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“The life of the law has not been logic; it has been experience.”

-Oliver Wendell Holmes, Jr.

Statute of Repose: An Unexpected Benefit Especially for Transactional Lawyers

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Statute of Repose: An Unexpected Benefit Especially for Transactional Lawyers

In Evanston Insurance Co. v. Riseborough, the Illinois Supreme Court, in a divided opinion, declared that the six year statute of repose for attorneys in Illinois applies to anyone seeking to sue an attorney on any basis arising out of the attorney's professional work.  5 N.E. 3d 158, 166-67 (Ill. 2014). This ruling cut a wide swath in circumscribing the rights of non-clients to sue attorneys for mistakes.

The Illinois six year statute of repose cuts off the right of a plaintiff to sue an attorney six years from the date of the attorney's mistake or misconduct notwithstanding discovery issues or when the cause of action actually accrues.  Id., see 735 ILCS 5/13-214.3(c).  Prior to the Evanston Insurance ruling, several courts had held this repose limitation only applied to suits arising out of the attorney-client relationship. See, e.g., Ganci v. Blawelt, 294 Ill. App. 3d 508, 515; (4th Dist. 1998).  In overruling Ganci, the Supreme Court in Evanston extended the rule to third party beneficiaries, to plaintiffs pursuing fraud or misrepresentation claims or anyone else seeking to sue an attorney on any theory relating to their actions as an attorney-not just legal malpractice.

For the transactional practitioner this is an extremely helpful ruling. Mistakes made in wills, trusts, deeds or other documents that remain undiscovered until a death or seminal event may be beyond reach for affected parties. Similarly, for attorneys performing transactional documentation such as loan, buy-sell or merger documents, the discovery of mistakes that are delayed beyond six years cannot be visited upon the attorney.

For defending all legal malpractice claims, but especially transactional claims, this is an important defense to consider when claims are reaching back to old asserted mistakes of counsel. The date the mistake occurred is an important fact to be pinned down when planning a defense. Conversely, for plaintiffs, it is essential to know that lack of discovery or that the cause of action has not accrued cannot circumvent this six-year bar to a cause of action.

For parties who for various reasons are affected by an attorney's work, but are not the actual client, this ruling can produce harsh results. The classic scenario that comes to mind is the beneficiary of a defective bequest in a will who had no knowledge of the mistake when it was drafted.  But, the court has concluded the legislature wants certainty and a finite window for claims which supersedes the unknowing plaintiff's possible right to recover. Until the legislature makes a change, that is the rule of law.

For additional information on this topic or to learn more about McKenna Storer’s legal malpractice services, please contact Sara Cook at (312) 558-3994.

Categories Legal Malpractice Defense



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