Sunday, March 1, 2020

Malpractice Suit Waives Attorney-Client Privilege For Third Party Counsel In Same Transaction

The Georgia Supreme Court holds that a malpractice suit implies waiver of the attorney-client privilege with respect to third-party attorneys involved in the representation

Under longstanding Georgia law, when a client sues his former attorney for legal malpractice, the client impliedly waives the attorney-client privilege with respect to the underlying matter or matters to the extent necessary for the attorney to defend against the legal malpractice claim. The issue presented in this appeal is whether the implied waiver extends to the client’s communications with other attorneys who represented the client with respect to the same underlying matter, but whom the client chose not to sue. The trial court held that the waiver does extend to such other counsel and therefore denied a motion for a protective order in this legal malpractice case. The Court of Appeals reversed, see Moody v. Hill, Kertscher & Wharton, LLP, 346 Ga. App. 129 (813 SE2d 790) (2018), and we granted certiorari to decide this issue of first impression. We hold that when a client sues his former attorney for legal malpractice, the implied waiver of the attorney-client privilege extends to the client’s communications with other attorneys who represented the client with respect to the same underlying transaction or litigation. For the reasons described below, we reverse in part and vacate in part the Court of Appeals’ judgment, and we remand the case with direction.

The client (Moody and two of his business entities) had invested in a California aerospace company. The law firm provided advice that included termination of the company president

Despite Moody’s specific requests, HKW failed to assert certain defenses properly, including that the California court lacked personal jurisdiction over Moody. HKW did not disclose or obtain written waivers of any potential or actual conflicts of interest resulting from prior or ongoing representation of Leucadia Group and Miller. Miller filed a motion in the Fulton County lawsuit to disqualify HKW, which was granted, and HKW then withdrew from the California lawsuit. The California court ultimately ruled that Moody’s appointment to Leucadia Group’s board of directors, Leucadia Group’s issuance of shares to LIH, and Miller’s termination as president of Leucadia Group were all void.

In the resulting legal malpractice suit, the law firm sought discovery

HKW requested, among other things: (1) Holland & Knight’s file for any corporate work performed for Plaintiffs regarding Leucadia Group, Miller, another named individual, and another named company; (2) Holland & Knight’s litigation file for the Fulton County lawsuit; (3) Holland & Knight’s litigation file for the California lawsuit; and (4) all correspondence related to that corporate work and the Fulton County and California lawsuits, including communications between Plaintiffs and Holland & Knight.

Both Plaintiff and Holland & Knight asserted privilege and sought a protective order

the trial court denied Plaintiffs’ motion for a protective order. The trial court found that it was undisputed that Holland & Knight together with HKW represented Moody in connection with the matters that are the subject of the legal malpractice complaint and held that Plaintiffs therefore had “waived the attorney-client privilege and work product protection concerning Holland & Knight . . . by asserting the present legal malpractice claims.”

The court here reviewed state law on attorney-client privilege and implied waiver

A similar rationale requires recognition that the implied waiver of the attorney-client privilege extends to other attorneys who represented the plaintiff-client in the same underlying matter. To succeed on a claim of legal malpractice, the plaintiff-client must prove three elements: “(1) employment of the defendant attorney, (2) failure of the attorney to exercise ordinary care, skill and diligence, and (3) that such negligence was the proximate cause of damage to the plaintiff.” Allen v. Lefkoff, Duncan, Grimes & Dermer, P.C., 265 Ga. 374, 375 (453 SE2d 719) (1995) (citation and punctuation omitted). Thus, by suing HKW for legal malpractice, Plaintiffs have put at issue questions of proximate causation, reliance, and damages, all of which may have been affected by other attorneys who represented Plaintiffs in the same matters underlying Plaintiffs’ malpractice complaint.

The Court of Appeals should have affirmed the trial court’s ruling that Plaintiffs  were not entitled to a protective order based on attorney-client privilege.

The Court of Appeals opinion is linked here. 

The court's remand recognized that the work-product doctrine must be considered. (Mike Frisch)

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