Shoemake v. Ferrer, 225 P.3d 990 (WA Feb. 4, 2010).
Facts: After attorney Ferrer mishandled Plaintiffs’ personal injury case and failed to advise them of a $100,000 settlement offer, Plaintiffs sued for legal malpractice and asked for the full amount they would have received in settlement, without subtracting Ferrer’s contingency fee, plus interest.
The trial court held that Ferrer ought to be allowed to subtract his contingency fee. The appellate court reversed and Ferrer appealed to the Supreme Court of Washington.
Issue: Is an attorney allowed to subtract his hypothetical fees in the underlying action from an award for damages in a legal malpractice action?
Washington followed the approach taken by the majority of the jurisdictions and held:
[C]alculating damages without deducting a negligent attorney’s hypothetical contingency fee is an appropriate measure of damages. The Shoemakes had to expend fees on a second lawyer in order to finish the job the first lawyer neglected to do. The majority approach makes the plaintiffs whole without conferring a windfall.
Additionally, the Court held that the Shoemakes were entitled to prejudgment interest on the full amount of their damages in the legal malpractice action, including the portion that Ferrer would have been entitled to as his contingency fee had he properly litigated the underlying matter.
Lesson: In a majority of the jurisdictions, including Washington, attorneys will not be allowed to deduct their hypothetical fees in the underlying matter from the damages awarded to their former clients in a subsequent legal malpractice action.