• October 11, 2013

HourglassTo many people, “S.O.L.” means “sh*t outta luck.”  To many lawyers, it means “statute of limitations.” And, in many cases, the two meanings are interchangeable for plaintiffs.

In legal malpractice claims in Minnesota, in particular, even with the relatively generous six-year statute, many once-potential plaintiffs are “S.O.L.”

For example, imagine you retain  lawyers in year 1, they represent you in drafting an “antenuptial agreement” (“pre-nup”) in year 1, you marry in year 2, you divorce in year 12, and when you divorce, you discover that the pre-nup failed to protect your premarital assets, which had been the point of the pre-nup in the first place.  S.O.L.

But this week, Minneapolis attorney Paul Sortland notched what could be an important win in opposition to a motion to dismiss a legal malpractice claim based on the S.O.L.

Hennepin County District Court Judge Philip D. Bush had to answer the question in this post’s title:  when measuring the six year statute of limitations for a claim of legal malpractice, we are to measure six years from what?

According to plaintiff’s allegations, plaintiff retained lawyers in 2004 (let’s call it “Year 1”) to help in her divorce.  In Year 2, it is alleged that the plaintiff’s lawyer failed to accurately describe her child custody preferences in court, failed to seek child support in a timely fashion, falsely represented her client’s agreement to child support, and waived any claim for spousal maintenance without her client’s knowledge or consent.  Plaintiff’s counsel was also to assist with was the valuation of her soon-to-be ex-husband’s business.  Plaintiff’s counsel allegedly undertook to determine the business’ value and concluded the business had no value.

In Year 8, the ex-husband’s business sold for $10 million.

In Year 9 (4/25/2013, to be precise), plaintiff brought her claim for legal malpractice.

So, is plaintiff “S.O.L.”?  For some of the claims? For all of the claims?

For none, according to Judge Bush’s decision, which adopted “the continuous representation doctrine.” As Judge Bush explains in a footnote of his order:

The continuous representation doctrine operates as follows: “As applied in legal malpractice actions, the [continuous representation doctrine] tolls the statute of limitations or defers accrual of the cause of action while the attorney continues to represent the client and the representation relates to the same transaction or subject matter as the allegedly negligent acts.”

(citing a 1986 decision from the Supreme Court of North Dakota).

Judge Bush points out that the doctrine does not change the date that the statute of limitations begins to run, it simply tolls the statute until the conclusion of the representation.  (So, for example, if engagement was from Year 1 to Year 3, and malpractice caused damages in year 1, but client did not discover the malpractice until Year 10 and brings suit in Year 10, the claim would be barred because Minnesota does not employ the “discovery rule” and the claim is more than six years from Year 3.  A claim brought in Year 8, however, would be viable under the continuous representation doctrine (but not without it, in which case it would fall outside the six year statute)).

A Connecticut Supreme Court decision on this issue seems to have been particularly persuasive to the Minnesota district court.

Photo by Jonathan Rotondo-McCord

Photo by Jonathan Rotondo-McCord

POST-SCRIPT:  ATTENTION FAMILY LAW LAWYERS: I recognize that family law is a stressful, difficult, volume-based business (that is, if you are not handling 20 or more (maybe a lot more?) files at the same time, you might have trouble making a decent living.  I am sympathetic.  But, fyi, as a lawyer who consults with unhappy former clients about potential claims for legal malpractice and pays attention to other cases out there (like this one), this issue of business valuation in the context of divorce appears to be a prominent risk in this practice area.  Family lawyers are not trained in business valuation.  They had better bring in help if they need it or get the client’s informed consent to forego getting a qualified valuation expert.  (Many clients, of course, just want out and they do not care if their ex-spouse walks away with a business of indeterminate value. They can certainly make that decision (if they are informed about the risks and benefits)).

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