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.
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.
The 2014 to 2015 Maryland Attorney Grievance Commission’s Annual Report has just been published. Attorney Grievance Commission During the 2015 fiscal year, 44 Maryland attorneys were disbarred, 33 were suspended, 8 were reprimanded by the Court of Appeals, and 24 were reprimanded by the AGC. Montgomery County led Maryland with 69 docket cases.
The report contains summaries of all the attorneys who were disciplined. Dennis Alan Van Dusen set the record for the shortest amount of time between being licensed as a Maryland attorney and being disbarred. He was admitted to the Bar on November 1, 2012. Six weeks later, he was criminally charged with 15 counts of surreptitious viewing and video recording of his female tenants; and he pled guilty on April 16, 2013 to 3 counts of visual surveillance of individuals in a private place without consent. He was disbarred on May 8, 2015.
Mark T. Mixter was disbarred for his flagrant abuse of the discovery process, including issuing and trying to enforce invalid subpoenas, intimidating witnesses, and generally obstructing the administration of justice. At the disbarment trial, Bar Counsel introduced evidence of Mr. Mixture’s misconduct from 22 different cases.
Bar Counsel interviewed many of Mr. Mixter’s opposing counsel. When Bar Counsel asked why they didn’t report Mr. Mixter’s deliberate pattern of misconduct to the Attorney Grievance Commission, the answer was always the same: “Once the case was over, I didn’t want to hear Mixter’s name ever again”.
Practice Pointer for Attorneys: Rule 8.3(a) of the Maryland Lawyers’ Rules of Professional Conduct requires an attorney to report a violation “that raises substantial question as to that lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects”.
We expect that attorneys should be able to write well. After all, litigation involves filing countless motions and oppositions. I having read thousands of documents drafted by opposing counsels, I estimate that about 5% are excellent writers, 90% are good writers, and 5% are horrible writers.
If you want to retain an attorney who is an excellent writer, I recommend that you ask the attorney for a recent writing sample and ask the attorney the names of the last 3 books he or she has read. Great writers are also prolific readers. Steven King, who has sold in excess of 300 million books, states this about writing: ““If you don’t have time to read, you don’t have the time (or the tools) to write. Simple as that.”
I read about 40 books a year. My favorite authors include Dave Barry, Bill Bryson, Christopher Buckley, Michael Connelly, Robert Galbraith (J.K. Rowling), John Grisham, Chelsea Handler, William Least Heat-Moon, Steven King, Stieg Larrson, Michael Lewis, George R.R. Martin, Chris Moore, David Sedaris, Robert Reich, Neal Stephenson, Sarah Vowell, and Jeannette Walls.
In its July 24, 2015 opinion in Attorney Grievance Commission v. Kenneth Haley, the Maryland Court of Appears disbarred an attorney for depositing legal fees into his business account, instead of his Attorney Trust Account, without client’s informed, written consent.
In its strongly worded opinion, the Court of Appeals cogently explained: “A lawyer engages in misappropriation by intentionally depositing unearned fees into an operating account instead of an attorney trust account, or retaining unearned fees after the representation’s termination, without the client’s consent. See Garrett, 427 Md. at 227, 46 A.3d at 1179 (“Misappropriation is any unauthorized use by an attorney of a client’s funds entrusted to him or her, whether or not temporary or for personal gain or benefit.” “[M]isappropriation of funds . . . is an act infected with deceit and dishonesty[,] and ordinarily will result in disbarment in the absence of compelling extenuating circumstances justifying a lesser sanction.” Attorney Grievance Comm’n v. Wills, 441 Md. 45, 59, 105 A.3d 479, 487 (2014). In Attorney Grievance Comm’n v. Roberts, 394 Md. 137, 166 (2006) we stated: ‘The sanction of disbarment is so justified because attorneys are charged with remembering that the entrustment to them of the money and property of others involves a responsibility of the highest order. They must carefully administer and account for those funds. Appropriating any part of those funds to their own use and benefit without clear authority to do so cannot be tolerated'”.
