This summer’s decision by the Missouri Supreme Court in Nail v. Husch Blackwell Sanders illustrates the inherent difficulty a legal malpractice plaintiff faces when trying to prove causation in a transactional case. In Nail, the court held that the plaintiff failed to show that, but for the law firm’s allegedly negligent drafting of a settlement agreement, he would have obtained a more favorable outcome. Summary judgment in favor of the defendant law firm was therefore affirmed.
The plaintiff in Nail argued multiple theories of liability, one of which was that a settlement agreement he entered into with his former employer relating to certain stock options was negligently drafted by the law firm in that it did not require the employer to place particular documents in escrow and this failure prevented him from being able to enforce the settlement agreement’s liquidation clause. The court held that, to prevail on this theory, the plaintiff had to prove that the former employer would have agreed to include the necessary provisions in the settlement agreement and, further, that the former employer would later have breached them. The plaintiff did not offer any evidence that the former employer would have agreed to any of these provisions or that the former employer would have breached them. The court characterized the plaintiff’s hypothesized claim as “pure speculation.”
The Missouri Supreme Court’s holding is the latest in a line of legal malpractice cases involving transactions and, in particular, settlement agreements, in which the courts have rejected plaintiffs’ claims as being too speculative. In the 2013 Bryant v. Bryan Cave case, the Eastern District of the Missouri Court of Appeals similarly rejected on causation grounds a legal malpractice plaintiff’s claim against a law firm for negligently failing to address certain issues in an antenuptial agreement. The court of appeals rejected as speculative all types of evidence submitted by the plaintiff—including expert testimony—that his wife would have agreed to his changes. The court of appeals acknowledged the difficulty in proving such a claim, but nevertheless rejected plaintiff’s claim on summary judgment.
In light of these cases, it is hard to conceive of a situation, short of direct evidence of an actual agreement, in which a legal malpractice plaintiff would be able to prove in a transactional situation that its then-opposing party would have agreed to terms more favorable to the plaintiff. Courts thus far have consistently held that such claims are inherently speculative.
As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation and should not be relied on as such. Please contact one of our legal malpractice defense lawyers if you have any questions.
This update was prepared by Robert F. Murray and D. Leo Human.