When a Lawyer’s Delay Means a Lost Opportunity to Collect on a Judgment—the D.C. Circuit Addresses Proximate Cause in Legal Malpractice Cases

You’re a plaintiff suing a foreign sovereign notorious for not paying judgments—or even contesting U.S. cases. Default judgment and finding and attaching assets is the strategy. But your lawyers’ errors draw out the process for years. In the meantime, an opportunity comes and goes to collect on the judgment you’re seeking, costing you millions. Ugh. The attorneys’ delay obviously was the actual cause of your lost opportunity—but for the delay, you could have collected. But was it the “proximate cause” under the law?

Earlier this month, the D.C. Circuit addressed this issue in Estate of Botvin v. Heideman, Nudelman & Kalik, P.C., No. 22-7171 (D.C. Cir. Sept. 6, 2024).

The answer: it could be.

Yael Botvin was 14 years old when he was killed by Hamas suicide bombers. In 2005, his estate and surviving family members sued Iran for helping to orchestrate the attack. Unsurprisingly, Iran did not participate in the case. Nevertheless, due to a series of alleged errors and delay, the Botvins’ lawyers didn’t obtain the final default judgment until nearly eight years later, in 2013.

With $11.7 million in judgments in hand, counsel were able to collect $2.8 million from a U.S. fund for victims of state-sponsored terrorism. The problem is that, while the Botvins’ lawyers struggled to secure the judgment, $1.9 billion owned by Iran’s central bank was discovered in a U.S. bank account. More than a thousand victims came forward seeking to collect on judgments from the account. Interpleader proceedings followed, and in June 2012, the claimants reached agreement to split the proceeds on a pro-rata basis, but only if the claimant already held a judgment. The Botvins, according to the complaint, missed out on $6 million.

When the Botvins sued for malpractice, the lawyers moved to dismiss the complaint for, among other things, failure to adequately plead proximate causation. The district court dismissed the complaint with prejudice, finding that, while the complaint adequately pled but-for causation of plaintiffs’ loss, the injury to the estate and family was not foreseeable as a matter of law, and therefore the alleged attorney negligence could not have been the proximate cause of the loss.

Applying D.C. law, the D.C. Circuit reversed. The D.C. Court of Appeals has defined proximate cause to mean a “direct and substantial” connection between the act and the injury, and that the injury is “foreseeable.” Holding that foreseeability in this case was an issue for the jury, the Court reasoned that only the TYPE OF HARM must be foreseeable, not the particular method by which the harm will occur. Drawing a parallel to medical malpractice, the D.C. Circuit explained, it is enough that a hospital declined to admit a pregnant patient appearing ill with jaundice, even though the patient eventually died of an extremely rare liver disease.

Under this framework, the Court concluded that a jury could reasonably conclude that the lawyers should have foreseen that “a years-long delay in obtaining default judgments against Iran would cause the Botvins to miss out on satisfaction opportunities.” (It didn’t help the lawyers that they had also represented other clients in making claims on the same assets the Botvins missed out on. Oof. Not a good look.)

Causation can be hard to establish in a legal malpractice case. Lots of people lose lawsuits. And a fair number of clients are dissatisfied with their lawyers when they lose or don’t get all that they think they deserve. Connecting a lawyer’s bad lawyering sufficiently to the client’s harm is key. “Proximate cause” can be a squishy concept. But the Botvin case helps clarify the difference between foreseeable harm (enough) and foreseeing the specific way in which the client ends up being harmed by the lawyer’s error (unnecessary).