General Standard for Recovery

To prevail on a litigation-based legal malpractice claim, plaintiff must prove the following: (1) the attorney (and/or law firm) owed a duty to use such skill, prudence, and diligence as members of his or her profession commonly possess and exercise under similar circumstances; (2) defendant breached this duty; (3) a proximate causal connection between the breach and the resulting injury; and (4) actual loss or damage resulting from defendant’s negligence. (Mattco Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820, 833.) The elements of a legal malpractice claim, on their face, appear to suggest a plaintiff can recover all damages directly and proximately caused by his/her attorney’s negligence. However, the actual scope of recoverable damages is much more limited, controlled by what is commonly referred to as the “case-within-a-case” standard.

Under the case-within-a-case standard, plaintiff must prove but for the attorney’s negligent acts or omissions, he or she would have obtained a more favorable judgment or settlement (i.e., result) in the underlying action. (Viner v. Sweet (2003) 30 Cal.4th 1232, 1241; CACI 601 (“To recover damages from [name of defendant], [name of plaintiff] must prove that [he/she/it] would have obtained a better result if [name of defendant] had acted as a reasonably careful attorney”).)  In other words, the alleged damage must “follow[ ] the act complained of as a legal certainty.” (Filbin v. Fitzgerald (2013) 211 Cal.App.4th 154, 165 (internal citations and quotation marks omitted).) “[T]he mere probability that a certain event would have happened, upon which a claim for damages is predicated, will not support the claim or furnish the foundation of an action for such damages.” (Campbell v. Magana (1960) 184 Cal.App.2d 751, 758.)

The case-within-a-case method functions as “an objective approach to decide what should have been the result in the underlying proceeding or matter.” (Church v. Jamison (2006) 143 Cal.App.4th 1568, 1585.) “The purpose of this requirement, which has been in use for more than 120 years, is to safeguard against speculative and conjectural claims.” (Viner v. Sweet, supra, 30 Cal.4th at 1241.) “It is a standard of proof designed to limit damages to those actually caused by a professional’s malfeasance.” (Mattco Forge, Inc. v. Arthur Young & Co., supra, 52 Cal.App.4th at 834.)

Importantly, the case-within-a-case approach is the only legal malpractice damages methodology accepted by the courts. (Mattco Forge, Inc. v. Arthur Young & Co., supra, 52 Cal.App.4th at 834; Orrick Herrington & Sutcliffe LLP v. Sup. Ct. (2003) 107 Cal.App.4th 1052, 1059 (The case-within-a-case approach applies “in all legal malpractice actions involving a client’s assertion that his attorney has either negligently prosecuted or defended the client’s claim”) (internal citations and quotation marks omitted).) As such, if there is no challenge to the outcome of the litigation there is arguably no actionable claim for legal malpractice. (Campbell v. Magana (1960) 184 Cal.App.2d 751, 754.)

Case-within-a-case considerations aside, there can otherwise be no claim for legal malpractice if the negligent conduct does not cause actual appreciable harm. (Williams v. Wraxall (1995) 33 Cal.App.4th 120, 130.) Absent actual damage, an attorney’s breach of the standard of care amounts to nothing more than “negligence in the air” that is per se not actionable. (Filbin v. Fitzgerald, supra, 211 Cal.App.4th at 169-170.) “The mere breach of a professional duty, causing only nominal damages, speculative harm, or the threat of future harm—not yet realized—does not suffice to create a cause of action for negligence.” (Budd v. Nixen (1971) 6 Cal.3d 195, 200.)

Harm is actual and appreciable if it is irremediable – i.e., “impossible to remedy; something which is lost, or incorrigible.” (Goebel v. Lauderdale (1989) 214 Cal.App.3d 1502, 1507 (internal citations and quotation marks omitted).) A couple examples of speculative harm that are not recoverable include (a) exposure to liability without further detriment (Blain v. The Doctor’s Co. (1990) 222 Cal.App.3d 1048, 106), and (b) damages allegedly caused by litigation delay where there is no evidence of the requisite but for causation that delay caused the subject damages. (Thompson v. Halvonik (1995) 36 Cal.App.4th 657, 663.)

Categories of Recoverable Damages and Applicable Limitations

1. Value Of The Underlying Claim

For failure to bring a claim, the measure of damages is “the value of the claim lost.” (Piscitelli v. Friedenberg (2001) 87 Cal.App.4th 953, 979 (quoting Smith v. Lewis (1975) 13 Cal.3d 349, 361) (internal quotation marks omitted).) Where some amount of recovery is obtained via settlement or judgment, the measure of damages “is the difference between what was recovered and what would have been recovered but for the attorney’s wrongful act or omissions.” (Mosier v. Southern California Physicians Insurance Exchange (1998) 63 Cal.App.4th 1049-1050.)

1. Emotional Distress

Plaintiff can recover damages for emotional distress caused by the attorney’s negligence. However, an attorney’s negligence normally will not support a claim for emotional distress damages in conjunction with economic loss or property damage. (Merenda v. Sup. Ct. (1992) 3 Cal.App.4th, 10.) Emotional distress is “not an inevitable consequence of the loss of money.” (Id.) Emotional distress damages are recoverable only where such injury “naturally ensues from the acts complained of.” (Id.)

3. Attorney’s Fees

Plaintiff cannot recover attorney’s fees paid to the negligent attorney in the underlying lawsuit. (Orrick Herrington & Sutcliffe LLP v. Sup. Ct., supra, 107 Cal.App.4th at 1058-1060.) Additionally, plaintiff cannot recover attorney’s fees incurred in prosecuting a legal malpractice claim. This is so even if there is a prevailing party attorney’s fees provision in the fee agreement between plaintiff and the negligent attorney. (Santisas v. Goodin (1998) 17 Cal.4th 599, 615.) The reason being, such fees are recoverable in contract, not tort. (Id.)

Notwithstanding the above, plaintiff can recover attorney’s fees incurred in prosecuting a lawsuit against a third party, or defending against claims of a third party, where such actions are a direct result of attorney malpractice. (Orrick Herrington & Sutcliffe LLP v. Sup. Ct., supra, 107 Cal.App.4th at 1059-1060.)

4. Punitive Damages

Punitive damages are not recoverable as part of the underlying lawsuit. (Ferguson v. Lieff, Cabraser, Heimann & Bernstein, LLP (2003) 30 Cal.4th 1037, 1052-1053.) Hypothetically speaking, a plaintiff could recover punitive damages if he/she could demonstrate the attorney’s negligent conduct amounts to “despicable conduct” done with a “willful and conscious disregard” of the safety of others. (Civ. Code § 3294, subd. (c)(1).) Plaintiff would need to show by clear and convincing evidence the attorney’s conduct was sufficiently “wanton and willful” and that harm to others was a virtual certainty. (Taylor v. Sup. Ct. (Stille) (1979) 24 Cal.3d 890, 895-96.)

Takeaway

The scope of recoverable damages for legal malpractice is much more limited than the scope of damages recoverable for general negligence. Regardless of the nature of the error or omission at issue, if the attorney’s act (or failure to act) did not affect the outcome of the lawsuit, there is no actionable claim for legal malpractice.

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