIC), argued that COVID-19 did not have a physical impact on Tarrar’s property and that coverage under the policy was only for business interruption in the event the property was physically lost, damaged, or undergoing repairs/replacements. The defendant’s myopic view of damage extends only to personal property that is broken, torn, dented, or destroyed by COVID-19 or any government restriction.

 

There are far more dangerous risks to a property than a dent. When coworkers are in close vicinity at their employer’s property, COVID-19 represents a viral, airborne infection that easily spreads from person to person. Just as we wouldn’t expect employees to work in a building permeated by carbon monoxide, we wouldn’t expect them to work on a property with a harmful virus circulating in the air.

How is Civil Authority insurance coverage established?

Tarrar believes its losses should be covered under the AIC policy’s Civil Authority insuring Agreement. Insurers began adding Civil Authority coverage to “all risks” decades ago to expand business interruption coverage to include situations where the property has not sustained damage, but the government prohibits property access because of damage to a nearby property. For example, during the 2021 Caldor Fire, local agencies required businesses in the Lake Tahoe area to close due to unsafe air conditions. The Civil Authority insuring agreement covered profits lost by companies ordered to close because of dangerous air quality indexes.

 

What’s the common thread? Government officials ordering businesses to close because of unsafe air conditions. While the driver behind the closures differed, the underlying foundation was the same. Tarrar’s economic damages are a direct result of government shutdowns in response to a highly transmissible, dangerous airborne virus.

 

Further bolstering Tarrar’s position, AIC’s policy does not require physical loss or property damage to occur within a limited radius of the insured property. Under AIC’s coverage, AIC will pay for the actual loss of business income and necessary extra expenses caused by Civil Authority action that prohibits access to the property due to physical loss or damage caused by or resulting from any Covered Cause of Loss.

 

Tarrar believes that AIC’s refusal to recognize Tarrar’s loss of business income under the Civil Authority policy constitutes both bad faith and a breach of contract.

What’s next for this case?

Tarrar Enterprises, Inc. appealed the Superior Court’s summary dismissal of the Civil Authority claim, placing this case in the Court of Appeal of the State of California, First Appellate District, Division II.  Because of the significance of the coverage issues presented, Reed Smith filed an amicus brief on behalf of the United Policyholders, a respected national non-profit 501(c)(3) organization, in support of coverage.   Oral arguments in this case are scheduled for September 12, 2022.

 

The outcome of this case holds incredible weight for businesses still trying to receive rightful compensation under their insurance policies. The last several years forced all of us to recalibrate our stance on risks associated with being in close proximity with others. We all made (and continue to make) adjustments based on an ever-shifting pandemic environment, but insurance companies remain stuck in outdated and unfair arguments that fail to address today’s challenges and the realities of the pandemic.

As part of our firm’s commitment to the community, we have supported Homeboy Industries as volunteers for events there and by providing financial support.  If inspired to do so, we would welcome you to join our firm in support of this worthy organization.  Homeboy began as a grassroots movement started by Jesuit priest Father Greg Boyle, Executive Director, in the Dolores Mission Parish, and is a 501(c)3 nonprofit, a Community Based Organization (CBO).  Father Boyle began Homeboy to answer the need for employment and educational opportunities among underserved youth in Los Angeles.  Located in downtown Los Angeles, Homeboy Industries provides hope and job training for formerly gang involved and previously incarcerated people so they can redirect their lives and become contributing members of society.  Please check out their website at homeboyindustries.org.

 

Lawyers need to be prepared for the State Bar’s audit of Client Trust Accounts without prior notice or prior consent.

To enhance disciplinary investigations, the California State Bar Trustees are asking the legislature to enhance reporting from banks and authorizing audits of trust accounts based on risk assessments and random selection. Per Business and Professions Code 6091, the State Bar has had this statuory authority but now is seeking to further enhance its authority.  What can lawyers do in response to this ?  Always make sure that all client trust funds are properly identified by client, and that the lawyer records the receipt of client funds twice (in the client ledger and the trust account journal).   There must be a monthly reconciliation of the client ledgers, account journals and bank statement.     Reconciliation means checking the three records lawyers are required to keep-bank statements, the client ledgers and the trust account journal, against each other so that you can find and correct any mistakes.   If a lawyer does not feel that he/she has the skills to perform the reconcilitation, a bookkeeper should be hired or the use of a computerized system such as Quickbooks, Quicken or a similar program can assist with the reconciliation process.    The records must be maintained for a minimum of five years.

 

The answer is yes! We at McGonigle Law, received the #1 arbitration award in California in 2021 as recognized by topverdict.com. McGonigle Law recently recovered $3,461,030.05 on behalf of a client at an arbitration conducted entirely via Zoom.  Click here to see Top Verdict Award.

 

Our firm represented the Plaintiff in a misrepresentation and wrongful termination case against Plaintiff’s former company, PeerNova, Inc. and Naveed Sherwani.  The case was arbitrated to conclusion by Martin H. Dodd, Esq. under the auspices of the American Arbitration Association.

 

The Plaintiff was a successful cryptocurrency entrepreneur and blockchain industry innovator who had founded one of the industry’s most innovative and successful Bitcoin cloudmining companies before agreeing to merge his company to form PeerNova, Inc. Thereafter, Plaintiff was wrongfully fired from his position in the resulting company. The Plaintiff was represented by Timothy McGonigle, Esq. and Thomas Foote, Esq.

 

Plaintiff’s Claims

 

On July 17th, 2017, we filed the case in the Santa Clara County Superior Court, seeking damages for negligent misrepresentation and wrongful termination in violation of public policy, among other claims. The dispute was largely centered around two events:  (1) various promises made by Defendant Naveed Sherwani, which convinced the Plaintiff and others to merge their company with Sherwani’s company to form PeerNova, Inc., and (2) the unfair termination of Plaintiff from his position as Vice President at PeerNova.

 

We argued that Sherwani had made certain promises leading up to the merger – promises which were not kept, and that the termination was a breach of the Plaintiff’s employment contract with PeerNova. McGonigle Law further argued that their client was terminated as retaliation for using his shareholder’s voting rights to vote two directors off PeerNova’s board of directors due to differences of opinion about business strategy.

 

The Results of the Arbitration

 

After a lengthy arbitration process (conducted entirely via Zoom due to the Covid-19 pandemic), we were able to produce a stellar result for our client.  The firm recovered $3,023,807 for the Plaintiff in monetary damages, lost earnings, emotional distress, punitive damages, and interest. In addition, an additional $485,000 was received via a pre-arbitration settlement with a co-defendant, which made the total recovery $3,508,807 for Plaintiff.  The Final Arbitration Award was issued on June 15, 2021 and following a post-arbitration hearing, the full amount awarded was paid in late 2021.

 

 

 

 

Conclusion

 

It is relatively common for power struggles and conflict to occur in new blockchain startups as the industry is very new, dynamic, and volatile. In this particular case, one of the leaders of a promising cryptocurrency company was duped into voting his shares in favor of a merger, and then unfairly fired from the resulting company because of his effort to influence who sat on the company’s board – a right which he was entitled to exercise, without penalty under California and Delaware law because of his shareholdings and voting power.

 

We were able to overcome summary judgment and ultimately prove at arbitration that the key claims made by the Plaintiff were well founded, a years-long effort which demanded substantial legal skill and expertise.  We were all thrilled with this hard fought victory and that the Plaintiff would be fairly compensated for the financial losses and emotional distress that he sustained following his unfair termination from the company.

 

If you have clients that you believe could benefit from our services, please get in touch with us at McGonigleLaw.com.