Home Medical Malpractice PENNSYLVANIA ATTORNEYS TAKE NOTE – A Voluntary Settlement Agreement May No Longer Bar A Legal Malpractice Action – Professional Negligence

PENNSYLVANIA ATTORNEYS TAKE NOTE – A Voluntary Settlement Agreement May No Longer Bar A Legal Malpractice Action – Professional Negligence

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Pennsylvania has long been an outlier amongst jurisdictions in
holding that clients cannot sue their attorney for legal
malpractice after voluntarily agreeing to a settlement. A recent
concurring opinion by a Pennsylvania Supreme Court Justice in
Khalil v. Williams, et al. (July 20, 2022) suggests that
it is only a matter of time before attorneys can no longer rely on
this defense to a legal malpractice claim.

The Muhammad Decision

In 1991, the Supreme Court of Pennsylvania created what is known
as the Muhammad doctrine, which prohibits an
attorney’s clients from bringing non-fraud legal malpractice
claims if the client voluntarily agreed to a settlement.
Muhammad v. Strassburger, McKenna, Messer, Shilobod &
Gutnick,
526 Pa. 541 (1991). In Muhammad, former
clients of the defendant law firm sued their former attorneys for
legal malpractice because the clients were dissatisfied with the
settlement of a previous medical malpractice action. Id.
The plaintiffs in Muhammad had lost an infant after a
botched circumcision, brought suit against their newborn’s
doctors, and subsequently settled the suit for just $26,500. The
Muhammads later sued their counsel in the medical malpractice
action, alleging that their former attorneys’ negligence caused
the Muhammads to accept this low settlement offer.

The Court determined that dissatisfied plaintiffs may not sue
their attorneys for malpractice “following a settlement to
which that plaintiff agreed, unless that plaintiff can show he was
fraudulently induced to settle the action.” Id.
at547. This has remained the rule in Pennsylvania for three
decades, in line with Pennsylvania’s longstanding public policy
encouraging settlement.

The Khalil Decision

The recent Khalil decision upheld the Muhammad
doctrine but issued a strong signal that this may be changed in the
near future. In a Majority opinion written by Justice Debra Todd,
the Pennsylvania Supreme Court held that Appellant Dr. Ahlam
Khalil’s claims against her former attorneys are not barred by
Muhammad. In allegations stemming from litigation over a
flood in Khalil’s condo, Khalil claimed that her attorneys in
that litigation were negligent in allowing her to enter into a
settlement in one case that precluded her counterclaims in a
second, separate case, and in explicitly advising her that
settlement in the first case would not affect her counterclaims in
the second. Reversing the Superior Court’s dismissal of
Khalil’s claims against her attorneys, the Majority applied an
exception to the to the Muhammad doctrine:
Muhammad is inapplicable where a plaintiff’s claim is
not based on the amountof a settlement, but on the attorney’s
failure to advise the client of the consequences of entering the
settlement. See McMahon v. Shea,688 A.2d 1179 (Pa. 1997);
Collas v. Garnick, 624 A.2d 117 (Pa. Super. 1993).?

While the Pennsylvania Supreme Court did not explicitly overrule
Muhammad, a concurring opinion penned by Justice David
Wecht suggests a future change in course. Justice Wecht agreed with
the majority that the trial court had erred in dismissing
Khalil’s fraud and negligence claims against her attorneys, but
minced no words in expressing his views on Muhammad:
“Unlike the Majority, however, I would overturn this
Court’s deeply flawed decision in [Muhammad v.
Strassburger
]. It is high time that we overrule that
unfortunate precedent.”

Justice Wecht’s concurrence takes issue with the idea that
Muhammad reflects good public policy. He argues that
“the Muhammad rule does not encourage settlements in
any meaningful way,” but “it does protect negligent
attorneys from civil liability.” Justice Wecht bluntly refutes
the Muhammad Court’s argument that allowing
malpractice suits against settlement counsel would back up the
courts, writing, “this Court reached the unbelievable
conclusion that it had to kick some litigants out of court in order
to ensure that no litigants are denied prompt access to the
courts.” He even takes issue with the terminology used to
describe these litigants, indicating that referring to them as
“dissatisfied” or “disgruntled” indicates a
bias against them. The concurrence is a scathing rebuke of what
Justice Wecht refers to as “a true national outlier” of a
precedent: “You can search from coast to coast, but you will
not find another state where they kick legal malpractice plaintiffs
out of court and call it ‘public policy.'”

The Wecht concurrence is a comprehensive counterargument to the
application of the Muhammad doctrine and its original
public policy justification. Although Muhammad remains the
precedent, Justice Wecht’s position is ripe for future courts
to take up when they are inevitably presented with a new iteration
of these legal malpractice claims. It may only be a matter of time
before Pennsylvania’s Muhammad doctrine is
history.

Practically speaking, attorneys should no longer rely on the
Muhammad doctrine as a defense to a legal malpractice
claim when advising clients during the settlement process.
Attorneys should take special care to advise the client throughout
the settlement process and confirm in writing that the client
understands the risks and benefits to the settlement so that the
client cannot later claim ignorance if they second guess their
settlement decision.

The case is Khalil v. Williams, et al., No. No. 24 EAP
2021, 2022 WL 2824672 (Pa. July 20, 2022).

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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