It’s frustrating to think that an attorney your company pays for representation would act in a way that does not serve the firm’s best interests. Unfortunately, it happens. Businesses in California and across the country face this kind of risk every day. Violations of trust can occur in any number of ways – overbilling for services, a conflict of interest, or breach of fiduciary duty.
In one recent case outside of California, the claim made by plaintiffs of a family held company was that an attorney hired to draft an operating agreement in connection with a firm management dispute. Because of the actions he took, plaintiffs alleged that he helped a corporate manager in a scheme that saw the manager secretly pay himself $1.5 million. That manager, who happened to be a member of the family, then left the company.
What the plaintiffs specifically claimed was that the attorney’s management agreement allowed the suspect relative to hid his salary, and that he further shielded company records from other family members by writing a cease-and-desist letter on behalf of the exiting relative.
At trial, the attorney acknowledged he had been hired by the company to draft the agreement. However, he said he didn’t intend to hide financial information. Rather, he simply didn’t know the value of the company’s shares. He also disputed the claim that the agreement allowed the suspect relative to set his own rate of compensation. Meanwhile, a legal ethics professor testifying for the plaintiffs testified that the attorney erred by communicating with the suspect relative after he opted to leave the company. In the end, a jury found the attorney’s law firm to be 32 percent liable for the family firm’s losses. At last word, an appeal of the verdict was under discussion.
Mistakes happen in all of life’s arenas. The law is no exception. But certain indicators can suggest attorney malpractice. These can include:
- Failure to communicate
- Evidence of lying or misleading statements
- Failure to perform at a certain level of competence
Generally, people who don’t have the benefit of a law degree may find it hard to be sure when an attorney’s work is below par. If you have suspicions, you should seek another attorney’s help.