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Headlines have proclaimed the advent of medical malpractice tort reform in Texas, largely ignoring the effect of the new legislation on other tort claims, such as legal malpractice. In fact, much of the Texas Omnibus Civil Justice Reform Act applies to all tort claims, and the act will affect the legal malpractice area directly and indirectly. Somewhat ironically, the Legislature’s effort to reduce tort litigation could spawn new legal malpractice claims — suits against lawyers who fail to adapt to the new laws. In actions filed after Jan. 1, 2004, lawyer-defendants will have the option of invoking a statutory “offer of settlement” process. If the defendant chooses to invoke the process and the plaintiff rejects the offer, the defendant may recover post-rejection attorney fees (and certain expert witness costs) if the ultimate award is at least 20 percent less than the offer. The rule works both ways, however. Once the defendant invokes the process, the plaintiff may make a responsive settlement demand and may recover fees and costs if the ultimate award exceeds the plaintiff’s demand by at least 20 percent. Although seemingly mutual, the offer of settlement process does not put plaintiffs and defendants on equal footing. A plaintiff who “hits a home run” will recover attorney fees. But a defense home run — a summary judgment or take-nothing judgment — does not entitle the defendant to attorney fees because the act limits recovery to 50 percent of the economic damages awarded to the plaintiff plus 100 percent of non-economic and exemplary damages. In other words, recovery is available only when and to the extent the plaintiff wins something. Will legal malpractice defendants invoke the offer of settlement process? To some extent the answer depends on additional rules the Texas Supreme Court must promulgate by Jan. 1, 2004. Unless these rules allow adequate time to develop and present dispositive motions before making a settlement offer, defendants with strong legal or merits defenses may forego the process. On the other hand, expect lawyer-defendants to invoke the process when the main controversy is the existence or amount of damages, as opposed to liability. The act simplifies existing responsible-third-party (RTP) practice by allowing defendants to designate RTPs without formally joining them. RTPs now will be defined as those whose wrongful act or omission contributed “in any way” to the harm alleged by the plaintiff. If the loss allegedly was caused in part by an unknown criminal actor, the act allows designation of a “John Doe” RTP. The new RTP provisions will apply to all actions filed after July 1, 2003. Most lawyer-defendants will seek leave to designate as many RTPs as possible because the jury will be instructed to allocate 100 percent of any fault among the plaintiffs, the defendants, the designated RTPs and any settling persons. Designating more candidates for allocation theoretically increases the chances that the jury will assess a lower percentage of fault against the lawyer-defendant. This can be especially important when co-defendants are judgment-proof, because in almost all cases the defendant avoids joint liability if found to be less than 50 percent at fault. Although not frequently awarded in Texas professional liability cases, exemplary damages may become even less common thanks to the act. Juries will have to agree unanimously to award exemplary damages and also agree unanimously on the amount. The act does restore the term “gross negligence” as a basis for awarding exemplary damages, but defines “gross negligence” by adopting one of the former definitions of malice, which was already a ground for exemplary damages. INCREASED RISK The act may turn out to be a double whammy for some Texas plaintiffs lawyers. Not only will it be harder to secure complete relief for their clients — particularly clients injured by medical malpractice — but plaintiffs lawyers may face new risks of professional liability claims. The biggest legal malpractice trap awaits those who fail to observe the act’s effective dates. Suppose a client with a serious medical malpractice claim engaged a lawyer on Aug. 15, 2003, and the lawyer filed the client’s suit on Sept. 15. After a difficult and lengthy trial, the jury was persuaded by the lawyer’s impassioned argument and awarded the client $4 million for pain and suffering. The court then reduced those non-economic damages to $250,000, pursuant to new � 74.301 of the Texas Civil Practice and Remedies Code. The client’s new lawyer blames the first lawyer for failing to file suit before � 74.301′s effective date (Sept. 1) and demands that the first lawyer make up the lost $3,750,000. Claims like this will be brought; indeed, a plaintiffs legal malpractice lawyer will find this fact pattern irresistible. After all, in most legal malpractice cases the client lost the underlying claim. This means the client normally has to prove not only that the lawyer made a mistake, but also that the lawyer’s error — and not one of the hundreds of other things that affect trial outcome — caused the loss. The lawyer-defendant gets to argue that the client would have lost anyway, or in any event wouldn’t have recovered much. Here, however, the client won the case, and the cause and amount of the lost damages are not in dispute. The two most difficult legal malpractice elements — causation and damages — are already established. The lawyer-defendant is left to argue why it was impossible or imprudent to file the case before Sept. 1. The adoption of comprehensive tort reform raises a thorny question regarding the scope of a Texas lawyer’s duties. When the facts allow a client to bring suit in either Texas or a jurisdiction without tort reform, does a Texas lawyer owe a duty to advise the client about the relative advantages and disadvantages of each forum? Is it asking too much to require Texas lawyers to be familiar with the laws of the other states? Suppose a Texas client hires a lawyer to file a medical malpractice suit, but the suit could be filed in either Texas or Oklahoma. If the lawyer files suit in Texas without advising the client that Oklahoma law does not cap non-economic damages (except in pregnancy or emergency room cases), does the lawyer run the risk that the client will look to him or her when the damages awarded in Texas are capped? On the other hand, is it really reasonable for a client to expect that a Texas lawyer is familiar with the ever-changing details of other states’ laws? The lawyer’s duty in this situation is not clear. The safest course for attorneys may be to incorporate a provision in a standard engagement agreement disclaiming knowledge of the laws of other states and advising clients that the lawyer agrees only to pursue the case in Texas, even though different relief may be available in other states. The act is still in its infancy, and faces many challenges and developments. However, the act is certain to have a strong effect on future Texas tort cases, including legal malpractice claims. Those who ignore the act may learn more about legal malpractice litigation than they ever wanted to know. Paul Koning is a partner in the Dallas office of Hughes & Luce (www.hughesluce.com), where he chairs the firm’s professional defense practice group. His e-mail address is [email protected]. If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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