Plaintiff may seek an award of damages in a legal malpractice case corresponding to whatever plaintiff may have recovered if the underlying matter had been handled properly. Some restrictions on the kinds of damages that are recoverable are discussed in other articles, but the amount of damages is a different matter.
Among the most common and important issues relating to the amount of recoverable damages in a malpractice claim relates to one’s ability to collect on a malpractice judgment. The defendant lawyer and law firm may have insufficient insurance and assets to cover the claim. Consider a client with a personal injury claim worth approximately $2 million against a fully insured company or the government. Suppose the client hires a law firm that fails to timely initiate a lawsuit and thus loses the claim. Suppose that law firm only carries $500,000 of professional liability (malpractice) insurance and has minimal assets and income. The client is not in a good position to recover all his/her damages.
Similar scenarios are common enough that it makes sense to select a law firm likely to carry sufficient malpractice insurance and/or to have significant assets to cover the loss if things go awry due to lawyer mistakes. Sometimes a plaintiff under those circumstances can tap into a larger insurance limit if the insurance company unreasonable refuses to accept an offer of settlement within the full policy limits, however.
The question sometimes arises whether a claim in the underlying case could ever have been successfully collected. This has a direct impact on the amount of damages available in a malpractice case, because the damages in a malpractice case are derivative of the client’s losses in the underlying case. If the client could never have recovered a nickel after prevailing in the underlying case, then the client was not damaged by any lawyer mistakes. There are some special rules relating to proof in the malpractice case that a successful result in the underlying case could have been collected. See our other article - To prove damages in my legal malpractice case, do I have to prove that I could have collected on a judgment against the defendant in the underlying case if I had won?
Other limitations on damages in the underlying case would be carried through to computation of damages in the malpractice case. For instance, if there are statutory caps on amount of non-economic damages (pain and suffering, emotional distress) applicable to the underlying claim which limited the amount that could have been sought and recovered, then those caps would also determine the limit of damages recoverable in the malpractice case. Washington’s statutory caps on non-economic damages have been struck down as unconstitutional, so if the underlying matter was or would have been a Washington case, then this is not a consideration. Oregon has statutory caps on non-economic damages (pain and suffering) of $500,000. However, these were significantly rolled back in recent court cases which determined the cap to be unconstitutional for many kinds of claims. (A discussion of that subject is outside the scope of this article.)