In Pirates of the Caribbean: The Curse of the Black Pearl, Elizabeth Swann is taken captive by Captain Hector Barbossa. She cites the Code of the Order of the Brethren for authority that she must be taken to shore. Captain Barbossa declines, saying:

First, your return to shore was not part of our negotiations nor our agreement so I must do nothing. And secondly, you must be a pirate for the pirates’ Code to apply and you’re not. And thirdly, the Code is more what you’d call “guidelines” than actual rules.

(Emphasis added). A recent decision by the appellate court is an opportunity to re-examine how closely the Rules of Professional Conduct resemble the Code of the Order of the Brethren.

Vandenberg v. Brunswick Corporation, 2017 IL App (1st) 170181, is a fascinating read for any trial lawyer or judge. The most recent decision in the case concerned an appeal by Brunswick Corporation of a circuit court order vacating prior orders and reinstating a settlement agreement between the parties. At the trial court level, Brunswick had successfully sought to vacate the settlement agreement. Brunswick’s theory alleged, in part, the fraudulent concealment of material facts by the plaintiffs’ attorney.

In short, the defendant alleged that, while deliberating, the jury sent a question to the judge concerning allocation of fault, indicating it might return a verdict that would preclude a recovery for the plaintiff. The plaintiff’s attorney, with knowledge of both the existence and content of the jury’s question, accepted the settlement offer without disclosing any information about the question to the defendant’s insurance carrier. The defendant’s success, however, was short-lived when a new judge1 vacated the order and reinstated the settlement.

On appeal, the appellate court defined fraudulent concealment:

The elements needed to prove fraudulent concealment are (1) concealment of a material fact, (2) intent to induce a false belief where there exists a duty to speak, (3) that the other party could not have discovered the truth through reasonable inquiry and relied upon the silence as an indication that the concealed fact did not exist, (4) that the other party would have acted differently had it known of the concealed information, and (5) that its reliance resulted in an injury. Id. ¶ 31

It would seem that all of the elements but for number two had been met by Brunswick. The difficulty for Brunswick was establishing a duty on the part of the plaintiffs’ attorney to speak. The appellate court ruled that the duty to speak would arise from a special or fiduciary relationship on the part of the attorney. Brunswick did not argue that the plaintiffs’ attorney had a fiduciary duty to Brunswick nor that he was in a special or confidential relationship with Brunswick. Rather, Brunswick argued and the circuit court had originally found that the plaintiffs’ attorney’s duty to speak arose under “court rules and rules of professional conduct.”

The appellate court acknowledged the Supreme Court’s exclusive authority to regulate attorney conduct and discipline attorneys accordingly. The process, including the Rules of Professional Conduct and the ARDC are part of a “comprehensive program to regulate attorneys and punish their misconduct.”

However, the appellate court cited the Preamble to the Rules of Professional Conduct and two attorney malpractice cases decided by the appellate court in holding that the Rules of Professional Conduct did not create a duty on the part of the plaintiffs’ attorney to disclose material facts to the defendant or defendant’s attorney. In the absence of such a duty, Brunswick could not “prove fraudulent concealment as a means to vacate the parties” settlement agreement.” Id. at ¶ 34.

The current Rules of Professional Conduct were adopted by the Supreme Court in 2010. They superseded the Rules of Professional Conduct which had been adopted in 1990. Those Rules had replaced the Code of Professional Responsibility. This article has no intention of examining the differences between and among the separate sets of rules. And although different sets of rules have been adopted over the years, it is hard to imagine that the Supreme Court would view them any differently today than it did in 1988 when, in a disciplinary case, In re Demuth, 126 Ill. 2d 1 (1988), it stated:

The Code of Professional Responsibility is not precatory; its rules are mandatory rules of conduct. Attorneys who fail to understand them or follow them do so at their peril. Id. at 14.

Nevertheless, Paragraph 20 of the Preamble to the Rules of Professional Conduct reads, in part, as follows:

Violation of a Rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached…The Rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability.

In addition to the above Preamble, the Vandenberg court relied on Nagy v. Beckley, 218 Ill. App. 3d 875 (1st Dist. 1991) and Owens v. McDermott, Will & Emery, 316 Ill. App. 3d 340 (1st Dist. 2000).

In Nagy, the plaintiffs had filed a four count complaint against their former attorney. The first count alleged malpractice for the negligent failure to advise the plaintiff of a defense in an underlying case and of a possible conflict of interest with the other parties in that case. The plaintiff made the same factual allegations in Count II, but included an allegation that the defendant’s failures violated Canon 5 of the Code of Professional Responsibility. In affirming the trial court’s dismissal of Count II as duplicative, the court found no authority which would permit “ethical malpractice” to be a separate cause of action.

