Court Opinion

ID: 4713469
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:39:24.118+00
Date Added: 2024-06-11T08:07:17.847610
License: Public Domain

Sanders, J.
(dissenting) — The majority holds an attorney can never recover prospective fees from cocounsel. I disagree. Instead of focusing on the facts at hand, the majority seeks to prevent any possible conflict at any possible time in any possible case. Majority at 448-49 (fearing “potential conflicts of interest that harm the client’s interests may arise” (emphasis added)). It claims any liability between attorneys for prospective fees creates a fiduciary duty between attorneys, which might interfere with an attorney’s duty of loyalty to the client. The duty breached here, however, is the standard duty of due care every professional owes to any foreseeable plaintiff as well as the duty we all have not to break our contracts. And there is no conflict of interest if an attorney recovers fees from cocounsel because cocounsel has already damaged the mutual client’s case through his own negligence.
¶28 Tahar Layouni was injured and retained Michael Mazon to recover for his personal injury. Mazon associated Steven Krafchick as cocounsel. Both entered into a joint venture agreement to “split fees and costs equally,” Clerk’s Papers (CP) at 26, where Mazon was to draft the complaint and find the addresses of the defendants for service and Krafchick was to file and serve the complaint. Krafchick failed to do his part and as a consequence Layouni’s case was dismissed. Layouni then sued both attorneys for malpractice and recovered $1.3 million. If Layouni had recovered this net amount at trial, after paying an agreed one-third contingent fee, each attorney would have received a $325,000 fee. However because of Krafchick’s inaction, Mazon was denied any fee. Mazon has three dis*454tinct theories to support recovery: tort, contract, and unjust enrichment.
¶29 I agree an attorney owes every client an undivided duty of loyalty, and this duty is inviolate and must be protected. But the majority’s rule is so broad it insulates attorneys from responsibility for their professional negligence even where there is no remaining duty to the client to protect. After Krafchick breached his duty of care, resulting in dismissal of the case, Layouni no longer needs Krafchick’s loyalty. But instead of providing the proper remedy to Mazon for Krafchick’s negligence, the majority protects Krafchick, providing a broad shield apparently available only to lawyers.
I. Krafchick breached his duty of care to Mazon
¶30 Any other professional must bear the cost of his negligence.4 The majority looks to California precedent to support the claim there is no fiduciary duty between lawyers. Majority at 447 (citing Beck v. Wecht, 28 Cal. 4th 289, 290, 48 P.3d 417, 121 Cal. Rptr. 2d 384 (2002)). However, Beck only holds an attorney does not have a fiduciary duty to protect a cocounsel’s fees. That is all it holds. Beck, 28 Cal. 4th at 298.5 But even assuming an attorney owes no fiduciary duty to cocounsel, he must still exercise that duty of care and act as a reasonable attorney would under similar circumstances. Restatement (Third) of Law Governing Lawyers § 52(1), at 375 (2000) (“[A] lawyer who owes a *455duty of care must exercise the competence and diligence normally exercised by lawyers in similar circumstances.”). A lawyer owes a duty of care to nonclients when:
(a) [T]he lawyer . . . invites the nonclient to rely on the lawyer’s opinion or provision of other legal services, and the nonclient so relies; and
(b) the nonclient is not, under applicable tort law, too remote from the lawyer to be entitled to protection.
Id. § 51(2), at 356-57.6 Under this rule Krafchick owed Mazon a duty because Krafchick invited Mazon to rely on the provision of his legal services, and Mazon did rely. Discussing the rule’s rationale, the American Law Institute balances the same concerns raised by the majority:
Lawyers regularly act in disputes and transactions involving nonclients who will foreseeably be harmed by inappropriate acts of the lawyers. Holding lawyers liable for such harm is sometimes warranted. Yet it is often difficult to distinguish between harm resulting from inappropriate lawyer conduct on the one hand and, on the other hand, detriment to a nonclient resulting from a lawyer’s fulfilling the proper function of helping a client through lawful means. Making lawyers liable to nonclients, moreover, could tend to discourage lawyers from vigorous representation. Hence, a duty of care to nonclients arises only in the limited circumstances described in the Section.
Id. § 51 cmt. b at 358. And these limited circumstances are present here. Mazon was foreseeably harmed by Krafchick’s *456failure to timely serve the defendant. Concerns militating against liability are not present here. There is no difficulty distinguishing the harm resulting from Krafchick’s negligence and Krafchick’s assisting his client. Krafchick was not helping his client when he failed to timely serve a complaint. Nor does liability discourage vigorous representation; rather liability encourages zealous advocacy.
¶31 Krafchick is also liable under section 56 of the Restatement. This section provides “a lawyer is subject to liability to a client or nonclient when a nonlawyer would be in similar circumstances.” Id. § 56, at 416. Unlike the majority, the Restatement makes no special exemption for attorneys:
Lawyers are subject to the general law. If activities of a nonlawyer in the same circumstances would render the nonlawyer civilly liable or afford the nonlawyer a defense to liability, the same activities by a lawyer in the same circumstances generally render the lawyer liable or afford the lawyer a defense.
Id. § 56 cmt. b at 416. Krafchick would generally be liable for his negligence. His negligence arguably cost Layouni $1.3 million in potential recovery and Mazon $325,000 in potential fees. Layouni recovered his share in the form of a credit to the settlement. However Mazon recovered nothing.
