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Mediators routinely hear an attorney make "The Threat." And when
it comes, it is often accompanied by a raised voice and index
finger, either jamming down staccato-like on the table or
wagging around. The attorney's voice drops to effectively
communicate readiness to use this ultimate weapon in the arsenal
of law and revenge. Should a settlement not be reached in this
mediation, the attorney intones, the opposition along with their
attorney can expect to be served right after this case with a
Malicious Prosecution lawsuit.
Malicious Prosecution targets the opposing parties and/or their
legal advisors who did not prevail in a prior legal action.
The Threat is often made deep into the mediation. By this time,
the client has progressively relinquished, in a series of steps,
more and more dollars or claims in the name of negotiation. The
Threat is an attorney's way of proving undying loyalty to the
client and aggressiveness for the cause during the difficult
stages of compromise. Or, the Threat is made to motivate the
opposition, or at least the mediator, to somehow close the deal
on the last offer made. That's how mediators often see it.
Nothing more.
But, there is something more.
It's not just threats. Malicious prosecution cases are being
filed in ever-increasing record numbers. Attorneys and their
former clients are being reunited as defendants in lawsuits. The
risk of claims against an attorney by third parties (people who
the attorney does not represent) is at an all-time high. The
biggest peril of litigation facing a lawyer practicing in Los
Angeles now is no longer a legal malpractice claim by his or her
client - it is a malicious prosecution action by the disgruntled
opposing litigant who was named as a party in that client's
unsuccessful prior lawsuit.
Some bitterly bemoan the rise in popularity of this once
universally disfavored claim as further evidence of the decline
in civility among lawyers. Others applaud how these cases
succeed in getting frivolous litigants and their greedy trial
lawyers to pay the attorneys' fees and costs incurred by the
innocent and in especially egregious cases, punitive damages
too. Either way, a mediator must understand certain points about
malicious prosecution.
The essential elements of a Malicious Prosecution claim are: (1)
that the prior action was initiated by or at the defendant's
direction and was terminated in plaintiff's favor; (2) was
brought without probable cause; and (3) was commenced with
malice.
Settlements entered into at mediations typically include a
dismissal of claims. Such a dismissal cannot be the basis for a
malicious prosecution action. A red flag is raised however where
a claim is dismissed outside of a mediation and not in
furtherance of a settlement, either by the court or voluntarily
by a party. Under certain circumstances such dismissal can be
the basis for a Malicious Prosecution action. This is another
reason why mediators should encourage parties to conclude with
an agreement or memorandum of settlement in writing. It makes
absolutely clear that the dismissal was filed pursuant to a
settlement.
California attorneys are often caught off guard on a number of
matters when sued for malicious prosecution. First, although
professional liability insurance can cover defense costs in a
malicious prosecution action, it will not indemnify the attorney
for damages. This places the sued attorney on the hook
personally if a jury finds him liable for his client's prior
unsuccessful lawsuit. Second, he or she may not be able to waive
the attorney - client privilege even though that may be the only
effective way to mount a defense. Third, when a party gets sued
in a malicious prosecution action, that party frequently turns
around and cross complains against his attorney.
Finally, an attorney defendant may be found liable for Malicious
Prosecution on the basis of merely one of many causes of action
from a complaint or cross complaint in the underlying action. It
just takes one bad apple -- even where all the other causes of
action in the bunch are found to be good or, as a court would
say, objectively tenable. Many attorneys overplead their
clients' cases and do not appreciate the risk.
While Malicious Prosecution claims are hard to prove (e.g.,
malice or ill will is tough to show) an attorney defendant is
particularly motivated to settle to prevent his or her fate from
being decided by a jury which may harbor negative stereotypes
about trial lawyers.
A relatively new weapon to stave off a frivolous malicious
prosecution claim is available. Under California Code of Civil
Procedure § 425.16, the anti-SLAPP statute, challenge to an
action for malicious prosecution may be filed within 60 days
after the complaint is served, during which time all discovery
is stayed unless "good cause" is shown. And unless the plaintiff
establishes "reasonable probability" of success on the merits,
the case is dismissed with an award of attorneys fees to the
prevailing defendant.
But, a significant number of malicious prosecution cases are not
being stricken thorough this special challenge. Case in point: I
recently mediated a malicious prosecution of a malicious
prosecution case. The dispute that started the entire litigation
was ancient history.
So, the next time The Threat of malicious prosecution is made in
a mediation, a mediator might guide the participants to give it
a second thought.
© 2003
Daniel Ben-Zvi.
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