Rule 1.15(c) of the Maryland Lawyers’ Rules of Profession Conduct requires that all fees paid by a client be deposited into the Attorney Trust Account, unless the client has given his or her informed, written consent to a different arrangement. Informed, written consent requires the attorney to advise the client of both the advantages of depositing the fees into the Attorney Trust Account as well as the disadvantages of depositing the fees into the attorney’s business account.
Practice pointer for clients: It is a common trick among Maryland attorneys to claim that a portion of your initial fee is “earned when paid” or constitutes a non-refundable retainer. You should strike such language from any proposed retainer agreement.
A lawyer may only withdraw funds from the Attorney Trust Account as legal fees are earned or expenses incurred. Accordingly, the invoices from your lawyer should reflect that your initial retainer was deposited into the law firm’s Attorney Trust Account.
The following article was written by my former client as part of a college class on research and survey design:
Several years ago, I had the misfortune of being involved in a protracted legal dispute. The entire experience was made infinitely worse by the first two attorneys that I retained. The first attorney, a highly regarded and extremely expensive Rockville attorney, was too busy to perform the necessary work on my case. I then interviewed 3 replacement attorneys. I made the rookie mistake of retaining a Bethesda attorney, who excelled at marketing herself and self-promotion, but lacked the sufficient legal skills and expertise to properly represent me.
After an exhaustive search, I then retained Stewart A. Sutton. What a difference the right attorney makes. He reviewed and personally organized my legal file and documents; he conferred with me to make sure that he understood the facts of my case; he researched and explained the applicable law to me; and he developed a new legal theory to resolve my case. As a result of Stewart A. Sutton’s efforts, I was able to settle my complex legal dispute quicker, more favorably, and less expensively than I had ever expected.
The lesson that I learned is that the right attorney will be able to resolve your legal problem in a favorable and expeditious manner. The wrong attorney will prolong your legal problems or make them worse. This makes the selection of your attorney a critical step in the process of solving your legal issues.
So that others do not repeat my mistakes, I wanted to determine how a person should go about retaining an attorney. In conjunction with a college course I was taking on surveys and research, I designed and undertook a study to answer my question.
My methodology was simple. I obtained the names and addresses of a wide cross-selection of former clients from recently closed civil court files from Montgomery County Circuit Court. I then interviewed the clients regarding whether or not they were satisfied with their former attorneys. I obtained basic characteristics of the attorneys from their former clients, the attorneys’ website, and other public databases. I then compared the characteristics of the attorneys from satisfied clients with the characteristics of the attorneys from dissatisfied clients.
The results were astonishing. I found that the attorneys for the satisfied clients shared many common characteristics. I have distilled my findings into 6 areas of inquiry and 15 essentials questions that a client needs to ask to retain the right attorney.
I. Survey Questions
Step 1: GRADUATE OF A TOP RATED LAW SCHOOL
The first step is to select an attorney who attended a top rated law school. There are 200 law schools in the United States. Select an attorney who attended one the top 20 law schools as ranked by U.S. News and World Report.
Top rated law schools have a highly selective admission process; and graduation from one of these schools assures that the attorney has received a first rate legal education. While the University of Maryland produces many fine lawyers (Ranked No. 48), you are more likely to be satisfied with graduate from these local law schools: University of Pennsylvania (No. 7); University of Virginia (No. 10); Duke (No. 11); Georgetown University (No. 14); and George Washington (No. 20).
The other schools in the top ten are: Yale; Harvard; Stanford, Columbia, University of Chicago; New York University; Berkeley; and University of Michigan. The remaining schools in the top 20 are: Northwestern; Cornell; UCLA; University of Texas; Vanderbilt; University of Southern California; and Washington University in St. Louis.
Questions for clients to ask:
1. Which law school did you attend? (top 20 law school)
2. When did you graduate? (12 or more years ago)
Step 2: LARGE FIRM EXPERIENCE
The best students from top rated law schools are recruited by prestigious law firms located in major cities. These large firms are structured to train young lawyers to gain the necessary skills to practice law.
