Legal Malpractice In International Business Transactions
Lawyers are at an increased risk of committing legal malpractice when they begin representing clients in areas of the law unfamiliar to them. This is particularly true if the relevant legal principles are complex. Consequently, lawyers who normally specialize in domestic law (for example, the common law of contracts and the Uniform Commercial Code (“UCC”)) have a heightened exposure to malpractice liability when they start to represent clients in international business transactions (“IBTs”). Those transactions may be governed by foreign law or international agreements, such as English law or the United Nations Convention on Contracts for the International Sale of Goods (“CISG”).
Of course, even knowledgeable and experienced IBT lawyers are at risk of being sued for legal malpractice. IBTs often raise a multitude of legal issues and require reference to numerous sources of law. Many of those sources are highly specialized, like the Carriage of Goods by Sea Act (“COGSA”) and the Federal Bill of Lading Act. In such a challenging practice environment, errors can be made.
Indeed, even if an IBT lawyer has not erred, a malpractice claim may be filed, as supported by the fact that “disputes arising from private [IBTs] have . . . increased significantly in the last twenty years.” Presumably, that trend, in itself, demonstrates an increased risk that legal malpractice actions will be threatened or asserted against IBT lawyers. The losing parties to international business disputes—like the losers to domestic disputes—may seek to reallocate their losses to the lawyers who represented them in the underlying transactions. In the American legal profession, the risk of being sued for legal malpractice is substantial because the “number of claims continues to increase at a rate greater than the increase in the lawyer population.”