Legal Malpractice Not a Compulsory Counterclaim

The New Mexico Supreme Court held that a legal malpractice action need not be brought as a compulsory counterclaim to an action brought by the law firm assserting a charging lien against the former client. The law firm had agreed to a settlement of the underlying litigation, purportedly without the client’s consent. The trial court found that the law firm had sufficient authority to settle and ordered the settlement enforced over the client’s objection.

The court held:

…Computer One’s [the client] objections to the charging lien reflect the limited nature of such a lien. Because only the value of the fees are at issue, a client’s objections to a charging lien may well differ from a client’s claim of legal malpractice. When objecting to a charging lien, a client may challenge the reasonableness of the value assigned to the attorney’s fees, or the basis for that value. Similarly, a client may attack the validity of the fee agreement itself upon which the charging lien was based. In contrast, a client’s claim of legal malpractice challenges the actual performance of the lawyer’s duties, not the hourly rate the lawyer charged for those duties. See Rancho del Villacito Condos., Inc. v. Weisfeld, 121 N.M. 52, 56, 908 P.2d 745, 749 (1995) (“[A] plaintiff must show, usually through expert testimony, that his or her attorney failed to use the skill, prudence, and diligence of an attorney of ordinary skill and capacity.” (quoted authority omitted)). Because the objections to the charging lien were distinct from the claim asserted in Computer One’s malpractice lawsuit, we reject the Firm’s argument that the issues in Computer One’s malpractice claim were necessarily litigated below.

(Mike Frisch)