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Battle Continues between Attorneys and Client over Attorneys’ Failure to Review Documents – eDiscovery Case Law

In Price Waicukauski & Riley v. Murray, 1:10-cv-1065-WTL-TAB (S.D. Ind. Sept. 18, 2014), Indiana District Judge William T. Lawrence granted the plaintiff’s request for summary judgment for failure to pay attorney’s fees of over $125,000, and refused to issue summary judgment for either party related to a legal malpractice claim for the plaintiff’s admitted failure to review documents produced in the defendants’ case against another party because of a factual dispute regarding the plaintiff’s knowledge of the documents produced.

Case Background

This case was filed in August 2010 by the Plaintiff, Price Waicukauski & Riley, LLC, (“PWR”) against the Defendants, Dennis and Margaret Murray and DPM, Ltd. (“Murrays”), to recover $127,592.91 in attorneys’ fees owed to the plaintiff. The attorneys’ fees stem from the plaintiff’s representation of the defendants in a rather contentious lawsuit against Conseco that spanned more than six years, ultimately settling.  In November 2010, unhappy with the plaintiff’s representation, the defendants filed a counterclaim against the plaintiff alleging legal malpractice.

Legal Malpractice Claim of Breach of Duty of Loyalty

The defendants alleged several allegations of legal malpractice against the plaintiff, including conflict of interest, failure to properly plead federal subject matter jurisdiction and failure to take depositions and conduct discovery as they requested, among other allegations.  One allegation related to the defendants’ claim that the plaintiff breached the duty of loyalty to the defendants by failing (despite the defendant’s request to do so) to review documents before production in the case that revealed a Trust set up on behalf of the plaintiffs that wasn’t disclosed in interrogatory responses.  The plaintiff informed Mr. Murray that it reviewed the documents; however, it ultimately admitted that it did not.  As a result of the misleading interrogatory responses, Conseco filed a motion for sanctions which was granted, resulting in the defendants being ordered to pay over $85,000 in attorneys’ fees to their opponent’s lawyers.

The defendants claimed that the plaintiff knew about the Trust from the outset of its representation; however, the plaintiff (“falsely and underhandedly”, according to the defendants) represented to the magistrate judge assigned to the Underlying Litigation that it had no knowledge of the Trust until the defendants’ accountant produced the Murrays’ tax returns.

Judge’s Analysis and Ruling

The plaintiffs referenced Niswander v. Price Waicukauski & Riley, LLC, where the court held that “[w]hether . . . the Plaintiffs’ attorneys had a duty to review the documents personally before producing them in discovery . . . is simply not something within the knowledge of a layperson.”  However, Judge Lawrence noted, “[t]he Murrays have no expert testimony on either of these two related claims; however, they claim they fall into the above-mentioned exception for when no expert testimony is needed: ‘when the question is within the common knowledge of the community as a whole or when an attorney’s negligence is so grossly apparent that a layperson would have no difficulty in appraising it.’”  Judge Lawrence also agreed with the defendants differentiation of Niswander to this case in that they specifically directed the plaintiff to review the documents while the plaintiffs in Niswander did not.

Judge Lawrence also stated that “[t]he same rings true with the Murrays’ allegation that PWR falsely denied knowledge of the Trust… Again, the Court believes that it is well within the knowledge of a layperson that attorneys should not lie and falsely implicate their own clients in order to shield themselves from liability. Thus, the Court agrees that no expert testimony is needed on this claim regarding the standard of care.”

However, Judge Lawrence decided that “neither party is entitled to summary judgment on this issue” because “there is a factual dispute that precludes granting summary judgment on this claim. PWR maintains that it did not lie; it steadfastly maintains that it had no knowledge of the Trust at the outset of the litigation. Thus, when asked by the magistrate judge when it found out about the Trust, it informed her truthfully. Therefore, whether or not PWR breached a duty that caused injury to the Murrays depends on whom the jury believes: Mr. Murray or PWR.”

Ultimately, Judge Lawrence granted the summary judgment on behalf of the plaintiffs for the attorney’s fees of $127,592.91 (which the defendant did not dispute, but argued that “[t]he successful pursuit of [their] claims would effectively eliminate PWR’s claim”) and denied the defendant’s summary judgment request, but refused a final judgment as outstanding claims remained against the plaintiff.  Judge Lawrence concluded his ruling by noting that “The only claims that remain to be tried are the proximate cause issue with regard to the federal subject matter jurisdiction claim and the allegation of malpractice committed by PWR as a result of its alleged failure to review certain documents that led to sanctions being imposed on Mr. Murray.”

So, what do you think?  Does the failure by the plaintiff to review the defendant’s production constitute legal malpractice?  Please share any comments you might have or if you’d like to know more about a particular topic.

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