Lawyers Mutual was pleased to sponsor the Kentucky Justice Association’s March seminar on legal malpractice. The program covered liability theories, defending the accused lawyer, damages, the role of experts, and insurance coverage issues. Presented by an experienced and enthusiastic faculty, the seminar was one of the best I have attended. We hope it is made an annual offering by the KJA.
Two lawyer liability subjects covered at the seminar are of particular interest:
Wrongful Use of Civil Proceedings (A.K.A. Malicious Prosecution)
Lee Sitlinger gave an outstanding presentation on wrongful use of civil proceedings. After going over the elements of the cause of action, damages, and Kentucky case law, Lee offered this risk management advice for avoiding a wrongful use of civil proceedings suit when considering whether to bring a medical malpractice suit. This advice in principle is equally applicable to avoiding such suits in other situations.
Note: In our Fall 2007 newsletter we offered this risk management guidance for obtaining medical records:
Note: One seasoned Kentucky lawyer advises: “The best approach most often with a dog case is to take your medicine. Quit procrastinating, do the discovery, set the case for trial, try the case, lose the case; i.e., clean up your own mess. After all, you took the case.” Also keep in mind that if a lawyer believes the dog case lacks a good faith basis for proceeding, SCR 3.130 (1.16) Declining or Terminating Representation, mandates withdrawal because pursuing the case is a violation of SCR 3.130 (Rule 3.1) Meritorious Claims and Contentions, and procedural rules forbidding baseless and frivolous actions.
Does the Kentucky Consumer Protection Act Apply to Lawyers?
The Kentucky Consumer Protection Act (KCPA) provides in pertinent part:
KRS.367.170 Unlawful Acts: (1) Unfair, false, misleading, or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.
KRS 367.220Action for recovery of money or property – When action may be brought: Any person who purchases or leases goods or services primarily for personal, family or household purposes and thereby suffers any ascertainable loss of money or property, real or a personal, as a result of the use or employment by another person of a method, act, or practice declared unlawful by KRS 367.170, may bring an action under the Rules of Civil Procedure … to recover actual damages …. equitable relief …. punitive damages.
At the seminar the opinion was expressed several times that the KCPA applies to lawyers which, if correct, opens the door to yet another liability exposure for Kentucky lawyers. The plain meaning of the statutory words certainly supports that conclusion.
My opinion, however, is that the KCPA does not apply to the practice of law – at least not until the Kentucky Supreme Court rules that it does. The Kentucky Constitution vests the Supreme Court with the exclusive authority to regulate the Bar. Just as Kentucky lawyers were not permitted to practice in limited liability entities until the Supreme Court issued rules authorizing them (see SCR 3.022 and 3.024), the KCPA should not apply to the practice of law without Supreme Court approval. The recent Pennsylvania case of Beyers v. Richmondet al., 937 A.2d 1082 (Pa.2007), illustrates this position.
In Beyers a lawyer was sued for conversion of settlement funds under a Pennsylvania consumer protection law similar to KRS 367.220. The Pennsylvania Supreme Court held that applying consumer protection law to lawyers encroaches upon the Court’s exclusive constitutional power to regulate lawyer conduct in the practice of law in Pennsylvania.The Court pointed out that the state’s Rules of Professional Conduct cover misappropriation of client funds and provide an exclusive remedy for such conduct. Accordingly, the consumer protection law does not create a separate action for the same conduct. It was acknowledged, however, that lawyers acting in other capacities than the practice of law would be subject to consumer protection laws (e.g., “attorney’s who regularly engage in debt collection practices apart [from] their legal representation ….”).
Currently Kentucky lawyers are subject to claims for malpractice, abuse of process, and breach of fiduciary duty. The Kentucky Rules of Professional Conduct are replete with client protection rules. Examples are rules on diligence, fees, confidentiality, conflicts of interest, business relations with clients, safekeeping client property, truthfulness, respect for the rights of represented parties and third parties, and misconduct involving dishonesty, fraud, deceit, or misrepresentation. Our consumers are well protected. It is hard to see the need for an overlay of generic consumer protection law to protect them.