Thursday, July 31, 2014

Beating Malpractice Claim As Easy As ABC

The Washington State Supreme Court sitting en banc has held in a legal malpractice matter arising from a joint venture agreement to operate a debt collection business

 In this opinion, we consider whether the trial court erred in applying the doctrine of equitable indemnification (also known as the "ABC Rule") to hold that the legal malpractice plaintiffs here suffered no compensable damages as a matter of law and that summary judgment dismissal was appropriate.

We adhere to established precedent. Where the only damages claimed by a legal malpractice plaintiff are attorney fees incurred in a separate litigation and the only legal basis on which plaintiff asserts those fees are compensable is the ABC Rule, then the defendant is entitled to summary judgment dismissal if the ABC Rule does not apply to the undisputed facts as a matter of law. That was the situation presented here. We decline the invitation to reexamine the ABC Rule in the legal malpractice context because that issue wasnot raised below. We affirm.

In a related ruling, the court held that the attorney who had created an entity that provided legal services and financial contributions to the client violated the former version of Rule 1.8(a)(business transactions with client).

As a result, the agreement was void for public policy reasons.

The court majority opined at length about the application of the Rules of Professional Conduct to civil litigation, concluding

We do not purport to set out any all-encompassing rule for how violation of any RPC in connection with a contract might affect that contract's enforceability. We simply reaffirm that a contract entered in violation of former RPC 1.8(a) may not be enforced unless it can be shown that notwithstanding the violation, the resulting contract does not violate the underlying public policy of the rule.

Chief Justice Madsen dissented and would not use the rules as a basis for civil liability.

Justice McCloud concurred but disassociated himself with the majority's expansive discussion of the intersection between the rules and civil claims predicated on an ethics violation.

(Mike Frisch)

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