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Maryland Legal Malpractice Attorney

Maryland attorney is disbarred for excessive billing

In Attorney Grievance Commission of Maryland v. Framm, 449 Md. 620 (2016), the Maryland Court of Appeals disbarred Rhonda I. Frame for excessive billing (among other reasons).  Framm was retained by her client to vacate a $55,000 judgment entered in a divorce case.  Framm was successful in having the $55,000 judgment vacated, but she charged $58,748.77 in attorney’s fees and collected $54,000 in fees.

There were several reasons why Framm’s charges were disproportionate to the amount in dispute, including (a) she engaged in abusive discovery tactics; (b) she charged the client “for her work in procuring [the expert]’s testimony despite the fact that her discovery misconduct caused his testimony to be excluded”; and (c) she charged the client for her numerous defective filings.

In disbarring Framm, the Court of Appeals found that Framm violated her ethical duty to advise the client that the cost of continuing with the litigation may nullify any benefit.  Secondly, Framm’s fees were unreasonable, because the excessive amount of time she expended on the case was largely due to her own litigation mistakes and misconduct.   The Court of Appeals concluded that although the client obtained the result he wanted, that outcome “was not because of Respondent’s efforts, but rather despite the Respondent’s misconduct”.

Practice Pointer for clients: (1) An attorney’s fees must be reasonable.  Your attorney’s fees usually should not exceed the amount in controversy; and (2) when an attorney commits a mistake, you should not be billed for the time and effort that it takes the attorney to correct the mistake.  In other words, the client should not be charged for the attorney’s defective work or the time  that it takes the attorney to correct his or her mistakes.

Maryland attorneys have a contractual and ethical duty to submit regular invoices to their clients

If you retain a Maryland attorney on an hourly basis and the attorney does not submit invoices to you on a regular basis, there is a good chance that your attorney is attempting to conceal from you his or her excessive billing.  At the very least, you are being deprived of the critical information as to whether the attorney is litigating the case within your budget.

In Maryland, most retainer agreements expressly provide that the attorney or law firm will submit monthly invoices.  Even if this language does not appear in the retainer agreement, the Maryland attorney or law firm still has a professional duty to submit regular invoices in order to comply with the ethical obligation “to keep the client reasonably informed of the status of his case.   See the Maryland Lawyers’ Rules of Professional Conduct at Maryland Rule 19-301.4; and Attorney Grievance Commission of Maryland v. Roth, 428 Md. 50, 74 (2012) (concluding that an attorney violated Md. Rule 19-301.14(a)(2) regarding communications with clients by failing to provide the clients with monthly billing statements).

Maryland attorneys commonly have their clients sign Retainer Agreements with a 12 year statute of limitations

In Maryland, there is a 3-year statute of limitations to sue for breach of contract.  See Courts & Judicial Article 5-101.  Many law firms in Maryland extend the time to sue their clients for legal fees to 12-years by having the client sign their Retainer Agreement under “seal”.   See Courts & Judicial Article 5-102(a)(5) (creating a 12-year statue of limitations for contracts signed under seal).

The operational language, found above the clients’ signature line, creating the 12-year statute of limitation typically states “witness my hand and seal”, “signed and sealed”, or the more formal “I agree to the foregoing and set my hand and seal on this 4th day of July 2017”.

The deceptive part is that the operational language itself does not explain that the law firm has extended its time to sue the client from 3-years to 12-years.  Nor have I ever seen Retainer Agreement in Maryland that explains to the client the significance of a signing the document under seal.

Note that the clients’ execution of a Retainer Agreement under seal does not extend the clients’ statute of limitations to sue the lawyer, unless the lawyer also signs the document under seal.

 

Securities litigation malpractice

I recently represented a client who had a legal malpractice claim against his former securities litigation attorneys.  The client had retained securities attorneys to pursue a claim against a national bank for breach of its fiduciary duty as an indentured trustee for mortgage backed securities.  The client had loss his entire investment in high interest promissory notes backed by mortgages when the issuer filed for bankruptcy. Unfortunately, the client’s securities litigation case was dismissed by the court due to the attorneys’ failure to prosecute the lawsuit in a diligent manner.

