The Rules for Proving Actual Damages in Legal Malpractice
Proving actual damages is a two-part problem. First, one must consider establishing the monetary loss. Damages must be affirmatively established by the aggrieved client. Damages are not presumed and the client bears the burden of showing that damages resulted.
Where the legal malpractice plaintiff’s recovery is lost or the settlement is less than what was otherwise reasonable, recovery is limited to the property interest lost as a result of the alleged malpractice, an amount necessarily limited to the net amount the plaintiff would have ultimately recovered in the underlying case.
One example of net amount is where a workers’ compensation lien would have been recoverable in the underlying lawsuit. The type of lien does not attach to the legal malpractice action but it does reduce the recovery in the legal malpractice lawsuit. Net amount does not mean however that there is a setoff of the attorney fees that would have been paid to the negligent attorney on a contingency fee basis had the errors not have taken place.
A separate element for recovery is the attorney fees that are incurred in efforts to undue the damages. However, the loss of the use of the money from the date that a judgment should have been entered is another way of seeking pre-judgment interest which is not allowable.
Where “an attorney has been engaged to defend an action and the action is lost through the attorney’s negligence, the amount of the judgment suffered by the client is, generally, a proper element of recovery in a malpractice proceeding against the attorney.” This is so even though the damages have neither been paid nor are capable of being paid.