It took eight days for the State Bar of Georgia to turn a failure at the Supreme Court of Georgia into a success at the General Assembly.
As lawmakers wrestled with gun laws and ethics reform in the closing days of the legislative session last week, bar lobbyists worked to quietly amend bills to override a March 18 high court decision allowing assignment of legal malpractice claims to third parties.
The bar had vigorously opposed such a ruling, which one malpractice defense lawyer said could force malpractice insurance rates up as much as 25 percent.
The justices ruled unanimously in Villanueva v. First American Title, S12G0484, that legal malpractice claims may be assignable when they involve financial loss because of property damage but do not involve personal torts or injuries resulting from fraud.
State Bar President Robin Frazer Clark said Friday the bar sprang to action within hours of the decision’s release. "I instructed our lobbying team that day to look for vehicles to attach an amendment to that would prohibit the assignment of legal malpractice claims."
Bar lobbyists then pushed lawmakers to amend House Bill 359, which dealt with the disposition of unclaimed property and was sponsored by the governor’s chamber floor leaders, and House Bill 160, which dealt with foreclosure registries and future conveyances. Rules allow legislators to tack on new, seemingly unrelated provisions to bills as long as the provisions pertain to the same code sections as the original bills.
In the bills, O.C.G.A. § 44-12-24 is amended so that it reads: "Except for those situations governed by Code Sections 11-2-210 and 11-9-406, a right of action is assignable if it involves, directly or indirectly, a right of property. A right of action for personal torts, for legal malpractice, or for injuries arising from fraud to the assignor may not be assigned."
HB 359 passed March 26, HB 160 passed March 28, the final day of the session, and both are headed to Governor Nathan Deal’s desk for his signature.
"This was major work by the State Bar on behalf of all Georgia lawyers, and it protects the confidential attorney/client relationship from the consequences of Villanueva," Clark said.
Clark added that her lobbying team got approval for the amendments from the bills’ sponsors—Rep. Chad Nimmer, R-Blackshear, and Rep. Mike Jacobs, R-Brookhaven, who is a lawyer, and the governor’s lawyers, Ryan Teague, David Werner and Thomas Worthy. Clark also credited McKenna Long & Aldridge partner Randy Evans, a longtime Republican adviser, with facilitating the amendments. Evans was the lawyer who predicted a hike in insurance rates as a result of Villanueva.
The governor’s office did not respond to a request for comment on Friday, but Evans said Governor Nathan Deal approved of the amendments.
"The sooner that this goes into effect, the better, especially given that every malpractice policy renewal before this can get into effect will reflect [through higher premiums] what the court has done," said Evans.
"I think it’s unfortunate the Legislature had to wade into a role that has traditionally been within the court’s inherent power—to regulate the profession of law," Evans added. "But it’s clear in the recent decision that the court decided to yield that to the Legislature, and I’m glad that the Legislature and the governor heeded the call."
A spokesperson for the state Supreme Court said the high court declined to comment.
Charles Brown of Beloin, Brown & Blum, the winning lawyer in the Villanueva case, declined to comment on the legislation Friday other than to say, "It’s total news to me."
On the day of the decision, Brown dismissed fears that the court’s ruling would put more practitioners at risk for being sued by third parties.
"I wouldn’t say this is going to necessarily expand into a secondary market of legal malpractice law claims," he told the Daily Report.
Atlanta lawyer David Lefkowitz, who represents plaintiffs in legal malpractice actions, said he was disappointed but not surprised by the bar’s actions.
"I am not sure when the leadership of the State Bar began to see the bar as the functional equivalent of a trade union, but this transaction is to the detriment of clients and to the image of lawyers," Lefkowitz said via email.
"[T]he leadership of the State Bar, without any notice to its members, has again taken steps to protect lawyers and limit clients’ rights," he added.
Lefkowitz also expressed concern the legislation would bar assignment of some legal malpractice claims that were assignable prior to the Villanueva decision, such as those brought by bankruptcy trustees or executors of estates.
"If so, that is a great disservice to the citizens of Georgia," he said.
Evans said he believes those types of claims will not be affected by the legislation because they are not contracts and are governed by the operation of law. However, Clark said she believes the legislation applies to all malpractice claims.
By comparison, the remainder of the bar’s 2013 legislative agenda was fairly low-key. It opposed a bill in the Senate that would have replaced Georgia’s medical malpractice system with a workers’ compensation-type board and another that would have codified voluntary binding arbitration agreements between nursing homes and residents or their families.
