Lawyers Cannot Be Held Liable For Malpractice If The Bad Advice They Give Leads To A Result That Was Not Foreseeable

For those of you who do not like analysis: lawyers cannot be held liable for malpractice if the bad advice they give leads to a result that was not foreseeable. In the case summary below, the client was given bad advice which led to her being prosecuted for forgery. Under the particular facts of the case, forgery was a legal impossibility, so the court found that the lawyer’s bad advice (to forge a signature) did not have a causal connection to the crime the client was charged with.

Those of us who are lawyers remember the Palsgraf case written by Cardozo. Guard pushes man onto train. Fireworks drop from man’s hands. The fireworks cause commotion. The commotion causes a scale on the other side of the train station to fall onto a lady. Lady sues train station. Result: lady loses lawsuit!

I did not understand it back then but I do now. There is “causation” and there is “legal causation.” In other words, almost any bad act can be traced to a series of events. But for any of those events, the bad act would not have happened. So are all those people responsible?

For example: A stranger is born. Twenty years later, I see him on the highway and give him a ride to your house, just in time, because you were just about to leave the city. The guy stabs you. Now, you can sue the guy for the harm he caused but can you sue me? But for me, he would not have made it in time. What about the stranger’s mom? But for her giving birth to him, this would not have happened! So the law has to put a stop somewhere and that is the root of “legal causation.”

The details.

To sue an attorney for legal malpractice, you have to show four things:

(1) the duty of the attorney to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise;
(2) a breach of that duty;
(3) a proximate causal connection between the breach and the resulting injury; and
(4) actual loss or damage resulting from the attorney’s negligence.

This article/case brief is about the 3rd element: proximate causal connection between the breach and the resulting injury.

When poor legal advice results in litigation that could have been avoided, that is surprisingly not enough to sue your lawyer. That’s just “but for” causation. You need to show that the advice was the proximate cause of the litigation! This means you have to find a causal connection between your lawyer’s breach of his duty and the injury you’ve suffered.

The fact pattern is as follows: A client comes into your office with a problem. The problem is she is the true owner of a bank account which hasn’t been used in ages. The account is in the name of her now dead husband and two former partners who disclaim any interest in the account. Your client accidentally deposited $36,000 into the account and needs the money ASAP!

The proper advice would be to update the account card so your client would be the proper signatory, but that slipped your mind. Instead, you told her to forge a check in her own name as if one of the named account holders had signed it. Malpractice? What is she is later prosecuted for forgery!?

First, we have to know more about writing checks (my apologies). The negotiation of a check is a matter of private contract between a financial institution and a depositor. A check is a signed instrument by which the depositor (the drawer) instructs the financial institution (the drawee) to transfer the depositor’s funds to a check bearer in accordance with the account agreement.

In summary, an instrument is a “note” if it is a promise to pay and a “draft” if it is an order to pay. A check then, is a draft payable on demand and drawn on a bank. The purpose of a signature on a check is to authorize and obligate the financial institution to pay out the funds in accordance with the depositor’s prior instructions.

Here is the catch, even though the prior instructions state which signatures must be accepted, under the California Commercial Code, a valid signature may be made by penning “any name, including a trade or assumed name, or by a word mark, or symbol” so long as the signer intends to effectuate a transaction.

So when your client signed the check, she impersonated the named owners. This is not a crime but a breach of the agreement with the bank! To make “imposter” a crime, there must be an intent to defraud. Since your client owns the account, it’s impossible for her to defraud anyone with the transaction just described!

Consequently, there is no way you could have predicted she would be charged for forgery.

California has adopted the substantial factor test set forth in the Restatement Second of Torts, section 431. This means the conduct is a legal cause of harm if it is a substantial factor in bringing about the harm. This happens when the conduct is recognizable as having an appreciable effect in bringing about the harm.

Courts have found that the link between the conduct and harm suffered is closely related to foreseeability in the inquiry because a defendant owes no duty to prevent a harm that was not a reasonably foreseeable result of his negligent conduct.

A key element to the crime of forgery is intent to defraud, and a depositor cannot intend to defraud herself. Therefore it was legally impossible to foresee a district attorney trying to prosecute forgery as a crime under these facts.

Therefore, the Court found no causation between the crime charged and the advice given.

The full case can be found here.