A. In General
The damages in a legal malpractice case are usually the economic difference between what the client would have received if the underlying matter had been handled non-negligently, and what the client actually got. When the underlying matters was a claim or lawsuit, this could mean the likely amount that would have been recovered on a claim versus the amount actually recovered. However, if the client was a defendant in the underlying case, it can also be the difference between, for instance, a large judgment against the client and the absence of such a judgment if the client had won.
In transactions, the concept is the same. For instance, in a legal malpractice case involving an underlying real estate or business deal, damages for attorney mistakes handling the deal might include the lost economic opportunity or profit. (But there are some special rules about lost profits to prevent recovery of speculative losses.)
B. Emotional Distress Damages
Emotional and psychological distress damages (pain and suffering) are generally not recoverable in legal malpractice cases, with exceptions (see below). However, it is important to be more precise about what this means. The negligent failure to obtain a judgment (or settlement) in the underlying case, where the underlying claim allowed for the recovery of emotional distress damages, is actionable in a legal malpractice case, because in the malpractice case those damages are considered economic damages. This makes sense because the client was denied financial recovery in the form of a money judgment or settlement, even if they would have been on account of underlying physical injury and related pain and suffering.
For example, suppose the defendant lawyer mishandled an underling personal injury case involving a serious auto accident, which allows for the recovery of physical injuries and associated psychological and emotional distress. In the subsequent malpractice case, the defense cannot avoid damages by mischaracterizing the lost recovery (judgment) as "emotional distress damages." The damages are recoverable in the malpractice case because they are economic damages viewed within the context of the malpractice lawsuit. Put differently, the damage in the malpractice lawsuit is the lost judgment (or settlement).
The general rule against recovery of emotional distress damages in legal malpractice cases refers to emotional distress that flows from the malpractice, not the underlying injury giving rise to the "case-within-a-case" that the lawyer mishandled. For example, suppose a lawyer mishandled a lawsuit, resulting in the loss of a plaintiff’s judgment on a breach of contract claim. Suppose further than over the course of the lawsuit, the lawyer’s various delays and mistakes unfolded over a long period of time, during which the client experienced great frustration, even to the point of seeking psychological counselling. Suppose further that the loss of the case, which resulted in a defense verdict, was a devastating financial blow to the client, exacerbating the frustration already experienced. The client may sue his lawyer for the dollar value of the lost judgement, but not for any of the distress and frustration.
This general rule against recovery of emotional distress damages, when the distress was caused by the malpractice itself, as opposed to being an element of the underlying case, applies in Washington and in Oregon. However, there are exceptions in both jurisdictions.
In Washington, simple malpractice resulting in pecuniary loss that causes emotional upset does not support emotional distress damages. However, the plaintiff in a legal malpractice case may recover emotional distress damages when significant emotional distress is foreseeable from the sensitive personal nature of the representation or when the attorney’s conduct is particularly egregious. Schmidt v Coogan, 173 P3d. 273, 162 Wn2d. 488 (2007).
In Oregon, the issue is a bit less straightforward. The traditional rule has been that damages for emotional distress were unavailable unless they were the result of a foreseeable physical injury. This meant that emotional distress damages for legal malpractice were out. However, more recently, the issue was taken up in an Oregon case, Hilt v Bernstein, 75 Or App 502, 707 P2d 88 (1985). In Hilt, plaintiff sued her former attorney for malpractice, alleging that the attorney’s negligence in counseling her during a divorce proceeding had resulted in the loss of her equity in her home, causing her mental distress. The court did not resolve the issue of whether the attorney-client relationship gave rise to a legal protected interest sufficient to allow recovery of emotional distress damages without regard to their source. Instead, the court concluded that, because the plaintiff’s underlying loss was "solely an economic one," the invasion of any interest was not sufficient to warrant the recovery of emotional distress damages.
However, in McEvoy v Hilkson, 277 Or 781, 562 P.2d 540 (1977), the court allowed a claim for emotional distress damages against the client’s wife’s former attorney resulting in the loss of a parent-child relationship, after the attorney violated a court order to keep the child’s passport and the client’s ex-wife fled the country with the child.
In a 1997 Oregon case involving medical malpractice, the court allowed recovery of emotional distress damages with no physical contract or injury, based on negligence in subjecting a patient with claustrophobia and asthma to an MRI. The language and reasoning of that case, which discussed the special relationship between doctor and patient, would seem to have significant applicability to the lawyer-client relationship as well. Curtis v MRI Imaging Services II, 148 Or App 607, 941 P2d. 602 (1997); affirmed, 327 Or 9, 956 P.2d 960 (1998). In that case, the court referred to the Hilt case (see above), noting that it turned on the nature of the invasion, and suggesting that it did not preclude claims for emotional distress in a legal malpractice when the subject of the representation and client loss were different.
The takeaway from these Oregon cases seems to be that 1) something more than mere foreseeability of emotional distress damages is required when there is no physical injury caused by the defendant; 2) a lawyer-client relationship may impose heightened responsibilities such that emotional distress damages without a physical injury may be available, but not without examination of the "interest invaded," to cause emotional distress; 3) plaintiffs must present evidence of something more than financial loss caused by the lawyer’s negligence as the cause of the emotional distress; 4) the interest invaded to cause emotional distress must be something significant, but is not defined, and is probably determined on a case-by-case basis; and 5) legal malpractice which causes the loss of (or substantially compromises) a parent-child relationship, for example, appears to support a claim for emotional distress damages.
Thus, the rule in Oregon may be similar to the rule in Washington, in the sense that both jurisdictions focus on the nature of the subject matter of the representation and consequent harm causing emotional distress. In Washington, the courts provide more explicit guidance, by reference to the "sensitive personal nature of the representation."