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Confidentiality trumps a claim of negligence

By Diane Karpman

Diane Karpman
Karpman

Legal malpractice (like other torts) requires duty, breach, causation and damages. Duty is created by the attorney-client relationship, and breach will often involve a violation of the ethical rules. Remember that not all rule violations cause damages, and some rule violations do not always merit consideration by the State Bar (such as conflicts, Rule 3-310), unless they are coupled with other serious misconduct.

The typical arsenal of tort defenses exists to defeat claims of negligence. Sometimes claims of privilege/ confidentiality can be artistically asserted to defeat claims of negligence against lawyers, or to significantly narrow the evidence plaintiffs can present to establish their claims.

In Solin v. O’Melveny & Myers (2001) 89 Cal. App. 4th 451, a firm claimed it could not defend itself without the disclosure of the client’s privileged and confidential information. The court agreed and held that the action was such that it was incapable of full resolution without breaching the attorney-client privilege. Thus the entire case was properly dismissed. Therefore, “confidentiality” was strategically deployed as a type of defense.

In a recent case involving mediation confidentiality, a “settle and sue” client learned mediation is the lawless wild west. The gist of the malpractice claim involved a mediation brief and e-mails regarding the mediation of the underlying case. The client claimed that his former attorney unilaterally decreased the settlement demand without his knowledge or consent, “forcing” him to settle for a lot less.

The plaintiff in Wimsatt v. Superior Court (2007) 152 Cal. App. 4th 137, alleged his former lawyers breached their fiduciary duties by unilaterally discounting the settlement demand in mediation of the underlying case. In the allocation of power between the lawyer and the client, it would be fairly radical to allow a lawyer to usurp this fundamental client right, which is almost universally recognized as vesting with the client. The statutory confidentiality of mediation is powerful in California. Courts are prohibited from carving out exceptions, even if a client becomes the possible victim of lawyer misconduct. In a well-reasoned decision, the court was not at all happy about this result, but was hampered by prior decisions.

“The stringent result we reach here means that when clients . . . participate in mediation they are, in effect, relinquishing all claims for new and independent torts arising from mediation, including legal malpractice causes of action against their own counsel. Certainly clients, who have a fiduciary relationship with their lawyers, do not understand that this result is a byproduct of an agreement to mediate. We believe that the purpose of mediation is not enhanced by such a result because wrongs will go unpunished and the administration of justice is not served.” (At p. 163)

Authorities maintain that when a lawyer’s fiduciary duties are impaired, the client should be put on notice. Clients don’t understand that mediation means that they have no redress against attorney negligence. In Wimsatt, the defendants employed mediation confidentiality to severely limit the evidence of negligence that could be used to establish legal malpractice. As one blogger put it: “What happens in mediation, stays in mediation.”

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