Showing 4 posts from October 2015.

Only Current Shareholder can Bring Derivative Legal Malpractice Claim Against Counsel for the Corporation

BoardroomThis Illinois Supreme Court in September 2015 held that to bring a derivative legal malpractice claim against counsel for a corporation, the plaintiff must have been a shareholder at time of the alleged negligence, and he or she must maintain his or her status as a shareholder throughout the entire pendency of the action. Stevens v. McGuireWoods LLP, 2015 IL 118652. The court noted that even assuming plaintiffs were successful, they could not have collected personally on any judgment entered against corporate counsel on derivative claims because at the time they filed the legal malpractice action against the defendant law firm, plaintiffs had relinquished any and all ownership in company. Therefore, the defendant law firm's alleged failure to assert contested claims against corporate counsel in a timely manner caused no injury to plaintiffs in their individual capacities. The court reaffirmed the well-established principle that a legal malpractice plaintiff must have suffered "actual damages." See also Eastman v. Messner, 188 Ill.2d 404, 721 N.E.2d 1154 (1999).

The Stevens court did not, however, address the attorney-client privilege issues which will surely surface in derivative claims, such as where the corporation (through its current management or "control group" refuse to waive the attorney-client privilege).

Arizona's Mediation Process Privilege Bars Malpractice Allegations

In its September 22, 2015 opinion in Grubaugh v. Blomo ex rel. Cnty. of Maricopa, No. 1 CA-SA 15-0012, 2015 WL 5562347, the Court of Appeals of Arizona held that the state’s mediation process privilege was not waived when plaintiff sued her attorney for malpractice arising out of alleged substandard advice given during a family court mediation. In addition, the court held that any of plaintiff’s allegations that were dependent upon privileged information should be stricken from the complaint. This case follows a number of others across the country that have been criticized for insulating attorneys from liability for their actions during the course of mediation. More ›

Illinois Court Finds LPL Insurer has no duty to Defend Action for Injunction or for fees Unrelated to Malpractice Claim

An Illinois appellate court ruled in Illinois State Bar Ass'n Mutual Ins. Co. v. Burkart, No. 4-14-1036, 2015 WL 5657857 (Ill App. 4th Dist. Sep. 24, 2015) that a malpractice insurer had no duty to defend against an action seeking injunctive relief or an action for fees unrelated to a professional negligence claim. More ›

Seventh Circuit Warns: “When in Doubt, Disclose.”

The Seventh Circuit sends a message to the bar regarding potential conflicts of interest in a class action matter, reaching an issue raised for the first time on appeal: “when in doubt, disclose.” More ›

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