Legal malpractice, or it should be said the “standard of care” for defining it, has been described using a range of sometimes superfluous and often overlapping generalizations that do little to truly define the inherent components of that standard. This is so despite the existence of an extensive multivolume treatise¹ on the subject and one Restatement by the American Law Institute.² Without knowing what really comprises legal malpractice from a practical point of view, it is difficult for a lawyer to know how to avoid it, much less to litigate such claims or opine on the adequacy of another lawyer’s services.³

Unfortunately, there is no published Wisconsin case law or other controlling authority regarding the elements underlying the general standard. For example, an error of judgment by a lawyer is excused when dealing with an unsettled or debatable proposition of law; yet, there is virtually no authority defining or analyzing the judgmental process being protected.⁴ Not surprisingly, there is little, if any, discussion of the various components that make up the standard of care for lawyers.⁵ This article is an attempt to address that gap in analysis.⁶

General Formulation of the Standard of Care

The standard of care for lawyers has been defined in various, although practically identical, ways.⁷ These include “skill and care,” “care, skill and judgment,”⁸ “customary skill and knowledge which normally prevails at the time and place,”⁹ “care, skill, diligence and knowledge,”¹⁰ and “degree of care commonly possessed and exercised by other reasonable, careful and prudent lawyers.”¹¹

None of these seem to include or exclude elements of another formulation. All of them leave open the question of who is the reasonably prudent lawyer and what constitutes “skill and care.”¹² Without trying to decipher whether one or more of the characteristics are or are not within the scope of another, suffice it to say that for all practical purposes they are synonymous. But this does not really help define what a reasonably prudent lawyer should or should not do in performing professional responsibilities in a transactional or litigation context.

The legal profession requires lawyers to “constantly select among alternatives, whether the task be rendering advice, producing a written product or acting for a party in litigation.”¹³ Generally, the standard of care to be exercised by a lawyer in performing such services with respect to various alternatives for a client is what a reasonably prudent lawyer would do or refrain from doing under the same or similar circumstances. There is a slight modification if the lawyer holds herself out as having special knowledge or skill in an area – in which case a higher standard may apply, namely that of a reasonably prudent lawyer possessing such special knowledge or skill.¹⁴ In situations when a lawyer is practicing in a specialty field with national certification or recognition, such as patent or securities law, a national standard may apply in lieu of what is generally regarded as a state-by-state standard.¹⁵

Regardless of the territorial scope, courts have recognized that “lawyers … like professional men engaged in furnishing skilled services for compensation … are entitled to … a wide discretion in determining what practices and principles are best suited for the work undertaken by them.”¹⁶ In effect, the standard essentially boils down to whether the lawyer acts competently in performance of his or her services – the assessment of which is to be objective rather than subjective.¹⁷

Defining the Reasonably Prudent Lawyer

This raises the question of how one determines who a reasonably prudent lawyer is and what they would or would not do. Is it to be measured on the basis of a lawyer with two years’ or 35 years’ experience or lawyers spanning that entire experience range resulting in some kind of average for a reasonably prudent lawyer? Logic suggests that a reasonably prudent lawyer’s performance standard should be determined on the basis of competence regardless of the years of experience.¹⁸ Similarly, by limiting the standard to prudent lawyers practicing “in the same or similar circumstances,” the law avoids the need to consider what practitioners outside the field in question would do or not do.¹⁹

An Objective Standard Controls. As the Treatise suggests, what a reasonably prudent lawyer would do in a given situation should be measured objectively regardless of the extent of experience in the area. If a group of lawyers with 10 or fewer years of practical experience would handle a transaction in a manner that is inconsistent with that of lawyers with 30 years of experience, this should not diminish, nor in other instances elevate, the overall standard of practice for a theoretical prudent lawyer.

However, years ago, several decisions in Wisconsin unfortunately seemed to adopt a standard based on a lawyer’s individual education and experience rather than an objective prudent lawyer standard.²⁰ That has since been abrogated under the current jury instructions, which use a “reasonably prudent lawyer” standard. While it may be conceptually difficult to fashion the exact parameters for who a reasonably prudent lawyer is in a given situation, there should be some general performance criteria based on lawyers across the entire spectrum of experience who exhibit the characteristics that, for lack of a better term, constitute “good lawyering.” It need not be the best lawyering but should be reasonably acceptable in as close to an objective fashion as one might be able to obtain.

