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The Debate Over Legal Malpractice Damages and Contingent Basis

An interesting debate is brewing in the legal malpractice arena. Is an attorney who takes a case on a contingent basis entitled to reduce the client’s award for legal malpractice by the amount the attorney would have received as compensation?  Sound complicated?  Well, it is.  Here is an example.  Vicky Innocent is hurt badly in a car wreck.  She hires Larry Lawyer to represent her on a 1/3 contingent basis.  This means that the lawyer will take 1/3 of whatever he recovers Vicky for her injuries (for example, if he recovers $100,000 for her, then Larry’s fee would be $33,333.33).  Now let’s assume that Larry Lawyer forgets to file the lawsuit within the statute of limitations and Vicky can no longer recover from the at-fault driver.  So, Vicky hires a Malpractice Attorney to to sue Larry Lawyer to recover for her what she would have received from the car wreck.  If a jury  Vicky $100,000, does Larry Lawyer get to subtract $33,333.33 from it and just give Vicky $66,666.66?  If so, then she is likely going to be hit with another whammy when Malpractice Attorney asks for his 1/3 contingent fee.  Poor Vicky may only end up with $33,333.33 after the reduction.  Such is the argument currently brewing over legal malpractice damages in Texas.

Kentucky has never addressed the issue; however, I don’t think it would allow Larry Lawyer a set-off for his contingent fee because of KRS 411.165.

Hans Poppe

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