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Divorcee's legal malpractice claim is summarily dismissed as too late: representation on appeal and in seeking ex-husband's indemnification is "unrelated."

Suzanne Rhodes had signed an antenuptial agreement prior to her 2002 marriage and sought legal advice before filing for a divorce in 2006.  She retained the Gates Law Office and John F. Schaefer to represent her.  They signed a fee agreement that included a provision calling for a "minimum engagement fee" of $40,000.00, along with a "results-oriented fee...which can only be assessed at the conclusion of the matter..."  After the divorce was concluded, there was an appeal and an issue arose with regard to Rhodes' agreeing to indemnify one of her ex-husband's creditors.  She ultimately paid $500,000.00 to the creditor to secure relief from an 18 million dollar indemnity claim.  She then sued the lawyers for malpractice.

The parties disputed the facts about the indemnity agreement, with the lawyers claiming they were never apprised of the agreement and did all they could to avoid the risks they could investigate.  The client claimed that the lawyers were informed of the agreement and dropped the ball.  They also disputed when the divorce retention ended--and thus whether the two-year statute of limitations and the six-month discovery period had run.  The lawyers' [insurer, most likely] claimed that the work they did after the divorce judgment was entered was "unrelated" and therefore allowed the statute of limitations to run.  Rhodes' attorneys argued that the attorneys' work related to the appeal and the indemnification agreement, and the ex-husband's duty to Rhodes, extended the statute of limitations, since it arose out of the same fee agreement.

The Court of Appeals panel affirmed the trial judge's summary disposition of Rhodes' claim, holding that the work performed after the divorce judgment entered was done more than two years after the attorneys "discontinue[ed] serving the plaintiff in a professional to the matters out of which the claim for malpractice arose..."  The judges chose to emphasize the "important distinction between an ongoing attorney-client relationship and a remedial effort concerning past representation."  Even though the attorneys represented Rhodes on the appeal and after the case was remanded to the trial judge, the Appellate Court ruled that a letter they sent her at the initiation of the case severed the post-judgment elements of the representation from the divorce representation. 

We find it dubious that a client would recognize or appreciate that the lawyers' representation "as to the matters out of which the claim arose" ended before the appeal or the further court proceedings, if the lawyer continued to represent him or her.  Even more mysterious to us was the Court's conclusion that the attorneys' filings in the divorce action attempting to secure indemnification by the ex-husband were not service "with regard to matters out of which the claim for malpractice arose," and "did not involve the divorce proceedings."  The panel held that this case could be distinguished from prior Supreme Court precedent by the fact that in this case the "plaintiff did not have an ongoing relationship with defendants."  We'd guess that the client would beg to differ on that point--as would any person watching in the court room.  The Court also ruled that the six month discovery rule did not extend Rhodes' statute of limitation, because she didn't raise the malpractice claim within six months of receiving an indemnity demand from her husband's creditor.

Lastly, the Court ruled that the "results-oriented" fee agreement was not a contingent fee agreement--which the Michigan Supreme Court has held would be void as against public policy.  We're not sure we understand the Court's reasoning on that point, frankly.

Thompson O’Neil, P.C.
309 East Front Street
Traverse City, Michigan 49684
Toll Free: 1-800-678-1307
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