This opinion is subject to revision before final

p ublication in the Pacific Reporter

201 7 UT 31

IN THE



## S UPREME 

## C OURT OF THE 

## S TATE OF 

## U TAH

E AGLE M OUNTAIN C ITY

, Appellant

,

v.

P ARSONS K INGHORN & H ARRIS

, P.C.

, Appellee

.

P ARSONS K INGHORN & H ARRIS

, P.C.

, Third

- Party Plaintiff,

v.

W ILLIA M S & H UNT
, P.C.

,

Third

- Party Defendant.

No. 20150915

Filed June 7, 2017

On Direct Appeal

Fourth District

, Spanish Fork

The Honorable James M. Brady

No. 130300194

Attorneys:

Mark O. Morris, Amber M. Mettler, Douglas P. Farr, Salt Lake City, for appellant

Stuart H. Schultz, Byron G. Martin, Salt Lake City, for appellee

Phillip A Cole, Minneapolis, Minnesota, Timothy K. Conde,
Lauren A. Shurman, Sal t Lake City, for third

- party defendant

C HIEF J USTICE D URRANT authored the opinion of the Court, in which

A SSOCIATE C HIEF J USTICE L EE
, J USTICE D URHAM

, J USTICE H IMONAS , and
J USTICE P EARCE joined.E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

2 C HIEF J USTICE D URRANT , opinion of the Court:

Introduction

¶ 1 Eagle Mountain City (the City) brought this legal malpractice action in its own name, but the district court concluded the action is “tainted in some respect” because it was “born of” an assignment. The court granted summary judgment, dismissing the

case without prejudice on the ground that the assignment of legal malpractice claims violates public policy. We reverse. We hold that, even assuming the City assigned its legal malpractice claim, this assignment does not violate public policy.

¶ 2 The City entered into a contractual arrangement with Cedar Valley Water Association (Cedar Valley) to share in any recovery from this legal malpractice action brought against defendant Parsons Kinghorn & Harris, P.C. (Parsons Kinghorn). The parties frame this dispute in t erms of whether this arrangement transferred sufficient control over the malpractice claim from the City to Cedar Valley to constitute an assignment. We view things differently. We conclude that the more appropriate question is whether the voluntary assign ment of legal malpractice claims violates public policy as a general matter. If it does not, there is no need to determine whether the contractual arrangement in this case amounted to an assignment

of such a claim.

¶ 3 We hold that there is a strong presumpti on that legal malpractice claims are voluntarily assignable, but we do not foreclose the possibility that an assignment in a future case could present such strong public policy concerns that it will be invalidated. We reach this result because the public p olicy rationales articulated by other courts are largely unpersuasive or inapplicable in our jurisdiction given recent developments in the Utah Rules of Civil

Procedure and the Utah Rules of Professional Conduct. With these procedural safeguards in place, legal malpractice claims are presumed to be freely assignable, and the circumstances of this case do not rebut that presumption.

Background

¶ 4 Cedar Valley sued the City in an earlier proceeding (the Well Lawsuit), which ended when the City and Cedar Valley e ntered into a settlement agreement and a contingent fee agreeme nt (collectively, Agreements). The Agreements contemplated that the City would bring the lawsuit that is now before us

— a legal malpractice action

— against its former attorneys, Parsons Kinghorn. We first briefly describe the background of the Well Lawsuit,Cite as: 2017 UT 31

Opinion of the Court

3 providing details relevant to some of the policy considerations we discuss below. We then describe the district court’s grant of summary judgment in this case.

¶ 5 The Well Lawsuit arose out of a c ontract (the Capacity Purchase Agreement) where the City agreed to purchase a well from Cedar Valley. The Capacity Purchase Agreement provided that the City would have an obligation to remit money to Cedar Valley if

certain t riggering conditions occurred. Parsons Kinghorn advised the City that the triggering conditions had not occurred, and it accordingly advised the City not to remit any money to Cedar Valley. Cedar Valley sought payment from the City, but Parsons Kinghorn repeatedly advised th e City that no payment was due.

¶ 6 In response, Cedar Valley brought the Well Lawsuit against the City. That litigation focused on whether the triggering conditions had occurred, requiring payment under the Capacity Purchase Agreement. Cedar Valley, through its lawyers S nell & Wilmer, advanced one interpretation of the contractual language describing the triggering events, and the City, on the continued advice of Parsons Kinghorn, offered a contrary interpretation. 1

¶ 7 Shortly before the Well Lawsuit was to go to trial, the City and Cedar Valley entered into a settlement agreement, which incorporated by reference a contingent fee agreemen t. The Agreements impose conditions on the City’s ability to bring this malpractice action and give Cedar Valley certain contractual rights of control over the action. For example, the Agreements provide, in relevant part:

As part of the Settlement Agreement, [the City] has agreed to make demand and if needed file and prosecute a complaint against [Parsons Kinghorn] . . . alleging negligence and related malpractice claims (“Lawsuit”), solely on the terms an d conditions of this Agreement.

. . . .

_____________________________________________________________

1 The City apparently continued to consult with Parsons Kinghorn during the pendency of the Well Lawsuit, but because an attorney of Parsons Kinghor n was a material witness in that case, the City was represented by separate counsel, Williams & Hunt, P.C., in that proceeding.E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

4 [The] City and Cedar Valley desire to retain [Snell & Wilmer] to bring the lawsuit against [ Pars ons Kinghorn]

. . . .

[C]ommunications between the jointly represented Clients [the City and Cedar Valley] and Attorney [Snell & Wilmer] are privileged as to third parties but are not privileged as to the Clients which are bei ng jointly represented.

. . .

In the Settlement Agreement, [the] Cit y and Cedar Valley agreed that after payment of costs, each would

receive one

- third . . . of the recovery, if any, from [Parsons Kinghorn] in the Lawsuit.

