Beal Bank, SSB v. Arter & Hadden, LLP, et al., California Supreme Court Case No. S141131
In a case that has been watched closely by law firms and insurers, on September 27, 2007, the California Supreme Court issued a unanimous opinion that reversed a Second Appellate District decision which held that the limitations period for a legal malpractice claim is tolled as to a law firm while one of the firm's former attorneys continues to represent the firm's former client in the same matter at a new law firm.
The Court of Appeal's decision meant that a law firm could be vulnerable to a legal malpractice claim even if years have passed since the involved firm lawyer worked at the firm, so long as the alleged malpractice occurred while the lawyer was with the firm and the lawyer continued to represent the client in the same matter since leaving the firm.
In its decision, the Supreme Court focused on the tolling provision of California Code of Civil Procedure section 340.6(a)(2), which provides that the one-year statute of limitations period is tolled if "[t]he attorney continues to represent the plaintiff regarding the specific subject matter in which the alleged wrongful act or omission occurred." According to the Court, the tolling provision applies only to the "attorney" and not to the law firm. A broader reading of the statute, the Court said, places an increased burden on the legal profession by forcing firms to anticipate claims years after a client has left the firm. The Court noted that the ultimate result is increased insurance premiums as liability is extended, and it further noted that a narrow reading of the tolling provision is consistent with the legislature's intent to create a finite limit on the time during which a party can file a legal malpractice claim.
The state Supreme Court's decision largely is viewed as a victory for law firms and insurers in understanding and anticipating the liability of law firms.
For the full California Supreme Court decision, see: http://www.courtinfo.ca.gov/opinions/documents/S141131.PDF
For additional information regarding this case, or any related professional liability insurance issue, please contact Joan N. D'Ambrosio or Jessica L. Kelly in the San Francisco office of Duane Morris LLP or any other attorney of Duane Morris' Professional Liability Group.
This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.
Duane Morris LLP, one of the 100 largest law firms in the world, is a full-service firm of more than 600 lawyers. In addition to legal services, Duane Morris has independent affiliates employing approximately 100 professionals engaged in other disciplines. With offices in major markets, and as part of an international network of independent law firms, Duane Morris represents clients across the United States and around the world.
