Eagle Mountain City entered into a contract with Cedar Valley Water Association to share in any recovery

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Eagle Mountain City entered into a contract with Cedar Valley Water Association to share in any recovery from a legal malpractice action against the City’s attorneys, Parsons Kinghorn & Harris P.C. Parsons Kinghorn represented the City in the negotiation and management of an agreement with Cedar Valley for the purchase of a well. That deal fell apart, largely because Parsons Kinghorn (allegedly negligently) advised the City that certain conditions that were a prerequisite to the City’s performance failed to occur. Cedar Valley sued the City for breach of the well contract. Now represented by other legal counsel, the City agreed to settle the claim with Cedar Valley. The settlement agreement included the assignment to Cedar Valley of its interest in the malpractice action against Parsons Kinghorn. In response, Parsons Kinghorn argued that the assignment was ineffective because it was contrary to a strong public policy against voluntary assignment of legal malpractice claims, because of concerns about commoditizing or merchandising such claims, the effect such assignments would have on the sanctity of the attorney–client relationship, and the possibility that such assignments would create an incentive for parties to collude against the losing party’s attorney (by agreeing to artificially inflated damages in return for the right to collect on the subsequent malpractice claim). Were these concerns sufficient to overcome the strong presumption in favor of assignability?

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Business Law The Ethical Global and E-Commerce Environment

ISBN: 978-1259917110

17th edition

Authors: Arlen Langvardt, A. James Barnes, Jamie Darin Prenkert, Martin A. McCrory

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