Summer is a time for relaxation and reading. Enjoy this collection of recent Pennsylvania cases, a new ABA Formal Opinion, and the associated risk management tips.

Work Product Doctrine
Lawyers preparing cases for trial, or even lawyers negotiating transactions, can relax just a little more this summer, as in BouSamra v. Excela Health, (June 18, 2019) the Pennsylvania Supreme Court acknowledged the significant protections of the attorney work product doctrine, protections that may apply even if the client has foolishly revealed your work product to a third party.

In this case, outside counsel rendered advice by email to inside counsel for the client. Inside counsel then forwarded that advice to a media relations firm for further action. The client waived any attorney-client privilege in doing so. However, that was not the end of the analysis, as the Court recognized that a lawyer enjoys a separate work product privilege. The Court held that the attorney work product doctrine is not waived unless the work product is disclosed to an adversary or disclosed in a manner that significantly increases the likelihood that an adversary or anticipated adversary will obtain it.

Also, the work product protection is not limited to litigators, but applies to lawyers in other practice areas, such as those negotiating business transactions. The Court remanded the case for further consideration in light of the new test announced.

What does this mean for your practice?

• Discuss the attorney-client privilege with your client. A discussion emphasizing the importance of the privilege and how to avoid waiver is in order from the outset of representation.

• Take measures to keep your work product confidential! The case is not a free pass to be sloppy with confidential work product and expect protection.

• Advise others with whom you share work product of its confidential nature. Put your expectation of confidentiality in writing.

• Consider using confidentiality agreements.

For a copy of the opinion, click on this link: BouSamra

Arbitration Agreements with Your Client
For those lawyers seeking to limit potential publicity resulting from a malpractice action, arbitration may be a good option. However, do not assume that you can enforce an arbitration agreement with your client, absent informed consent and independent counsel.

In Mackin Medical v. Lindquist & Vennum, (Dec. 26, 2018), a trial court refused to enforce an arbitration clause as it was held to be in violation of Rule 1.8 of the Rules of Professional Conduct. An attorney cannot limit liability for malpractice without telling a client to consult with independent counsel.

Although arbitration agreements are always subject to challenge by a client, such clauses are more likely to be upheld, or not challenged at all, if the following guidance is observed:

• Put the agreement to arbitrate in writing.
• Make the writing conspicuous.
• Obtain your client’s signature on the agreement.
• Explain that the right to a jury trial is being given up.
• Tell your client to consult with independent counsel.
• Do not ask for a prospective waiver of any type of claim.
• Consider the sophistication level of the client.

For a copy of the opinion, click on this link: Mackin.

Third Party Beneficiary Standing to Sue
The area of wills, estates and trusts is especially troublesome for the practitioner. Beneficiaries, disappointed with their inheritance, routinely challenge the lawyer who provided services to the decedent.

Although the frequency of lawsuits is not declining, Pennsylvania courts have limited the right of some beneficiaries to sue. The case of Estate of Young v. Louis (Pa. Super. 2018) is yet another case involving an unexecuted estate planning document and a beneficiary attempting to blame the lawyer for not having the document executed prior to death. In this case, a draft trust amendment purported to change the beneficiary. The intended beneficiary claimed that negligent preparation of estate documents prevented receipt of assets from the trust. Judgment for the law firm was affirmed, based on prior precedent, making it difficult for a beneficiary to gain standing to sue based on an unexecuted document. The intent of the testator cannot be determined in such circumstances.

This case does not prevent a lawsuit against a lawyer for errors in a fully executed document. It also does not prevent a beneficiary from suing. For example, this case resolved by summary judgment, causing the lawyer to incur time and expense to defense. Accordingly, attorneys drafting documents would be wise to document the manner in which draft documents are provided to clients, to document any instructions given to the client as to execution and document any change of heart by a client.

For a copy of the opinion, click on this link: Young.

Keeping your Client Informed
Often, a legal malpractice case can be won based on a procedural defense, such as the statute of limitations. However, this is only possible if the lawyer can show that the client was clearly informed of the circumstances giving rise to the alleged error.

This scenario arose in Commc’ns Network Int’l v. Mullineaux, (Pa. Superior Ct. 2018) wherein the Court held that the statute of limitations barred the claim. Counsel provided opinions to the client, who failed to read them. This lack of diligence in discovering the malpractice barred the claim. A malpractice claim is triggered when the error giving rise to the claim occurs. It is tolled if the client cannot, through the exercise of diligence, discover the error.

So, how do we start the statute of limitations running? Keep clients informed! Keep clients informed not only of the good developments, but negative developments as well. Do so frequently. And, do so in writing!

For a copy of the opinion, click on this link: Mullineaux.

Fees Due to Predecessor Counsel
A client cannot be exposed to excessive fees in the form of paying two contingency fees due to a change in counsel. And yet, the issue of how the fee is to be divided up in the event of a recovery is often not addressed, or not addressed in a timely fashion, by successor counsel.