“Skill and Care” In Transactional Representations

Because a given legal task, depending on the circumstances, may require one to function as an adviser, an advocate, or both, it is fair to assess the skills a reasonably prudent lawyer should possess and exercise that are common to transactional and litigation services as well as those that are different. It may be easiest to do so by starting with transactional representation as a base line for the advisory role of lawyers, although representation in transactions will most often require some advocacy as well.

Initial Assessment – One’s Own Capabilities. The first responsibility of a lawyer, when it comes to a potential engagement involving the review, negotiation, or preparation of a transactional agreement, is to understand that her role primarily involves an advisory function in “the drafting of such documents and counseling about their potential legal effect.”²¹ As such, it is essential that the lawyer be able to accurately assess her own capabilities to handle the matter. The lawyer must recognize not only what she knows and does not know in the substantive field of law but also what skills she does or does not possess – that is, whether she is competent to handle the matter in the first place.

To satisfy the standard of care, a lawyer should not even accept an engagement without possessing the skill set required of a reasonably prudent lawyer unless there is a qualified peer review process in place to ensure the resulting representation meets the prudent lawyer standard. If that level of competence is lacking and unavailable within one’s firm, the lawyer must advise her client on the limits of her professional capabilities and decline the engagement. In those situations, it would be advisable to refer the client to other, qualified counsel, who might be a specialist in an appropriate case,²² although it does not appear the standard of care requires one to make specific referrals. Even though a failure to possess the requisite capabilities when accepting an engagement would generally constitute a breach of the standard of care, this fails to adequately identify what those requisite capabilities should be.

These seem to be rather simple concepts for any lawyer to apply, but they are not. The basic problem is that the concepts assume the lawyer is not “unconsciously incompetent” and instead is “consciously competent” or even “consciously incompetent”²³– the latter of which would trigger an obligation to decline the engagement or solicit a competent peer reviewer to supplement the areas of incompetence. In short, the challenge is for a lawyer to be able to conduct a critical self-analysis of capabilities and shortcomings. Without that, she is destined to suffer with unconscious incompetence, which eventually will lead to commission of malpractice.

The Required Skill Set. The fundamental responsibilities of legal counsel engaged to negotiate, prepare, or review transactional documents are as follows:

1) to possess and exercise a reasonable degree of skill commensurate with the nature of the transaction (in light of the subject matter and complexity) including those with respect to:

• analytical ability;

• attention to detail;

• the interrelationship of contract provisions and avoidance of inappropriate inconsistency, ambiguity, and potentially ill-advised or missing provisions in light of the client’s objective for the transaction as a result of sound contract analytics;²⁴

• familiarity with applicable terms of art (or recognition of potential unfamiliarity sufficient to prompt an investigation into the meaning of such terms through research or a peer review process); and

• familiarity with basic rules of contract drafting and interpretation and their impact on potential acceptability from the client’s perspective;²⁵

2) to inquire about the client’s “knowledge, goals, and concerns about the matter and … be open to discussion of the appropriate course of action”²⁶ – in short, to understand the client’s fundamental objective in entering a transaction;

3) to recognize that clients often do not thoroughly read or understand all the provisions contained in agreements submitted for their review prior to formal acceptance and to take reasonable measures to ensure that a client is not thereby contributing to an assumption of risk that should be reasonably obvious to the lawyer and unacceptable to the client;²⁷ and

4) to properly advise one’s client on the legal ramifications of present and absent contract provisions so the client can properly assess acceptability of the risks and benefits in light of her underlying objective – recognizing that the fundamental purpose of a written contract is to allocate risks and benefits between the contracting parties.²⁸

Legal Advice versus Practical or Business Advice

There is often a difficult distinction to be drawn between nonprofessional business advice and strictly legal advice, although the former may still trigger tort liability under the right circumstances.²⁹ The first level of inquiry should be whether the law requires, prohibits, or restricts an activity under a proposed contractual provision. If so, it falls within the scope of required legal advice.