. . .

Clients each agree that [Snell & Wilmer] is entitled to

one

- third (1/3) of the sums recovered f rom [Parsons Kinghorn] (including its insurers), after out of pocket

costs are first deducte d from such recovery.

. . .

[A]ll costs incurred in connection with the Lawsuit shall be paid by Cedar Valley

, but all amount of such Costs shall be first repaid fr om any recovery received.

. . .

In the event that [Parsons Kinghorn] and/or its insurer(s) make an offer of settlement to Clients, and they cannot mutually agree on the terms of negotiated settlement of the Lawsuit, then the clients agree to first negotiat e in good faith. Failing an agreement then, the parties shall mediate their dispute before a

mediator

. . . . In the event the dispute is not resolved by mediation, each of the Clients shall select an

arbitrator and the two selected arbitrators shall selec t a

third arbitrator. . . . The decision of the three arbitrators regarding whether to accept or reject the pending offer

shall be bin ding on the Clients.Cite as: 2017 UT 31

Opinion of the Court

5 ¶ 8 The City brought the current lawsuit in its own name in December 2013, pleading legal malpractice un der both tort and contract theories. A little more than a year later, in February 2015, Parsons Kinghorn filed a motion for summary judgment, seeking to have the suit dismissed on the ground that the City

— through the Agreements

— assigned its legal malpracti ce claim to Cedar Valley

and that such an ass ignment violates public policy.

¶ 9 The district court agreed with Parsons Kinghorn that the Agreements constituted at least a partial assignment of the legal malpractice claim, which the court determined violated p ublic policy. In particular, the district court concluded that, although the Agreements did not “express[ly] assign[]” the legal malpractice claim, “it is obvious that the Agreements transfer to [Cedar Valley] a substantial level of control over the litiga tion decisions and a substantial portion of [the City’s] property rights.” The court granted summary judgment in favor of Parsons Kinghorn, dismissing the case without prejudice, but attaching certain conditions to the City’s ability to re

- file. The court ordered that, as a condition of re

- filing, the City must “ satisf [ y ] the Court that [the legal malpractice claim] will be prosecuted independently of the settlement agreement. To do so, at a minimum, [the City] needs to establish that its litigation is

not controlled in any way by [Cedar Valley], and that [the City] is not represented by attorneys a ssociated with [Cedar Valley.]”

¶ 10 The City appeals. First, i t argues that the district court erred in concluding that the Agreements amounted to an assignment of its legal malpractice claim. Second, it argues that its contractual arrangement with Cedar Valley does not violate public policy. We have jurisdiction under Utah Code section 78A

- 3

- 102(3)(j).

Standard of Review

¶ 11 The issue on appeal is whether the district c ourt properly granted summary judgment in favor of Parsons Kinghorn on the City’s legal malpractice claim. Summary judgment is appropriate only where “there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a mat ter of law.” 2 We

“ review [] a summary judgment for correctness, giving no deference to the [district] court’s decision.” 3

_____________________________________________________________

2 U TAH R. C IV

. P. 56( a ).

3 Bahr v. Imus , 2011 UT 19, ¶ 15, 250 P.3d 56.E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

6 Analysis

¶ 12 We begin by explaining why we need not consider the parties’ arguments regarding whether the City relinquished sufficient righ ts to control its legal malpractice claim that it can be said to have assigned that claim. We instead assume that the City’s arrangement with Cedar Valley amounted to an assignment. We then consider the public policy concerns articulated by other courts,

c oncluding that they are unpersuasive in view of the current procedural and ethical safeguards of our legal system. Because we view our system as well

- equipped to sort the wheat of these claims

from the chaff

— whether the action is brought by the alleged vic tim of malpractice or the victim’s assignee

— we hold that legal malpractice claims are presumed to be voluntarily assignable. But we leave open the possibility that in a future case such an assignment could violate clearly expressed and compelling public

po licy concerns and thus be invalid.

I. We Assume the Contractual Arrangement Between the City and Cedar Valley Amounted to an Assignment of a Legal Malpractice Claim

¶ 13 The parties have focused their arguments on whether the Agreements amounted to an assignment of a legal malpractice

claim. 4 We think this approach asks the wrong question. These arguments are based on caselaw from other jurisdictions that have expressly concluded that the assignment of legal malpractice claims

_____________________________________________________________

4 The City argues that the Agreements did not transfer s ufficient control over the litigation to amount to an assignment. It claims that Cedar Valley received only a right to recover a portion of the proceeds from the claim, not the claim itself. Parsons Kinghorn counters that Cedar Valley received contractual rights of control over numerous aspects of the malpractice action, in addition to a portion of the proceeds, and therefore received a partial assignment of the legal malpractice claim. For example, Parsons Kinghorn argues that Cedar Valley received the con tractual right to compel this lawsuit to be brought. It also points out that the City is required to “obtain prior approval by [Cedar Valley] before it can settle the claim, or if the parties disagree, ultimately submit its rights to settle its case to

bin ding arbitration.” Finally, it notes that Cedar Valley has the contractual right to receive a portion of the recovery obtained in this suit, and it is responsible for fronting all costs in the malpractice action, to be reimbursed out of any recovery.Cite as: 2017 UT 31

Opinion of the Court

7 violates public policy. In those cases, courts have been forced to draw lines between permissible and impermissible levels of control over a legal malpractice claim. 5 But these arguments and the difficult

line

- drawing they entail signal to us that we should hesitate to

embark on th is path unless we are first convinced that the assignment of legal malpractice claims violates public policy. If it does not, arguments regarding how much control is sufficient to constitute an assignment are simply irrelevant.

¶ 14 We conclude that the better approach is to first determine whether the assignment of legal malpractice claims violates public policy as a general matter. We turn to that task now, examining public policy rationales that have been articulated by other courts.

