Thank you for sharing!

Your article was successfully shared with the contacts you provided.
There are countless scenarios that can lead a client to sue his or her former attorney for legal malpractice. Some former clients have indeed been wronged, while some claims may be questionable. As with any other cause of action, however, no judge or jury will get to decide the issue if the suit hasn’t been filed within the statute of limitations. For legal malpractice, the statute of limitations is two years because the claim is premised on the attorney’s alleged negligence. For claims that the attorney breached a fiduciary duty to the client, the limitations period is four years. Seeking to take advantage of 1999 legislation — Texas Civil Practice and Remedies Code � 16.004, which codified a four-year statute of limitations for breach of fiduciary duty — plaintiffs have increasingly taken to labeling all of their claims as breaches of fiduciary duty. While the distinction between attorney malpractice based on negligence and breach of fiduciary duty to the client is narrow, it can be drawn. In the 1989 case Cosgrove v. Grimes, the Texas Supreme Court said that legal malpractice claims are based on the lawyer’s alleged failure to exercise ordinary care, which constitutes negligence. When the facts add up to the attorney’s failure to exercise ordinary care and skill in the representation of his client, the suit almost always will be one for negligence and nothing more. In addition to the general duty to exercise ordinary care, attorneys owe their clients fiduciary duties. As pointed out by the Texas Supreme Court in the 1965 case Archer v. Griffith, the contractual relationship between attorney and client is highly fiduciary in nature. When a client questions a former attorney’s fiduciary loyalty, it is the attorney who bears the burden of establishing that perfect fairness, adequacy and equity existed in that relationship. Negligence claims cannot be fractured into other causes of action, such as breach of contract, misrepresentation, deceptive trade practices, fraud or breach of fiduciary duty to present additional avenues for recovery. A breach of fiduciary duty claim based on an alleged act or omission that failed to meet the standard of care for a lawyer is a negligence claim. The key to distinguishing between the two causes of action is to focus on the facts and circumstances that give rise to the client’s complaint. If the breach of fiduciary duty claim is based on the same facts and circumstances as the legal malpractice claim, it is likely that a Texas court will consolidate the two claims as a single legal malpractice claim. In the 2001 case Goffney v. Rabson, the 14th Court of Appeals in Houston recognized that Texas courts have found that an attorney breaches a fiduciary duty to the client by: 1. failing to disclose conflicts of interest; 2. failing to deliver client funds; 3. placing personal interest over client interest; 4. improperly using client confidence; 5. taking advantage of client trust; 6. engaging in self-dealing; and 7. making misrepresentations in transactions with the client. The common thread in these seven situations is the effect on the attorney-client contractual relationship. While negligence is present when an attorney’s conduct falls short of the ordinary care standard, a fiduciary duty is breached only when the attorney’s conduct impairs the fairness or equity in the attorney-client contractual relationship. To show a breach of fiduciary duty, the client must establish a transaction between the attorney and the client whereby the attorney acted in such a way as to damage the client’s trust or confidence or to take an unfair advantage at the expense of the attorney-client relationship. LEGISLATIVE FIX? Before 1999, Texas appellate courts were split over the applicable limitations period for a breach of fiduciary duty cause of action. Some courts said that breach of fiduciary claims were tort actions, so the two-year limitations period applied. Other courts applied a four-year statute of limitations to breach of fiduciary duty claims brought against attorneys when the basis for those claims was deception or fraudulent misrepresentation. These courts likened such a breach to fraud and felt that the four-year statute of limitations for fraud should apply. In an effort to clear up the conflicting case law, the Texas Legislature codified the statute of limitations for breach of fiduciary duty claims at four years. The four-year statute of limitations applies to breach of fiduciary duty claims brought after Sept. 1, 1999. Last month, the 4th Court of Appeals in San Antonio held in Millan v. Dean Witter Reynoldsthat claims based on events that took place before Sept. 1, 1999, would still be subject to the two-year statute of limitations that court and others applied before the new legislation. Though the Legislature cleared up one problem by making the four-year statute of limitations for breach of fiduciary duty uniform, it created another. Plaintiffs try to shoehorn basic attorney malpractice claims based on negligence into breach of fiduciary duty claims. Breach of fiduciary duty claims can be distinguished from claims for attorney malpractice. While the distinction between the two claims can sometimes be hard to find, it can be of ultimate importance. Luckily, Texas judges don’t rely on labels and know a negligence claim when they see one. Still, the ability to plead and successfully argue the distinction between the two causes of action can mean the difference between sustaining a legitimate breach of fiduciary duty claim or consolidating a breach of fiduciary duty claim into a single legal malpractice action, barred by limitations. Bill Cobb is a shareholder in the business and tort litigation sections of Cowles & Thompson, www.cowlesthompson.com, in Dallas and heads the firm’s professional liability practice group. Jennifer Brownell is an associate with the firm’s business litigation section. David Woodward is a partner in the firm.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.