New York Attorney Malpractice Blog

Defendant attorneys in legal malpractice cases often have valid, technical, factual and compelling defenses.  Sometimes they claim that the alleged malpractice is a question of judgment; sometimes the law suit is too late.  In other examples, there is a less than clear relationship between the attorney and plaintiff, perhaps beneficiary to an estate or plaintiff sues an opponent's attorney.

Here, in Zautner v. Arcodia, 2009 Slip Op 31362(u), Justice  Joseph C. Terasi cuts to the chase, and denies summary judgment.  Plaintiff is the seller of a house, and defendant is his attorney.  The contract called for defendant to hold the down payment, which in this case was sizeable.  Down payments are, in one instance, the remedy for buyer wrongfully cancelling the contract.

Defendant failed to collect the down payment, and of course, the buyer wrongfully cancelled.  What was defendants excuse?  He said that in his area of the state, brokers usually held onto the deposits, so he allowed the broker to hold onto it.  What of the fact that seller had no broker, and the house was for sale "by owner ?"

Defendant apparently had no answer.  Summary judgment granted against the attorney.

In a short, one line reversal, the Court of Appeals put to rest a very old legal malpractice case, Gotay v. Breitbart..  The Court of Appeals simply wrote: "Plaintiff's legal malpractice claim was not brought within the applicable statute of limitations period, and defendants-appellants established as a matter of law that the continuous representation doctrine does not apply."

This is a case that arose in the 1990's at a time when it was not necessary to purchase an index number, and cases were commenced by service of a summons and complaint.  In this Erbs palsy case against the NYCHHC, we see several traps that personal injury attorneys feared at the time.  Service of the complaint on NYCHHC rather than the hospital, loss of the files in a long intervening period, and failure to purchase an index number when the rules changed.

For a longer discussion of judicial activism and "fanciful" theories see Justice Friedman's dissent in the Appellate Division.  This dissent, although not credited in the Court of Appeals decision, is the reason for reversal.  It is interesting to note that Justice Lippman wrote the majority opinion in the Appellate Division, which his new court reversed.

From the Dissent:

"This legal malpractice action is the culmination of a long and convoluted chain of events that began three decades ago. Ultimately, however, the lawsuit's timeliness turns on an attorney's sworn—and entirely uncontradicted—account of what occurred at his meeting with plaintiff and her father on January 28, 1999, more than three years before the commencement of the action. The attorney (Mark Hankin) avers in his affidavit that, at the January 1999 meeting, he advised plaintiff and her father that his firm would not undertake plaintiff's representation in a medical malpractice matter arising from her birth in 1977.[FN1] Hankin further states that, in response to his rejection of plaintiff's case, "plaintiff's father requested the immediate return of the file."

In opposing defendants' summary judgment motion, plaintiff submitted no evidence of any kind—not in deposition testimony, not in an affidavit, not in a letter, not in a jotted piece of notepaper—controverting Hankin's account of the January 28, 1999 meeting. Indeed, Hankin's account of the meeting is not even challenged in plaintiff's appellate briefs. The majority nonetheless denies summary judgment to the appealing defendants, based on two theories never suggested by plaintiff. The majority's first theory is that plaintiff and her father (although neither [*6]makes this claim) were unaware that Michael Handwerker, the attorney who had accepted plaintiff's matter several years before, had joined Hankin's firm. The other theory the majority has devised is that Hankin's claim that plaintiff's father requested the return of the file at the January 1999 meeting is somehow placed in doubt by boilerplate language in Hankin's follow-up letter, dated February 22, 1999, offering to return the file "[i]n the event you require the whole or any portion thereof."

Here is a blackletter rule:  You must obtain consent from the Worker's Compensation carrier before settling a personal injury action in which there was WC payments.  If you don't, the WC carrier takes a 'vacation" and the plaintiff stops getting money.  Easy, No?

in Flaherty v Attie ;2009 NY Slip Op 51296(U) ; Supreme Court, Queens County ; Markey, J. we see what happens.  Our guess is that plaintiff stopped getting paid a few months after settling the case. but the decision does not supply this detail.  Plaintiffs sue their attorney, and lose on statute of limitations grounds.
 

