Claimant may not assign proceeds of legal-malpractice claim

By David L. Martin

A legal-malpractice claimant may not assign the proceeds of his claim to an adverse litigant, even if the claimant pursues the claim in his own name, the Washington Court of Appeals has held. The decision prevents parties from evading Washington’s rule against assignment of a legal-malpractice action.

In Kim v. O’Sullivan, no. 56032-2-I (Jun. 19, 2006), Thomas Reina was injured in a bar fight and later sued the bar owner, Dong Wan Kim, for liquor liability. Kim’s liquor-liability insurer, Columbia Casualty Company, assigned attorney Jay O’Sullivan to defend Kim under a reservation of rights. Kim later claimed that O’Sullivan’s defense of him was deficient in several ways and that as a result, Kim and Columbia both underestimated the strength of Reina’s case.

In February 2003, Kim and his personal counsel, Karl Park, entered into a settlement with Reina without consulting O’Sullivan. Kim consented to judgment against them for $3 million. Kim assigned to Reina any insurance proceeds or insurance bad-faith claims under his $1 million Columbia policy and another $1 million general-liability policy with Odyssey Re Limited. Kim also assigned to Reina his legal-malpractice claims against O’Sullivan and promised to cooperate with Reina’s prosecution of the claims against O’Sullivan and the insurers. In return, Reina agreed to hold Kim harmless from the risks and expenses of the litigation against the insurers and O’Sullivan.

Reina later settled with the insurers for $797,500, leaving him to pursue only the legal-malpractice claims.