II. There I s a Strong P resumption that the Voluntary Assignment of a
Legal Malpractice Claim Does Not Violate Public Policy

¶ 15 The question is whether public policy prohibits the voluntary assignment of legal malpractice claims. We first note that, before wading into the public pol icy arena, this court, like many others, indulges in a strong presumption of freedom of contract. We have long held that “[f]or a contract to be void on the basis of public policy, ‘there must be a showing free from doubt that the contract is against publi c policy.’” 6 A corollary of this principle is that a contract will be held to violate public policy only where it violates a “well

defined and dominant” policy. 7 When pressed at oral argument, counsel for Parsons Kinghorn described the assignment of legal malpractice claims as

— at worst

— “unseemly.” But even if we agreed

_____________________________________________________________

5 Compare Davis v. Scott , 320 S.W.3d 87, 91 (Ky. 2010) (“This level of control over a lawsuit is consistent with an assignment of the entire cause of action, not merely the proceeds of the litigation.”)

, with Weston v. Dowty , 414 N.W.2d 165, 167 (Mich. Ct. A pp. 1987) (“Since plaintiffs agreed to assign only a portion of their recovery, if any, from the malpractice suit, and since they did not specifically assign the claim or cause of action .

. . , we conclude that no assignment of a legal malpractice action occurred.”).

6 Ockey v. Lehmer , 2008 UT 37, ¶ 21, 189 P.3d 51 (quoting Frailey v. McGarry , 211 P.2d 840, 847 (Utah 1949)).

7 See, e.g.

, State Farm Mut. Auto. Ins. Co. v. Koshy , 995 A.2d 651, 665 (Me. 2010) (“A contract is unenforceable as violating public policy

. . . only if it violates a well

- defined and dominant policy that may be ascertained from the law and legal precedent.”).E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

8 with that characterization, there is no basis in our law for overriding freedom of contract simply because the result would be “unseemly.” Instead, we approach this task by asking whether the assignment of legal malpractice claims violates a clear and compelling public policy.

¶ 16 In looking for such a policy against the assignment of legal malpractice claims, we start with the fact that we have already recognized that the involuntary assignment of these claims through bankruptcy does not violate public policy. 8 In upholding these involuntary assignments, we recognized that the public policy interest in allowing access to our courts outweighed any countervailing policy concerns. 9

¶ 17 Parsons Kinghorn asks us to take a different approach to voluntary assignments. It contends that the voluntary assignment of legal malpractice claims violates public policy as a general matter. The implication of this argument is that we need not look to the specific circu mstances of a case to see whether any particular public policy concerns are implicated by its facts, but that there should simply be a blanket prohibition.

¶ 18 We reject this invitation to make such a categorical prohibition. Instead, we examine the concerns articulated by other courts, explaining that each of these concerns is significantly mitigated by safeguards found in the Utah Rules of Professional

Conduct and the Utah Rules of Civil Procedure. The concerns can be summarized into four general categories: 1) commoditizing and merchandising of legal malpractice claims; 2) despoiling the sanctity of the attorney

- client relationship; 3) sowing the opportunity and incentive for collusion; and 4) fostering public loss of respect for the legal profession. After considering each in turn, we conclude that

t hese concerns do not justify prohibiting the assignment of legal malpractice claims.

_____________________________________________________________

8 See, e.g.

, Snow, Nuffer, Engstrom & Drake v. Tanasse , 1999 UT 49,
¶ 13, 980 P.2d 208.

9 Id. (“We are reluctant to permit the denial of access to our courts by persons asserting negligence claims against lawyers in this fashion.”).Cite as: 2017 UT 31

Opinion of the Court

9 A. Concerns Regarding Commoditiz ing or Merchandi s ing of Legal
Malpractice Claims

¶ 19 Many courts express ing commoditization concer ns about the assignment of legal malpractice claims base their reasoning on a 1976 opinion by the California Court of Appeals, Goodley v. Wank &
Wank, Inc. 10 There, the court reasoned, without citation to authority

, that permitting the assignment of legal malpractice claims would spawn a flurry of meritless litigation and debase the legal profession.

It is the unique quality of legal services, the personal nature of the attorney’s duty to the client and the confidentiality of the attorney

- client relationshi p that invoke public policy considerations in our conclusion that malpractice claims should not be subject to assignment. The assignment of such claims could relegate the legal malpractice action to the market place and convert it to a commodity to be expl oited and

transferred to economic bidders who have never had a professional relationship with the attorney and to whom the attorney has never owed a legal duty, and who have never had any prior connection with the assignor or his rights. The commercial asp ect of assignability of choses in action arising out of legal malpractice is rife with probabilities that could only debase the legal profession. The almost certain end result of merchandizing such causes of action is the lucrative business of factoring ma lpractice claims which would encourage unjustified lawsuits against members of the legal profession, generate an increase in legal malpractice litigation, promote champerty and force attorneys to defend themselves against

strangers. 11

¶ 20 As an initial matter, courts that express these types of concerns typically echo the Goodley court’s qualms about the marketing of legal malpractice claims to investors who are essentially strangers to the underlying subject matter. Some courts have recognized that where the pu rchaser of a legal malpractice claim has an “intimate connection” with the underlying case, the

_____________________________________________________________

10 133 Cal. Rptr. 83 ( Cal. Ct. App. 1976).

11 Id. at 87

.E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

10 concerns of commoditization are not present. 12 In the case at hand, Cedar Valley had an “intimate connection” with the underlying case by virtue of being a party in the underlying contract that formed the basis for the malpractice action ; so we are not presented with concerns of open market commoditization.