"[P]laintiffs commenced their action against defendant to recover damages for, inter alia, legal malpractice and fraudulent concealment. Plaintiffs allege that, in 1998, they retained the legal services of defendant to represent them in an underlying personal injury suit. The injury allegedly sustained by plaintiff John J. Flaherty (Flaherty) occurred during the course of his employment. On December 24, 1998, a retainer agreement was signed, and defendant filed a summons and complaint on March 26, 1999 in connection with the underlying accident. During the pendency of that action, Flaherty was receiving workers' compensation benefits, said benefits creating a lien against plaintiffs and their potential recovery.  [D]efendant Attie had failed to obtain pre-settlement consent from the workers' compensation carrier and/or the New York State Insurance Fund and/or plaintiff's [*3]employer, which ultimately negatively affected plaintiffs' right to future workers' compensation benefits; and failure to obtain such clearance, approval, or consent constituted legal malpractice. Plaintiffs, furthermore, allege that defendant's failure to disclose this to plaintiffs was an attempt by defendant to fraudulently conceal any alleged malpractice.
 

In or about 2006, plaintiffs contacted defendant Attie with regard to the above circumstances. Plaintiffs allege that from 2006 until May of 2008, a new attorney-client relationship was formed by defendant Attie undertaking the responsibility to seek nunc pro tunc consent and approval of the settlement. Plaintiffs contend that, in so doing, defendant Attie made affirmative representations to plaintiffs that he would and could secure such consent and approval and, that, in May 2008, defendant Attie acknowledged to plaintiffs that he failed to seek nunc pro tunc consent to the settlement during this time. Plaintiffs claim that the above constituted a second instance of legal malpractice, as well as fraudulent concealment, by making affirmative representations that defendant Attie could do that which he could not, and by, again, failing to disclose to plaintiffs the malpractice which he had allegedly committed in 2001. Plaintiffs then filed the subject suit on December 18, 2008.

On the contrary, plaintiffs improperly attempt to convert defendant's alleged failure to obtain pre-settlement consent — a negligent act — into an active, ongoing, concealment. However, failure to disclose the wrongdoing is insufficient to invoke this "uncommon remedy," which requires fraudulent behavior (Ross, 8 NY3d at 491; see also, Zumpano, 6 NY3d at 675; Weiss v Manfredi, 83 NY2d 974, 977 [1994]; Ferdinand v Crecca & Blair, 5 AD3d 538, lv. to appeal denied, 5 NY3d 710 [2004]). Based on the above, plaintiffs failed to show that they were prevented from bringing suit due to their justifiable reliance on some intentional [*5]misrepresentation made by defendant after his alleged failure to obtain pre-settlement consent (see, Bevinetto, 51 AD3d at 614). The fact that defendant claimed on the closing statement that there were no "medical liens" does not rise to the level of wrongfully inducing plaintiffs not to file suit; rather, this speaks to the alleged malpractice about which plaintiffs are complaining. By plaintiffs' own admission, they had no contact whatsoever with defendant until sometime in 2006. Notably, then, there is no evidence of any type of ongoing misrepresentation made to plaintiffs for an approximate five-year period (see, e.g., Melnitzky v Hollander, 16 AD3d 192 [1st Dept.], lv. to appeal denied, 5 NY3d 710 [2005]). "

Legal Malpractice is unique, in that lawyers write the rules for suing lawyers, and those cases are heard by lawyers.  This situation does not obtain in any other field of jurisprudence.  Here is an interesting case from Small Claims Court and a report from the NYLJ by Mark Fass.  Read the case for its wide-ranging discussion of Citibank's practices, and its findings on Claimant's attorney, who was not present nor a party.

"A Staten Island judge has thrown out a small claims action over a broken furnace filed by the buyer of a house against the seller's attorney."""This is another case of what appears to be a disturbing trend of litigation being brought by persons suing attorneys who did not represent them for that attorney's proper representation of his or her client," Judge Straniere wrote in DeFelice v. Costagliola, 81/09. "The theory behind bringing these baseless legal actions being that owing to the small amount of money involved, the lawyer would pay the claim rather than engage in the cost of litigation."

