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TO SETTLE OR NOT TO SETTLE?
MAKE NO MISTAKE ABOUT IT!

Charnay v. Cobert, 145 Cal. App.4th 170 (2007)
By: David C. Peterson, Esq.
 

The Charnay v. Cobert case involves the alleged malpractice of an attorney who is accused of failing to properly advise his client to settle when she had the opportunity. It was alleged that attorney Joseph Cobert wrongfully and negligently advised his client, Martha Charnay, not to settle a case filed against her but instead encouraged her to fight the matter and pursue a cross-action. When, in the end, she faced judgment against her for over $600,000.00 and was charged $360,000.00 by her attorney, she filed suit for malpractice.

 

The trial court initially terminated the malpractice action by granting Cobert’s motion for summary judgment. The claims were, in essence, viewed as too speculative. In addition, the court found that a written document had provided notice to Ms. Charnay of her obligation to pay attorney’s fees to the other party if she lost.

 

On appeal and in a unanimous decision, the Court of Appeal (Second District – Division Seven) overturned the trial court and remanded the case for adjudication not inconsistent with the Appellate Court’s decision rendered November 28, 2006, and certified for publication.

 

Is this a trend?  A message may be contained in this decision that the courts are sending to attorneys who carelessly encourage their clients to enter into or continue litigation when better alternatives are available. The gate is open for more malpractice actions against lawyers whose clients lose big at trial. As we know, all it takes sometimes is a supporting case, a theory and an expert, to pursue a malpractice claim.

 

In remanding the case, the appellate court was essentially advising the trial court to allow a trier of fact to determine whether the attorney was more interested in the money to be made than the welfare of his client. This included whether Cobert encouraged his client to continue litigation when settlement was available at a far less cost. Also at issue is whether the attorney assured his client of prevailing at trial.

 

Attorneys with integrity should not find themselves in the position of Mr. Cobert (if he is ultimately found liable on Charnay’s claims). But as usual, all attorneys now must be extra vigilant because of the conduct of a few.

 

This is really a continuation of the trend already faced by lawyers because of the misconduct of others. For example, one element of the CMADRESS Program in the Santa Barbara Superior Court, addresses almost exactly what the Charnay case dealt with; that is, attorneys cannot be trusted to give their clients honest and forthright information about their risks, the costs of litigation and what opportunities they have to settle early in the dispute or litigation.

 

The CMADRESS Program requires, relatively soon after the action is filed, that all parties, insurance representatives and trial counsel personally appear (no exceptions) before an appointed mediator who is to give ”…(1) a thorough education of the parties in litigation describing the appropriate dispute resolution methods which may be useful for resolution of the case, and how those methods may have an [e]ffect on the cost of case resolution; and (2) an early settlement conference …. (CMADRESS PROGRAM OVERVIEW, Summer, 2006, Santa Barbara Superior Court, www.sbcadre.org” (emphasis supplied).

 

The court goes on to provide that: “Full participation by trial counsel in the CMC is critical as is attendance at the CMADRESS session by parties, counsel and insurance representatives with full settlement authority. The court is fully enforcing this aspect of the program.” (Supra; emphasis not supplied. This means sanctions.)

 

It is reported by the Court that the CMADRESS Program has been successful. Many more cases are settling at earlier rates than before. (CADRe Program Report and statistical information: www.sbcadre.org/CADRe/stats.htm)

 

It’s not the program itself that has caused consternation among some lawyers forced into the process, it’s the taking away of the lawyers’ ability to determine when and how to approach various means of settlement with their clients and with the other side. A similar feeling pervaded the Bar when delay reduction procedures were put into place, forcing lawyers into tight scheduling (unless excused by qualifying certain cases as “complex”). Many attorneys felt the courts had become too imposing upon their ability to gage when and how their cases were best handled in terms of timing, discovery and other pre-trial procedures.

 

This overall trend to reign in lawyers seems to be gaining momentum as the public and certain political leaders continue to criticize attorneys and the courts. They claim the system is too cumbersome and expensive, leaving the average person unable to utilize it as intended. Business leaders frequently report their unhappiness with the legal system which means for them a seemingly endless and expensive battle once lawyers get involved. (SCMA News, February, 2005, Volume 14, No.1.)

 

Another example is a published piece called, A Report on the Lawsuit Industry in California, 2005, which states, in part, as follows:

 

“The Report found that the plaintiffs’ bar had developed an increasingly sophisticated business model and was taking for itself an increasingly large share of national income. * * * Trial Lawyers, Inc. was among the most profitable businesses in the world, and its lobbying influence was unparalleled.” * * * (It) reaps its profits from unwilling customers – the litigation industry’s growth and sophistication seemed deeply troubling.”  * * * “A year and a half later, we find our concerns validated ….”  (Manhattan Institute Center for Legal Policy, Trial Lawyers, Inc.: A Report on the Lawsuit Industry in America, September 2003, Trial LawyersInc.com)

 

All of this seems to have fueled the trend of taking more aggressive approaches against lawyers who appear to abuse the system and their clients, driven by motives other than protecting and promoting their clients’ best interests. At the same time, the Courts have adopted a “customer service” style of approach toward the litigants. And the State Bar continues to ramp up its efforts to go after attorneys accused of misconduct.

 

Lawyers appear to be in the back seat regarding these trends. The message seems to be: “govern and protect yourself accordingly.” 


Mr. Peterson is a local mediator with LLM and Masters Degrees in Alternative Dispute Resolution. For questions or information, he may be reached at (804) 441-5884 or davidcpeterson@charter.net. His website can be found by searching the web at “David C. Peterson, Mediator,”  or through the CADRe Website.

 

 

End Note

 

The following may assist in a quick analysis with your client of the impact of the litigation:

 

QUICK GENERAL ANALYSIS OF POTENTIAL IMPACT OF LITIGATION

 

PRIMARY REASON LITIGATION COMMENCED ____________________________

________________________________________________________________________

 

INTERESTS EXPECTED TO BE SATISFIED BY COMPLETING LITIGATION

________________________________________________________________________

 

TOTAL ESTIMATED EXPENSE FROM COMMENCING LITIGATION TO JUST

BEFORE TRIAL: $________________________________

 

ESTIMATED LENGTH AND COST OF TRIAL (JURY OR BENCH?)

_________________ DAYS/WEEKS/MONTHS $ __________________________

 

ESTIMATED COST FOR POST TRIAL PROCEEDINGS

$__________________________________

 

REALISTIC RANGE OF RESULTS FROM TRIAL

$_________________  TO  $__________________

 

REALISTIC PERCENTAGE OF CHANCE OF LOSING ALTOGETHER

______________ % OR OF NOT EXCEEDING 998 OFFER ________________ %

 

REALISTIC ABILITY TO RECOVER FEES

______________ % (INCLUDING 998 OFFER ISSUES)

 

REALISTIC ABILITY TO RECOVER COSTS (INCLUDING 998 OFFER ISSUES)

______________ %

 

REALISTIC LENGTH OF TIME BETWEEN COMMENCING LITIGATION

AND COMPLETING TRIAL AND POST TRIAL PROCEEDINGS, IF ANY

______________  MONTHS/YEARS

 

NUMBER OF HOURS/DAYS EXPECTED THAT CLIENTS WILL BE

PERSONALLY ENGAGED IN VARIOUS ASPECTS OF LITIGATION AND TRIAL

______________  DAYS  _____________ HOURS

 

POTENTIAL CONSEQUENCES OF LITIGATION AND TRIAL

PERSONALLY ____________________________________________________________

PROFESSIONALLY ________________________________________________________


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