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10/3/2018 » 10/5/2018
2018 Annual Meeting and CLE/CEU Presentation

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Member Achievement and Case News: Featured

Conflicted Attorney Owes Fees in LPL Claim

Wednesday, June 6, 2018   (0 Comments)
Posted by: Tom Jensen
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Client sold assets of his business to one Anderson for $350,000 on a promissory note. After three payments buyer defaulted. Business sued Anderson for collection, triggering Anderson's bankruptcy. Discharge was denied due to Anderson's fraud. Business obtained $470,020 judgment against Anderson. Client convinced Anderson to sue his bankruptcy attorney for malpractice to generate funds to satisfy the judgment. Client agreed to hire the attorney; attorney Howard took the case and sued. Howard then settled the case and disbursed funds to Anderson keeping the balance for his fees. Client received nothing and then sued Howard for malpractice.  Jury found in favor of client and awarded $775,000 in damages. Trial court reduced damages to the amount Anderson received in the settlement. On appeal in Lerette v. Howard, 300 Neb. 128 (June 1, 2018) the Supreme Court agreed. Client failed to present evidence a higher settlement could have been obtained. Nor could damages be based upon what might have been awarded in the LPL trial, because the case was settled. Thus damages had to be premised upon loss resulting from failure of counsel to pay the settlement to client. Court also ruled the full $350,000 settlement had to be paid to client due to counsel's conflict of interest. Thus he had to forfeit his fee in addition to remitting the amount paid to Anderson.    

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