Questions for clients to ask:
3. Where did you work after you graduated law school? (a prestigious or well known law firm)
4. How many attorneys worked at the law firm? (50 or more)
5. Where was the law firm located? (a city with a population over 500,000)
6. How long were you employed at this law firm? (5 or more years years)
Step 3: BEGAN OWN LAW FIRM
After working at least 5 years at a large law firm, a lawyer has acquired sufficient skills to represent clients without supervision. A small fraction of such lawyers will eschew the high pay and prestige of working at a downtown law firm and start their own legal practice in suburban areas.
An attorney who starts his or her own firm is both confident and ambitious. You are looking for an attorney is a founding member of the firm and has been self-employed for at least 3-years.
Questions for clients to ask:
7. Are you a founding member of this firm? (yes)
8. When did you start your firm (3 or more years ago)
Step 4: SMALL FIRM
Small law firms (1 to 3 lawyers) have a distinct advantage over large firms. Small law firms have less overhead, less staff to supervise, and are less likely to become overextended with too many clients. A high attorney-to-staff ratio ensures that the attorneys are performing the work, not paralegals or secretaries.
Questions for clients to ask:
9. How many attorneys work at your firm? (1 to 3)
10. How many staff do you directly supervise? (0 or 1)
Step 5: NON-MATERIALISTIC
Many lawyers deliberately attempt to create the impression that they are successful by displaying their extravagant lifestyle. They drive high-end luxury vehicles, wear designer clothes and expensive jewelry, and live in high priced homes. The problem arises when lawyers live beyond their means. Such lawyers have a dysfunctional incentive to take on more cases than he or she can possibly handle. The hallmark of an overextended lawyer is providing low quality legal service to a high number of clients and charging excessive fees.
A non-materialistic lawyer is not concerned with creating the impression that he or she is successful by displaying ostentatious badges of wealth. The hallmark of a non-materialistic lawyer is providing high quality legal services to a small number of clients. Such lawyers can afford to turn away business, because they are not burdened with an extravagant lifestyle overhead.
Questions for a client to ask:
11. What type of vehicle does the lawyer drive? (under $30,000)
12. What type of watch does he or she wear? (under $250)
Questions concerning the attorney’s personal property can easily be worked into your initial interview with your prospective lawyer. You might say that you admire the attorney’s watch and inquire as to the manufacturer. You may inform the attorney that you are thinking about buying a new car, solicit his or her advice, and then ask him or her what type of vehicle he or she drives.
Step 6: Acknowledged legal expertise
A non-materialistic attorney wants to impress clients, colleagues, and judges with his or her legal knowledge and skills. Such lawyers write legal books or articles for law journals, teach other lawyers at seminars, and serve as expert witnesses in court cases.
Questions for a client to ask:
13. Have you written a book or an article for law journal? (yes)
14. Have you taught other lawyers at a seminar or conference? (yes)
15. Have you testified in court as a legal expert? (yes)
II. INTERPRETING THE SURVEY RESULTS
The clients who were most satisfied with their attorneys had affirmative responses to 12 or more of the questions. The clients who experienced the least amount of satisfaction had affirmative responses to 6 or fewer questions. Clients who had between 7 and 11 affirmative responses generally had a neutral experience with their attorney.
My findings are only preliminary in nature. A comprehensive study will have to be conducted to validate my results. My recommendations may only be applicable to clients who are seeking to retain an attorney in Montgomery County, Maryland.
Based upon anecdotal evidence of friends who have used my recommended methods for retaining an attorney, my advice increases the probability that the client will be satisfied with his or her attorney.
I was recently offered the opportunity to buy a beautiful plaque for $179 from American Registry, LLC, stating that I had been “Awarded an Excellent Avvo Rating”. I declined the offer.