¶32 The majority fears attorneys might “develop an impermissible self-interest in preserving the claim for the prospective fee, even when the client’s interests demand otherwise.” Majority at 449. This is fiction. Krafchick’s negligence would never be in the client’s interest. An attorney must always timely serve a complaint and failure to do so may be negligent. When an attorney commits malpractice and that same misconduct damages cocounsel, there is no reason both the client and cocounsel should not be allowed to recover. This result does not jeopardize an attorney’s duty of loyalty, it promotes it.
*457II. Krafchick breached his contract to Mazon
¶33 In its eagerness to announce its broad rule, the majority conflates Mazon’s causes of action and unwittingly attacks the freedom to contract. Even if an attorney can be specially insulated from his professional responsibilities, surely he must be at least held to his contracts. Mazon and Krafchick explicitly agreed to bear and divide the responsibilities, costs, and profits of their joint venture. CP at 26. Mazon agreed to prepare the complaint and Krafchick agreed to serve it. Mazon held up his end of the bargain; Krafchick breached his.
¶34 When a contract is breached, the nonbreaching party is generally entitled to expectation damages. The Restatement (Second) of Contracts entitles Mazon to:
(a) the loss in the value to him of the other party’s performance caused by its failure or deficiency, plus
(b) any other loss, including incidental or consequential loss, caused by the breach, less
(c) any cost or other loss that he has avoided by not having to perform.
Restatement (Second) of Contracts § 347, at 112 (1981), quoted with approval in Eastlake Constr. Co. v. Hess, 102 Wn.2d 30, 46, 686 P.2d 465 (1984). Krafchick breached his promise to serve the complaint, costing Mazon any fee he would have earned. The majority does not address Mazon’s contractual claims and suggests no reason why breach of the contract should also be excused. The Court of Appeals rejected Krafchick’s contract claims because it claimed the agreement created the specter of a divided duty of loyalty. But there was no inconsistency here between serving the interests of the client and the cocounsel. If an attorney cannot hold cocounsel liable for a breach of contractual obligations between them, contracts become meaningless scraps of paper. The law holds Krafchick must be held to his contract, but the majority’s decision threatens the integrity of any cocounsel agreement.
*458III. Krafchick will be unjustly enriched if allowed to keep damages owed to Mazon
¶35 Equity also supports Mazon’s recovery. Assuming the damages calculation was correct, Krafchick’s negligence and breach of contract lost a potential $1.9 million recovery. Layouni received the two-thirds he was entitled to. According to the contract, Mazon was entitled to one-half the remainder. But Krafchick never had to pay. The Restatement (Third) of Restitution begins with the familiar rule: “A person who is unjustly enriched at the expense of another is liable in restitution to the other.” Restatement (Third) of Restitution and Unjust Enrichment § 1 (Discussion Draft 2000).7 The majority allows Krafchick to keep the $325,000 owed to Mazon. This is precisely what the Restatement forbids. Id. § 1 cmt. a.
IV. Public policy favors allowing Mazon to recover prospective fees
¶36 The majority claims public policy motivates its holding, not preexisting legal standards. The majority accepts the Court of Appeals rationale that a bright-line rule “prevents conflicts from arising at any point during the representation, assures the client’s interest is paramount regardless of the issue, and is easy to administer.” Majority at 447. While the majority is correct that allowing attorneys to recover prospective fees under limited circumstances may not always be easy to administer, a judge’s job is not necessarily an easy one. The remaining concerns are irrelevant if an attorney loses his client’s case through negligence and incompetence. Liability arose only after the malpractice. If the client’s best interests were paramount, Krafchick would have timely served the defendant. Linking liability to cocounsel and liability to the client provides a greater incentive for an attorney to pursue the case.
*459¶37 The majority also claims letting attorneys sue one another will erode public confidence — what little remains— in the legal system.8 This is speculation at most, not adequate reason to deny a lawyer the legal right to recover damages sustained as the result of another’s negligence or breach of contractual duty. What will the image of lawyers insulating themselves from liability do? By turning a blind eye to an attorney’s negligence, the majority hopes to encourage “cocounsel to back each other up and ensure that there are fewer mistakes in pursuing the best outcome for the client.” Majority at 450. Apparently Mazon should have checked with Krafchick daily, acting as his cocounsel’s keeper. An attorney with enough time to constantly investigate his cocounsel’s activities likely does not need co-counsel in the first place. Dividing responsibilities provides common clients extra talent and resources and promotes efficiency.
¶38 The majority hopes to send a clear message: “each cocounsel is entirely responsible for diligently representing the client.” Majority at 450 (emphasis added). The bright-line rule adopted today does the opposite; Krafchick is only partially responsible for his mistake. He breached his duties of care to both client and cocounsel. Based on the settlement amount, this cost Layouni $1.3 million and Mazon $325,000. Layouni recovered $1.3 million, while Mazon recovered nothing.
¶39 Mazon should be allowed to recover his prospective fees from Krafchick. Accordingly the Court of Appeals should be reversed.
¶40 I dissent.
Reconsideration denied January 11, 2007.