"Claimant testified that when he moved into the premises on December 12, 2008 the furnace was not operating properly. Claimant had temporary repairs done on December 13, 2008 at a cost of $425.00 and then on December 18, 2008 paid $1,800.00 for the installation of a new furnace. Claimant spoke to his attorney whom, the claimant credibly testified, advised him to sue the seller's lawyer because the seller allegedly had moved from New York. There is no evidence as to the new address of the seller and if she is beyond the jurisdiction of the court. "

"Claimant's cause of action is dismissed on the merits. Defendant has no personal liability for the actions or inactions of his client. Defendant is not a stakeholder pursuant to an escrow agreement nor did he personally promise to perform any obligations for his client. This suit is completely baseless. The court commends the claimant for being honest and forthright admitting that his attorney suggested that he bring this suit, however, there are consequences of his actions. Defendant was required to incur the expense of hiring an attorney to represent him in this matter and was subjected to public ridicule as a defendant in a crowded small claims courtroom in regard to an alleged breach of contract arising from his work as an attorney.

Many times in legal malpractice cases, courts find causes of action to be duplicitive.  Some of this arises from over-pleading.  As an example, plaintiff may plead legal malpractice, negligence, breach of contact, breach of fiduciary duty, unjust enrichment, fraud, and so on  Courts will trim these causes of action, all the while assuring plaintiff that any damages will still be permitted before the jury.

In our continued examination of SMARTIX INTERNATIONAL CORPORATION, a.k.a. SMARTIX INTERNATIONAL, LLC, - against - GARRUBBO, ROMANKOW & CAPESE, P.C. AND ANTHONY RINALDO, ; 06 Civ. 1501 (JGK); UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2009 U.S. Dist. LEXIS 29114; 
March 30, 2009,  we look at the non-duplicitive cause of action for inflated billing and unjust enrichment.

"The plaintiff brings a claim for unjust enrichment against the defendants on the basis of alleged over-billing. The elements for a claim of unjust enrichment under New York law are: (1) that the defendant was enriched; (2) the enrichment was at the plaintiff's expense; and (3) the circumstances were such that equity and good conscience require the defendants to make restitution. See, e.g., Golden Pac. Bancorp v. Fed. Deposit Ins. Corp., 273 F.3d 509, 519 (2d Cir. 2001).
 

"In connection with its unjust enrichment claim, the plaintiff asserts, among other things, that the defendants inflated their bills without justification. The plaintiff produces evidence raising issues of fact with respect to whether bills were inflated without justification. (See, e.g., Dus Decl. Ex. 42 at 10/3/2000 and 10/11/2000 entries.) The defendants do not respond substantively to the plaintiff's unjust enrichment claim, arguing only that the unjust enrichment claim should be dismissed [*28] as duplicative of the plaintiff's legal malpractice claims. See, e.g., Town of Wallkill v. Rosenstein, 40 A.D.3d 972, 837 N.Y.S.2d 212, 215 (App. Div. 2007) (holding that claims for unjust enrichment and breach of fiduciary duty, among other claims, should be dismissed because "[t]hey were merely duplicative of the legal malpractice cause of action, as they arose from the same facts and did not allege distinct and different damages").

This argument is without merit, because the unjust enrichment claim is not duplicative of any of the legal malpractice claims. The unjust enrichment claim alleges that the defendants inflated their legal bills. The legal malpractice claims allege errors in judgment and performance by the defendants with respect to the legal services they provided to the plaintiff. Plainly these are different claims relying on different facts.

In a well-reasoned opinion from the SDNY, Judge Koeltl determined that plaintiff may continue with three claims against the attorneys.  In SMARTIX INTERNATIONAL CORPORATION, a.k.a. SMARTIX INTERNATIONAL, LLC,  - against - GARRUBBO, ROMANKOW & CAPESE, P.C. AND ANTHONY RINALDO, 6 Civ. 1501 (JGK); UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2009 U.S. Dist. LEXIS 29114;March 30, 2009, Decided
 

In this case, Smartix, a corporation with certain ticketing intellectual property, was in the business of selling and licensing that technology, and wanted to enter into a contract with Mastercard.  They retained the defendant law firm to advise them on the contract negotiation, to engage in corporate governance, and put one of the attorneys on the board.

