Judiciary Law § 487 is a harsh, almost medieval law, with treble damages and a potential criminal conviction lurking. The Appellate Division has said that it is not lightly granted, and in Brookwood Cos., Inc. v Alston & Bird LLP 2017 NY Slip Op 00535 [146 AD3d 662] January 26, 2017 Appellate Division, First Department looks at a claim of churning for large fees. The conduct has to be rather bad. How bad (or egregious)?
“In support of its Judiciary Law § 487 (1) claim, Brookwood alleges that A&B was deceitful by inducing Brookwood to retain it as its litigation counsel. Brookwood claims such deceit was perpetuated a number of ways. One way was by A&B failing to disclose that the Nextec-related patent noninfringement opinions A&B had prepared could not be used in the patent action to defend Brookwood against claims that it had acted willfully. Brookwood maintains that the reason A&B did not use them was that it would have resulted in the waiver of the attorney-client privilege. Brookwood also claims that the reason A&B litigated the patent action in the manner it did was to ensure that the case would continue, essentially “churning” the case for A&B’s own pecuniary gain. The motion court properly dismissed the Judiciary Law § 487 claim because there are insufficient facts from which to conclude that A&B intentionally deceived Brookwood, or that A&B otherwise acted so egregiously that Judiciary Law § 487 was violated (Agostini v Sobol, 304 AD2d 395, 396 [1st Dept 2003]; Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 13 [1st Dept 2008], lv denied 12 NY3d 715 ). Brookwood’s arguments that A&B could not use its noninfringement opinions in the patent litigation because it would have waived the attorney-client privilege is incorrect as a matter of law. In re Seagate Tech., LLC (497 F3d 1360, 1374 [Fed Cir 2007], cert denied 552 US 1230 )[FN3] held that the assertion of an advice of counsel defense in a patent infringement action does not automatically constitute a waiver of the attorney-client privilege. We recognize that the opinion of counsel “may be relevant to the issue of willful infringement, for timely consultation with counsel may be evidence that an infringer did not engage in objectively reckless behavior” (Aspex Eyewear Inc. v Clariti Eyewear, Inc., 605 F3d 1305, 1313 [Fed Cir 2010]). Even if the issue of attorney-client [*5]waiver was open to dispute, it had no bearing in the patent action because willfulness was never reached. Thus, the facts alleged do not support a finding of an intent to deceive or a chronic and extreme pattern of legal delinquency causing damages to Brookwood (Wailes v Tel Networks USA, LLC, 116 AD3d 625, 625-626 [1st Dept 2014]).”