Imagine this hypothetical scenario: You consult with a new client for a civil matter. The law on this matter is not complicated. You have done the legal research beforehand, and you correctly identify several legal issues as the client is telling you their story. Based on what the client is telling you, you believe that the client may have a good case that would entitle them to money damages.
The client is very pleased with how the consultation went, and they sign a fee agreement with you in short order.
You know that the applicable statute of limitation puts the deadline to file over a year away, but the client is out a large sum of money, they insist that they gave you everything you need, and they are anxious to get the process started.
Can you rely on your client’s statements and file the lawsuit? You should not be surprised to learn that the answer depends on several factors.
Statute and Supreme Court Rules
Wis. Stat. section 802.05, modeled after Rule 11 of the Federal Rules of Civil Procedure, governs pleadings, motions, and other papers filed with the court, and places an affirmative duty on Wisconsin attorneys to conduct an “inquiry reasonable under the circumstances” into the factual basis of their claim before signing the complaint or other paper and filing it with the court.1 Failure to do so may result in sanctions.
Further, failure to conduct a reasonable inquiry before filing with the court may be a basis for discipline under SCR 20:1.1 (Competence).2
This article discusses some basic principles of what it means to conduct a “reasonable inquiry” for purposes of Wisconsin’s Rule 11, and provides direction for attorneys who question how much they can rely on their clients.
Attorneys who are interested in filing a lawsuit, motion, or other paper with the court should know that Wis. Stat. section 802.05(2)(c) states that:
[b]y presenting to the court, whether by signing, filing, submitting, or later advocating a pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, all of the following: (c) The allegations and other factual contentions stated in the paper have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. (Emphasis added).
Not all factual allegations need to be proven when pleaded or advocated, and attorneys are not penalized for eventually being wrong on the facts.3
Indeed, it’s possible for a plaintiff’s attorney to lose on summary judgment and not be subject to sanctions.4 This is because Wisconsin’s Rule 11 does not require attorneys to be correct, it simply requires them to conduct an inquiry reasonable under the circumstances before submitting or advocating their argument to the court. Courts reviewing attorney conduct under this section apply an objective test.5
The extent to which you can rely solely on information provided by your client depends on this objective test. The objective test directs a reviewing court to consider:
whether the signer of the documents had sufficient time for investigation; the extent to which the attorney had to rely on his or her client for the factual foundation underlying the pleading, motion, or other paper; whether the case was accepted from another attorney; the complexity of the facts and the attorney’s ability to do a sufficient pre-filing investigation; and whether discovery would have been beneficial to the development of the underlying facts.6
A proper application of this test is from the perspective of the attorney with the limited information that they had at the time they filed the challenged paper.7
Circumstances Are Important
To return to the hypothetical posed at the beginning of this article, the extent that the hypothetical attorney can rely on the information provided by the client depends on the circumstances.
Considering that the attorney has time to conduct an independent investigation, and considering that the theory of the case is rather simple and won’t require an expert, the courts will likely impose a higher burden on the attorney to conduct an independent investigation and have support for their factual claims when they file their pleading, motion, or other paper.
But, perhaps some pieces of information are too expensive to investigate, or perhaps some information can only be gained through formal discovery. Those facts would cut the other way, and allow the attorney a wider berth to base allegations on less concrete evidence.
Belich: Be Cautious and Independently Verify
Belich v. Szymaszek8 is an example of a case where the attorney relied on their client’s story too much and didn’t conduct a sufficient pre-filing investigation.
In Belich, an attorney filed a lawsuit on behalf of their client alleging that a student worker stole $60,000 in cash from the client’s house while the student was working on the client’s windows. The client’s theory of the case was that the student worker stuffed $60,000 in cash, made up of mostly $20 bills, in his shorts or a window frame, and walked past the client and out the door. The client admitted that she didn’t discover that the money was missing until three days later, and then didn’t report the money missing until a month later.
The lawyer relied entirely on their client’s story, and filed suit against the student. The student prevailed on summary judgment, dismissing the case, and then filed a motion seeking costs and attorney’s fees, which the circuit court granted.
On review, the Court of Appeals affirmed the award of attorney’s fees on the basis that the attorney did not conduct a reasonable prefiling investigation. Applying the objective test, the Court of Appeals found that the attorney was under no constraint that would relieve them of their duty to investigate the factual basis of their claim.
In this case, the attorney’s investigation was clearly insufficient, because they did not investigate any of the apparent inconsistencies in their case. Rather, the attorney accepted their client’s story on faith alone.
The attorney’s complete reliance on the client’s story was clearly a violation of the Rule 11 requirement, even if their reliance was in good faith. As the Supreme Court stated in Riley v. Isaacson:
[s]imple reliance upon one’s client is not sufficient. ‘An empty head but a pure heart is no defense. [Rule 11] requires counsel to read and consider before litigating.’ Likewise, sec. 802.05, Stats., also bars a defense of good faith. It instead creates obligations to one’s adversaries and to the legal system to avoid needless cost, delay and waste of judicial resources.”9
At a minimum, the attorney in Belich should have questioned the client’s theory and answered how the student plausibly could have carried out so much cash undetected.
Jandrt: Obligation to Investigate Is Ongoing
In contrast to the attorney in Belich, the law firm in Jandrt conducted a sufficient prefiling investigation but violated their investigatory duty later on.