¶ 21 But even if Cedar Valley were a stranger to the underlying
transaction, we still would not conclude that th ese concerns are justified. First, the California Court of Appeals has, in dicta, questioned the continued validity of the Goodley court’s holding:

Yet there is a legitimate question whether [the Goodley court’s] view of the legal profession comports with the evolved attorney client relationship of today. The explanation that allowing the assignment of claims would unduly “debase” and “commercialize” the profession may very well have reflected the popular
view in 1976. However, the fears which motivated

Goo dley ’s defense of an idealized attorney

- client relationship are open to some doubt 25 years later. Legal actions against attorneys are now common, and the risk that assignments of claims will generate unfounded litigation unfairly burdening judicial

docket s may be too speculative to justify continuing the prohibition. . . . [T]he continued viability of this rule created by intermediate appellate courts, has not yet been tested by the scrutiny of our high court. 13

¶ 22 Other courts have likewise concluded that the se commoditization concerns are speculative. 14 We agree. The speculative nature of these concerns is magnified by the fact that

_____________________________________________________________

12 See, e.g.

, Thurston v. Cont’l Cas. Co. , 567 A.2d 922, 923 (Me. 1989) (“We are not here confro nted with the establishment of a general market for [legal malpractice] claims; this assignee has an intimate connection with the underlying lawsuit.”)

.

13 Musser v. Provencher , 109 Cal. Rptr. 2d 214, 2 27 n.7 (Cal. Ct. App. 2001)

, review granted and opinion superseded , 31 P.3d 1271 (Cal. 2001), and aff ’ d , 48 P.3d 408 ( Cal. 2002).

14 See , e.g. , Kommavongsa v. Haskell , 67 P.3d 1068, 1078 (Wash. 2003) (rejecting the argument that commoditization would be a concern because “[p]ersonal injury claims have been assi gnable in Washington for years” and the court “ ha [ d ] not seen a lucrative business arise in the factoring of those claims”)

.Cite as: 2017 UT 31

Opinion of the Court

11 several states allow assignment of legal malpractice claims in certain circumstances, and those states have not reported signific ant problems or been forced to overrule their precedent and abandon the practice. 15 We also note that even courts that prohibit the assignment of legal malpractice claims have allowed the assignment of malpractice claims against other professionals, such as accountants. 16 We see little reason to single out lawyers for protection against malpractice claim assignment when the legal system forces other professionals to face their clients’ assignees for alleged malpractice.

¶ 23 We expect that, as the California Cour t of Appeals itself has noted, some of the concerns that animated courts nearly half a century ago to forbid the assignment of legal malpractice claims are no longer present in the current legal system. We discuss two changes of particular importance: firs t, the evolution of rule 11 as an
effective deterrent of frivolous claims, and second, the trends toward reduced concerns regarding the ancient doctrine of champerty and broader acceptance of third

- party litigation funding.

¶ 24 First, in the last forty years t here have been significant changes to rule 11 of the rules of civil procedure

— a rule that prohibits attorneys and unrepresented parties from, among other things, presenting frivolous claims

. 17 The Federal Rules of Civil

_____________________________________________________________

15 See, e.g.

, New Hampshire Ins. Co. v. McCann , 707 N.E.2d 332, 337 (Mass. 1999) (“We suspect that fear of ‘open trading’ is based in part on outmoded concepts and protectionism. We ‘have long abandoned the view that litigation is suspect,’ and have recently abolished the rule against champerty, now permitting the litigation of claims financed by others in return for their receipt of a portion of the proceeds of the litigation. There is nothing to show that, in those jurisdictions that permit the voluntary assignment of a malpractice
claim, there has been an increase in baseless lawsuits.” (citation omitted) ).

16 See, e.g. , KPMG Peat Ma rwick v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. , 765 So. 2d 36 (Fla. 2000); First Cmty. Bank & Tr

. v. Kelley, Hardesty, Smith & Co. , 663 N.E.2d 218 (Ind. Ct. App. 1996).

17 See U TAH R. C IV

. P. 11(c) (“If . . . the court determines that ” a suit is frivolous, “the court may . . . impose an appropriate sanction upon the attorneys, law firms, or parties that . . . are responsible for the violation.”).E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

12 Procedure often serve as models for s tates, 18 and the federal version of rule 11 was amended in 1983 to specifically give the rule teeth. 19
Prior to this amendment, the rule “failed to deter abuses in litigation,” in part because the rule lacked clarity, which made state

and federal courts hesi tant to impose sanctions under it. 20

This ineffectiveness resulted from several deficiencies in the Rule. For example, the standard requiring ‘good ground to support’ a pleading was vague. Under this standard, an attorney was required to investigate facts and present them ‘to the best of his knowledge, information, and belief.’ Courts interpreted this as a subjective and rather vague requirement of good faith and were reluctant to impose sanctions under it. In addition, the only improper purpose for conduct ing litigation acknowledged by the original Rule was delay. The Rule failed to recognize that litigation can be conducted for other improper purposes, such as to mislead the court, to harrass an opponent, to impose defense costs, or to pressure an opponent into a
settlement. Last, courts were reluctant to invoke the

_____________________________________________________________

18 While commentators have noted that the recent trend is against states modeling their proc edural rules on the federal system, the 1983 amendment to rule 11, which as discussed below substantially bolstered that rule’s breadth and effectiveness at curbing meritless litigation, was adopted by many states, including Utah. John B. Oakley, A Fresh L ook at the Federal Rules in State Courts , 3 N EV

. L.J. 354, 382 (2003).

19 In fact, the 1983 amendments to rule 11 sharpened its fangs so much that commentators criticized the amendments for “foster[ing] excessive and costly litigation unrelated to the merit s,” and federal

rule 11 was amended in 1993 to address some of these concerns. Margaret L. Sanner & Carl Tobias, Rule 11 and Rule Revision , 37 L OY

. L.A. L. R EV

. 573, 582 (2004).