Things went wrong with the MC contract and then Smartix was sued by plaintiffs named Metzger.  Plaintiffs retained defendants to defend that suit.  In this blog entry we'll look at the legal malpractice claims, and in tomorrow's we'll look at the unjust enrichment claim.

Plaintiffs complained that defendants failed to advise them correctly on the Mastercard contract negotiation and left them open to Mastercard's exploitation.  Beyond that, they claim malpractice when defendant attorney failed to attend a court ordered mediation session, [as well as the other attorneys] and was open to a sanctions hearing for which they billed plaintiffs.

Judge Koeltl denied summary judgment on both counts. "The plaintiff's first legal malpractice claim is based on the defendants' representation of the plaintiff in the course of the Metzger litigation. The plaintiff alleges that it was billed for the defendants' attendance at a sanctions hearing resulting from Mr. Rinaldo's failure to attend a court-ordered mediation. The defendants [*11] point out that both Metzger parties failed to attend the court-ordered mediation and that no sanctions were ultimately imposed.

The allegation regarding the sanctions hearing raises an issue of material fact with respect to the plaintiff's first legal malpractice claim. The plaintiff has provided evidence that it was billed in connection with a sanctions hearing resulting in part from Mr. Rinaldo's failure to attend a court-ordered mediation.  [T]he failure to follow direct orders from the court would fall below any standard of care. Cf. Logalbo v. Plishkin, Rubano & Baum, 163 A.D.2d 511, 558 N.Y.S.2d 185, 187-88 (App. Div. 1990) (finding in the absence of expert testimony or expert report that attorney who disregarded "clearly defined and firmly imbedded" obligation failed to meet any permissible standard of due care). Moreover, although the defendants point out that the trial judge in the Metzger litigation did not ultimately [*12] impose sanctions on the defendants, they do not argue that this decision by the trial judge precludes a finding of legal malpractice against the defendants, and there is no reason that would be so. Plainly claims for legal malpractice may exist even where attorneys have not been sanctioned for their conduct."
 

"The plaintiff has produced evidence in the form of deposition testimony that the MasterCard Agreement was drafted to the disadvantage of the plaintiff and contained certain vagaries that MasterCard was able to exploit at the expense of the plaintiff. (Katz Dep. at 47-49 ("[The Agreement] was very vague . . . . It did not protect Smartix from MasterCard's efforts to secure [*19] use of the software outside the contract."), 101 ("The MasterCard Agreement was vague enough so that MasterCard felt that they would roll the dice and try to do these businesses without us, which they subsequently did . . . ."); Huber Dep. at 72 ("It sounds as if MasterCard can do pretty much anything they want with this in one part of the contract . . . . There's also penalty clauses in here that would cause Smartix enormous damages if they wanted to market this outside of MasterCard . . . .").)
"

Privity of contract is an essential in legal malpractice litigation.  One may not sue the opponent's attorney; only one's own.  What makes for privity of contract?  As all know, no writing is necessary to create a contract.  So, can there be privity of contract without a retainer agreement.  Putting aside Rule 137 questions about the attorney's obligation to provide a writing, in Denise Terio,  v Lance Roger Spodek, Reich Reich & Reich, P.C., 2008-03594, 2008-04435;  SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT; 2009 NY Slip Op 4412; 2009 N.Y. App. Div. LEXIS 4411June 2, 2009, Decided we see a short answer:
 

"To recover damages for legal malpractice, a plaintiff [**4] must prove, inter alia, the existence of an attorney-client relationship (see Velasquez v Katz, 42 AD3d 566, 567, 840 N.Y.S.2d 410; Moran v Hurst, 32 AD3d 909, 822 N.Y.S.2d 564; Wei Cheng Chang v Pi, 288 AD2d 378, 380, 733 N.Y.S.2d 471; Volpe v Canfield, 237 AD2d 282, 283, 654 N.Y.S.2d 160). While a plaintiff's unilateral belief does not confer upon him or her the status of client (see Volpe v Canfield, 237 AD2d at 283), an attorney-client relationship may exist in the absence of a formal retainer agreement (see e.g. Swalg Dev. Corp. v Gaines, 274 AD2d 385, 386, 710 N.Y.S.2d 619). To establish an attorney-client relationship there must be an explicit undertaking to perform a specific task (see Wei Cheng Chang v Pi, 288 AD2d 378, 733 N.Y.S.2d 471; Volpe v Canfield, 237 AD2d at 283)."

