$3 Million Award Slashed as Double Recovery
The trial court entered default judgment in a legal malpractice action against an attorney and his law firm awarding nearly $3 million in damages to a litigation financing firm. On appeal the Fifth Circuit upheld the finding of negligence and determined any error in the order striking the attorney's pleadings as a sanction for discovery violations was not clear or obvious, nor did it prejudice the attorney. Delivering a bit of a mixed bag, the Fifth Circuit then concluded the court awarded damages for fees and expenses the litigation funding company paid before it even hired the defendant, without it having established culpability for the loss. Consequently, it reversed the damage award for attorney fees but found the attorney’s negligence might have cost the plaintiff either the $1.2 million it expected to recover in the underlying matter, or attorney fees in pursuing the fruitless matter—but not both.