Legal Malpractice Claims Are Not Assignable as a Matter of California Public Policy
In Kracht v. Perrin, Gartland & Doyle (1990) 219 Cal. App. 3d 1019, the Court recognized:
"It is now well settled that under California law a former client may not voluntarily assign his claims for legal malpractice against his former attorneys.
In Goodley v. Wank & Wank, Inc. (1976) 62 Cal. App. 3d 389, and more recently in Jackson v. Rogers & Wells (1989) 210 Cal. App. 3d 336, the courts determined that although choses in action for property or pecuniary losses are generally assignable, a claim for legal malpractice is more akin to those types of claims which are not assignable, i.e., claims for personal injury, wrongs of a purely personal nature (such as injuries to the reputation or feelings of the injured party) or breaches of contracts of a purely personal nature (such as promises of marriage). (Goodley . . ., supra, 62 Cal. App. 3d at pp. 393-395; Jackson . . ., supra, 210 Cal. App. 3d at pp. 341-342.)
Goodley and Jackson concluded that the attorney-client relationship (although containing contractual elements) is unique and involves a highly personal and confidential relationship, making the relationship '. . . more analogous to a contract of a personal nature than to an ordinary commercial contract' (Jackson . . ., supra, 210 Cal. App. 3d at p. 342), and rendering claims for negligent breach thereof nonassignable." (Fn. omitted.) The court's omitted footnote 4 provides: "The vast weight of authority from other jurisdictions also holds that legal malpractice claims are not assignable. (See Jackson . . ., supra, 210 Cal. App. 3d at p. 343.)" (Kracht, supra, 219 Cal. App. 3d at p. 1023, fn. 4.)
In Kracht, the Court explained that the decisions in Goodley, supra, 62 Cal. App. 3d 389, and Jackson v. Rogers & Wells (1989) 210 Cal. App. 3d 336 both recognized that numerous public policy considerations are involved in the determination of whether claims for legal malpractice should be assignable. With respect to Goodley, this court stated:
"Goodley noted the attorney owes a duty of undivided loyalty and diligence in representing the client. Such duty is personally owed by the attorney and may not be delegated to others, and is owed solely to the client, his one intended beneficiary. Assignability would encourage commercialization of claims, and would force attorneys to defend themselves against persons to whom no duty was ever owed. Moreover, the legal profession is debased by such commercialization, because it could (1) encourage unjustified lawsuits; (2) generate increased malpractice lawsuits, burdening the profession, the court system and (to the extent malpractice premiums would inevitably rise and be passed to the consumers) the public; and (3) promote champerty. (Goodley. . ., supra, 62 Cal. App. 3d at p. 397.)
"Champerty" is defined as a "bargain between a stranger and a party to a lawsuit by which the stranger pursues the party's claim in consideration of receiving part of any judgment proceeds; it is one type of 'maintenance,' the more general term which refers to maintaining, supporting, or promoting another person's litigation. . . ." (Black's Law Dict. (6th ed. 1990) p. 231, col. 1.)
Assignability could conceivably reduce the public's access to legal services, since the ever present threat of assignment by irresponsible clients (seeking quick financial gain) could cause lawyers to evaluate more selectively the desirability of representing a particular client. (Id. at pp. 397-398.)" (Kracht, supra, 219 Cal. App. 3d at pp. 1023-1024.)
This court also noted in Kracht that the Jackson decision recognized that other policy considerations support the rule of nonassignability of legal malpractice claims: "Jackson cited additional policy considerations militating against assignability.
The sanctity of the relationship, with its duties of vigorous representation and undivided loyalty, is imperiled by assignability. If an attorney perceives that his current adversary might some day be entitled to sue him for malpractice, he may be reluctant to pursue vigorously the current litigation for fear of providing motivation (i.e., his adversary's wrath) for a later malpractice action. Such a damper on the attorney's zeal also undermines the client's trust in his attorney, because the client could well question whether the attorney was making tactical choices based solely on the client's best interests." (Kracht, supra, 219 Cal. App. 3d at p. 1024, citing Jackson, supra, 210 Cal. App. 3d at pp. 347-348.) The Court Kracht that the Goodley rule applies to any assignment of a legal malpractice claim, whether voluntary or involuntary. ( Kracht, supra, 219 Cal. App. 3d at p. 1024.)
In Kracht, the plaintiff (Kracht), as administratrix of an estate, had obtained a judgment in California against a third party (Hogue) in the underlying case. (Id. at p. 1021.)
When Kracht served discovery on him, Hogue consulted attorneys who assisted him in the preparation of responses to the discovery requests. (Ibid.) Kracht obtained the underlying judgment after the trial court found the responses inadequate. (Ibid.)
Kracht sought and obtained a court order under Code of Civil Procedure sections 708.510 and 708.520, compelling Hogue to assign to her all choses in action which he held against the attorneys who had assisted him. (219 Cal. App. 3d at p. 1021.) When Kracht filed a complaint for legal malpractice against the attorneys, they successfully demurred on the ground legal malpractice claims are not assignable. Kracht appealed from the resulting judgment of dismissal. (Id. at p. 1022.)
Affirming the judgment of dismissal, this court in Kracht held that "the public policy concerns expressed in Jackson and Goodley are violated by any assignment of claims, whether voluntary or (as here) involuntary." (Kracht, supra, 219 Cal. App. 3d at p. 1024.)
In so holding, this court reasoned that "additional public policy reasons against assignability of a legal malpractice claim are suggested by this case, involving an involuntary transfer to the former adversary. First, a suit could be filed, even though the former client (to whom the duty was owed) was entirely satisfied with the services and opposed the filing of a malpractice lawsuit. Second, a suit brought on a claim acquired by involuntary assignment, and against the client's wishes, places the attorney in an untenable position. He must preserve the attorney-client privilege (the client having done nothing to waive the privilege) while trying to show that his representation of the client was not negligent." (Kracht, supra, 219 Cal. App. 3d at p. 1024.)