Clark, a trial lawyer whose husband lobbies for the Georgia Trial Lawyers Association, said the bar viewed both pieces of legislation as "infringements on citizens’ Seventh Amendment rights to jury trials." Neither bill made it out of the Senate Health and Human Services Committee, but committee chairwoman Renee Unterman, R-Buford, vowed that she would work with stakeholders on both before the 2014 session.
The Legislature, also on the last day of the 2013 session, approved a budget for fiscal year 2014, which starts July 1. The budget, which includes $17.4 in billion in state funds, contained cuts to most government agencies, including those in the judicial branch.
State Supreme Court Chief Justice Carol Hunstein, who is also head of the state Judicial Council, said the judiciary was spared the brunt of the cuts.
"I think that, in general, the Legislature has done what it could in bad fiscal times to fund the judicial system," she said Friday. "In many respects, they have not given us a percentage reduction that is present in some of the other agencies."
The budget did not include $208,000 requested by the Judicial Council to expand e-filing to trial courts.
Hunstein said that not appropriating the funds "will affect the speed with which e-filing comes to the trial courts in the state of Georgia, but I’m sure the AOC [Administrative Office of the Courts] and the Judicial Council will do our best to continue and push forward to ensure we do have e-filing for the litigants and attorneys in the state. Georgia is one of the few states that really doesn’t have that ability."
The budget also eliminated a position within the Administrative Office of the Courts that works with accountability courts, for a savings of $78,806, and cut the Judicial Council’s overall budget by $150,000. However, the budget did include $112,508 in additional money for the state Court of Appeals to prevent furloughs.
Other bills of interest to lawyers that are headed to the governor:
• HB 21 creates voluntary post-adoption contact agreements between adoptive parents and birth relatives that outline sharing of a child’s medical history and progress as well as visitation privileges. The new law would also consider any child 14 or older a party in the creation of the agreement.
• HB 242 reorganizes and modernizes the state’s 42-year-old juvenile code dealing with neglected and delinquent youth—a project that began a decade ago under the State Bar’s Young Lawyers Division. The bill also incorporates recommendations by the governor’s criminal justice reform council, including a two-tiered designated felony scheme and creation of community-based treatment programs aimed at keeping low-risk juvenile offenders out of detention centers.
• HB 336 gives insurers at least 30 days to respond to a settlement offer before a bad faith claim may be brought against them and requires that all settlement offers contain specific information, such as the amount of payment and release details. The new law pertains only to motor vehicle torts and is limited to regulating offers of settlement submitted prior to the filing of a lawsuit. The bill was the product of negotiations among a secret group of plaintiffs’ and insurance defense lawyers convened by the speaker of the House earlier this year.
• HB 382 shields public school districts from liability when they allow private entities to use their school facilities for events through recreational joint-use agreements. The original bill also applied to public entities, but the Legislature removed them from the legislation because the state is prohibited from agreeing to hold-harmless provisions in contracts. School district attorneys questioned the need for the bill, which was heralded by the American Heart Association as a way to fight childhood obesity, because they believe school boards already have sovereign immunity from liability claims.
• HB 437, 443, 444 are bills specific to Fulton County courts, which sprang from a task force’s recommendations last year. The bills would delineate terms and duties of the Fulton County courts’ chief judges, mandate that the county’s chief magistrate be elected instead of appointed and raise county-funded portion of the Superior Court judges’ salaries to $49,748 a year..
• HB 451 creates new judgeships in the Chattahoochee and Oconee Judicial Circuits.
• HR 4 offers a settlement with Tennessee over what Georgia deems to be a mistake in the placement of the states’ boundary line. The settlement would allow Georgia to exercise its water rights to Lake Nickajack and lay claim to 1.5 square miles of land along the shoreline. The resolution threatens Tennessee with litigation at the U.S. Supreme Court if it doesn’t agree to the settlement by the last day of Georgia’s 2014 legislative session.
• SB 66 increases maximum fines for contempt in superior and state courts from $500 to $1,000.
• SB 120 allows probate court judges in counties that do not have state courts to request district attorneys prosecute misdemeanor criminal cases, rather than have only the law enforcement officers involved in the cases bring them to court. The bill also would allow county commissions to hire private attorneys to prosecute those cases if district attorneys decline.