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Soon after getting an offer to sell their 12-year-old audio book business in 1996, Michael and Deborah Raffin Viner retained corporate transactional lawyer Charles Sweet to negotiate a deal for them. The Southern California couple made it clear that there were certain contractual conditions that were “essential and non-negotiable,” and received Sweet’s assurances that he had gotten them all included. He hadn’t, so the Viners, claiming they lost millions, sued for malpractice, eventually winning more than $13 million at trial. An appeal court reduced that amount by more than $5 million, but upheld the crucial finding that the Viners — in order to recover the value of what they lost — didn’t have to prove that Sweet could have obtained a better outcome for them. In doing so, opponents say, the court hung transactional lawyers out to dry. Today, the California Supreme Court takes up Viner v. Sweet, S101964, during oral arguments in Los Angeles. Twenty-three California bar associations, law firms and individual lawyers have filed amicus curiae briefs with the court in support of Sweet, warning that transactional lawyers now face a vast new exposure to malpractice unless the lower court ruling is overturned. Disgruntled clients, they say, can now sue lawyers for botched transactions without having to go through what’s known as the “trial within a trial” required in malpractice cases arising out of litigation. “The longstanding requirement of proof that the client would have achieved a better outcome absent negligence, the court of appeal held, applies only to litigation malpractice cases, not to cases alleging negligence in connection with a transaction,” Mark Helm, who represents Sweet and his former law firm, Washington, D.C.’s Williams & Connolly, wrote in court papers. “This holding violates settled principles in the law not only of professional malpractice, but of negligence more generally, and it rests on fundamental errors of law and logic.” The Viners, long involved in the film and television industry, accused Sweet, now a partner at Honolulu’s Carlsmith Ball, of neglecting to include seven specific conditions in the Employment Termination Agreement that were essential to concluding a deal over their Dove Audio Inc. Among these were provisions providing the couple monthly payments from Dove for three years, credit for work done at the company and the right to engage in film and TV work — with the likes of Carl Reiner, Stephen King and Andy Rooney — that didn’t interfere with Dove’s audio book business. Sweet had never drafted an ETA and ended up not including the conditions demanded by the Viners. Even so, Sweet and his firm argued that the Viners had the duty of proving at a trial within a trial that “but for” their lawyer’s negligence they would have gotten a better deal. L.A.’s 2nd District Court of Appeal disagreed. “In the context of litigation malpractice the ‘trial within a trial’ approach is designed to substitute objective evidence for ‘pure speculation and conjecture,’” Justice Earl Johnson Jr. wrote. “In the context of the sort of transactional malpractice involved in this case, that approach does the opposite: It would introduce unprecedented layers of pure speculation and conjecture into the trial of the malpractice action.” In other words, the court felt it would be impossible — because of the give-and-take nature of transactional negotiations — to determine in a trial within a trial whether someone could have gotten a better deal in a business negotiation. Los Angeles lawyer Peter Sheridan, who represents the Viners, believes the appeal court got it right. “As the court of appeal pointed out,” the Christensen, Miller, Fink, Jacobs, Glaser, Weil and Shapiro partner wrote in court papers, “‘Better deal’ could only be ‘proven’ with endless layers of ‘what ifs’ and ‘what thens’ and ‘had you knowns’ — sheer guesswork with no evidentiary value that would not be admitted in the simplest auto accident case.” Sheridan, who could not be reached for comment, also argued in court documents that the case does not present the issue of a better deal. “Michael Viner and Deborah Raffin Viner,” he said, “wanted, sued for and were awarded damages not for some hypothetical ‘better’ deal, but only for the deal that W&C told them they had gotten.” The better-deal concept, Sheridan maintained, is nothing less than the old “but for” standard that he said was rejected by the California Supreme Court in 1991 in Mitchell v. Gonzales, 54 Cal.3d 1041. In that case, he argued, the high court didn’t abandon the requirement of causation, but used the “substantial factor” test. “Thus, under Mitchell and its progeny, firmly ensconced in every courtroom in this state for years, the relevant question is not whether the plaintiff would have been ‘better off absent the defendant’s negligence,’” Sheridan wrote. “It is whether the defendant’s negligence was a substantial factor in the harm that was in fact sustained by the plaintiff.” Sheridan’s sole amicus, HALT Inc., a Washington, D.C.-based nonprofit group that focuses on lawyer accountability, agreed wholeheartedly. “The modern trend of authority, both in California and other jurisdictions,” group counsel Suzanne Mishkin wrote, “is to employ ‘substantial factor’ analysis to avoid the inequities that accompany the ‘case within a case’ approach, the ‘but for’ causation requirement and derivative doctrines.” Sweet’s lawyer, Helm, said in a telephone interview that transactional lawyers all over the state are sweating the outcome of this case. “The court of appeal’s ruling,” he said, “eliminates a vital requirement that has been imposed in malpractice cases for over 100 years. I think we have to establish to the court that this is a deviation from prior precedent, and an unwise one.”

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