Transactional Legal Malpractice

Legal malpractice claims arise when an attorney’s incompetence or negligence leads to a client incurring financial losses they would not have otherwise faced. This could be a result of the attorney’s failure to act competently, such as not filing a claim in the appropriate court before the statute of limitations expires. Other instances include inadequate investigation of a claim, scheduling errors leading to your claim’s dismissal, exclusion of evidence and witnesses, failure to communicate with a client, and more. 

In business transactions involving attorneys, the risk of an attorney being sued for malpractice is significantly higher than in other areas where legal malpractice claims are brought. This starkly highlights the complexities and risks in transactional matters, where experience and knowledge of the law and applicable regulations are crucial. Statistics reveal that 90% of transactional malpractice claims are filed against attorneys whose transactional practice or cases make up less than 10% of their total practice. 

Common Errors in Transactional Matters

Business transactions where a lawyer’s negligence may lead to a malpractice claim are:

  • Negligent drafting and negotiation of contracts
  • Not properly advising a client of the tax implications of a transaction
  • Not including key provisions in a contract that would have benefitted the client and had a high likelihood of being accepted
  • Overlooking other material provisions that adversely impacted the client
  • Failing to advise a client of an offer or settlement that would have been satisfactory and later resulted in the client losing the case or having to accept a much lower settlement
  • Not getting client’s consent to a settlement 
  • Mispresenting facts to a client who relied on them in signing an agreement
  • Not disclosing a conflict of interest

Conflict of interest claims are not unusual in business transactions involving multiple parties. Around 15% of transactional malpractice claims involve nondisclosure of conflict of interest by the attorney involved. The attorney may have represented an opposing party in a prior claim, had a business relationship with that party or a close relative, or that the attorney would personally benefit to the detriment of his client. 

Fraud is another common claim in transactional matters. If your attorney intentionally withheld facts to deceive you, misrepresented facts or made statements with no legal or reasonable basis or made promises that were either not performed or impossible to do so, then you may have a valid malpractice claim. 

Proving a Legal Malpractice Claim

To have a valid claim of legal malpractice, your legal malpractice attorney has to prove that there was an attorney-client relationship that created a duty by the attorney to employ the skills, diligence, and competence followed by other attorneys in the legal community. Then, your attorney must present evidence that your prior lawyer breached his duty to you and that the breach was the proximate cause of your damages or a substantial factor in causing it. Damages must not be vague or speculative and must be adequately proved.

Transactional malpractice differs from most other legal malpractice claims, where the claimant must show that the attorney’s conduct fell below the standard of care and that the underlying case was valid. For instance, if your attorney failed to file your injury claim on time and is now barred, you must show that you were injured by a negligent party or entity, that your injuries were proximately caused by that party’s negligent conduct, and that you suffered verifiable damages. In other words, you must prove the case-within-the-case.

Transactional malpractice often does not involve this condition or requirement. Instead, the claimant or her legal malpractice attorney must present credible evidence that the attorney’s negligence was the substantial cause of the claimant’s loss of funds or a benefit from the immediate transaction.

Retain the Law Office of Burns and Jain 

If you feel that your attorney ignored your concerns or was negligent in how your business transaction was conducted or negotiated, call a legal malpractice attorney from Burns and Jain. Although not all bad transactions result from attorney malpractice, it is worthwhile for our attorneys to investigate and scrutinize the matter. Call us at (617) 227-7423 to schedule a consultation.

Leave a comment

Your email address will not be published. Required fields are marked *