Next, one should ask whether legal training is necessary to either handle the activity or to understand the term or obligation. If not, it is not technically a legal issue the lawyer is obligated to address as such within the scope of her services. On the other hand, the question of whether a client is protected by a certain provision, while certainly encompassing an element of nonlegal business risk assessment, will generally entail an overall legal assessment that only a lawyer is qualified to provide.³⁰

Obviously, if there is a legal requirement that an agreement for the given transaction include a certain provision, a lawyer’s failure to incorporate it will, in nearly all instances, breach the standard of care. That said, absent such a legal requirement, the issue becomes one of whether the lawyer should have required or at least discussed with his client the need for or advisability of such a provision.

Permissible and Mandatory Practical Advice. Generally speaking, a lawyer is not liable for a failure to provide business advice to a client or for a client’s failure to fully comprehend the business implications of a clear contractual provision or one that falls within the purview of the accounting profession.³¹ The question then becomes whether a lawyer is obligated, in the exercise of proper care, to advise a client of matters that are not strictly legal in the sense of being illegal or, if present in a contract, focusing only on the legal (that is, nonbusiness) ramifications.

The Restatement commentary provides that a lawyer “may include economic, social, political, and moral implications of the courses of action open to the client.” It goes on to provide that a lawyer “must ordinarily explain the pros and cons of reasonably available alternatives.”³²

In advising a family-held business on how to structure a buy-out and drafting the documents necessary for the transaction, a Vermont lawyer was found to have breached the standard of care for lawyers in that state by failing “to inform his clients of the possible need for, and implications of, a covenant not to compete.”³³ The lawyer did not even discuss the desirability of such a provision nor the implications of not having one.

In effect, the not-so-technically legal implications of a transaction can trigger an obligation to advise a client of what might be considered predominately practical elements of a proposed transaction that an experienced lawyer would customarily review with a client – which, in turn, can raise the bar for good lawyering. Thus, a less experienced lawyer is well advised to learn “best practices” in her field to avoid unwittingly falling below the bar of a prudent lawyer for that transaction.

The Restatement comments, in discussing the standard of care, go on to provide that a “lawyer must perform tasks reasonably appropriate to the representation, including, where appropriate, … rendering of practical and ethical advice, and drafting of documents.”³⁴ In the same vein, it provides that a lawyer’s advice “may properly include” the lawyer’s views on a course that is “not narrowly legal in nature.”³⁵

However, such nonlegal advice seems to get elevated to a “particularly appropriate” level when the client “reasonably appears to be unaware of such considerations or their importance or when it should be apparent that the client expects more than narrow legal counsel.”³⁶ The Restatement commentary then further elevates “significant non-legal aspects” to a mandatory status for lawyer advice when necessary to meet the standard of competence and diligence normally exercised by lawyers in similar circumstances.³⁷

Document Drafting – Blending Legal and Practical Advice

It is quite common for a client to engage a lawyer to prepare a contract for a proposed transaction and provide the lawyer with what the client assesses as key deal terms, leaving to the lawyer the task of identifying other deal terms the client may never have even considered. In that process, it is also common for the lawyer to identify additional business terms that are appropriate for the transaction with little, if any, legal requirement that they be included.³⁸

Consequently, the vast majority of counsel rendering these services are expected to provide practical advice on aspects of a proposed transaction that have potential legal ramifications in terms of whether a client is likely to realize the desired benefits and minimize the potential risks inherent in the transaction. Whether the failure to do so amounts to a breach of the standard of care will be determined on the basis of what a reasonably prudent lawyer would do under the same or similar circumstances. In short, good lawyering in these situations requires a certain degree of competence based on practical experience in handling transactional matters of that general nature sufficient to properly assist a client in achieving the client’s overall objectives.