 The Restatement (Second) of Torts recites the familiar standard of care for professionals: “[0]ne who undertakes to render services in the practice of a profession or trade is required to exercise the skill and knowledge normally possessed by members of that profession or trade in good standing in similar communities.” Restatement (Second) op Torts § 299A (1965). See also Hizey v. Carpenter, 119 Wn.2d 251, 261, 830 P.2d 646 (1992) (“To comply with the duty of care, an attorney must exercise the degree of care, skill, diligence, and knowledge commonly possessed and exercised by a reasonable, careful, and prudent lawyer in the practice of law in this jurisdiction.”).

 In a companion case to Beck, the California Supreme Court allowed an attorney to sue cocounsel for indemnification. Musser v. Provencher, 28 Cal. 4th 274, 284, 48 P.3d 408, 121 Cal. Rptr. 2d 373 (2002). There was no fiduciary duty involved that might potentially divide the attorney's loyalty to his client. The California rule is more limited than what the majority creates today.

 The number of cases citing to section 51 of the Restatement shows lawyers must also be conscious of how their actions will affect nonclients. Whether from cocounsel or others, a lawyer is susceptible to lawsuits from nonclients. This threat does not force the lawyer to violate his duty of loyalty; it motivates him to act properly, both for his client and foreseeable plaintiffs. See, e.g., Paradigm Ins. Co. v. Langerman Law Offices, 200 Ariz. 146, 155, 24 P.3d 593 (2001) (holding “a lawyer has a duty, and therefore may be liable for negligent breach, to a nonclient •under the conditions set forth in previous case law and the Restatement”); Osornio v. Weingarten, 124 Cal. App. 4th 304, 312, 21 Cal. Rptr. 3d 246 (2004) (allowing a disqualified beneficiary to sue the attorney who prepared the will for negligence); Banco Popular N. Am. v. Gandi, 184 N.J. 161, 186, 876A.2d 253 (2005) (allowing a bank to sue an attorney who negligently prepared an opinion letter to the bank from the attorney’s client); Friske v. Hogan, 2005 SD 70, 698 N.W.2d 526, 532 (allowing children to maintain a malpractice action against the attorney for negligence in drafting their father’s will).

 Restitution is more than a contract remedy. See Restatement (Third) of Restitution and Unjust Enrichment § 1 cmt. h at 12 (Discussion Draft 2000). Rather it is “itself a source of obligations, analogous in this respect to tort or contract.” Id.

 The majority cites from Beck as support: “Public confidence in the legal system may be eroded by the spectacle of lawyers squabbling over the could-have-beens of a concluded lawsuit, even when the client has indicated no dissatisfaction with the outcome.” Beck, 28 Cal. App. 4th at 296. That hypothetical is not this case. Layouni sued both Krafchick and Mazon for malpractice; there is no greater way to indicate dissatisfaction with the outcome.