Some of the largest law firms in New York are the personal injury giants Jacoby & Meyers LLP and Finkelstein & Partners. All across upstate New York, wherever there are cars and personal injuries, you’ll find their offices. One of the institutional problems of the personal injury world is the expense of litigation. Smaller firms act as banks for their clients. The firm advances court costs, medical record costs, deposition transcript costs…you get the picture. Jacoby has its own inhouse bank, which lends money to the client. This shifts the ultimate cost of credit to the client and away from the law firm.
Rodriguez v Jacoby & Meyers, LLP 2015 NY Slip Op 02427 Decided on March 24, 2015 Appellate Division, First Department is a case which investigates this practice. Is it proper? Does it violate contingent fee rules? Is it deceit ?
The answer to deceit is no. The balance remains unanswered.
“As to the cause of action for breach of fiduciary duty based on over-billing, the record does not permit a finding as a matter of law as to whether the expenses billed by defendants Total Trial Solutions, LLC (TTS) and Cinetrial Solutions, LLC (CTS), providers of litigation support services, were authorized and were reasonable, since issues of fact exist whether defendant Jacoby & Meyers’s guidelines for the provision of litigation support services were followed and whether TTS and CTS provided services in excess of what had been deemed necessary.
The record does not permit summary dismissal of the complaint on the ground of unclean hands since, in addition to the above-cited issues of fact as to the following of the guidelines for litigation support services, issues of fact exist as to which individual or individuals at Jacoby & Meyers were responsible for litigating the case and for reviewing and approving the litigation support services.
As to the breach of fiduciary duty claim based on a conflict of interest, the retainer agreement clearly disclosed that attorneys had a financial interest in TTS and CTS, and advised plaintiff to seek an independent attorney’s opinion on the issue of case expenses if she felt the need (see generally Halevi v Fisher, 81 AD3d 504 [1st Dept 2011], lv denied 16 NY3d 711 [2011]). Plaintiff presented no evidence either that she had difficulty with English (indeed, her[*2]deposition testimony in English reflects no such difficulty) or that her injury rendered her unable to understand the agreement she signed.
For the same reasons, plaintiff’s contention that defendants committed fraud by omission by concealing their conflict of interest from her is unavailing. Nor does the retainer agreement’s language of “potential” conflict of interest render the disclosure less clear.
As to the breach of fiduciary duty claim based on the alleged filing of an improper retaining lien, it has not been determined whether defendants were discharged for cause (see Teichner v W & J Holsteins, 64 NY2d 977 [1985]; Eighteen Assoc. v Nanjim Leasing Corp., 297 AD2d 358 [2d Dept 2002]).
There is no evidence that defendants engaged in misconduct constituting a violation of Judiciary Law § 487 (see e.g. Lifeline Funding, LLC v Ripka, 114 AD3d 507, 508 [1st Dept 2014]).”