In Jandrt, the law firm Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman, S.C. (Previant) filed a lawsuit on behalf of a class of children born with birth defects. The theory of the case was that the defendant, Jerome Foods, negligently caused pregnant mothers, who were employees at the defendant’s turkey processing plant, to be exposed to chemicals in the plant which in turn caused the children to develop birth defects in utero. Previant accepted the case from another attorney, who had conducted their own investigation, and provided the results to Previant.
After being retained, Previant engaged in further investigation by reviewing relevant medical and scientific literature, interviewing plaintiffs’ mothers, and consulting with an expert. At this point, the plaintiffs didn’t know how they would prove causation, as more research and discovery was required.
Meanwhile, the state legislature passed SB 11 (1995), which made significant changes to the law of comparative negligence. This change in the law of negligence would likely impact the potential outcome of the case in an unfavorable way for the plaintiffs. The new law was scheduled to take effect in a few months after Previant was retained.
One week before the new law was to take effect, Previant filed their lawsuit. After conducting discovery for several months and receiving a substantial number of documents, the law firm again consulted with an expert who opined that there were no scientific studies that would help the plaintiffs prove causation. The expert concluded that causation could only be proven by an epidemiological study to determine whether there was a connection between the environment and the problem pregnancies.
The law firm decided that engaging in this study would be too expensive. Shortly thereafter, the law firm informed Jerome Foods that they wished to voluntarily dismiss the complaint. Jerome Foods moved for sanctions.
On review, the Wisconsin Supreme Court concluded that Previant violated section 802.05, not when they filed the lawsuit, but as they continued the litigation. By continuing the litigation and therefore advocating their position to the court, Previant was under a duty to continue their reasonable inquiry and only maintain the lawsuit if they continued to have a reasonable factual basis to support their claim.
Considering the time constraints that Previant faced, the variety of sources from which they based their lawsuit, and the expert opinion they sought, the Supreme Court concluded that Previant satisfied their obligation to conduct a reasonable inquiry before filing the lawsuit.
However, the Circuit Court concluded that Previant should have realized earlier that they would not be able to prove causation. This finding was upheld by the Supreme Court. By continuing to advocate their pleadings without conducting a reasonable inquiry into the required factual basis of their claim, Previant violated section 802.05. What was reasonable at the beginning of the lawsuit became unreasonable as time constraints diminished and Previant obtained detailed discovery from Jerome Foods.
The Lessons Learned
At all stages of litigation, attorneys must take affirmative steps to investigate the factual basis of their claims, and only maintain the action if, after that reasonable inquiry, they conclude that there is a factual basis to support their claim.
Again, they do not need to prove all required facts with certainty, but an attorney has to inquire into those facts with reasonably available means.
In conclusion, section 802.05 places an affirmative duty on attorneys to conduct a reasonable investigation of the factual basis of their claims before filing pleadings, motions, or other papers with the court. SCR 20:1.1 places a similar duty on attorneys.
Attorneys do not need to be certain that their factual claims are correct, they only need to conduct an investigation that is reasonable under the circumstances.
What will be considered reasonable under the circumstances depends on how their conduct will stand up against the objective test. Important considerations under the objective test include time constraints, costs, and available avenues to obtain required information.
If the attorney is pressed for time, or all available means to investigate the case are too costly or time consuming, then the attorney’s duty to conduct a reasonable pre-filing investigation will be lower than if the attorney has time and resources to properly investigate their claims.
The lesson to be learned from Belich and Nunnery is to be cautious of stories told by new clients, and to independently verify or corroborate their claims if possible. Jandrt should teach attorneys that their obligation to investigate the factual basis of their claims is ongoing. What a reviewing court may consider reasonable at the initial stage of a lawsuit may not be reasonable nine months later.
1 See Belich v. Szymaszek, 224 Wis. 2d 419, 431, 592 N.W.2d 254 (Ct. App. 1999); 2005 WI 86, S. Ct. Order 03-06, filed June 21, 2005.
2 See In re Disciplinary Proceedings Against Nunnery, 2007 WI 1, ¶¶ 60-62, 298 Wis. 2d 289, 725 N.W.2d 613.
3 Jandrt v. Jerome Foods, Inc., 227 Wis. 2d 531, 551, 597 N.W.2d 744 (1999) (citing Stern v. Thompson & Coates, Ltd., 185 Wis. 2d 221, 243, 517 N.W.2d 658 (1994)).
4 Jandrt, 227 Wis. 2d at 551 (citing Colan v. Cutler-Hammer, Inc., 812 F.2d 357, 360 n.2 (7th Cir. 1987)).
5 Jandrt, 227 Wis. 2d at 549 (citing National Wrecking Co. v. International Brotherhood of Teamsters Local 731, 990 F.2d 957, 963 (7th Cir. 1993)).
6 Jandrt, 227 Wis. 2d at 550-51.
7 Id. at 551.
8 Belich v. Szymaszek, 224 Wis. 2d 419, 592 N.W.2d 254 (Ct. App. 1999).
9 Riley v. Isaacson, 156 Wis. 2d 249, 259, 456 N.W.2d 619 (1990) (quoting Mars Steel Corp. v. Continental Bank N.A., 880 F.2d 928, 932 (7th Cir. 1989)).