HeplerBroom Summer Associate Ethan S. Bennett contributed to this blog post.
Are legal malpractice claims assignable? Nearly 20 years ago, the Supreme Court of Connecticut extensively surveyed case law across the country to answer this question. See Gurski v. Rosenblum and Filan, LLC, 276 Conn. 257, 885 A.2d 163 (2005). At the time, the Court noted that most jurisdictions had concluded that they are not assignable for various public policy considerations. Id. at 169. While Gurski’s majority “public policy rationale” remains intact[1], some novel legal issues and divergent holdings have begged the question: is this prohibition still the majority view?
As the Gurski Court noted in 2005, most states barred these assignments, pointing to the demeaning of the legal profession through the “commercialization” of such claims. Other courts opined the potential degradation of the “unique and personal” relationship between a lawyer and client or the attorney’s duty of loyalty and confidentiality in rejecting assignments. Still, some jurisdictions did not definitively decide the legality of assignment and, instead, adopted a case-by-case approach. See Gurski, 885 A.2d at 173.
One particularly novel and divisive issue that has arisen more frequently concerns whether a plaintiff can assign the proceeds of her legal malpractice claim instead of the claim itself. See e.g., Beavor v. Tomsheck, 519 P.3d. 1260 (Nev. 2022).[2] Most courts have concluded that the transfer of an interest in the proceeds of a legal malpractice claim is, as a practical matter, nothing more than a de facto assignment of a claim and, therefore, barred. See e.g., Unruh Chiropractic Clinic v. De Smet Ins. Co. of South Dakota, 782 N.W.2d 367, 370 (S.D. 2010). Some courts have distinguished the two and found the assignment of proceeds to be merely a way for wronged clients to use their assets. See e.g., PADRM Gold Mine, LLC v. Perkumpulan Inv. Crisis Ctr. Dressel – WBG, 498 P.3d 1073 (Alaska 2021).[3] As such, this issue will likely continue to arise as litigants seek to circumvent their state’s prohibition against legal malpractice assignments.