I was able to obtain a favorable settlement for the client against the former attorneys.  The client recovered from his legal malpractice case and a prior case about 25% of his losses from the mortgage backed securities.  A 25% recovery of losses in a securities case far exceeds the national average of the recovery of 2.2% of losses in the settlement of class action securities cases in 2014.

 

 

Court of Special Appeals’ unreported decision vacating a dismissal of a legal malpractice complaint on the grounds that the allegations in the complaint raise a question of fact as to whether the statute of limitations was tolled.

On December 1, 2016, the Court of Special Appeals in an unreported decision found that Stewart A. Sutton’s client had pled sufficient facts in her legal malpractice case against Baltimore lead paint attorney, Saul Kerpelman and his law firm, Kerpelman & Associates, to create a question of fact as to whether the statute of limitations had been tolled.  In vacating the dismissal of his client’s legal malpractice lawsuit, Judge Deborah S. Eyler stated that based upon “the facts alleged by Natashia, reasonable jurors could find that her cause of action against Kerpelman for legal malpractice did not accrue until the firm ceased representing her, on December 3, 2012, under the continuation of events doctrine”.  The appellate court further found that “Reasonable jurors could find that Natashia could not have discovered the existence of her claim by ordinary diligence because she relied on Kerpelman to advise her of all information that is significant and matter to the matter that is the subject of the relationship, including the existence of a potential malpractice claim for the handing of the 1986 lead paint lawsuit”.

Stewart A. Sutton was interviewed by the Daily Record about the Court of Special Appeal’s decision. Stewart A. Sutton was quoted as saying: “My client, Natashia Woods, had the misfortune of retaining the one attorney in all of Maryland who had the motivation to conceal from her the fact that her 1986 lead paint case against the same landlord had been settled by Mr. Kerpelman for the inadequate amount of $1,000”.

 

 

Are “Super Lawyers” really superior lawyers?

I just received the 2017 edition of “Super Lawyers” for Maryland.   Three Montgomery County law firms that I had successfully sued for legal malpractice on behalf of my clients have prominent ads in the magazine extolling their virtues.

As I have stated numerous times, no publication can ever accurately rate the ability of a lawyer.  Super Lawyer’s in its disclaimer printed in tiny, light gray ink agrees: “We make no claim, promise, or guarantee about the accuracy, completeness, or adequacy of the information contained in this magazine . . . The hiring of an attorney is an important decision that should not be solely based upon the advertising or the listings in this magazine”.

Unfortunately, clients do use rating services in selecting attorneys.  The inevitable consequence is that some lawyers and law firms have too many clients and not enough time to adequately represent each client.   It’s no wonder that so many former clients of these so-called “super lawyers” had to retain me to sue their former attorneys for legal malpractice.

When does a legal malpractice cause of action accrue in Maryland?

For a client to sue his or her former attorney in Maryland for legal malpractice, the client must first have suffered damages.  This usually means that the client must wait until the underlying case is concluded to determine whether in fact the attorney’s malpractice caused the client to suffer damages.

A cause of action “does not accrue until all elements are present, including damages”.  Baker, Watts & Co. v. Miles & Stockbridge 95 Md.App. 145, 187 (1993); Owens-Illinois v. Armstrong 326 Md. 107, 121 (1992) (holding that a cause of action arises “when facts exist to support each element”); Rounds v. Maryland-National Capital Park & Planning Commission 441 Md. 621, 654 (2015) (“For any statute of limitations analysis, the operative date is the date that a claim accrues”).

Damage is a necessary element of a legal malpractice count.  Supik v. Bodie, Nagle, Dolina, Smith & Hobbs, P.A. 152 Md.App. 698, 717 (2003) (legal malpractice requires “duty, breach, causation, and damage”).  “The absence of any one of those elements will defeat a cause of action in tort”.  Id.   Thus, the accrual of a tort claim requires a party “first sustains compensable damages that can be proven with reasonable certainty”.  Edmonds v. Cytology Serv. of Maryland, Inc. 111 Md.App. 233, 270 (1996); Rounds, 441 Md. at p. 654 (holding that a “claim accrues when the plaintiff suffers the actionable harm”).