20 Julia K. Cowles, Rule 11 of the Federal Rules of Civil Procedure and

the Dut y to Withdraw a Baseless Pleading , 56 F ORDHAM L. R EV

. 697, 700 (1988) (“Experience showed that in practice Rule 11 failed to deter abuses in litigation. Courts found the Rule difficult to apply and

enforce and so were reluctant to use it.” (footnotes omitt ed) ).Cite as: 2017 UT 31

Opinion of the Court

13 Rule because they viewed the striking of a faulty pleading as a harsh penalty. 21

¶ 25 But today, the rule has been refined into a tool that courts use frequently to “deter repetition” in “presenting

. . . to the court”

claims that are frivolous and factual contentions that lack evidentiary support or a likelihood of such support after further investigation or discovery. 22 We are aware of no court to have explained why rule 11, in its current form, is i nsufficient to deal with whatever increase there might be in frivolous legal malpractice suits arising from permitting assignment of these claims.

¶ 26 Second, the Goodley court’s concerns about commoditization spurring an increase in litigation fail to accoun t for the increase in

meritorious litigation that these assignments will enable.

“ [P] romot[ing] champerty” is no longer the pressing concern to

courts that it once was. 23 The doctrines of champerty and maintenance seek to curb powerful intermeddlers from su bverting the legal process by acquiring an interest in litigation that otherwise

does not concern them. 24 These doctrines

— with their attendant suspicion of third parties meddling in litigation

— trace their roots to the English common law. 25 But the primary concerns that motivated these ancient prohibitions are no longer present in today’s society, and to the extent they remain , they are adequately addressed by other legal mechanisms. 26 Courts have accordingly moved away

_____________________________________________________________

21 Id. at 700

– 01 (footnotes omitted).

22 U TAH R. C IV

. P. 11 (b), ( c ) (2)

.

23 133 Cal. Rptr. at 87.

24 See Note, Modern Views of Champerty and Maintenance , 18 H ARV

. L. R EV

. 222, 222

– 23 (1905) (“The object [of champerty and maintenance] was to prevent intimidation of the courts by the great lords, who by enlisting in suits in which they had no proper interest, overawed courts and juries, and perverted ‘the remedial process of the law into an engine of oppression.’” (cita tion omitted)).

25 In fact, their roots go still deeper, likely back to the concept of “sycophancy” in ancient Greece. See Max Radin, Maintenance by Champer t y , 24 C AL

. L. R EV . 48, 48

– 51 (1935).

26 For example, in Saladini v. Righellis

, the Supreme Judicial C ourt

of Massachusetts explained that it “no longer [is] persuaded that the champerty doctrine is needed to protect against the evils once feared: speculation in lawsuits, the bringing of frivolous lawsuits, or (Continued)E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

14 from limiting litigati on funding in favor of increasing access to justice. This shift recognizes the inherent inequity in allowing a

citizen’s financial means to curtail his or her ability to vindicate legal rights. Our decision in Snow, Nuffer, Engstrom & Drake v. Tanasse to

u p hold the involuntary assignment of legal malpractice claims represents one illustration of a broader movement away from unduly protecting attorneys at the expense of their clients’ ability to

access the courts. 27 We continue to adhere to that view today, a nd we reject commoditization concerns as misplaced and out of touch with the current realities of our society and legal system. We next discuss why we do not share other courts’ concerns that allowing assignment of legal malpractice claims imperils the san ctity of the

attorney

- client relationship.

B. Concerns About the Effect of Assignment on the “Sanctity of the
Attorney

- Client Relationship”

¶ 27 C ourts have expressed concern that allowing the assignment of legal malpractice claims will “embarrass the attorney

- client relationship and imperil the sanctity of the highly confidential and fiduciary relationship existing between attorney and client.” 28

financial overreaching by a party of superior bargaining position. ” 687 N.E.2d 1224, 1226 (Mass. 1997) . The court reasoned that “[t] here are now other devices that more effectively accomplish these ends.”

Id. at 1226

– 27

. As examples of these other devices, the Saladini court pointed to that jurisdiction’s rules of professional conduct and rule 11 of its rules of civil procedure. Id. at 1227.

We also note that it is not at all clear why an investor would choose to purchase a lawsuit that appeared to be frivolous. See Ang lo

- Dutch Petroleum Int’l, Inc. v. Haskell , 193 S.W.3d 87, 104

– 05 (Tex. App. 2006) (“It is doubtful that litigation funding agreements

,

. . . in which the investor has no right to repayment unless th e plaintiff receives a recovery, serve to increase litigat ion. Presumably, prior to making an investment . . .

, an investor would consider the

merits of the suit and make a calculated risk assessment on the probability of a return on its investment. An investor would be unlikely to invest funds in a frivolous la wsuit, when its only chance of recovery is contingent upon the success of the lawsuit.”).

27 1999 UT 49, ¶ 13 (“We are reluctant to permit the denial of access to our courts by persons asserting negligence claims against lawyers in this fashion.”).

28 Goodle y , 133 Cal. Rptr . at 8 7

.Cite as: 2017 UT 31

Opinion of the Court

15 Concerns regarding the attorney

- client relationship often trace back

to Picadilly, Inc. v. Raikos , where the Indiana Supreme Court described two problems it concluded would arise if these assignments we re permitted: 1) the fear of assignment would cause attorneys to temper their zealous advocacy; and 2) the assignment would interfere with the attorney

- client privilege. 29 We are not persuaded by either justification.

1. Concerns that Attorneys Will Temper Their Zealous Advocacy

¶ 28 T he Picadilly court expressed concern that “[a]n attorney’s loyalty is likely to be weakened by the knowledge that a client can sell off a malpracti ce claim, particularly if an adversary can buy it.” 30 According to this line of reasoning, the knowledge that a legal malpractice claim could be assigned will become “an important bargaining chip” in settlement negotiations. 31 Courts have also suggested that permitting assignment would allow an adversary to “drive a wedge” between client and attorney “by creating a conflict

of interest.” 32 We find none of these concerns persuasive.

