TBA Law Blog

Posted by: Letters of the Law on Oct 1, 2016

Journal Issue Date: Oct 2016

Journal Name: October 2016 - Vol. 52, No. 10

Legal Malpractice Statute of Limitations Subject of Debate

Russell Fowler’s feature article in the May issue was enjoyable from a historical perspective (“For Whom Montgomery Bell Tolls … Not for Tennessee Lawyers: Judicial Finality and Legal Malpractice”). The article, however, takes an interesting turn into the supposed flaws with the statute of limitations as applied to claims of legal malpractice, such that he leaves the article open to rebuttal. Currently, the Discovery Rule is applied evenly across all claims of professional negligence.

I know of no other area of the law requiring the mandatory wait-and-see approach contained in the Finality Rule. A rule requiring the parties to wait until it is determined whether the alleged malpractice could be cured prior to filing suit would place lawyers in such a position and time period of uncertainty that would necessarily undermine the practice of law and compromise the attorney-client relationship. Yet the article argues the opposite: that the finality rule would bolster the attorney-client relationship. I, however, cannot imagine the attorney-client relationship improving in the situation where a lawyer commits malpractice and is then forced in the awkward position of forging ahead despite the now prejudiced case. Such a scenario could cause the lawyer to take a less than meritless appeal or an appeal which serves no real purpose except advancing the lawyer’s self-interest in curing the malpractice. Such action would take focus off the client and shift it onto the lawyer attempting to cure his or her own mistakes. Imagine the situation where a lawyer advises the client that he or she may have committed malpractice, and also advises the client they cannot file their claim for legal malpractice until the underlying case has been fully adjudicated. This effectively leaves the client with two options: either terminate the lawyer and attempt to find new counsel, or continue with a lawyer who has admitted to a mistake. These scenarios either prejudice the client or foster distrust. The Court of Appeals has already held a client who terminates a lawyer for a perceived mishandling of their case triggers the statute of limitations for legal malpractice. Riddle v. Carlton, No. W2011-02145-COA-R3-CV, 2012 Tenn. App. LEXIS 362, at *9-11 (Tenn. Ct. App. May 31, 2012).

The scenario where a plaintiff is forced to maintain “inconsistent positions” in the underlying case and the malpractice case represents such a small minority of cases that it cannot justify exposing all lawyers to the uncertain statute of limitations set out by the Finality Rule, especially when our Supreme Court has condoned a stay in the malpractice case when this rare situation does arise.

It is unclear whether the author would have the Finality Rule apply solely to claims arising from litigation or whether he would have it extend to all claims of professional negligence like healthcare liability and accounting malpractice. Additionally, when would the statute of limitations begin to run for claims arising from transactional matters?

There is also the issue of how the Finality Rule would be reconciled with the five-year statute of repose applicable to all “acts and omissions” occurring after July 1, 2014. Tenn. Code Ann. § 38-3-104(c)(2). Although rare, cases are sometimes litigated longer than five years, especially considering the timeframe for appeals. Suppose the act of malpractice occurred in year one, but five years later the issue giving rise to the malpractice had yet to be resolved by a court of last resort. The statute is clear the five-year repose begins to run “after the date on which the act or omission occurred.” The claim would be extinguished despite the fact the plaintiff sustained an injury all because the Finality Rule operated to bar the filing of the suit at the time the injury was actually sustained.

The author posits the statute of limitations for legal malpractice and malicious prosecution are “inconsistent.” However, an essential element of malicious prosecution is a full and favorable adjudication of the underlying case. Comparing the two types of actions in the context of the Discovery Rule is indeed “inconsistent” because establishing a prima facie case for malicious prosecution has little to do with the statute of limitations in legal malpractice cases.

Finally, the article does not mention John Kohl & Co. P.C. v. Dearborn & Ewing, 977 S.W.2d 528 (Tenn. 1998), the preeminent Supreme Court case discussing the Discovery Rule. While the article states statutes of limitations “should be construed in favor of preserving claims,” our Supreme Court correctly recognized “the rationale for the existence of statutes of limitations, which is to avoid the uncertainties and burdens inherent in pursuing and defending stale claims.” John Kohl & Co. P.C., 977 S.W.2d at 533.

— Richard Glassman, Memphis

Author’s response: My article and Richard Glassman’s letter echo the disagreement among courts as to when the statute of limitations should begin to run on possible legal malpractice in ongoing litigation. I believe my article answers Mr. Glassman’s objections.

Nevertheless, he states: “Currently, the Discovery Rule is applied evenly across all claims of professional negligence.” That is the very problem with post-1995 Tennessee jurisprudence. It fails to recognize the difference between law and other professions: chiefly the appellate process. And awaiting finality is what is done in other causes of action dependent on the outcome of underlying litigation, including malicious prosecution, and prevents unnecessary lawsuits. It also relieves non-lawyer clients from having to continually second-guess their counsel to determine during the midst of litigation if a mistake has been made and the statute has been triggered. Moreover, resolution of the dynamic litigation process may establish that there was no error at all or render it harmless.

History, judicial economy, many jurisdictions and the reputation of the bar recommend returning to such an approach.

— Russell Fowler, Chattanooga