I've come across this situation numerous times. (sans the attorney though...)
What Greenalleycat wrote is pretty much what I'd say.
One other thing though, I don't subscribe to the "hydrostatic pressure" line of thinking (too much).
The wall does not have the strength to safely resist horizontal loading. USUALLY (around Southwest Ohio) the culprit is moisture sensitive clayey soils. When they get wet, they swell and push the wall inward. Once the wall moves out of the way, the pressure deminishes. When they get dry, the clayey soils shrink. If the pressure from a column of water was there, the wall would keep moving in.
That's just how I look at it. You're welcome to disagree. I have avoided these types of assignments over the past several years. I've been lucky to be busy enough without this type of headache job.
As far as when to recommend structural repairs - I always tell my clients that whoever owns the house, owns the problem that could progress to an unsafe condition at any time (as GAC wrote). Generally I say that ANY movement is cause for concern about the durability of a wall and 1" is the most common threshold of movement whereby a structural repair is typically recommended. I am not aware of any code (building or design) that prescribes a limit. Basically, if it's broke (ANY crack and inward movement), it can't support the code required load.