¶ 29 R egarding zealous advocacy, the Picadilly court suggested

that

If an attorney is providing zealous representation to a client, the client’s adversary will likely be motivated to strike back at the attorney in any permissible fashion. If an adversary can retaliate by buying up a client’s malpractice action, attorneys will begin to re think the wisdom of zealous advocacy. 33

We find this reasoning tenuous. A number of courts have described
this concern as “farfetched,” 34 and we agree. 35 We are not convinced

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29 582 N.E.2d 338, 342 (Ind. 1991).

30 Id.

31 Id. at 343.

32 Zuniga v. Groce, Locke & Hebdon , 878 S.W.2d 313, 317 (Tex. App. 1994).

33 Picadilly , 582 N.E.2d at 342.

34 New Hampshire Ins. Co. , 707 N.E.2d at 336

– 37 (“It is farfetched to imagine that a lawyer will be discouraged from zealously representing a client out of fear that the client may later offer a malpractice action against the lawyer as a part of the resolution of (Continued)E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

16 that attorneys will “strike back” at their adversaries by obtaining and prosecuting unmeritorious legal malpractice actions. If they do so, they face not only the bulwark of rule 11, but the threat of professional sanctions for violating the rules of professional

conduct. 36 The desire to “strike back” does not seem likely to outweigh these significant deterrents. Further, the concern that

attorney s will temper their zeal fails to account for the fact that attorneys are ethically obligated to act “with zeal in advocacy upon the client’s behalf.” 37 We find it unlikely that an attorney would

ch oose not to zealously pursue a client’s claims out of fear of assignment for the simple reason that by doing so the attorney would likely be giving the client grounds for bringing a malpractice

claim.

¶ 30 W e are also unconvinced by the concern regarding confli cts of interest. Courts have suggested that, as soon as the topic of assigning a legal malpractice claim rears its head in settlement talks,

another case.”); Gregory v. Lovlien , 26 P.3d 180, 184 n.6 (Or. Ct. App. 2001) (“We note, as [other] courts have, that some of the concerns that typically are cited appear overstated. . . . [T] he risk that a future assignment of the client’s malpractice claim to an adversary will

temper an attor ney’s present representation of his or her client seems remote at best. It may ensure that the attorney provides better representation.”).

35 Commentators, too, have criticized this argument. See, e.g.

, Kevin Pennell, Note, On the Assignment of Legal Malpra ctice Claims: A

Contractual Solution to a Contractual Problem , 82 T EX

. L. R EV

. 481, 498 (2003) (“The major flaw in this argument is that it assumes that parties will not act rationally when settling their disputes. . . . [I]f all parties behave rationally, then a legal malpractice claim against an attorney who has zealously and effectively represented his client is worth nothing. An attorney who fears his client will assign his legal malpractice claim to the client’s adversary will thus have more

incentive to zealously represent his client, not less.”).

36 U TAH R. P ROF ’ L C ONDUCT 3.1 (“A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless

there is a basis in law and fact for doing so that is not

frivolous

. . . .”).

37 U TAH R. P ROF ’ L C ONDUCT 1.3, cmt 1 (“A lawyer must act with

commitment and dedication to the interests of the client and with zeal in advocacy upon the client’s behalf.”).Cite as: 2017 UT 31

Opinion of the Court

17 attorneys will be forced to send their clients to receive the independent advice of another lawyer because of the c onflict of interest inherent in advising a client on the propriety of a settlement involving the assignment of a legal malpractice claim. 38 We understand the forces animating this concern, and we recognize that the need to bring in separate counsel could increase the expense for parties seeking to negotiate settlement of their disputes. But the assignment of a legal malpractice claim may be a pertinent consideration for the parties to the settlement agreement, and if an attorney would be exposed to a conflict of interest necessitating the services of an independent attorney to advise the client on the settlement offer, then that is a necessary cost of litigating a dispute. Foreclosing this option by prohibiting assignment would frustrate opposing counsel’s ability to highlight the potential malpractice of an adversary.

¶ 31 This case illustrates the benefits that would be lost by prohibiting assign ment: the adversary, who may be in the best position of all to investigate and discover the legal malpractice of an opponent, can negotiate with the victim in a way that allows the victim to recognize the value of its legal malpractice claim. We fail to

se e how the additional expense that could be incurred if conflicts arise outweighs the benefits that attend permitting such assignments.

2. Concerns that Permitting Assignment Will Do Violence to the

Attorney

- Client Privilege

¶ 32 T he Picadilly court also expre ssed concern that allowing assignment could strain attorneys’ duty to maintain client confidentiality. One court reiterated the concern as follows:

[T]he Picadilly court observed that once a client sues his attorney, the attorney is permitted to disclose

c onfidential client information that is reasonably necessary to establish a defense. So long as the client maintains control over the suit, the scope of the

_____________________________________________________________

38 Picadilly , 582 N.E.2d at 343 (“An adversary might well make a

favorable settlemen t offer to a judgment

- proof or financially strapped client in exchange for the assignment of that client’s right to bring a malpractice claim against his attorney. Lawyers involved in such negotiations would quickly realize that the interests of their

clie nts were incompatible with their own self

- interest.”).E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

18 disclosure can be limited by the client’s power to drop the claim. Once the client assigns the claim , the client’s control over the litigation is lost, but the attorney’s right to defend by revealing client information

survives. 39

¶ 33 But this concern overlooks the fact that the client waives

— to

an extent

— the attorney

- client privilege by bringing a legal malpractice claim. 40 The waiver is no broader whether it is the client or the client’s assignee bringing the malpractice claim. 41 We expect that those courts that have expressed concern about the attorney

client privilege may have been concerned about overbr oad waivers, but our rules of professional conduct specifically delineate the scope of waiver for defending against a legal malpractice claim, 42 and we see no reason to go beyond that by outright prohibiting the assignment of the claim. Concerns regarding t he attorney

- client privilege are just as likely to be implicated when a legal malpractice

claim is involuntar il y assigned through the bankruptcy process, but we have concluded such transfers do not violate public policy as a general matter. 43 We likewise do not see the attorney

- client privilege concerns as justifying a barrier to voluntary assignments.