Advice Without Self-interest

It should go without saying that a lawyer is required to perform transactional advisory services solely in the client’s best interest and free, as far as reasonably possible, of the lawyer’s own self-interests. The standard of care and a lawyer’s fiduciary obligation toward a client do not countenance advice driven by a desire to obtain additional legal fees or to avoid the assertion of a malpractice claim with respect to a prior representation by the lawyer’s firm.

Litigation Skill and Care

Although a litigator certainly engages in advisory services for his client and must possess the same skill set for competency as required of transactional counsel, the role of an advocate is significantly different. This is because litigation, by its very nature, is a fluid and evolving activity relying on specific advocacy skills, which need to adapt to constant change throughout the process. As observed in an American Bar Association publication, “lawsuits, by their very nature, are evolutionary and subject to change.”³⁹ An apt analogy characterizing the fluid nature of litigation is that “[a] trial is like a painting – if one aspect of the painting changes, the other aspects may change as well.” ⁴⁰

Strategy, Tactics, and Client Concurrence. A decision to do or not do something (or an oversight) may be consistent with a reasonable strategy for pursuit of a litigation objective. To constitute a violation of the standard of care, an oversight or conscious inaction must be both critical to pursuit of a litigation strategy and fatal to its successful implementation.⁴¹ Because of this, it may be extremely difficult to reliably determine whether a breach of the standard of care occurs.

Not only is a litigator often confronted with unsettled or debatable legal issues, which are either known or discoverable through research and subject to judgmental immunity,⁴² but the range of alternatives to accomplish a desired objective can be extremely broad and often is restricted by financial and other considerations. Absent specific, properly informed instructions from a client, the litigator is generally recognized as empowered to control the manner and details of the lawsuit.⁴³ Because an advocate must consider a multitude of factual circumstances and the uncertainty as to what will be persuasive at a particular moment, the Treatise characterizes the advocate’s judgment decision as “tactical” and thereby the subject of judgmental immunity.⁴⁴

The standard of care requires a lawyer to obtain client approval for an overall strategy directly and substantially affecting the client’s prospects of achieving a litigation objective. If reasonable alternative strategies exist, those should be discussed as well. However, the standard of care affords much greater flexibility to the litigator in exercising judgment as to the choice of tactics employed in pursuit of a strategy.

Despite the latitude given a litigator, the standard of care will be breached if an overall strategy is outside the realm of reasonable strategies a prudent litigator might choose. If within that range, a litigator should discuss with her client the significant risks and potential benefits of the recommended strategy and, if other reasonable alternatives exist, then in comparison to those as well.⁴⁵ Except in unique circumstances,⁴⁶ the client should be the one responsible for making an informed decision on whether pursuit of a given strategy, within the range of reasonable ones, is in his best interests. As an overall rule of thumb, if there is any question whether a particular claim or defense should be advanced that potentially might have a significant impact on achieving the client’s overall litigation objective, a prudent lawyer will consult with the client before deciding whether to proceed with the claim or defense.⁴⁷

Conclusion

Given the absence of authority defining a prudent lawyer and the various elements comprising the standard of care to be exercised by such a lawyer, it is not surprising that lawyers can be blindsided by professional negligence claims. Lawyers can perform legal services with confidence they are doing so consistent with the standard of care only by delving below the surface of generalizations used to define legal malpractice. The foregoing discussion and analysis will aid in accomplishing that objective, if the reader keeps in mind the following rules of thumb:

To avoid malpractice, lawyers must reliably self-assess their own capabilities in light of the particular skill set requirements for appropriate delivery of legal and related practical advice and services and then supplement any deficiency with a peer review process involving qualified counsel. In addition, litigators must assess strategic alternatives and then obtain the client’s informed consent without relinquishing the lawyer’s control over tactical decisions.

Endnotes

¹ Ronald E. Mallen, Legal Malpractice (Thomson Reuters, 2015) [hereinafter Treatise].

² Restatement of the Law (Third), The Law Governing Lawyers (American Law Institute, 1998) [hereinafter Restatement].

³ This article focuses on transactional and litigation services although the analysis is equally applicable to lawyers serving in an expert witness capacity.

