WI COS 7th Circuit denies claim for $1.2M attorney fees as damages in a legal malpractice suit.

Byline: David Ziemer

A client can't claim $1.2 million in attorney fees as damages in a legal malpractice suit, where the fees were incurred defending against a mere $10,000 discovery sanction.

The Seventh Circuit held on April 7 that, even assuming that attorney fees are damages that can be recovered, the amount incurred was not a reasonably foreseeable consequence of the failure to comply with a discovery request.

Illinois State University was sued by several female professors who claimed sex discrimination and retaliation. ISU was represented by the law firm of Giffin Winning Cohen & Bodewes (Giffin Winning), and was insured by TIG Insurance Company.

The professors were represented by attorney Joel Bellows. The underlying case has a lengthy appellate history, having proceeded twice to the U.S. Supreme Court. Varner v. Illinois State University, 972 F. Supp. 458 (C.D. Ill. 1997), affirmed, 150 F.3d 706 (7th Cir. 1998), vacated, 528 U.S. 1110 (2000), on remand, 226 F.3d 927 (7th Cir. 2000), cert. denied, 533 U.S. 902 (2001).

In 1994, while the Varner case was pending before the EEOC, ISU provided Giffin Winning with two gender equity studies. In 1996, Bellows requested the studies. Instead of providing copies of the studies that it already possessed, Giffin Winning forwarded the requested to William Gorrell, an ISU official. Gorrell never complied with the request, however.

Later, after Gorrell had left ISU's employ, he provided copies of the studies to Bellows on his own. He also executed an affidavit describing the existence of a "planning policy database" on which he said the studies were based.

Bellows then sought sanctions against ISU and Giffin Winning (the firm of Latham & Watkins was defending ISU by this time).

After a four-day hearing, Judge Michael M. Mihm found that no planning policy database ever existed. Nevertheless, he sanctioned Giffin Winning $10,000 for discovery lapses (a sanction later vacated). Bellows' motion for default judgment as a sanction was denied, and Bellows, in fact, was also sanctioned $10,000.

In the course of defending against the $10,000 sanction, however, TIG paid $1.2 million to Latham & Watkins.

TIG then sued Giffin Winning for legal malpractice, claiming those fees as damages. U.S. District Judge Samuel Der-Yeghiayan dismissed the action, and TIG appealed. The Seventh Circuit affirmed in a decision by Judge Terence T. Evans.

The court first raised, but declined to address two issues: whether its...