Academic journal article Texas Law Review

On the Assignment of Legal Malpractice Claims: A Contractual Solution to a Contractual Problem*

Academic journal article Texas Law Review

On the Assignment of Legal Malpractice Claims: A Contractual Solution to a Contractual Problem*

Article excerpt

I. Introduction

The law generally affords great latitude to parties who contract with each other to structure their relationships as they see fit.1 However, the lawyer-client relationship is treated differently from other contractual relationships.2 Although a retainer agreement between a lawyer and his client is a contract, lawyers have additional, noncontractual legal duties to their clients. As officers of the court, lawyers have ethical obligations to their clients in addition to their contractual obligations.3 Also, the lawyer is a fiduciary of his client and may be liable in tort for a breach of that duty, even if he has not breached the contract.4 Retainer agreements are often heavily skewed in favor of the attorney and a court may be rightly concerned with attorney overreaching.5 However, in addition to seeking to protect clients from the sinister machinations of their attorneys, courts are also concerned with protecting attorneys from the "knavery of their clients."6 Furthermore, public policy considerations, such as public respect for the legal profession and confidence in the administration of law, also come into play in a dispute between an attorney and his client.7

In 1976, a California appellate court, in an issue of national first impression, held that a legal malpractice claim may not be assigned.8 Since that time, the majority of courts facing this issue have followed that court's lead and held that legal malpractice claims cannot be assigned.9 But a handful of courts have held that they may be assigned under certain circumstances.10 Commentators have vigorously defended and derided the prohibition against assignment of legal malpractice claims.11

This Note argues that a legal malpractice claim is a form of property and should be freely assignable; however, attorneys should be allowed to limit a prospective client's right to assign a potential legal malpractice claim, provided the client provides his informed consent. Part II of this Note surveys the jurisprudence regarding the assignment of legal malpractice claims, highlighting the seminal cases and the policy reasons they give for and against free assignability. Part III argues that these reasons are unpersuasive; legal malpractice claims should be freely assignable, as is almost every other chose in action. Finally, Part IV argues that attorneys should be allowed to include anti-assignment provisions in their retainer agreements, assuming that they fully inform the client of the effect of that provision. This approach is consistent with contract law and will allow the parties to allocate the risks arising from the contract as they see fit.

II. American Jurisprudence Regarding the Assignability of Legal Malpractice Claims

A. Overview of Assignment of Choses in Action

A "chose in action" is the "right to receive or recover a debt, demand, or damages on a cause of action ex contractu or for a tort or omission of a duty,"12 or, more colloquially, a "right[] to payment."13 At early common law, choses in action were not assignable,14 partly because courts feared champerty and maintenance15 but also because the early English courts regarded rights as personal and non-transferable.16 As England switched to a capitalist economy, merchants demanded that the restraints on alienation of contractual rights and debts be lifted.17 When courts of law refused to accommodate their demands, courts of equity were happy to oblige.18 Eventually, restraints on alienation of other rights were relaxed to the point that assignability became the rule, rather than the exception.19

In the United States, the Supreme Court adopted the survivability rule, holding that personal claims that died with the owner were incapable of assignment, but that claims which attached to property survived the owner's death and were assignable.20 Although courts have practically abandoned the survivability test in favor of public policy considerations when determining whether a particular chose in action is assignable,21 assignability is now the rule rather than the exception. …

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