Assignability of professional negligence claims: look for collusion.

• Author: Outten, Samuel W.

In recent years, defense attorneys have seen growing attempts to assign professional negligence claims. These assignments raise serious questions of public policy. On the one hand, plaintiffs argue that assignment of claims often provides prompt relief for injured parties and encourages settlements. On the other hand, defense lawyers argue that the courts should not permit a professional negligence cause of action to be converted into a mere commodity.

In analyzing the assignability issue, one should distinguish between close and confidential relationships (such as the attorney-client relationship) and other less intimate relationships (such as the relationship between an insurance agent and an insured). In the legal malpractice context, many courts disfavor assignments. (31) Courts view the assignability of a legal malpractice claim with a skeptical eye because it is "predicated on the uniquely personal nature of legal services and the contract out of which a highly personal and confidential attorney-client relationship arises, and public policy considerations based thereon." (32)

Courts have justly feared that such an assignment could "relegate the legal malpractice action to the marketplace and convert it to a commodity to be exploited and transferred to economic bidders who have never had a professional relationship with the attorney." (33) Such factoring of malpractice claims could "encourage unjustified lawsuits against members of the legal profession, generate an increase in legal malpractice litigation, promote champerty and force attorneys to defend themselves against strangers." (34)

While an attorney-client relationship is indeed special, defense lawyers should take note of the trend in other professional negligence contexts of permitting assignability. More liberal assignment rules will have repercussions for attorneys as well as other professionals. However, even in jurisdictions where assignment is favored, there remain tools to defeat assignment--most especially, the existence of collusion.

An example of the growing trend in permitting assignments is Fowler v. Hunter. (35) The Fowlers were seriously injured when their motorcycle was struck by Sallie Hunter's car. The car was owned by Gynecologic Oncology Associates ("GOA"), a practice with which her husband was affiliated. Auto-Owners Insurance Company insured the vehicle with limits of $1 million. GOA also had a commercial umbrella policy for $4 million procured through...