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If your lawyer mishandles your money, is that legal malpractice?

You may or may not know it, but your attorney has a fiduciary duty to you. From the moment he or she first takes your advance until the moment you part ways, your attorney owes you a clear accounting of your funds.

Lawyers who treat your money like their own often face discipline—even disbarment. In fact, such commingling of funds is one of the leading causes for California disbarment. But does this behavior count as legal malpractice?

Rule 1.15

The California State Bar spells out the financial responsibility your lawyer owes you in Rule 1.15. It says your attorney must, among other things:

  • Keep your money separate from his or her own
  • Give you the option to keep your money in a trust account if you would otherwise pay a flat fee in advance
  • Not put his or her money into the same account as your funds, with some exceptions
  • Notify you of any money or property he or she receives on your behalf
  • Keep clear records of all funds held in your name
  • Pay you the money to which you’re entitled

Sadly, some California attorneys don’t follow these rules. Some don’t pay attention and will commingle funds, perhaps without malice. Some simply commit fraud, perhaps feeding their clients bad records. Such failures are grounds for State Bar discipline and may even be grounds for criminal charges. But they aren’t always grounds for legal malpractice.

Two steps for legal malpractice

Proving legal malpractice requires two things:

  • Showing that the attorney acted wrongly
  • Demonstrating that the wrongs had a real, negative impact on your case

While an attorney’s violation of Rule 1.15 would clearly qualify as wrongdoing, it wouldn’t necessarily meet the second criteria. Yes, you were harmed, but it’s not clear that the action harmed your case.

Take appropriate action

When your attorney mishandles your funds, you have multiple options. Depending on how an attorney mismanages your money—such as if he or she fails to inform you of a matter that could impact your settlement—the error may be grounds for malpractice. More likely, you can try to resolve it directly with the attorney, file a complaint with the State Bar or pursue other legal avenues. You might try more than one route.

If you’re uncertain how to respond, you likely want the opinion of another attorney. You might not trust the attorney you suspect of mishandling your funds to give you the best advice. An attorney who has experience with legal malpractice and breaches of fiduciary duty may help you better understand your options.