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A landmark decision from the Illinois Appellate Court has opened the door for legal malpractice claims based on a "lost opportunity," even in a lottery system. A law firm's flawed corporate structuring for cannabis dispensary applications led to disqualification, and the court has now ruled that this lost chance may be actionable. This ruling could significantly expand malpractice exposure for lawyers in Illinois.
In a significant decision for legal professionals and malpractice insurers alike, the Illinois Appellate Court has clarified that clients may pursue legal malpractice claims for a lost opportunity—even when that opportunity stems from a lottery-based administrative process.
Background of the Cannabis Lottery Lawsuit
The plaintiffs in this case hired a law firm and related entities to form corporate structures and assist with applications for state-issued cannabis dispensary licenses. Central to their claim was that the law firm created a needlessly complex, multi-layered corporate structure that failed to meet Illinois' statutory social equity requirements.
As a result, two of the plaintiffs' ten applications were disqualified from the licensing lottery. The plaintiffs alleged that this disqualification was directly tied to the flawed legal advice and structuring.
The trial court originally dismissed the case, finding no malpractice and holding that plaintiffs could not recover for a lost chance to participate in the license lottery.
Appellate Court Ruling: A Lost Chance Can Be Grounds for Malpractice
The Illinois Appellate Court disagreed in part and reversed the dismissal of the legal malpractice count. The court emphasized two important principles:
- Loss of Chance Can Be Actionable – In certain scenarios where the odds of success can be calculated with precision client's lost opportunity may be sufficient grounds for malpractice damages.
- Professional Judgment Is Not Shielded When It Misses Legal Requirements – The court found that it was not clear the defendants' corporate structuring met the state's requirements, and therefore the issue of negligence remained viable for further litigation.
Implications for Legal Malpractice in Illinois
This decision may expand the scope of legal malpractice exposure in Illinois. Traditionally, courts have been reluctant to award damages for allegedly speculative harms like lost business opportunities. But when those lost opportunities can be tied to a quantifiable process—and to a lawyer's specific advice or structuring—Illinois courts may now allow such claims to proceed.
This ruling serves as a reminder: even seemingly indirect decisions—like how a business is structured—can have direct and costly malpractice implications.
Case: PBKM, LLC v. Kutak Rock, LLP, 2024 IL App (1st) 230033
Frequently Asked Questions
Can you sue a lawyer for a lost opportunity in Illinois?
What was the central issue in the cannabis license legal malpractice case?
How does this ruling affect lawyers who advise clients in regulated industries?
This ruling serves as a strong reminder that professional judgment is not an absolute shield against malpractice claims, especially when legal advice fails to meet clear statutory requirements. Lawyers advising clients on applications for licenses or other opportunities in regulated industries must ensure their strategies comply with all applicable laws to avoid liability for their client's lost chances.
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