So often, the practice of law seems to have devolved into an attorney v. client battle over the work and fees.  Here in Morelli & Gold  LLP v. Altman, NY Slip Op 31492(U) we see a large scale battle over a child support/custody case in which there has been litigation, fees, fee dispute, trial de novo, counterclaims and appeals. All this, and the case has not yet left the pleadings stage.

In her 32 page decision, Justice Edmead goes through a complete primer on:

a.  Rule 137 fee disputes, trial de novo, the pleading requirements for a trial de novo, and the forms used;

b.  Defenses and counterclaims after a fee dispute;

c.  Proper pleadings in legal malpractice counterclaims;

d.  The role of res judicata and collateral estoppel in legal malpractice fee disputes.

It's a long decision,,,look to the link and read through it for a good discussion on these issues.

Legal Malpractice litigation is a world apart from the rest of regular litigation ; it has its own rules, it has its own prinicipals, and is the sole set of rules written by attorneys to regulate attorneys.  Criminal legal malpractice is a world within a world...not unlike a russian doll set.

Here, in a Federal District Court case, we see how criminal defense attorneys enjoy almost total freedom from legal malpractice suits, and how a defamation law suit for words spoken in litigation will have little heft.

In Sash v. Rosahn, 08 cv 4032; Decided: June 16, 2009 ; District Judge Barbara S. Jones;U.S. DISTRICT COURT; SOUTHERN DISTRICT OF NEW YORK
 

"Plaintiffs bring a variety of claims stemming from Rosahn's legal representation of Sash at an April 2005 parole revocation hearing, during which Sash pled guilty with explanation to violations of conditional release.

The Court construes Plaintiffs' Complaint to state claims of legal malpractice, defamation, and intentional and/or negligent infliction of emotional harm.3

Specifically, Sash alleges that Rosahn committed malpractice in ineffectively representing him at a 2005 parole revocation hearing (including allegations that Rosahn failed to move to suppress certain evidence potentially relevant to the hearing, that Rosahn arranged with officers of the court to "fix" the hearing against Sash, and that Rosahn abaondoned representation of Sash following the hearing), defamed Sash in conversation with officers of the Court following the hearing, and intentionally or negligently inflicted emotional harm on Plaintiff Sash therein.4

On January 17, 2003, Plaintiff Sash was sentenced to a term of one to three years following a guilty plea on a second-degree forgery charge. Sash was placed on conditional release in January of 2005. In February 2005, Sash was arrested at his wife's residence in New Jersey for violation of his conditional release (leaving the state of New York without permission).

On April 4, 2005, at a parole revocation hearing, Sash pled guilty with explanation to violating the conditions of his release. Rosahn, then an employee of the Legal Aid Society of New York, represented Sash during that hearing and provided the explanation to the charges as requested by Sash.

Directly following the hearing Rosahn spoke with the administrative law judge and the parole specialist, during which conversation transcripts indicate that Rosahn stated, "thank you for biting your tongue," and "I had to bite my tongue," Comp. paras. 41-42. The Complaint alleges that these statements referred to Sash.
 

"[t]o state a cause of action for legal malpractice arising from negligent misrepresentation in a criminal proceeding, plaintiff must allege his innocence or a colorable claim of innocence of the underlying offense." Sash v. Dudley, No. 05-cv-7498, 2006 WL 997256, at **2-3 (S.D.N.Y. April 17, 2006); Carmel v. Lunney, 518 N.Y.S.2d 605, 607 (1987). It is well established under New York law that "so long as the determination of [a plaintiff's] guilt for that offense remains undisturbed, no cause of action will lie." Id. A guilty plea will therefore generally preclude a defendant from lodging a malpractice claim against his defense lawyer. See Scanio v. Palmiere & Pellegrino, 674 N.Y.S.2d 527, 528 (4th Dep't 1998); see also Estes v. Doe, No. 97 Civ. 8133, 1999 WL 983886, at *4 (S.D.N.Y. Oct. 29, 1999). "Thus, a criminal defendant cannot even state a claim for legal malpractice until his conviction is overturned or vacated."

