In an Atypical Legal Malpractice Case, the Delaware Superior Court Dismisses Insurance Agency’s Legal Malpractice Claim Against Its Former Attorneys | Marshall Dennehey

In GMG Ins. Agency v. Margolis Edelstein, 2023 WL 2854760 (Del. Super. Ct. Apr. 10, 2023), reargument denied sub nom. GMG Ins. Agency v. Edelstein, 2023 WL 3522297 (Del. Super. Ct. May 17, 2023), the plaintiff, an insurance agency, claimed that its attorneys failed to develop a sufficient record for purposes of prevailing on a summary judgment motion in an underlying tortious interference with contract case brought against it by a competitor. The insurance agency ultimately settled the underlying case for $1.2 million after a key employee changed his testimony in the form of an affidavit, essentially implicating the insurance agency. The insurance company claimed that if its lawyers had properly developed the record, it would have prevailed on its summary judgment motion and the tortious interference claim would have been dismissed by the court before the key employee had a chance to change his testimony. The Superior Court, however, concluded that the lawyers did sufficiently develop the record and that the underlying settlement was the result of an unforeseeable intervening event.

This is a rare case in which a legal malpractice claim arises from the defense of a civil action. In a typical legal malpractice case arising from litigation, the plaintiff is required to demonstrate that the defendant attorney caused him to lose a judgment that he would have otherwise obtained at trial. In Delaware, unlike most other jurisdictions, a plaintiff can prevail in a legal malpractice case against an attorney if he can demonstrate a loss arising from an improper defense of an underlying lawsuit, even if the attorney did not cause his client to lose a judgment. Country Life Homes, LLC v. Gellert Scali Busenkell & Brown, LLC, 259 A.3d 55 (Del. 2021).