Three Ways to Stop the One-Year Legal Malpractice Statute of Limitations From Accruing
November 29, 2023
California has a one-year statute of limitations (SOL) for all claims by clients against their former attorneys (except actual fraud which has a three-year period). California Code of Civil Procedure section 340.6. Generally (with all sorts of exceptions), the one-year period starts running when the attorney-client relationship ends and the client has suffered damage. Payment by the client to lawyer no. 2 to evaluate or correct lawyer no. 1’s mistake is “damage” which triggers accrual.
Frequently, the client faces a one-year deadline but is not ready to file suit for a variety of reasons (e.g., the lawsuit where lawyer no. 1 erred is still pending). So, what are the client’s options to protect its claims?
First, the client can ask the attorney to sign a tolling agreement extending accrual of the one-year SOL. Frequently, attorneys agree to a tolling agreement because the passage of more time might allow the client to correct the lawyer’s error, mitigate damage, and reduce the value of the claim. The parties can use the extra time to evaluate the claim and resolve it short of a lawsuit.
Second, the client can file a petition for mandatory fee arbitration with the local bar association. That filing stops the accrual of the one-year statute. Section 340.6(a)(5). The fee arbitration process can take several months and might lead to a resolution of the parties’ disputes, and it bars the lawyer from filing suit against the client for unpaid fees. Fee arbitration also has the possibility of setting up the client (or the attorney) to recover attorney’s fees if the parties do not accept the nonbinding arbitration award and proceed to binding arbitration or trial. B&P Code section 6204(d) (“The party seeking a trial after arbitration shall be the prevailing party if that party obtains a judgment more favorable than that provided by the arbitration award, and in all other cases the other party shall be the prevailing party. The prevailing party may, in the discretion of the court, be entitled to an allowance for reasonable attorney’s fees and costs incurred in the trial after arbitration, which allowance shall be fixed by the court.”)
Finally, the client can file a lawsuit (or a binding arbitration petition if provided for in the fee agreement). If there are good reasons why the lawsuit (or binding arbitration) should not proceed until some underlying issue gets resolved, then courts/arbitrators are often willing to stay the litigation for a period.
Mark B. Wilson, P.C. is a partner of Klein & Wilson. Mr. Wilson is a certified specialist in legal malpractice law in California.