Maryland courts have uniformly held that the “mere possibility of an injury in a negligence action does not rise to a cause of action”.  Supik v. Bodie, Nagle, Dolina, Smith & Hobbs, P.A. 152 Md.App. 698, 719 (2003); 65 C.J.S. Negligence § 56 at 353 (2000) (“The possibility of injury is not injury itself . . . possibility is insufficient to impose any liability or give rise to a cause of action”) (citing Resavage v. Davies, 199 Md. 479 (1952)).

In professional malpractice cases, there may be a long time interval between the negligent act and the resulting harm.  Edmonds,111 Md.App. at 257 (holding that the injury does not always occur simultaneously with the negligent act).  For a cause of action for professional malpractice to accrue, “there must be not only the negligent act, but a consequential injury, and the injury is the gravamen of the charge”.  Supik, 152 Md.App. at 719 (quoting 65 C.J.S. Negligence § 56 at 352 (2000)).

The rationale that the accrual of a legal malpractice claim requires damages is consistent with the public policy of fostering the attorney-client relationship: “It would be detrimental to the traditional attorney-client relationship to suggest that a client, each time a disagreement arose, should expect to be damaged and be required to consult yet another counsel to review the actions of the attorney earlier retained”.  Supik, 152 Md.App. at 722.

When does the 3-year statute of limitations to sue a Maryland attorney for legal malpractice begin to run?

The most common question that I’m asked is how long does a client have to sue his or her former attorney in Maryland for legal malpractice.  The general answer is that the 3-year time period to sue a former attorney for malpractice begins to run when the client discovered or should have discovered the malpractice by the exercise of reasonable diligence.

There are many situations in which a client will not discover the attorney’s legal malpractice until many years have passed.  In such situations, Maryland recognizes three doctrines that toll the statute of limitations: (a) the discovery rule; (b) the “continuation of events” theory; and (c) the “fraud exception” of Courts & Judicial Article § 5-203.

  1.    DISCOVERY RULE

After a legal malpractice cause of action arises, the “discovery rule tolls the accrual of the limitation period until the time the plaintiff discovers, or through the exercise of due diligence, should have discovered the injury”.  Frederick Road Limited Partnership v. Brown & Sturm 360 Md. 76, 95-96 (2000); Penwalt Corp. v. Nasios 314 Md. 433, 579 (1988) (holding that the statute of limitations does not begin to run until a plaintiff knows or reasonably should know the nature and cause of his or her harm); Litz v. Maryland Department of Environment 434 Md. 623, 641 (2013) (holding that the discovery rule “tolls the accrual of an action until the plaintiff knows or should have known of the injury giving rise to his or her claim”); Poffenberger v. Risser 290 Md. 631, 634-635 (1981) (“the cause of action accrues when the wrong is discovered or when with due diligence it should have been discovered”); O’Hara v. Kovens 305 Md. 280, 302 (1986) (holding that notice to trigger the statute of limitations “means having knowledge of circumstances which would cause a reasonable person in the position of the plaintiffs to undertake an investigation which, if pursued with reasonable diligence, would have led to knowledge of the alleged” claim).

Discovery or inquiry notice “is notice implied from ‘knowledge of circumstances which ought to have put a person of ordinary prudence on inquiry (thus, charging the individual) with notice of all facts which such an investigation would in all probability have disclosed if it had been properly pursued’”.  Windesheim v. La Rocca 443 Md. 312, 327 (2015) (quoting Poffenberger v. Risser 290 Md. 631, 637 (1981)). “Simply stated, inquiry notice is ‘circumstantial evidence from which notice may be inferred’”.  Id.

Maryland “has long applied [the discovery rule] in all manners of malpractice litigation”.  Frederick Road, 360 Md. at 97.  In such cases, the statute of limitations is tolled until the plaintiff has sufficient “knowledge of circumstances which would cause a reasonable person in the position of the plaintiffs to undertake an investigation which, if pursued with reasonable diligence, would have led to knowledge of the alleged cause of action”.  Round v. Maryland National Capital Park & Planning Comm. 441 Md. 621, 654-55 (2015) (internal quotations omitted).

