By: Stephen Weiss
Legal malpractice claims keep rising, and today, more so than ever before, attorneys must tread carefully to provide competent legal representation. Recently, firm mergers, changes in hiring practices, attorney departures, business pressures to complete work efficiently and precisely, attorneys taking on work they are ill-equipped to handle, and a struggling legal economy have all contributed to the growth of legal malpractice. One recent example of obvious malpractice is where a law firm did not take the time to read and understand several court orders, which then prevented its client the opportunity to appeal a $40 million patent verdict.[1]
Recently, AT&T lost to Two-Way Media in a patent trial over live streaming technology.[2] The technology at issue was AT&T’s U-Verse Internet television service, which infringed on Two-Way Media’s patents covering live streaming of audio and video content. A jury in the Western District of Texas awarded Two-Way Media $27.5 million and the judge added pre and post-judgment interest, bringing total damages to $40 million. That was only the beginning of AT&T’s tribulations.
Sidley Austin LLP and Davis Cedillo & Mendoza Inc. (“AT&T’s counsel”) represented AT&T in the Two-Way Media litigation and appealed the $40 million verdict. On February 6, 2014, a Texas judge barred AT&T from filing its appeal because AT&T’s counsel missed the appeal deadline.[3] AT&T’s counsel argued that the e-mail docket notices they received in November 2013 failed to clearly indicate that all post-trial motions had been resolved. Therefore, AT&T’s counsel complained that they were not aware that the appeal clock started in November.
Calling AT&T’s counsels’ actions “very troublesome,” the court found it most alarming that for over 52 days not one of AT&T’s 18 attorneys read the court’s November 2013 orders.[4] Had AT&T’s counsel read the November 2013 orders and not merely the docket text and e-mail notices, the attorneys would have realized the case’s finality and November’s triggering of the 30-day period for filing AT&T’s appeal. AT&T’s counsel alleged that in November they received e-mail notices that ruled on various under seal filings, but the notices did not reveal that the judge had denied AT&T’s post-trial motions. The court responded, “[t]he Court finds it is not sufficient for attorneys to rely on the electronic and e-mail notifications . . . The substance of the orders carry validity under the law, not the electronic NEFs.”[5] Making matters worse, the attorneys’ assistants downloaded and stored the orders and not one attorney read the orders until searching the docket in January 2014. The court’s holding was similar to In Re Worldcom, Inc., where the Second Circuit denied the right to appeal, holding that litigants have an “‘obligation to monitor the docket sheet to inform themselves of the entry of orders they wish to appeal.’”[6]
When determining whether a lawyer commits malpractice, state bar associations and/or state courts assess lawyer competence.[7] The legal professional standards are generally set by the Model Rules of Professional Conduct and states may vary in their respective variation of the Model Rules. The Model Rule on lawyer competence states, “[c]ompetent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”[8] A competent attorney will not only evaluate a case’s relevant facts and solve subsequent legal issues, but also adequately prepare to fulfill the lawyer’s scope of representation.[9] Under the Model Rules, AT&T’s counsel seemingly did not competently represent AT&T in the Two-Way Media litigation because the attorneys failed to provide requisite attention to prepare for the complex litigation and its ensuing appeal; such a fundamental and grievous error should have been avoided at the outset.
The Two-Way Media litigation stands out because it is a low point for legal ethical problems in the post-recession era. To comply with the Model Rule on lawyer competence and to adequately represent their client, attorneys must pay attention to the smallest details.[10] In doing so, “a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology . . . .”[11] Most courts (and all district courts) today use e-mail docket notices as a springboard to communicate with lawyers. Ignoring the orders associated with such notices, AT&T’s counsel failed to competently represent their client because the lawyers did not devote the minimum attention and preparation necessary to solve their client’s legal problem.
Across the legal profession, malpractice claims are rising and so too are law firm insurance company’s million dollar payouts. In a 2013 survey, six of the seven insurance companies for the top 250 law firms-collectively insuring 80 percent of the 250 largest U.S. based firms-reported a year over year increase in the number of claims greater than $50 million.[12] Contributing most to the rise in legal malpractice is: (1) the growing number of matters law firms handle; (2) the extraordinary costs associated with complex litigation; and (3) a struggling economy.[13] Generally, as law firm’s revenues decrease and growth becomes stagnant, attorneys take great risk handling cases in which they have no experience. Moreover, the recession left a stagnant job market and law school graduates with no option but to become solo practitioners.[14] With no tutelage or support, these young and solo practitioners are seemingly the most vulnerable to legal malpractice suits.
Experienced big law litigators and new graduates alike, all attorneys must take great care to ensure giving their clients competent legal representation founded on exceptional managerial principles. Changes in hiring practices, attorney departures, and a troubled economy will forever persist in the ever-changing, unpredictable legal business environment. Attorneys, however, must avoid trivial mistakes because attorneys are already perennial favorites to land as adversaries to those who were at one
[1] Ryan Davis, Sidley Austin Attys Missed Deadline To Appeal $40 M Verdict, Law 360 (Feb. 19, 2014, 8:44 AM), https://www.law360.com/technology/articles/509440/sidley-austin-attys-m.
[2] Two-Way Media, LLC v. AT&T Operations, Inc., No. 5:09-cv-476 (W.D. Tex. Mar. 20, 2013); see Davis, supra note 1.
[3] Order Denying Defendants’ Motion Pursuant to FRAP4(a) And Defendants’ Motion To Extend Prior Stay, Two-Way Media, LLC v. AT&T Operations, Inc., et al., No. 5:09-cv-476-OLG (W.D. Tex. Feb. 6, 2014), ECF No. 633.
[4] Id.
[5] Id.
[6] In Re Worldcom, 708 F.3d 327, 341 (2d Cir. 2013).
[7] Model Rules of Prof’l Conduct R. 1.1 (2014).
[8] Id.
[9] Model Rules of Prof’l Conduct R. 1.1 cmt. at 5.
[10] Id.
[11] Model Rules of Prof’l Conduct R. 1.1 cmt. at 8.
[12] Andrew Strickler, Malpractice Claims Rise With Partners On The Move, Law 360 (Feb. 19, 2014, 10:09 AM), https://www.law360.com/articles/451576/malpractice-claims-rise-with-pa; Law Fims See Rise in Malpractice Claim Frequency, Severity, Insurance Journal (Feb 19, 2014, 11:00 AM), https://www.insurancejournal.com/news/national/2013/06/27/296979.htm.
[13] See Strickler, supra note 12.
[14] Joshua Sebold, Post-recession, legal malpractice claims on the rise, McKenna Long & Aldridge LLP, .