¶ 34 In short, concerns regarding the attorney

- client relationship do not justify a blanket prohibition on the assignment of malpractice

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39 Kommavongsa , 67 P.3d at 1074.

40 U TAH R. P ROF ’ L C ONDUCT 1.6(b)(5) (“A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:

. . . to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client . . . or to respond to allegations in any proceeding concerning the lawyer’s representation of the client.”).

41 Kommavongsa , 67 P.3d at 1078 (“ Although certainly a client who assigns the legal malpractice claim loses control over the lawsuit, and cannot drop the lawsuit upon realizing the full extent of the waiver, the waiver itself is no broader if the claim is assigned than if the client brings the lawsuit himself or herself

— the attorney must still preserve those confidences and secrets that are not reasonably necessary to the defense of the claim.”).

42 Supra ¶ 33 n. 40

.

43 See Tanasse , 1999 UT 49 , ¶ 13

.Cite as: 2017 UT 31

Opinion of the Court

19 claims. Next we discuss w hy we likewise do not see the opportunity

and incentive for collusion to be intolerable.

C. Concerns Regarding the Opportunity and Incentive for Collusion

¶ 35 Courts have expressed concern that permitting the assignment of legal malpractice claims yields too f ertile an environment for collusion. Courts have reasoned that “[p]ermitting an assignment of a legal malpractice claim to the adversary in the underlying litigation that gave rise to the legal malpractice claim . . . creates the opportunity and incentive for collusion in stipulating to damages in exchange for an agreement not to execute on the judgment in the underlying litigation.” 44 The concern is that, “[b]ecause the ‘losing’ party in the consent judgment will never have to pay, nothing prevents the part ies from stipulating to artificially inflated damages that could serve as the basis for unjustly high damages in the ‘trial within a trial’ phase of the subsequent malpractice action.” 45

¶ 36 While courts have phrased the question broadly

— whether any assignment “to an adversary in the underlying litigation ” must be prohibited as fostering an opportunity for collusion

— a close inspection of these cases reveals that they invariably involve the following: 1) a defendant in the underlying case stipulating to a

consent judgment; 2) an assignment of a legal malpractice claim against the defendant’s litigation counsel; and 3) a promise not enforce the judgment as long as there is cooperation in the malpractice action. 46

_____________________________________________________________

44 Gurski v. Rosenblum & Filan, LLC , 885 A.2 d 163, 174 (Conn. 2005).

45 Edens Techs., LLC v. Kile Goekjian Reed & McManus, PLLC , 675 F. Supp. 2d 75, 79 (D.D.C. 2009).

46 See, e.g.

, id. ; Skipper v. ACE Prop. & Cas. Ins. Co. , 775 S.E.2d 37, 38 (S.C. 2015) (“The most common reason other courts have declined to permit assignments of legal malpractice claims is to avoid the risk of collusion between the parties. . . . When an original defendant is essentially relieved of liability, there is little incentive for the consent judgment to reflect the actual loss. As courts around the country have recognized, the potential for inflated damages in such consent judgments is manifest.”).E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

20 ¶ 37 We first note that we are not faced with such an

arr angement here. In this case, there is no contractual term providing that the City will owe nothing to Cedar Valley if it signs over its legal malpractice claim. We cannot see how the opportunity and incentive for collusion are intolerably strong where the defendant in the underlying proceeding still feels the sting of the original judgment. 47 If the assignor does not obtain a promise that the assignee will not execute, its incentive to collude is drastically diminished, because the assignor will remain respo nsible for the judgment.

¶ 38 So the most realistic collusion concerns are not present here. But even if they were, we do not view this concern as necessitating a blanket ban on assignment. To do so, we would have to ignore our legal system’s significant proce dural safeguards that operate to expose and extinguish unmeritorious claims. We have discussed a number of these above, and we reiterate them briefly here.

¶ 39 A s noted above, rule 11 operates to cull frivolous lawsuits and impose sanctions on parties and att orneys who foster them. 48 Second, a party who brings a malpractice action that is the product

of collusion will have to survive motions to dismiss and for summary judgment. Even if the claim can survive these procedural gatekeepers, the plaintiff bringing t he collusive suit will have to face the jury, and the facts regarding the opportunity and incentive for collusion will be on full display. Attorneys who bring collusive, frivolous claims will be subject to ethical repercussions. 49

¶ 40 We have confidence that t hese serious deterrents are sufficient to discourage attorneys considering concocting a scheme to inflate damages and then bring a leg al malpractice action against a former adversary’s attorney. To conclude that the assignment of

_____________________________________________________________

47 See, e.g.

, Edens , 675 F. Supp. 2d at 79 (“Edens had no incentive

to contest the extent of damages, because as long as it secured from Golf Tech a promise not to execute on the judgment, Edens would never have to pay anything. It is evident from the Settlement Agreement that there was no reason for Edens to try to minimize damages.”).

48 See supra ¶ 25

.

49 U TAH R. P ROF ’ L C ONDUCT 3.1 (“A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not

frivolous

. . . .”).Cite as: 2017 UT 31

Opinion of the Court

21 legal malpractice claims m ust be prohibited assumes that our legal system is insufficient to ferret out unmeritorious claims. We are not so skeptical of the process that we would ban these assignments out of fear of potential collusion.