In ABA Formal Opinion 487 (June 18, 2019), the ABA’s Standing Committee on Ethics and Professional Responsibility counsels that in a contingent fee matter, when a client fires the lawyer, successor counsel must notify the client, in writing, that predecessor counsel may have a claim to some portion of the contingent fee. The client may be aware of the right to fire the lawyer, but not aware that the predecessor counsel may still have a quantum meruit claim based on the original fee agreement.

In taking over an existing case, successor counsel should also consider whether the scope of undertaking involves only the litigation of the case itself, or also an assessment of the predecessor counsel’s fee claim, in the event the client objects to payment. Whether and to what extent successor counsel is to become involved in any fee dispute as between the client and predecessor lawyer should be memorialized in the engagement letter. The Opinion further advises that successor counsel cannot charge the client for work that merely increases the successor counsel’s share, without increasing the client’s recovery.

In summary, the ABA opinion, the cited model rules, and Pa.R.P.C. 1.5, are all designed to ensure that the client understands the total fee, how it is computed, when it is to be paid and to whom. The more a client understands and approves, ideally in writing, and as early in the transition as possible, the less risk of conflict for all lawyers involved.

For a copy of the opinion, click on this link: ABA Formal Op 487.

Dragonetti Exposure
For those exceedingly aggressive lawyers who believe that they face little risk of a lawsuit by the opposing party–to whom they owe no explicit due of care–think again. Wrongful use of civil proceedings as well as abuse of process are two torts brought by the opposing party against lawyers who engage in abusive practices or who file lawsuits without probable cause and for improper purposes.

In Raynor v. D’Annunzio, (Pa. Super. 2019), the Superior Court held that a lawyer’s post-trial proceeding for contempt represented a “procurement, initiation, or continuation of civil proceedings” as contemplated by 42 Pa.C.S. § 8351(a), commonly known as the Dragonetti Act. As defined by the Act, the term “civil proceedings,” was held sufficiently broad to encompass the wrongful use of a civil proceeding other than an entire lawsuit. Also, despite not being a party, the lawyer against whom the contempt proceeding was directed had standing to file the Dragonetti Action.

For a copy of the opinion, click on this link: Raynor.

We hope you are enjoying your summer. We also hope that this summer reading will give you some risk management ideas to bolster your relationships with your clients and minimize your risk of a claim.

Duty To Safeguard Data

On November 21, 2018, the Pennsylvania Supreme Court decided the much anticipated case of Dittman v. UPMC, holding that an employer has a legal duty to exercise reasonable care to safeguard its employees’ sensitive personal information stored by the employer on an internet-accessible computer system.

Lawyers who store sensitive information of employees or clients utilizing the cloud or a computer that is connected to the internet must immediately take heed of this decision and adopt reasonable safeguards to protect sensitive information. Lawyers who already have safeguards in place should reevaluate now and often in light of this decision.

This case arose when the personal and financial information of 62,000 UPMC employees and former employees was accessed and stolen from UPMC’s computer systems. Some of the data was utilized to file fraudulent tax returns on behalf of the victimized employees, resulting in actual damages. Other employees averred they were at risk in the future. The employees asserted a negligence claim and breach of implied contract claim asserting that UPMC had a duty to exercise reasonable care to protect their personal and financial information within its possession or control from being compromised, lost, stolen, misused and/or disclosed to unauthorized parties.

The trial court dismissed the case, declining to recognize a duty of care. Of importance to its decision, the trial court recognized that the Pennsylvania Legislature has imposed a statutory duty on entities to provide notice of a data breach only. In a split opinion, a panel of the Superior Court affirmed, finding also that no duty was owed by UPMC.

In its decision reversing the trial court and vacating the Superior Court, the Supreme Court agreed with the employees’ position that they were not advocating for the creation of a new duty of care, but application of an existing common law duty to a novel factual scenario. By utilizing this analysis, the Court avoided a full blown public policy assessment, as might be required in the event of a newly recognized duty. The duties, as averred by the plaintiffs, included:

  • Designing, maintaining and testing security systems; and
  • Implementing processes that would timely detect a breach.

Although the Dittman plaintiffs have simply earned the right to proceed at this stage of the litigation, the following types of conduct are what the Court found sufficient to state a claim if proven: 1) failing to adopt, implement and maintain adequate security measures to safeguard information; 2) failing to adequately monitor the security of its network; 3) failing to recognize the breach in a timely manner; and 4) violating current data security industry standards, including use of encryption, adequate firewalls and adequate authentication protocol.

Lawyers must not ignore their obligation to safeguard information. To the extent there was any room for doubt as to a lawyer’s ethical duty to safeguard information, the Supreme Court–which has the exclusive authority to regulate the conduct of Pennsylvania lawyers–has spoken. In addition, a lawyer can be exposed to third party tort liability in the event of a breach of client and employee data if reasonable safeguards are not in place.

For the full Supreme Court Opinion, inclusive of the Court’s analysis and rejection of the economic loss doctrine, follow this link: Dittman.