By: J. Randolph Evans

Last year, Georgians elected justices on the Georgia Supreme Court andjudges on the Georgia Court of Appeals. Next year, Georgians willlikely elect three justices on the Georgia Supreme Court and more on theGeorgia Court of Appeals.

During the last two weeks, one of those courts gave Georgians a freshand important reminder of just how much Georgia courts can affect thelives of Georgians – especially some of Georgia’s most important smallbusinesses – professionals like accountants, architects, engineers,lawyers and so on.

So what happened?

On October 27, 2011, the Georgia Court of Appeals decided a caseinvolving a lawsuit against a lawyer based on a real estate closing.Basically, the lawyer’s employer failed to pay off prior mortgages onthe property involved. The title insurance company paid off themortgages and then sued the lawyer.

So, what is the big deal?

Until the Court of Appeals changed the law, Georgia treated therelationship between professionals and their clients as special ordifferent from other relationships – and for good reason. Professionalrelationships between a client and someone like her lawyer or accountantcarries with them some very important protections.

For example, things said by a client to her lawyer are protected. And,until now, only the client could decide to waive that protection.

And, agreements between professionals in Georgia and a client carry withthem an obligation to act professionally or skillfully, even if theactual contract does not say so.

There are many other examples of duties and responsibilities that arespecial to the relationship between professionals and their clients. Asa result, courts have treated lawsuits based on the professionalrelationships differently in many respects. In fact, the GeorgiaLegislature has also treated such lawsuits differently, includingprotections against the growing risk of frivolous lawsuits againstprofessionals.

So, how did all of this change? Well, the Court of Appeals decided thatlawsuits against professionals for malpractice are just like any otherlawsuit. Based on this conclusion, the court held that someone otherthan the client can actually bring a lawsuit against the attorney (orthe accountant or any other professional).

In the case, an insurance company made a payment and claimed the rightto sue the lawyers. The court held that the insurance company couldbring the suit based on no more than a letter claiming the right to doso.

It may not seem like much, but the risks of such a court decision arebig.

Why?

Well, for starters, when someone files a lawsuit for malpractice, allthe client’s protections are lost. This means that all of theconfidential information from the client suddenly becomes public. Thisis okay if the client makes that decision and decides to go forward.But, under the Court of Appeals decision, someone other than the clientgets to make that decision with the client suffering the consequences.

Another effect of this decision is that many more malpractice lawsuitswill be brought against professionals practicing in Georgia. At a timewhen many professionals (as small businesses) are having a hard enoughtime just surviving, there is now this new and greater risk of beingsued – and sued by someone that was not even a client.

Under the Court of Appeals’ decision, lawsuits against professionals cannow be sold, transferred, or assigned as if they were a car or a house.Unfortunately, the decision has far reaching implications well beyondthe weighty issues regarding the relationship between professionals andtheir clients under Georgia law.

Professional liability insurance companies are certain to take note andwhen they calculate their insurance premiums next year, Georgiaprofessionals, and consequently their clients, will undoubtedly feel thepain.

But the risks from this decision extend even further. The potential forabuse is great. Every lender, creditor, partner, limited partner,insurer, or anyone else who is interested and makes a payment on behalfof a client can now waive all of the protections under Georgia law andbring a professional malpractice claim. Of course, when the lawsuitgets filed, both professionals and their clients lose while someone elsegets all the gain.

Look for claims and lawsuits against lawyers, accountants, architects,and virtually every other professional to become rather routine anytimesomething goes wrong. Certainly every time that there is a settlement,everyone who makes any kind of payment will now claim the rights ofevery client in the transaction including the right to sue everyprofessional involved.

Candidly, it is indeed difficult to see how the Court of Appealsdecision can be reconciled with all of the protections that Georgiacourts and the Georgia Legislature have given Georgia clients andprofessionals for years. But, that is now the law.

See, judicial elections do make a difference.