On March 26, 2021, a California appeals court reinstated a legal malpractice lawsuit that the trial court had thrown out, filed by well-known athletic trainer Jillian Michaels, who starred on The Biggest Loser for many seasons. While the appeals court’s opinion dealt with several complex legal issues, the judge elaborated on important concepts that we discuss in this space.
The attorney-client dispute
Michaels and her company Empowered Media, LLC, engaged law firm Greenberg Traurig and one of its entertainment law partners David Markman to represent her in professional negotiations and to draft and review proposed contracts such as for endorsements or appearances.
The dispute arose from two contracts Michaels executed under Markman’s watch in 2009. The first was for her appearances on The Biggest Loser. This agreement also restricted Michaels’ involvement in commercials for other parties.
The second contract was with nutrition company ThinCare for Michaels to provide “branding and promotional services.” This agreement warranted that Michaels and Empowered had signed no other contracts that would restrict them from fulfilling their contract with ThinCare and that their agreement would not interfere with any third-party’s rights.
Michaels alleges that her attorney Markman did not advise her that the two contracts were inconsistent, setting her up for conflicting legal responsibilities from which problems began to flow. Ultimately, she alleges millions of dollars in losses from resulting litigation with ThinCare and the loss of a licensing deal. She alleges that she would have considered other options rather than signing had she understood the conflicting contractual provisions.
Transactional malpractice
We have shared information before about two types of attorney malpractice: litigation or transactional. Negligence or malpractice in litigation concerns harm from a lawyer’s negligent behavior in the course of a lawsuit.
Transactional malpractice looks at a client’s losses when their attorney violates the duty of care to the client in the context of negotiating a deal or facilitating a transaction, including preparing legal documents like contracts or reviewing those drafted by other lawyers before execution.
Causation
The court spent considerable space discussing causation – that the lawyer’s malpractice harmed the client. In the blog at the link in the preceding paragraph, we discussed “no deal” or “better deal” – that without the transactional malpractice, the client could have gotten a better deal or may have chosen not to enter into a deal.
The judge wrote that the no deal-better deal scenarios are ways to prove causation, they are not the “actual test in determining causation.” California courts use the “substantial factor test” to prove causation – that the lawyer’s negligence is a cause in fact if it was a “substantial factor in bringing about the injury.”
Quoting California Civil Jury Instructions (CACI): “A substantial factor in causing harm is a factor that a reasonable person would consider to have contributed to the harm. It must be more than a remote or trivial factor. It does not have to be the only cause … Conduct is not a substantial factor in causing harm if the same harm would have occurred without that conduct.”
Finally, the court explained that to recover from legal malpractice, it must have injured the client and that in a business transaction, that harm or loss is financial. It may be necessary to present an expert opinion to establish the value of the commercial losses so that reasonable money damages may be awarded.