Malpractice Suits in Illinois Can Recoup Past Punitive Damages

Legal malpractice plaintiffs in Illinois can recover for punitive damages they incurred due to attorney negligence, despite a ban on punitive damages in malpractice cases themselves, the state’s top court ruled.

A unanimous Illinois Supreme Court ruled in favor of Midwest Sanitary Service Inc., which sought to recover $625,000 in punitive damages from Sandberg, Phoenix & Von Gontard PC, the law firm the company blamed for its loss in a whistleblower retaliation case.

Justice P. Scott Neville, writing for the court, agreed with the company’s argument that the $625,000 counted as compensatory damages in the malpractice case, even though the sum served as punitive damages in the underlying employee lawsuit.

Those damages “do not punish the attorneys but instead replace the loss” that Midwest blames on their negligence, Neville wrote. If Midwest prevails at trial, it “should be repaid for the full pecuniary loss it suffered as a result of a judgment that would not have been entered against it but for its attorneys,” he said.

The ruling Thursday upheld a decision by a mid-level state court that reached the same conclusion after a judge certified the issue for an interlocutory appeal. The malpractice suit hasn’t yet gone to trial.

The state’s justices rejected the argument that a recovery of previously awarded punitive damages would violate the same public policies behind the statute banning punitive damages for legal or medical malpractice.

The rationale behind the law is that attorneys shouldn’t face punishment in a speculative amount, based on a jury’s moral judgment, for what are really professional errors, Neville noted. The prospect of punitive malpractice liability might deter attorneys from taking on certain types of cases, he said.

But in Midwest’s case, the sum isn’t speculative, and the purpose of repaying it would be to make the company whole, not to punish the lawyers, the judge found.

Courts in other states with similar punitive damage policies have come out the same way, Neville said.

Chief Justice Anne M. Burke and Justices Michael A. Burke, Robert L. Carter, and Mary Jane Theis joined the ruling. Justices David K. Overstreet and Lisa Holder White didn’t participate in the decision.

The case is Midwest Sanitary Serv. Inc. v. Sandberg, Phoenix & Von Gontard PC, Ill., No. 127327, 9/22/22.