Lawyers Beware: Legal Malpractice Is Not Your Only Liability Risk When Representing Clients

December 4, 2019

In Parkinson v. Bevis, 165 Idaho 599 (2019), the Idaho Supreme Court was faced with a case of first impression on whether an attorney can be sued for a breach of fiduciary duty as a separate cause of action from legal malpractice.  In this case, an attorney forwarded a confidential email from a client to the opposing counsel. The email was forwarded after the case was resolved and did not result in any economic loss to the plaintiff. Nevertheless, the client sued the attorney for breach of fiduciary duty. The defense moved to have the case dismissed on the basis the cause of action was, in essence, a legal malpractice claim, which requires actual, compensable damages to be sustained by the complainant. The district court agreed and dismissed the case given the client experienced no economic loss.

On appeal, the client argued she was not seeking recovery of any lost value, instead she was seeking relief in equity for disgorgement and forfeiture of attorney fees. The Idaho Supreme Court agreed and vacated the judgment of dismissal, noting “a breach of fiduciary duty claim is an equitable claim for which a defendant may have to disgorge compensation received during the time the breach occurred, even if the plaintiff cannot show actual damages.” It further stated a client seeking only equitable remedies may state a claim for breach of fiduciary duty independent from a claim for legal malpractice, even when the breach was accomplished by potentially negligent acts. Consequently, “a lawyer can violate his fiduciary duty, causing damage to his client, resulting in a legal malpractice claim; but he can also cause no damage, in which case an equitable remedy… may be recoverable as well.” Whether disgorgement is an appropriate equitable remedy depends on several factors: (1) the extent of the misconduct, (2) whether the breach involved knowing violation or conscious disloyalty to a client, (3) whether forfeiture is proportionate to the seriousness of the offense, and (4) the adequacy of other remedies.

Key takeaways:

  • Attorneys may be sued for breach of fiduciary duty separate and apart from a legal malpractice claim. Unlike a legal malpractice claim, a breach of fiduciary duty claim does not require compensable damages to be sustained by the client in order for the client to be able to recover.
  • A claim for breach of fiduciary duty seeks only equitable remedies, which include disgorgement and forfeiture of attorney fees.