The second most deceptive marketing technique used by attorneys is the use of the designation of best, top, or super lawyer in a jurisdiction as determined by a local magazine, an advertising insert, or some other third party. These rating guides attempt to identify the super, best, or top lawyers in Montgomery County and/or Maryland in various practice areas, including family law, business law, civil litigation, personal injury, criminal, trials, and appeals. There is no scientific validity to the selection and rating process used to identify these so-called super, best, or top lawyers in Montgomery County and/or Maryland. In fact, these rating guides usually contain a disclaimer stating the same.
For example, the disclaimer in the 2014 edition of Super Lawyers magazine for Maryland candidly states: “THE HIRING OF AN ATTORNEY IS AN IMPORTANT DECISION THAT SHOULD NOT BE SOLELY BASED UPON ADVERTISING OR THE LISTINGS IN THIS MAGAZINE. NO REPRESENTATION IS MADE THAT THE QUALITY OF THE LEGAL SERVICES PERFORMED BY THE ATTORNEYS LISTED IN THIS MAGAZINE WILL BE GREATER THAN THAT OF OTHER LICENSED ATTORNEYS”.
Unlike the ranking of colleges or the quality of life in different cities, there is no objective criteria to rate lawyers. At most, the designation of top, excellent, best, or super lawyer signifies that the attorney has obtained some degree of popularity in Montgomery County and/or Maryland. But you wouldn’t want to choose a football league’s MVP based upon the player’s popularity. Instead, you would want to award this honor to the player who had the best season based upon measurable metrics, such as touchdowns thrown, points scored, passes caught, or yards gained.
In fact, the use of the designation of “best attorney” or “top rated lawyer” in advertising actually violates Rule 7.1(c) of the Maryland Lawyers’ Rules of Profession Conduct. This rule prohibits an attorney from comparing “the lawyer’s services with other lawyers’ services, unless the comparison can be factually substantiated”. According to Maryland Bar Counsel, a Maryland attorney should never use superlatives, such as “top”, “super”, “premier”, “best”, “most aggressive”, or “most successful”, because “it is almost impossible for the lawyer to factually substantiate” such claims. My advice to clients is to disregard all advertising that claims that the attorney is “super”, “best”, “top”, “greatest”, or “most” when searching for an attorney in Montgomery County and/or Maryland.
Mets’ manager, Casey Stengel, famously stated: “Can’t anybody here play this game?” The same can be said of Maryland attorney’s ability to draft a concise retainer agreement. An attorney has a duty to draft a retainer agreement that is clear and comprehensible to a client. Mallen & Smith, 1 “Legal Malpractice” (2009 ed.) § 2:10, p. 125 (“Elements—Clarity: Engagement agreements should be written to be understandable by the client”).
When a retainer agreement is ambiguous, it must be construed against the drafter. Ford Motor Credit Co. v. Jackson 328 Md. 188, 334 (1992) (“it is a canon of contract construction that ambiguities in the contract are to be construed against the drafter because that party had the better opportunity to understand and explain its meaning”); Suburban Hospital, Inc. v. Dwiggins 324 Md. 294, 306 (1991) (“If there is an ambiguity in a document, the drafter—in this case, Suburban—will have the ambiguity construed against it”).
Here are two example of ambiguous retainer agreements drafted by Maryland attorneys.
A. CONTINGENCY FEE
This Retainer Agreement provided that the law firm was entitled to receive either a one-third or 40% contingency fee: “Attorney is hereby retained on a contingent basis and is to receive an amount equal to thirty-three and 1/3 percent (33 1/3%) of any amount which is recovered for Client by settlement. Attorney is hereby retained on a contingent basis and is to receive an amount equal to forty percent (40%) of any amount which is recovered for Client by suit or arbitration”. The personal injury case was settled prior to trial. Was the attorney entitled to a one-third or 40% contingency fee?
The word “recover” has two meanings. Its broad meaning is “to get back or regain (something lost or taken away)”. Random House College Dictionary (1980 rev. ed.), p. 1104. But “recover” also has a narrow meaning in the context of jurisprudence: “to obtain by judgment in a court of law”. Id.