Attorneys deal in areas of well settled law and in areas of "unsettled law."  Clients have problems or issues which exist, no matter how settled the law is in that area.  Attorneys are held to a standard of reasonable care in all aspects of their representation.  How does one square these contradictory settings?

An answer is given in HNH Intl., Ltd. v Pryor Cashman Sherman & Flynn LLP ; 2009 NY Slip Op 04964 ; Decided on June 18, 2009 ;Appellate Division, First Department .
 

"Plaintiffs allege that defendant, a law firm, incorrectly advised them concerning the early 20th century sound recordings they proposed to re-engineer, re-master and distribute as CDs. After the CDs had been manufactured and distributed, plaintiffs were sued and found liable for common-law copyright infringement.

The court dismissed the legal malpractice complaint, pursuant to CPLR 3211(a)(1), based on documentary evidence from which it concluded that the state of the law at the time the advice was given was unsettled and defendants therefore had not " failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession'" at that time (quoting Darby & Darby v VSI Intl., 95 NY2d 308, 313 [2000]).

We conclude, however, that the state of the law was not so unsettled at the time the advice was given as to bar as a matter of law plaintiffs' claim that a reasonably skilled attorney would have advised that the CDs were or might be entitled to common-law copyright protection and would not have advised that the release of the CDs would not result in any copyright liability. Although defendant maintains that it did advise plaintiffs of the possibility of common-law liability and did not advise plaintiffs that the release of the CDs would not result in any copyright liability, we must accept the facts alleged in the complaint as true and accord plaintiffs the benefit of every possible
favorable inference (Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & [*2]Steiner, 96 NY2d 300, 303 [2001]). "
 

In Weksler v Kane Kessler, P.C. ;2009 NY Slip Op 04957 ;Decided on June 16, 2009 ;Appellate Division, First Department  we see the fatal duo of lack of privity and lack of proximity.  The short story is that Plaintiff, while married to decedent was promised a life-long annuity of $ 4000 per month, said to come from the adult sons, so long as she remained married until decedent's death.  He went into the hospital, came out and filed for divorce.  The sons never funded the annuity.  Plaintiff sues the decedent's attorney who prepared the plan and the sons, and loses all around.
 

"As to the claim for legal malpractice, there was never an attorney-client relationship between plaintiff and the firm. Even assuming plaintiff had been the firm's client, she failed to show how such alleged malpractice caused her injury, as the agreement simply effectuated the intent of the parties, i.e., to provide plaintiff with an annuity during her lifetime subject to the stated terms and conditions (see Finova Capital Corp. v Berger, 18 AD3d 256 [2005]; cf. Mandel, Resnik & Kaiser, P.C. v E.I. Elecs., Inc., 41 AD3d 386 [2007]).

Plaintiff's remaining causes of action against the firm, for negligent misrepresention and tortious interference, are dismissed as redundant of the legal malpractice claim (see Shwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d 193 [2003]; Reyes v Leuzzi, 2005 NY Misc LEXIS 2914, *3, 2005 WL 3501578, *4; cf. William Kaufman Org. v Graham & James, 269 AD2d 171 [2000]). Finally, although such affirmative relief was not sought, the court did not err in denying plaintiff an opportunity to amend her complaint for a second time, as the proposed speculative allegations failed to establish any viable cause of action (see Davis & Davis v Morson, 286 AD2d 584 [2001]). "

The short answer is when there is spoliation.  Spoliation is the intentional or negligent destruction of evidence.  It may take place prior to, or during litigation, and it always deprives one side of the use of otherwise admissible evidence. 

In the helicopter case, it seems to have been intentional. IN RE HELICOPTER CRASH NEAR WENDLE CREEK, BRITISH COLUMBIA, ON AUGUST 8, 2002; Docket No. 3:04md1649 (SRU)
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT; 2009 U.S. Dist. LEXIS 41477; May 18, 2009,

Spoliation comes into the legal malpractice picture when, for example, defendant attorney fails to take discovery of important evidence in the underlying case, and the ability later to obtain that evidence no longer exists.  In a matrimonial legal malpractice case, it may no longer be possible to discovery the other spouse's financial records, and so plaintiff cannot show exactly how much she lost by target attorney's negligent failure to take discovery.