D. Concerns Regarding a Public Loss of Respec t for the Legal System

¶ 41 Finally, courts have expressed concern that the public may lose respect for the legal system if they observe lawyers “shameless[ly] shift [] positions” between an underlying action and a subsequent malpractice trial. 50 The problem ari ses when the assignee of a legal malpractice claim attempts to prove causation. To do so, the assignee must prove that the judgment it obtained in the underlying proceeding was obtained solely due to the malpractice of litigation counsel in that underlying case, and not because the

defendant was indeed liable.

¶ 42 To illustrate, consider a personal injury action. After securing a judgment against the defendant, the plaintiff promises not to execute on it in exchange for the defendant’s assignment of a malpract ice action based upon the defendant’s attorney’s purportedly negligent conduct in that action. The subsequent malpractice action’s trial

- within

- a

- trial will feature the assignee attempting to show that, but for the defendant’s attorney’s negligent performa nce in the underlying case, no judgment would have been obtained. That would require the plaintiff to show that the defendant was not negligent, or that the defendant’s negligence did not cause the plaintiff’s injury

— diametrically opposite positions to tho se taken in the underlying suit. 51

¶ 43 Courts have identified this switch of positions as intolerable because in their view it demeans the legal profession. One court expressed the concern as follows:

[T] he “ trial within a trial ” that necessarily characterizes most legal malpractice claims arising from the same litigation that gave rise to the malpractice claim would lead to abrupt and shameless shift of positions that would give prominence (and substance) to the perception that l awyers will take any position, depending upon where the money lies, and that

_____________________________________________________________

50 See, e.g.

, Zun iga , 878 S.W.2d at 318.

51 See id.E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

22 litigation is a mere game and not a search for truth, thereby demeaning the legal profession. 52

Courts have expressed concern that jurors seeing such a position shift “would right ly leave the courtroom with less regard for the law and the legal profession than they had when they entered.” 53

¶ 44 We note first that the identified “shameless shift of positions” is not present in all legal malpractice assignments. “The fact that an attorney might be called on to defend against an assigned malpractice claim does not always mean that the attorney’s former adversary will compromise the strength of his underlying claim, resulting in some sort of role reversal which diminishes public

confidence i n the legal profession.” 54 Even the Picadilly court

— one of

the first to raise this concern

— recognized that “[s]hifts in position are inevitable as long as clients are allowed to bring malpractice claims, and attorneys are permitted to fight them.” 55

¶ 45 The case before us does not feature a shameless shift of positions. Here, n o attorney needs to take a position directly contrary to one argued earlier. The attorneys defending Parsons Kinghorn may present the same theory of the Capacity Purchase

_____________________________________________________________

52 Kommavongsa , 67 P.3d at 1078.

53 Picadilly

, 582 N.E.2d at 345.

54 New Hampshire Ins. Co. , 707 N.E.2d at 337. The New Hampshire

Ins. Co. court went on to recognize that

I t could be argued just as forcefully that, providing shelter for attorneys by prohibiting the voluntary assignment of malpractice claims, would actually diminish public confidence in the profession by creating the perception that the system provides

attorn eys with unjust ified special protection. . . . “ Rather than helping the image of the legal profession, a rule of non

assignability would give the impression that the profession has something to hide, that the courts are taking care of their own. A

more fav orable image will be projected by an acknowledgement that [the legal] profession, like any other, must face its problems and answer its accusers. Vindication after a full airing of the facts is a much better result than the suspicion that would fol low a

su ppression of the facts.”

Id. ( second alteration in original) (citation s omitted).

55 582 N.E.2d at 345 n.10

.Cite as: 2017 UT 31

Opinion of the Court

23 Agreement that Par sons Kinghorn advised the City to take regarding the City’s contractual obligations. And Snell & Wilmer may continue to advocate the same theory of that contract that it advised Cedar Valley to take. So no attorney will be required to advocate for a positi on that he or she did not advocate for in the underlying case. The only role reversal here is by the City, the alleged malpractice victim. And though the City is switching positions, this is the kind of
switch that, as the Picadilly court recognized, is in herent in a legal malpractice action. There is nothing shameless or disreputable about a client who was the victim of an attorney’s negligent advice repudiating the position that it took as a result of that bad advice.

¶ 46 Further, we are not persuaded that t he concern about position shifting is significant enough to ban altogether the assignment of legal malpractice claims. As a practical matter, an attorney who shifts positions can expect to have that shift highlighted for the jury. 56 The exposure of the shif t of positions would present a significant risk of the jury concluding that no malpractice had occurred. So an attorney who plans to so shift positions would need a convincing explanation to account for the shift in positions. That explanation may well ame liorate whatever loss of respect a j ury might otherwise experience.

¶ 47 In sum, the public policy concerns that have been voiced by courts on the subject of assigned legal malpractice claims are not present on these facts. But even if they were, we are not per suaded that these concerns are sufficiently clear and compelling to justify prohibiting the assignment of legal malpractice claims.

Conclusion

¶ 48 We conclude that the rationales that have been offered against the assignment of legal malpractice claims are un persuasive in view of our jurisdiction’s procedural safeguards, including our rules of civil procedure and rules of professional conduct. We accordingly hold that legal malpractice claims are presumed to be voluntarily assignable. We do not foreclose, howe ver, the possibility that a future case could present an assignment that violates clearly defined and compelling public policy concerns and therefore be

deemed invalid. The contractual a rrangement between the City and

_____________________________________________________________

56 See Pennell, supra ¶ 29 n. 3 5 at 502; Michael Sean Quinn, On the Assignment of Legal Malpractice Claims , 37 S. T EX

. L. R EV . 1203, 1233 (1996).E AGLE M OUNTAIN v. P ARSONS K INGHORN

Opinion of the Court

24 Cedar Valley does not implicate any su ch concerns. We therefore reverse the grant of summary judgment and remand for further proceedings.