Maryland was the first state to adopt the “discovery rule” in both medical and legal malpractice cases.  Hahn v. Claybrook 130 Md. 179 (1917); Poffenberger v. Risser 290 Md. 631, 634 (1981) (noting that a commentator claimed that Maryland was first to adopt the concept); Mumford v. Staton, Whaley & Price, 254 Md. 697 (1969); 3 Ronald E. Mallen, Legal Malpractice § 23.55 (2016 ed.) at  593.  California was the second state to adopt the “discovery rule”.  Id. at 594.  The adoption of the discovery rule did not alter the requirement that a cause of action would not accrue until the client suffers actual damages.  Id. at § 23:24 at p. 457; Budd v. Nixen 6 Cal.3rd 195, 198 (1971) (“We hold that a cause of action for legal malpractice does not accrue until the client suffers damage and that the determination of that date raises an issue of fact”).

  1.    “CONTINUATION OF EVENTS” THEORY

“Maryland has also recognized the ‘continuation of events’ theory, a corollary accrual doctrine, which serves to toll the statute of limitations where a continuous relationship exists between the parties”.  Frederick Road, Md. 360 at 97.

This tolling doctrine avoids the unnecessary disruption of the attorney-client relationship: “The continuous representation rule is consistent with the purpose of the statute of limitations, which is to prevent stale claims and enable the defendant to preserve evidence.  When the attorney continues to represent the client in the subject matter in which the error has occurred, all such objectives are achieved and preserved.  The attorney-client relationship is maintained and speculative malpractice litigation is avoided.”  3 Ronald E. Mallen, Legal Malpractice § 23.44 (2016 ed.) at 533.

The “continuation of events” theory is based on the equitable principal of detrimental reliance: “When a relationship develops between two parties, built on trust and confidence, the confiding party may rely upon the “good faith of the other party so long as the relationship continues to exist”.   This is especially true in fiduciary relationships such as the attorney-client relationship where a “client has the right to rely on his or her lawyers’ loyalty and to believe the accuracy and candor of the advice they give”.  Supik, 152 Md.App. at 714 (quoting Frederick Road, 360 Md. at 98 & 103).

The rationale for tolling the statute of limitations when there is a continuation of services by an attorney is that the attorney-client relationship is based upon “mutual trust and confidence” and the client “has the right to relax his or her guard and rely on the good faith of the other party so long as the relationship exists”.  Frederick Road, Md. 360 at 98 & 102.  The client’s right to rely upon an attorney’s advice is “founded upon public policy, because the confidential and fiduciary relationship enables an attorney to exercise a very strong influence over his client and often affords him opportunities to obtain undue advantage by availing himself of the client’s necessities, credulity, and liberality”.  Id., at 102 (quoting Hughes v. McDaniel 202 Md. 626, 633 (1953)).

It is “well settled that trust and confidence are basic to the attorney-client relationship”.  Frederick Road, Md. 360 at 101; Bar Association of Baltimore City v. Marshall 269 Md. 510 (1973) (“The relationship existing between an attorney and his client is one that of necessity requires mutual trust and confidence”).  Accordingly, “a client has the right to rely on his or her lawyer’s loyalty and to believe the accuracy and candor of the advice they give”.  Frederick Road, Md. 360 at 103.

As a result of their confidential relationship, the client “is under no duty to make inquiries about the quality or bona fides of the services received, unless and until something occurs to make him or her suspicious”.  Id. at 98; Desser v. Woods 266 Md. 696, 709 (1972) (“Nor is the confiding party under any duty to make inquiry to discover that the confidential relationship has been abused during the continuation of that relationship”).

Nevertheless, the statute of limitations will begin to run during an attorney-client relationship when “the confiding party knows, or reasonably should know, about a past injury”.  Supik, 152 Md.App. at 714-15.   However, it would normally take “extraordinary diligence”, not the required “ordinary diligence”, for client to discover an attorney’s legal malpractice during the representation, because the foundation of the attorney-client relationship is built upon trust and confidence in the attorney’s advice.  Frederick Road, 360 Md. at 105-06.