⁴ “Despite centuries of applying the error of judgment rule in attorney malpractice cases, the courts have not analyzed or defined the judgment process being protected.” Treatise, supra note 1, § 19:21, at 1267.

⁵ Id. § 20:2, at 1308 (“[a]though there are many decisions setting forth a standard of care or practice for attorneys, few courts have considered analytically what criteria are necessary and appropriate.”).

⁶ Damage causation is beyond the scope of this article. Suffice it to say that a breach of the standard of care does not result in malpractice liability unless the cause of a client’s damage is obvious (Restatement, supra note 2, § 52, cmt. g, at 383) or expert testimony establishes a causal link between the lawyer’s breach of the standard of care and the actual damages sustained by the client (Restatement, supra note 2, § 53, at 389). There is an exception in Wisconsin when the malpractice claim involves a “suit within a suit.” In those instances, courts properly exclude opinion evidence on causation “[b]ecause the second jury is not being asked to decide what the original jury would have done, [so that] expert testimony on the behavior of that particular jury or any other jury is irrelevant.” Cook v. Continental Cas. Co., 180 Wis. 2d 237, 251-52, 509 N.W.2d 100 (Ct. App. 1993).

⁷ Treatise, supra note 1, § 20:30, at 1310-11.

⁸ Wis. JI-Civil 1023.5 Professional Negligence: Legal – Status of Lawyer As A Specialist Is Not in Dispute.

⁹ Hughes v. Klein, 427 A.2d 353, 354 (Vt. 1981).

¹⁰ Cook, Flanagan & Berst v. Clausing, 438 P.2d 865, 867 (Wash. 1968).

¹¹ Feil v. Wishek, 193 N.W.2d 218, 225 (N.D. 1971).

¹² Aren’t judgment and knowledge inherent elements of a reasonably prudent lawyer’s skill? In fact, isn’t professional “care” likewise embodied in such a lawyer’s “skill”?

¹³ Treatise, supra note 1, § 20:1, at 1306.

¹⁴ See Wis. JI-Civil 1023.5A.

¹⁵ For this reason, it is unlikely to find a lawyer who is not licensed in a state rendering a malpractice opinion regarding legal services in that state, as opposed to what is relatively common when it comes to engineering expert witnesses, for example.

¹⁶ Peerless Ins. Co. v. Cerny & Assocs. Inc., 199 F. Supp. 951 (1961) (discussing Minnesota law). See also City of Mounds View v. Walijarvi, 263 N.W.2d 420 (Minn. 1978); DeThorne v. Bakken, 196 Wis. 2d 713, 724 (1995).

¹⁷ Treatise, supra note 1, § 20:3, at 1319-20 (“The ultimate test of competence is reasonable conduct, which is determined by the standard of care that requires exercise of skill and knowledge ordinarily possessed by attorneys under similar circumstances. ‘Ordinary’ care, however, is not based on what some other lawyers do. Nor is it necessarily established by what an ‘expert’ witness would have done. The standard is objective, based on what lawyers should do.”).

¹⁸ Otherwise, one would be left with an almost insurmountable obstacle to obtain expert opinion evidence – namely, to find a lawyer with extensive familiarity with the customary practice of lawyers within a given range of experience. Similarly, a purported expert subject to Daubert standards would otherwise have to demonstrate a reasonably reliable familiarity with the practice standards in effect at the time of the challenged legal services.

¹⁹ For example, the standard limited in this manner does not require or even allow consideration of how criminal defense lawyers would, on their own, handle complex real estate transactions.

 ²⁰ “We have also held that an attorney is bound to exercise his best judgment in light of his education and experience, but is not held to a standard of perfection or infallibility of judgment.” Helmbrecht v. St. Paul Ins. Co., 122 Wis.2d 94, 111, 362 N.W.2d 118 (1985) (citation omitted) (emphasis added).

²¹ Treatise, supra note 1, § 19:22, at 1270.

²² See Russo v. Griffin, 510 A.2d 436 (Vt. 1986).