The plaintiff in Owens v. McDermott, Will and Emery alleged that the defendants had violated Rule 1.9 of the Illinois Rules of Professional Conduct. That Rule relates to a lawyer’s obligation to a former client. The defendants had represented the plaintiff in his divorce, and then represented a close corporation in the plaintiff’s unsuccessful attempt to exercise a right of first refusal on its stock his ex-wife had received from him in the divorce. The trial court had dismissed the count, and the appellate court affirmed. The appellate court conceded that the defendants may have violated Rule 1.9, but stated “the mere fact that an attorney may have violated professional ethics does not, in and of itself, give rise to a cause of action for damages.”

Generally stated, the attorney-client relationship creates a fiduciary duty on the attorney as a matter of law, and it provides the basis for a cause of action against an attorney when a breach of that duty results in damages. Therein lies the basis of many a legal malpractice action. In such cases “while the rules of legal ethics may be relevant to the standard of care in a legal malpractice suit, they are not an independent font of tort liability.” Nagy v. Beckley, 218 Ill. App. 3d 875, 881(citations omitted).

The absence of any fiduciary duty owed by Vandenbergs’ lawyer to Brunswick or its lawyers doomed Brunswick’s attempt to establish fraudulent concealment and vacate the settlement agreement.

It must be considered, however, that had the Vandenberg court found that the Rules imposed upon the plaintiff’s lawyers the duty to disclose to the defendant and its lawyers, the final result would have harmed the plaintiffs, the very parties to whom the lawyer owed his first obligation.

So you see, we are all part of the brethren and bound to follow its rules at our peril and a fiduciary duty cloaks our clients with its mandate as well — sort of. Opposing parties, however, may find themselves in the same spot as Elizabeth Swann – citing rules which provide no protection, much less transport to safety.

In researching this issue, I came to consider two cases which, although they do not seem to add much to the discussion, came as a surprise to me. In Coughlan v. SeRine, 154 Ill. App. 3d 510 (1st Dist. 1987), an attorney sued his former client for fees which drew a counterclaim for malpractice. The trial court dismissed the second amended counterclaim for failure to state a cause of action.

On appeal, the First District noted that Count I of the second amended counterclaim “sounds in attorney malpractice.” The counter-plaintiff alleged that he had been overcharged by his attorney—a very novel argument by a disappointed former client. The appellate court found that an attorney is under a duty not to charge exorbitant or excessive fees and that a breach of that duty “is cognizable as malpractice and actionable because it literally fits the action’s definition.” Id. at 514. Further, the fact that the client had already paid the fees did not constitute a waiver of the breach of the duty.

I’ve been unable to find a subsequent case which cites Coughlin for the principle that excessive billing by an attorney may constitute malpractice.

In a more recent Rule 23 decision, Porro v. Esposito, 2013 IL App (1st) 120546–U, the defendants had obtained a default judgment on behalf of the plaintiff and over the next six years made occasional representations to the plaintiff that efforts at collection of the judgment would be made. In fact, the defendants made no efforts in that regard.

Seven years after the judgment was entered, the plaintiff hired a new attorney who served the judgment debtor with a citation to discover assets. The citation drew a motion to vacate the judgment based on lack of personal jurisdiction. The judgment debtor successfully challenged the special process server’s return of service. The judgment was vacated.

The new attorney’s efforts on behalf of the plaintiff failed when the trial court dismissed the suit pursuant to Illinois Supreme Court Rule 103(b) requiring diligence in service of process.

The plaintiff’s malpractice suit against the prior attorneys was dismissed, with the trial court emphasizing the failure to appeal the Rule 103(b) dismissal. While the appellate court addressed the issue of failure to appeal, another aspect of the opinion is important. The appellate court noted that the attorneys had “effectively [withdrawn] as Porro’s counsel, without notice to Porro” and breached Rule 1.16(d) of the Rules of Professional Conduct. That neglect could support a finding of the loss of claim against the judgment debtor and the consequential legal malpractice.

Whether or not, and the extent to which an attorney represents a client post-judgment is a matter for another day. Furthermore, the Porro case, not only because it is a Rule 23 decision, but because it is so fact intensive, may be of little guidance in the future. However, the appellate court’s reliance on an alleged breach of the Rules of Professional Conduct as the basis of a legal malpractice action is food for thought. 

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1. My discussion of the Vandenberg case is intentionally short on facts. You must read the opinion to get the full flavor of what occurred at the trial court level. There were three different judges involved from the jury trial through the entry of the order of dismissal by reason of the settlement and until the time the case was on its way to the appellate court.