Vicarious Malpractice Liability
Also from the Ohio Supreme Court web page:
The Court’s lead opinion, authored by JusticeTerrence O’Donnell, was rendered in response to a certified question ofstate law submitted by the U.S. Sixth Circuit Court of Appeals.
TheNational Union Fire Insurance Company of Pittsburgh retained theColumbus law firm of Lane Alton & Horst and a partner in that firm,attorney Richard Wuerth, to defend a claims adjustment firm, McLarensToplis, and an individual claims adjustor, Lany Wood, against a civillawsuit filed against them in federal court by Nationwide Insurance. During the second week of an extended trial, Wuerth informed severalLane Alton partners and also mentioned to the trial judge that he wasnot feeling well. Later that week, while the trial was still underway,Wuerth collapsed at home and was taken to the hospital. His doctorsubsequently advised the court that Wuerth was not physically ormentally capable of continuing with the trial, and would not be able todo so for a significant period of time. Lane Alton filed anunsuccessful motion for a mistrial, then assigned other firm attorneysto complete the trial. On Feb. 21, 2002, the jury returned a verdict infavor of Nationwide for $16.2 million. As the result of a high/lowsettlement agreement previously negotiated between the parties,National Union paid Nationwide $8.25 million on behalf of its insureds.
OnFeb. 21, 2003, National Union filed suit in the United States DistrictCourt for the Southern District of Ohio, claiming that Wuerth hadcommitted legal malpractice, that Lane Alton was vicariously liable forWuerth’s malpractice, and that the firm itself committed malpractice.While National Union alleged numerous wrongful acts and omissions byseveral individuals in the firm, Wuerth was the only individual namedas a defendant in the complaint. On a motion for summary judgment filedby Wuerth and Lane Alton, the district court dismissed Wuerth from theaction because National Union had filed its complaint after theexpiration of the one-year statute of limitations for legal malpracticeclaims set forth in R.C. 2305.11(A). Because National Union wastime-barred from obtaining a judgment against Wuerth, the districtcourt also dismissed the company’s claims for vicarious liabilityagainst Lane Alton. Finally, the district court determined that LaneAlton cannot be held directlyliable for legal malpractice because it isnot an attorney and does not practice law.
National Unionappealed to the United States Court of Appeals for the Sixth Circuit,asserting among other arguments that Lane Alton may be held directlyliable for legal malpractice. The court of appeals determined that Ohiolaw is unsettled on this issue and asked the Supreme Court of Ohio toanswer the following certified question: “Under Ohio law, can a legalmalpractice claim be maintained directly against a law firm when all ofthe relevant principals and employees have either been dismissed fromthe lawsuit or were never sued in the first instance?” The Court agreedto answer the certified question.
In today’s decision,Justice O’Donnell wrote that the Sixth Circuit’s inquiry raised twoseparate issues: “one, whether a law firm may be directlyliable for legal malpractice – i.e., whether a law firm, as an entity,can commit legal malpractice – and two, whether a law firm may be held vicariously liable for malpractice when none of its principals or employees are liable for malpractice or have been named as defendants.”
Withregard to direct liability, Justice O’Donnell noted that in pastrulings dealing with professional malpractice issues the Court hasapplied similar standards to physicians and attorneys. He citedseveral decisions in which the Court has held that the practice ofmedicine is limited to individual practitioners, and therefore that“because only individuals practice medicine, only individuals cancommit medical malpractice. For instance, in Browning v. Burt(1993) … we explained that ‘[a] hospital does not practice medicineand is incapable of committing malpractice,’” Justice O’Donnellwrote.
“This precedent concerning medical malpractice isconsistent with the general definition of ‘malpractice’ that we setforth in Strock v. Pressnell (1988) wherein we stated, ‘The term “malpractice” refers to professional misconduct, i.e., the failure of one rendering services in the practice of a profession to exercise that degree of skill and learning normally applied by members of that professionin similar circumstances.’ As with the practice of medicine, it isapparent that only individuals may practice law in Ohio. Section2(B)(1)(g), Article IV of the Ohio Constitution grants this courtoriginal jurisdiction with respect to ‘[a]dmission to the practice oflaw, the discipline of persons so admitted, and all othermatters relating to the practice of law.’” Pointing to multipleprovisions in the Court’s rules governing the practice of law thatapply only to “persons” rather than business entities, JusticeO’Donnell concluded: “(A) law firm is a business entity through whichone or more individual attorneys practice their profession. Whileclients may refer to a law firm as providing their legal representationor giving legal advice, in reality, it is in every instance theattorneys in the firm who perform those services and with whom clientshave an attorney-client relationship. Thus, in conformity with ourdecisions concerning the practice of medicine, we hold that a law firmdoes not engage in the practice of law and therefore cannot directlycommit legal malpractice.”
With regard to the issue ofvicarious liability of a law firm when none of the firm’s attorneys hasbeen found liable for malpractice, Justice O’Donnell wrote that Ohio’slaw of agency is based on the well-established doctrine of respondeat superior (the master is responsible for the acts of its servant).
“Althougha party injured by an agent may sue the principal, the agent, or both,a principal is vicariously liable only when an agent could be helddirectly liable … (I)n Comer v. Risko (2005) we recognizedthat ‘[t]he liability for the tortious conduct flows through the agentby virtue of the agency relationship to the principal. If there isno liability assigned to the agent, it logically follows that there canbe no liability imposed upon the principal for the agent’s actions.’… There is no basis for differentiating between a law firm and anyother principal to whom Ohio law would apply. In fact, the Restatementof the Law 3d, The Law Governing Lawyers (2000) … indicates that alaw firm has no vicarious liability unless at least one principal oremployee of the firm is liable. … Based on this authority, we holdthat a law firm is vicariously liable for legal malpractice only whenone or more of its principals or associates are liable for legalmalpractice. Accordingly, we answer the certified question of statelaw in the negative.”
Justice O’Donnell’s opinion was joinedby Chief Justice Thomas J. Moyer, Justices Maureen O’Connor and RobertR. Cupp and Judge Mary DeGenaro of the 7th District Court of Appeals, who sat by assignment in place of Justice Evelyn Lundberg Stratton.
ChiefJustice Moyer also entered a separate concurring opinion that wasjoined by Justice O’Connor, Judge DeGenaro and Justices Paul E. Pfeiferand Judith Ann Lanzinger in which he emphasized that today’s ruling wasin response to the very narrow legal question posed by the U.S. SixthCircuit, and does not preclude the possibility of direct liability by alaw firm to a client based on tortious conduct other than legalmalpractice.
He concluded: “I stress the narrowness of ourholding today. This opinion should not be understood to inhibitlaw-firm liability for acts like those alleged by the petitioner.Rather, a law firm may be held vicariously liable for malpractice asdiscussed in the majority opinion. Further, our holding today does notforeclose the possibility that a law firm may be directly liable on acause of action other than malpractice. Yet the limited record and thenature of answering a certified question do not permit us to entertainsuch an inquiry in this case. Therefore, I concur in the majorityopinion.”
Here is the court’s opinion. (Mike Frisch)