²³ See The Four Stages of Learning Any New Skill, by Gordon Training International: “Stage 1 – Unconsciously unskilled. We don’t know what we don’t know. We are inept and unaware of it.”; “Stage 2 – Consciously unskilled. We know what we don’t know. We start to learn at this level when sudden awareness of how poorly we do something shows us how much we need to learn.”; “Stage 3 – Consciously skilled. Trying the skill out, experimenting, practicing. We now know how to do the skill the right way, but need to think and work hard to do it.”; and “Stage 4 – Unconsciously skilled. If we continue to practice and apply the new skills, eventually we arrive at a stage where they become easier, and given time, even natural.” This learning stages model was developed by psychologist Noel Burch more than 30 years ago as an employee of GTI, although there is some evidence to suggest the “conscious competence learning model” was developed even earlier.

²⁴ Contract analytics are involved in properly drafting, reviewing, and interpreting both present and absent provisions in a contract. For example, if a prudent lawyer is primarily responsible for drafting a contract, it is a mistake to not include a boiler-plate disclaimer to the effect that no provision of the agreement should be construed against that party solely because they (that is, the lawyer and her client) drafted it, notwithstanding any rules of construction to the contrary.

²⁵ Assertion of this skill set was included in a recent malpractice opinion report by this author to which a highly regarded opposing expert took no exception.

²⁶ Restatement, supra note 2, § 20, cmt. c, at 171.

²⁷ Id. at 26. See also id. § 20, cmt. e, at 172: “Before a client signs a contract, for example, the lawyer ordinarily should explain its provisions.”

²⁸ Id. at 26.

²⁹ See Restatement (Second) of Torts § 552 (1977), Information Negligently Supplied for the Guidance of Others.

³⁰ For example, even though the business risk of a certain mortgage provision might be an obvious business risk to a lay client, the issue of attempting to preference proof payments would not be. It is a more difficult question as to whether a lawyer is required to advise her client as to the absence of collateral security for an opposing party’s performance or some other provision that might protect the client’s interests in transactions of that type.

³¹ A client, for example, can and should easily discern the difference between a guaranty of a certain amount of cash flow and a guaranty of ultimate profit.

³² Restatement, supra note 2, § 20, cmt. e, at 172 (emphasis added).

³³ Russo, 510 A.2d 436.

³⁴ Restatement, supra note 2, § 52, cmt. c., at 377 (emphasis added).

³⁵ Id. § 94, comment h.

³⁶ Id.

³⁷ Id.

³⁸ For example, it is unlikely a client would instruct her lawyer on which specific boilerplate provisions should be included, leaving that up to the judgment of counsel even though they may not be legally required for a binding contract.

³⁹ Deborah L. Cohen, Double-edged Rules: Proposed Accounting Changes Alarm Corporate Counsel, ABA J.16 (Jan. 2009).

⁴⁰ Cook, 180 Wis. 2d at 252.

⁴¹ As an example, failing to ask a given question during a deposition may, in hindsight, prove to have been a mistake; but, without knowledge of the overall strategy, it is virtually impossible to draw a conclusion that the standard of care was violated.

⁴² Treatise,supra note 1, § 19:6, at 1235; § 19.1, at 1227.

⁴³ Id. § 19:24, at 1279.

⁴⁴ Id. § 19:23, at 1273. See also Treatise, supra note 1, § 19.1, at 1227, referencing “tactical” issues as subject to the defense of judgmental immunity. Elsewhere, however, the Treatise notes that “[t]he courts agree that the litigation attorney is entitled to wide discretion in choosing between alternative strategies.” Treatise, supra note 1, § 19:29, at 1300.

⁴⁵ No authority has been found as to whether a client discussion of such risks and benefits involved with a given strategy (or in comparison to others) is essential for preservation of a litigator’s judgmental immunity should selection of a strategy be considered something other than purely “tactical” or within the scope of “manner and details” of a lawsuit.

⁴⁶ For example, insurance company clients quite often in effect delegate the role of selecting the preferred strategy to their litigation counsel.

⁴⁷ Often, a fundamental decision must be made on whether to assert every conceivable claim or defense as compared to focusing only on those with the best likelihood of success, as a means of controlling litigation expenses or for strategic reasons.