There is No Legal Malpractice in Arkansas for Decisions Made Regarding Unsettled Questions of Law

Sometimes the law surrounding a certain legal issue may be uncertain or there may be a split of authority among the courts regarding its meaning or enforceability.  If an attorney makes a decision based on his or her understanding of the unsettled question of law or what the attorney thinks is the correct interpretation, the attorney cannot be held liable to a client for legal malpractice.

In the Arkansas case of Evan v. Hamby, 378 S.W.3d 723 (Ark. 2011), a client sued his former attorney for malpractice.  The client maintained, among other claims, that the attorney failed to advise him to reinstate his corporate charter in order to limit his personal liability for corporate debts.

At the time the client entered into a promissory note, there was no statutory language stating that a reinstatement of a corporate charter would be retrospective in operation.  The client argued, however, that a reinstatement might have had a retroactive effect, and accordingly, the attorney should have advised him to reinstate it.

The court disagreed.  The court found that the client’s argument that the statute mighthave had a retroactive effect was insufficient to avoid summary judgment in favor of the attorney.

The court held: “An attorney is not, as a matter of law, liable for a mistaken opinion on a point of law that has not been settled by a court of the highest jurisdiction and on which reasonable attorneys may have different opinions.”  Evan v. Hamby, 378 S.W.3d 723, 730 (Ark. 2011).  Because the Arkansas Supreme Court had not settled the issue of retroactive application before, the client could not prove that the attorney’s conduct fell below the standard of care and caused his client’s damages.  The attorney could not be held liable for failing to advise the client that the option to reinstate the charter may be available.

The lesson to be learned from this case is that a court will not hold an attorney liable for strategic decisions the attorney makes using his or her reasonable professional judgment during his or her course of representation of a client regarding an unsettled question of law.

The attorneys at Bailey & Greer can advise you regarding whether you have a potential legal malpractice claim, so call us today for a free case consultation.