Black’s Law Dictionary (5th ed.) also recognizes that the word “recover” has both a broad and narrow meaning: “To get or obtain again, to collect, to get renewed possession of, to win back. To regain, as lost property, territory, appetite, health, courage. In a narrow sense, to be successful in a suit, to collect or obtain amount, to have judgment, to obtain a favorable or final judgment, to obtain in any legal manner in contrast to voluntary payment”.
This Retainer Agreement is ambiguous as to whether the one-third or 40% contingency fee applies.
B. ATTORNEY’S FEE PROVISION
This Retainer Agreement contained a fee-shifting provision when the attorney sues the former client for unpaid invoices: “In the event that we find it necessary to initiate appropriate legal actions against you to collect unpaid debts owed to the Firm, you will be responsible for the reasonable attorney’s fees and expenses associated in the collection of any debt based upon our usual hourly rates”.
In an unreported opinion, the Maryland Court of Special Appeals found that this provision was ambiguous, because it had two different meanings: (1) the law firm had the right to be reimbursed for the work its employees performed in collecting a debt against the client for the legal services performed in the underlying case; or (2) that the law firm is only permitted to seek reimbursement for fees incurred in retaining an outside counsel in collecting the debt against the former client for legal services performed in the underlying case.
Generally, law firms do not include a fee shifting provision in their retainer agreements. First and foremost, a pro se law firm does not incur any attorney’s fees in collecting its debt against a former client. “A lawyer who represents himself or herself has not incurred legal fees”. Frison v. Mathis 188 Md.App. 97, 109 (2009). Secondly, a fee-shifting provision would create a dysfunctional incentive for a pro se law firm to protract and over-litigate its claims against its former client.
This is a case study as to how a Rockville law firm overcharged its client by almost $10,000. The underlying case involved a relatively simple divorce action between parties, who had been married for only 3-years. The wife was represented by a Rockville law firm. I represented the husband.
The Rockville law firm charged $12,101 to its client from August 9, 2012 through February 25, 2013. I charged $2,860 to my client during the same time period. Many factors contributed to the $9,241 difference in attorney’s fees.
First, the Rockville law firm charged $310 per hour, whereas my rate is $200 per hour. Even if the Rockville law firm had billed at my rate of $200 per hour, its imputed fees of $7,820 still would have been grossly excessive.
Secondly, Rockville law firm was incredibly and, perhaps intentionally, inefficient. It billed an excessive amount of time for simple tasks. For example: The Rockville law firm billed 1.9 hours to prepare discovery requests. I billed my client 0.3 hours to prepare discovery requests. The Rockville law firm billed 10.5 hours to respond to my client’s discovery requests. I billed my client 4.1 hours to respond to the opposing party’s discovery requests.
Thirdly, the Rockville firm had 3 different attorneys perform legal services for the wife. When multiple attorneys work on the same case, there will be duplication of legal services. For example: On January 4, 2013, the parties attended a Scheduling Conference and a mediation session in Circuit Court. The Rockville law firm billed 3.9 hours for 2 different attorneys to represent the wife at these separate events. I billed my client 2.4 hours for the same events.
Fourthly, the Rockville law firm overworked or churned the file by performing unnecessary legal services. For example: The Rockville law firm charged almost $4,000 for its initial meetings with its client, drafting the Complaint for Divorce, preparing a Financial Statement, and having follow-up communications with its client. In contrast, I charged $500 for my initial meeting with my client, drafting the Answer and Counter-Complaint for Divorce, and preparing my client’s Financial Statement.
Overall, the Rockville law firm’s excessive bill can be attributed as follows:
15% Excessive hourly rate;
45% Inefficient rendering of legal services;
10% Duplication of services caused by multiple attorneys; and
30% Performing unnecessary legal services
Practice Pointer for Clients: Your selection of counsel will profoundly influence the amount of attorney’s fees that you will incur. I recommend that you choose an attorney who is both experienced and efficient and who charges $250 or less per hour.