Clients Versus Customers: Disguised Legal Malpractice Claims

Increasingly, client-plaintiffs bring lawsuits against attorneys disguised as unfair or deceptive trade practice claims rather than direct legal malpractice claims. This can be a strategic decision by plaintiffs and their counsel for several reasons, but attorneys have various defenses at their disposal, including adherence to our professional standards.

Understanding these legal strategies and preparing effective defenses is crucial for law firms to protect their practice, their people, and ultimately their clients.

Root Causes

1. Statute of Limitations: Legal malpractice claims often have shorter statutes of limitations than claims based on unfair or deceptive trade practices. Plaintiffs may attempt to extend the timeframe for filing a claim by framing the issue as a trade practice violation, which may be governed by more favorable statutes.
2. Lower Threshold for Proving Deception: Trade practice laws - which are generally statutory - typically have a lower burden of proof, focusing on whether the attorney's conduct was misleading or deceptive. In contrast, legal malpractice requires proving a breach of the attorney's duty of care, causation, and damages. Plaintiffs may prefer the more lenient standards in trade practice claims.
3. Treble Damages and Attorneys' Fees: Many jurisdictions' trade practice statutes allow for treble damages (i.e., tripling of damages) and the recovery of attorneys' fees. Legal malpractice, on the other hand, almost always limits damages to compensatory losses. By framing the claim as a trade practice violation, plaintiffs try to increase their potential recovery.
4. Emotional Appeal: Unfair or deceptive trade practice claims can carry emotional weight, suggesting unethical or predatory behavior by the attorney. This could make the attorney’s actions appear more egregious in the eyes of the jury, even if they amount to mere negligence rather than intentional misconduct. This is especially true where the attorney is heavily invested in marketing - billboards, TikTok dances, etc. can easily trigger a jury's biases.
5. Avoiding Expert Testimony: Legal malpractice cases almost always require expert testimony to establish that the attorney breached the standard of care expected of lawyers in similar situations. Trade practice claims, however, do not require the same level of expert analysis, potentially lowering the plaintiff's litigation costs and complexity.

Defenses

1. Preemption by Legal Malpractice Law: One primary defense is that claims of malpractice are governed exclusively by legal malpractice laws, which set the standard of care, damages, and procedural rules. Attorneys can argue that claims of deceptive trade practices are inappropriate because the underlying issues involve professional conduct, which should be analyzed under malpractice laws, not consumer protection statutes.
2. Requirement for Expert Testimony: Even in well-disguised trade practice claims, the attorney can argue that expert testimony is necessary to establish whether there was any breach of professional duty. This can shift the case back toward a malpractice framework and challenge the plaintiff’s ability to proceed without meeting this burden.
3. Economic Loss Rule: In some jurisdictions, the economic loss rule limits recovery in tort for purely economic losses when the relationship between the parties is contractual. Attorneys can argue that the client’s claims are based on economic losses stemming from the attorney-client relationship and, therefore, should be treated as contract or malpractice claims, not tort or trade practice claims.
4. Standing to Sue under Consumer Protection Statutes: Consumer protection statutes often apply to consumers or individuals purchasing goods and services for personal use. An attorney may challenge whether the plaintiff qualifies as a "consumer" under the relevant statute, particularly in cases where the legal services involved commercial or business matters.
5. No Deceptive Conduct: Attorneys can defend against unfair or deceptive trade practice claims by showing that their actions were transparent, and any dissatisfaction or damages arose from factors beyond their control (e.g., unfavorable legal outcomes). Providing detailed records of communications and billing practices can undermine claims of deception.
6. Professional Conduct as a Shield: Adherence to professional conduct rules and regulations can provide a strong defense. Attorneys who follow the applicable rules governing client communication, confidentiality, conflict of interest, and diligent representation can argue that their actions were within the bounds of accepted professional norms, making the claims of malpractice or trade practice violations unfounded.

Each of these defenses should be used to bolster your practice and should be incorporated into your engagement agreement - the contract creating the attorney-client relationship.

Pre-emptive Best Practices

1. Clear Communication and Documentation: Attorneys should document all key communications with clients, including the scope of work, fees, and potential outcomes. Engagement letters are your first and last lines of defense and must be detailed, and any changes to the representation need to be confirmed in writing. Transparency will help protect against claims of deceptive practices.
2. Accurate Billing Practices: Many unfair trade practice claims stem from billing disputes. To mitigate risk, attorneys should ensure their billing is clear, detailed, and consistent with the engagement letter. Any issues with billing should be addressed immediately and in writing.
3. Adherence to Ethical Rules: Strict adherence to the Rules of Professional Conduct helps minimize exposure to malpractice and deceptive trade practice claims. These rules cover conflicts of interest, competency, diligence, confidentiality, and communication. Following them diligently not only reduces liability but also provides a strong defense if a lawsuit arises.
4. Client Expectations Management: Lawyers should manage client expectations from the outset. Clearly explain potential outcomes, limitations of the case, and risks. Disclaim any guarantees or illusions of easy success. Clients who are aware of these factors are less likely to feel misled if a case does not proceed as hoped.
5. Dispute Resolution Clauses: Including confidential arbitration or mediation clauses in engagement agreements can help attorneys resolve disputes outside of court and limit the scope of litigation. Additionally, some clauses can specify that any disputes regarding the representation be governed solely by malpractice law, reducing the likelihood of claims being framed as trade practice violations.
6. Continuing Legal Education (CLE): Staying informed of evolving legal standards and professional responsibilities can help attorneys avoid inadvertent malpractice. Ongoing training and awareness of the latest rules of professional conduct and legal updates protect against claims.

Disguising legal malpractice claims as unfair or deceptive trade practice claims is a growing tactic some plaintiffs use to gain an advantage in litigation. However, attorneys have several defenses available, including the legal preemption of malpractice law, challenging the need for expert testimony, and proving adherence to professional conduct rules.

By maintaining best practices around client communication, billing, and legal ethics, attorneys can minimize the risk of facing such claims and defend against them effectively if they arise.

Let's chat about better practice, less stress.