  1.    THE “FRAUD EXCEPTION”

When “the knowledge of a cause of action is kept from a party by the fraud of an adverse party, the cause of action shall be deemed to accrue at the time when the party discovered, or by the exercise of ordinary diligence should have discovered the fraud”.  Courts & Judicial Article § 5-203; Frederick Road, 360 Md. at 98-99.

When there is an attempt to fraudulently conceal a cause of action, “a person is said to be on inquiry notice when a reasonable person would have used due diligence to investigate the fraud or underlying injury”.  Supik, 152 Md.App. at 715; Frederick Road, 360 Md. at 98-99; Dashiell v. Meeks 396 Md. 149, 169 (2006) (holding whether the statute of limitations is tolled “is ordinarily a question of fact as to whether the plaintiff failed to discover the cause of action because he failed to exercise due diligence or whether he was unable to discover it and, as a result, unable to exercise due diligence, because the defendant concealed the wrong”).

The “fraud exception” begs the question that “if a party is perpetrating fraud in such a manner as to obfuscate the confiding party, would a reasonable person be otherwise attuned to the fraud”?  Supik, 152 Md.App. at 715.  The logical answer is that the discovery of an attorney’s fraud by the client would normally take “extraordinary diligence”, as opposed to the required “ordinary diligence”.  Frederick Road, 360 Md. at 105-06.

Does your attorney have an alcohol, drug abuse, or mental health problem?

A new study found that attorneys in America suffer a high rate of alcohol and substance abuse as well as mental health problems.  See “The Prevalence of Substance Use and Other Mental Health Concerns among American Attorneys” published in the February 2016 issue of Journal of Addiction Medicine.  A sample of 12,825 licensed attorneys completed surveys that assessed their alcohol and drug use as well as symptoms of depression, anxiety, and stress.

In terms of alcohol abuse, 36% of the lawyers in the study were rated as problematic drinkers versus only 15% for physicians.  As for drug abuse (both prescription and illicit), almost a quarter of the lawyers fell into the severe (0.1%), substantial (3%) or intermediate (21%) range of drug abuse.  In the past 12 months, the attorneys reported the following drug usage rates: sedatives (16%), marijuana (10%), opioids (6%); stimulants (5%); and cocaine (1%).

The news get worse.  Although 21% of lawyers reported a drinking or substance abuse problem, only 7% of this group had ever sought help for alcohol or substance abuse.

The study also found that attorneys reported elevated levels of mental health issues.  Twenty-eight percent (28%) of the lawyers reported experiencing mild or higher levels of depression; 19% had mild or higher levels of anxiety; and 23% had mild or higher levels of stress.

Practice pointer for clients: It is absolutely critical that during the selection process of your attorney and during the representation by your attorney that you watch for signs that your attorney has an alcohol, drug abuse, or mental health issue.  Such signs include erratic behavior, not returning phone messages, missing deadlines, appointments, and court appearances, and being evasive regarding the status of your case.

Can a Maryland attorney demand a bonus?

If an attorney exceeds his or her client’s expectations, can the attorney demand a bonus from the client?  The answer is “no”.  The attorney can only seek payment of fees pursuant to the terms of the parties’ retainer agreement.  Rule 1.5(a) of the Maryland Lawyers’ Rules of Professional Conduct provide that an attorney’s fee must be reasonable.  It would be inherently unreasonable and unethical for an attorney to unilaterally impose an additional fee, regardless of how successfully he or she had represented the client.

A client, however, may award an attorney with a small gift.  The comments to Rule 1.8(c) of the Maryland Lawyers’ Rules of Professional Conduct states that a “lawyer may accept a gift from  a client, if the transaction meets the general standard of fairness”, such as a “present given at a holiday or as a token of appreciation”.

Practice pointer for clients:  If you want to give your attorney a gift, ask the attorney for the name of his or her favorite restaurant and then buy a gift certificate in an amount that would feed a family of four.

 

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Article by Stewart A. Sutton featured in the Maryland Bar Journal:
Emotional Distress Damages - Recoverable in Legal Malpractice Actions

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Law Office of Stewart Andrew Sutton, LLC
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