In the helicopter case: "...defendants' alleged failure to maintain or produce the allegedly "missing" records materially impaired her prosecution of her medical negligence and informed consent claims.

Plaintiff's "negligent spoliation" claim is akin to a legal malpractice claim [*6] in that "damages arise from the loss" -- or diminution of value -- of an underlying claim. . . . [P]plaintiff's primary medical negligence and informed consent claims ultimately failed for lack of proof of scientific/medical causation. Plaintiff argues that, if the allegedly absent records had been created or maintained and produced, Williamson might have been provided with the "missing link" that would have enabled him to identify and persuasively explain the causal relationship between gadolinium extravasation and Raynaud's syndrome. Specifically, plaintiff points to the fact that no records reflect the amount of gadolinium used during the procedure. . . .
 

We have commented about the Collateral Estoppel trap in legal malpractice with regard to fee arbitrations and hearings.  in short, when a court grants an attorney fee application, it implicitly determines that there can have been no malpractice, as the court may not award fees in the face of malpractice.  Fee arbitrations and hearings in state court happen, but not that often.  Bankruptcy fee hearings happen in every case, and in every case where fees are awarded to counsel, the question of res judicata comes up.

In re D.A. ELIA CONSTRUCTION CORP., Plaintiff, v. DAMON & MOREY, LLP, Defendant.;07-CV-143A  ;  UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK;   389 B.R. 314; 2008 U.S. Dist. LEXIS 25496 has been the leading case on this issue.  There, attorneys who had been granted fees were able to fend off legal malpractice claims based upon res judicata.

Now, in PENTHOUSE MEDIA GROUP, INC., , - against - PACHULSKI STANG ZIEHL & JONES LLP, ;UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;  2009 U.S. Dist. LEXIS 46617 we see a slightly different result.  Judge Scheindlin sitting in appeal of a US Bankruptcy decision by Judge Bernstein, finds that the legal malpractice plaintiffs did not have a full and fair opportunity to be heard, and that res judicata does not control the issue of legal malpractice.

"Although Pachulski's fee application was approved by the bankruptcy court in the prior proceeding, I cannot conclude as a matter of law that PMG had a full and fair opportunity to litigate allegations of Pachulski's malpractice during that hearing. Many of the factors used to consider whether a party had a full and fair opportunity to litigate an issue favor PMG, particularly given PMG's continued retention of Pachulski as its counsel. For instance, one of the factors courts have considered is "the importance of the claim in the prior litigation." 45 PMG had just undergone a reorganization with the help of Pachulski as its counsel. The possibility that Pachulski may have committed malpractice while representing PMG during that reorganization may not have been at the forefront of PMG's concerns. In addition, PMG [*16] had no "incentive [or] initiative to litigate" the malpractice issue, 46 considering that it expected Pachulski to continue to advise PMG in the winding down of its bankruptcy proceeding.

Of particular importance to this Court is the bankruptcy court's reliance on D.A. Elia Construction Corp. 50 Judge Bernstein concluded that D.A. Elia was directly on point, 51 but D.A. Elia is perhaps even more clearly distinguishable from the instant case than other cases cited by Pachulski, as in that case the malpractice claim was actually litigated during the fee application proceeding. D.A. Elia emphasized that
many of the same allegations made by Elia in its [malpractice] complaint were previously made by Elia in its objections to Damon & Morey's final fee application. Specifically, Elia argued to the bankruptcy court that the firm had labored under a conflict of interest, had committed legal malpractice and had failed to turn over money owed to the estate. The bankruptcy court provided Elia with ample opportunity [to] raise those claims, but ultimately rejected them as meritless. 52
The district court concluded that "it cannot be said that Elia was denied the opportunity to raise these [malpractice] claims in the prior action." 53 In the instant case, PMG raised no such objections [*19] at the fee hearing."

Clients often ask whether it matters that their legal malpractice case comes as a defense to an attorney fee case.  It should not, but judges are swayed by the procedural setting of cases before them.  Does it make a difference whether the legal malpractice case is a main action or a counterclaim?  Taking a look at this case gives possible insight.

