In a recent decision, the Illinois Supreme Court held that clients ordered to pay punitive damages can sue their attorneys to recover the money. In doing so the Court considered and rejected arguments that state law and public policy protect lawyers from being subject to punitive damages awards.
Midwest Sanitary Service Inc. retained St. Louis law firm Sandberg, Phoenix & Von Gontard to represent it in a whistleblower retaliation case filed against it by a former employee. Midwest lost the trial which resulted in a jury award of $160,000 in compensatory damages and, important to the case before the Court, $625,000 in punitive damages against the company. Following the verdict, Midwest sued its lawyers for malpractice alleging that the attorneys had committed various mistakes in the case including failing to designate defense witnesses in time and eliciting harmful testimony from a state official during cross-examination.
For their part, the attorneys sought dismissal of the legal malpractice suit arguing that Section 2-1115 of the Illinois Code of Civil Procedure prohibition against awarding punitive damages in medical or legal malpractice cases precluded Midwest from recovery of the punitive damages award. It also argued that allowing recovery in a legal malpractice suit of punitive damages awarded in an underlying suit would violate the public policy of Illinois. The trial court rejected the law firm’s arguments that it could not be held responsible for the punitive damages award. The Fifth District appellate court sided with the trial court. The Illinois Supreme Court granted the law firm’s petition for leave to appeal.
Initially, the Court noted that the malpractice case was still ongoing and that the appeal had not come from a final and appealable judgment but was an interlocutory appeal brought pursuant to Illinois Supreme Court Rule 308. As such, the Court’s task was to answer the question of whether, in a legal malpractice action, punitive damages incurred in an underlying action, which were proximately caused by the alleged negligence of the attorneys in the underlying action, can be recovered as compensatory damages from the allegedly negligent attorneys in a legal malpractice action. Continue reading ›