IN: Underlying bankruptcy action
Facts: Lawyers represented clients in a Chapter 11 bankruptcy case. When the lawyers discovered that they may have a conflict of interest with one of their creditors, they had the clients hire other lawyers to represent them in that matter. After the bankruptcy court approved their reorganization plan, the lawyers withdrew their representation of the clients. Two years and twelve days later, the clients sued the lawyers for malpractice.
Issue: Is the statute of limitation for lawyer malpractice tolled for fraudulent concealment?
Ruling: The statute of limitations for lawyer malpractice is two years in Indiana. But a statute of limitations stops when a lawyer, “by deception or a violation of duty, has concealed material facts from the plaintiff thereby preventing concealment of a wrong.” This doctrine of fraudulent concealment includes instances where lawyers conceal malpractice from their clients, and when lawyers fail to disclose information from their clients. The clients in this case alleged that the lawyers actively concealed their malpractice, but they did not present any evidence to support that allegation.
Even if they did show that the lawyers concealed their malpractice, the doctrine of fraudulent concealment does not reset the statute of limitations on the malpractice action. A client who discovers lawyer malpractice has the responsibility to begin a lawsuit within a reasonable time. Since the clients did not explain why they filed a suit more than two years after their representation ended, their suit was barred by the statute of limitations.
Lesson: When a lawyer conceals his malpractice from a client, a lawyer malpractice lawsuit must be brought within a reasonable time after discovery of the malpractice.