Have you been sued and it’s the fault of your former attorney: How long until you are precluded from suing the real party responsible?
Five years ago you engaged the services of an attorney to represent your interests in a certain transaction. All of a sudden the transaction is being challenged and you have been sued. It quickly comes to your attention that the pending litigation is a result of inaccurate legal advice given by your attorney three years ago. What are your options and how quickly must you act?
First, engage the services of a qualified attorney to help navigate you through the difficult to understand area of law that is contribution and indemnity.
Second, consider bringing a claim for contribution and/or indemnity against your former attorney. “[T]he right of indemnity and the right of contribution are separate and distinct theories of recovery and are mutually exclusive remedies for allocating the plaintiff’s damages.” Kerschner v. Weiss & Co., 282 Ill. App. 3d 497, 502 (1996). The decision about whether to bring a claim for contribution, indemnity or both – recognizing you will ultimately only be able prevail as to one theory – against your former attorney is a difficult decision made by analyzing the facts of each specific case and weighing them against the elements necessary to prove each theory. The factors and analysis used to determine this decision will be discussed in a later article. For the purpose of this article, we will focus only on how quickly one must act to bring either or both of these claims against his or her former attorney.
Illinois statute of limitations to bring a claim of contribution or indemnity “where an underlying action has been filed by a claimant” is as follows:
No action for contribution or indemnity may be commenced more than 2 years after the party seeking contribution or indemnity has been served with process in the underlying action or more than 2 years from the time the party, or his or her privy, knew or should reasonably have known of an act or omission giving rise to the action for contribution or indemnity, whichever period expires later.
735 ILCS 5/13-204(b). At first blush, the answer seems simple: a party has two years from the time it is sued to bring an action for contribution or indemnity against its former attorney. In reality, the answer is not so simple.
Illinois law provides a statute of limitations to actions specifically against attorneys. The statute provides:
An action for damages based on tort, contract, or otherwise (i) against an attorney arising out of an act or omission in the performance of professional services . . . must be commenced within 2 years from the time the person bringing the action knew or reasonably should have known of the injury for which damages are sought.
735 ILCS 5/13-214.3(b). In the scenario outlined above, it appears that the party being sued would be precluded from filing an action for indemnity or contribution against its former attorney because the act or omission of the attorney occurred at the time of the transaction – meaning the party could only sue its former attorney for the 2 years immediately following the attorney’s representation in the transaction in question. This outcome is seriously prejudicial to clients, especially clients represented by attorneys for transactional-type services, in which the inaccurate advice of the attorney may not be discovered for several years after the transaction took place.
Luckily – for clients at least – the law is actually not as harsh at it seems. The key is the language at the end of the statute applicable to attorneys: “from the time the person bringing the action knew or reasonably should have known of the injury for which damages are sought.” “For the purposes of a legal malpractice action, a client is not considered to be injured unless and until he has suffered a loss for which he may seek monetary damages.” Blue Water Partners, Inc. v. Edwin D. Mason, Foley and Lardner, 2012 IL App (1st) 102165, ¶ 49. Therefore, the statute of limitations for a party to sue its former attorney does not commence unless or until the party suffers a loss in which it can seek monetary damages (e.g. a judgment).
Arguably, a party suffers damages when it begins incurring attorney’s fees to defend the action allegedly caused by the former attorney. However, “incurring of additional attorney fees may trigger the running of the statute of limitations for legal malpractice purposes, but only where it is clear, at the time the additional fees are incurred, that the fees are directly attributable to former counsel’s neglect.” Lucey v. Law Offices of Pretzel & Stouffer, Chartered, 301 Ill. App. 3d 349, 355 (1st Dist. 1998). Exceptions to the rule are always possible, but will depend on the unique facts and circumstances of each case.
Despite the requirement that a party suffer a loss prior to the statute of limitations for an action against its attorney commencing, a party does not have an endless amount of time to bring an action against its former attorney. The statute pertaining to actions specifically against attorneys includes the following limiting language:
An action . . . may not be commenced in any event more than 6 years after the date on which the act or omission occurred.
735 ILCS 5/13-214.3(c). Therefore, a party may only sue its attorney for an act or omission in the performance of professional services for 6 years following the act or omission. Even though the statute limiting actions against attorneys appears – at first – to unfairly limit client actions against former attorneys to 2 years after an attorneys act or omission, it is actually somewhat forgiving and allows clients who find themselves in a lawsuit as a result a former attorneys inaccurate advice at least some time to bring an action based on theories of indemnity or contribution against the former attorney who is actually responsible. Again, if you do find yourself in situation such as the one describe above, the best advice is to always contact a qualified attorney as soon as possible.
James D. Trail