Can you get into trouble by giving a “preliminary opinion” about what a client’s claim might be worth? Possibly. But in Burds v. Hipes, a Georgia lawyer recently dodged a bullet when the state court of appeals held that an initial opinion about the possible value of the client’s claim was not actionable under theories of fraudulent inducement, misrepresentation or breach of fiduciary duty.
In the underlying case, the client hired the lawyer and her firm to represent him on an hourly-fee basis in his employment suit for unpaid wages. The client had tried to interest other lawyers in taking the case on a contingent-fee basis, but got no takers.
“Maybe” statements are not facts
The alleged fraudulent misrepresentation was in an e-mail sent to the client in response to the client’s request for a “clear understanding of the value of the case” and “a budget on filing a claim.” The lawyer’s response was hedged about with numerous qualifications. She told the client that:
- he “may be able” to get certain damages;
- he “probably could” require the employer to take certain actions;
- he “might be able” to obtain other damages, in the alternative;
- he “arguably” could rely on certain law;
- assuming certain facts, still other damages “might be recoverable.”
“Assuming all stars lined up [and] the jury loved you,” the lawyer continued, the client “might be looking at a figure of $448,725.” She also estimated that it might cost as much as $200,000 to try the case, and concluded that “the value of the case is dependent on many things ultimately, including what we are able to find in our evaluation research.”
The court of appeals held that the trial court correctly granted summary judgment in favor of the lawyer on the client’s fraud claim, citing Georgia authority holding that expressions of opinion or expectation cannot create liability for fraud. The lawyer’s e-mail to the client was merely a “very preliminary opinion … under a best case scenario [and contained] a number of disclaimers and conditional statements.” The statements were “simply not assertions of fact that could support a fraud claim.”
No fraudulent inducement or breach of duty
The client also alleged that he was fraudulently induced to enter into the hourly-fee contract by the lawyer’s statement that she would consider changing the agreement to a blended hourly/contingency contract. The trial court found no evidence that the lawyer “knew all along” that she would not change the agreement; moreover, the actual contract reflected the client’s agreement to pay hourly.
Last, the client alleged that the lawyer breached her fiduciary duty by failing to inform him early in the case that he had little chance of being able to settle it on favorable terms because there were no legal grounds to support it. The lawyer admitted to the client in an e-mail message that most lawyers would have turned down the case because it was difficult; but that was something the client knew already, from having shopped the case to other lawyers. And the court of appeals said that the assertion that the case was difficult was “not evidence that it was untenable or that she breached her fiduciary duty by not telling him so.”
Lawyer wins on fees
The lawyer had counterclaimed for unpaid hourly fees of $6,427, which the trial court granted summary judgment on in her favor. Completing the lawyer’s win, the court of appeals affirmed that judgment.
The take-away? If you are going to express an early opinion about the value of a claim, make sure that it is clearly just that — an opinion — by using language reflecting the degree of uncertainty inherent in such an assessment. The lawyer in Burds was undoubtedly glad that she did that.