Evans v. Hamby, 2011 Ark. 69 (February 17, 2011)
Facts: Evans sued his former attorneys alleging that they failed to raise the defense of usury and failed to advise him to reinstate a corporate charter. Defendants argued that they committed no malpractice, since the defense of usury– according to their understanding of the law, was not applicable and, under the statutory scheme at the time, reinstating the corporate charter would have been fruitless.
Issue: Could Evans pursue his claims for malpractice?
An attorney is not liable to a client when, acting in good faith, that attorney makes mere errors of judgment. Moreover, an attorney is not, as a matter of law, liable for a mistaken opinion on a point of law that has not been settled by the highest court of jurisdiction and on which reasonable attorneys may differ.
The Court held that the attorneys’ conclusion that the defense of usury was not applicable was reasonable, since Evans himself selected the interest rate at issue.
With regard to reinstatement of the corporate charter, the Court noted that the statute allowing corporations to reinstate their charter would have been applicable until July 30, 1999– several months after plaintiff’s corporation lost its authority to do business in Arkansas.
The Court explained that Evans’ argument that the statute might have had retroactive effect was not enough to avoid summary judgment in favor of Defendants:
An attorney is not, as a matter of law, liable for a mistaken opinion on a point of law that has not been settled by a court of the highest jurisdiction and on which reasonable attorneys may have different opinions. This court has never settled the issue of the retroactive application of Act 522 before its effective date. For that reason alone, it is clear to this court that Jerry Evans cannot prove that Hamby’s conduct fell below the generally accepted standard of practice and proximately caused his damages. While Hamby could have advised Jerry Evans that the option to reinstate the charter may be available to him, this fact alone is too tenuous to support proximate cause for legal malpractice.
Retroactivity is a matter of legislative intent. Unless it expressly states otherwise, we presume the legislature intends for its laws to apply only prospectively.
Lesson: An attorney will not be liable for strategic decisions made with reasonable professional judgement and analysis, unsettled questions of law, or laws that went into effect after the alleged negligence.