Kluczka v Lecci  2009 NY Slip Op 04867  Decided on June 9, 2009  Appellate Division, Second Department  holds that:
 

"The plaintiff retained the defendant attorney to represent him in a divorce action commenced by his former wife. The divorce action was settled by a stipulation pursuant to which the plaintiff agreed, inter alia, to waive his interest in the marital residence and give his former wife a share of his pension benefits, while she agreed to waive her interest in another property, and forgive certain child support arrears. The plaintiff thereafter commenced this action, contending that the defendant had committed legal malpractice by recommending that the plaintiff enter into the stipulation without obtaining appraisals of the subject real property or his pension.

Here, the defendant made a prima facie showing that he was entitled to summary judgment by demonstrating that the stipulation in the underlying divorce action was a provident agreement which provided both parties with benefits, and that his allegedly negligent failure to obtain appraisals did not cause the plaintiff to incur any damages. In opposition, the plaintiff failed to raise an issue of fact as to whether he incurred damages by submitting evidentiary proof that, but for the defendant's alleged negligence, he would have been able to negotiate a more favorable settlement (see Rapp v Lauer, 229 AD2d 383, 384; Rogers v Ettinger, 163 AD2d 257, 258). Accordingly, the Supreme Court should have granted that branch of the defendant's motion which was for summary judgment dismissing the complaint.

However, the court properly denied that branch of the plaintiff's cross motion which was for summary judgment dismissing the defendant's counterclaim to recover unpaid legal fees. An attorney may not recover fees for legal services performed in a negligent manner even where that negligence is not a proximate cause of the client's injury (see Martin, Van de Walle, Guarino & Donohue v Yohay, 149 AD2d 477, 480; Campagnola v Mulholland, Minion & Roe, 148 AD2d 155, 158, affd 76 NY2d 38). Here, the submissions of both parties demonstrate that there is a sharply disputed issue of fact as to whether the defendant's performance of legal services, as measured against that of an attorney of reasonable skill and knowledge, was negligent (see Kutner v Catterson, 56 AD3d 437). Thus, the issue of whether the defendant is entitled to recover legal fees on his counterclaim must await resolution at trial. "

CPLR 3211 (a)(1) is the "documentary evidence" portion of a general pre-answer motion to dismiss.  The standard applied to dismissal motions under this particular sub-section is:

"On a motion to dismiss based upon documentary evidence, dismissal is only warranted if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Klein v Gutman, 12 AD3d 417, 418; see CPLR 3211[a][1]; Saxony Ice Co., Div. of Springfield Ice Co., Inc. v Ultimate Energy Rest. Corp., 27 AD3d 445). Moreover, where "evidentiary material is submitted and considered on a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the court must determine whether the plaintiff has a cause of action, not whether the plaintiff has stated one" (Steve Elliot, LLC v Teplitsky, 59 AD3d 523, 524, citing Guggenheimer v Ginzburg, 43 NY2d 268, 275). "[U]nless it has been shown that a material fact as claimed by the [plaintiff] to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it . . . dismissal should not eventuate" (Guggenheimer v Ginzburg, 43 NY2d at 275).
 

Here, in the quote taken from Walker v Kramer ; 2009 NY Slip Op 04414 ;  Decided on June 2, 2009 ;  Appellate Division, Second Department we see a situation in which neither defendant demonstrated their right to dismissal.  Plaintiff has adequately stated a cause of action, or indeed, has a cause of action which the court discerned, in this matrimonial legal malpractice case.
 

A "client's unilateral belief" in the attorney-client relationship is insufficient to prove privity between the attorney and client, sufficient for a legal malpractice lawsuit, but subsequent behavior or acts by the attorneys might provide the necessary proof.  Here, in Terio v Spodek ;  2009 NY Slip Op 04412
Decided on June 2, 2009 ; Appellate Division, Second Department  we see how that might happen:
 

"To recover damages for legal malpractice, a plaintiff must prove, inter alia, the existence of an attorney-client relationship (see Velasquez v Katz, 42 AD3d 566, 567; Moran v Hurst, 32 AD3d 909; Wei Cheng Chang v Pi, 288 AD2d 378, 380; Volpe v Canfield, 237 AD2d 282, 283). While a plaintiff's unilateral belief does not confer upon him or her the status of client (see Volpe v Canfield, 237 AD2d at 283), an attorney-client relationship may exist in the absence of a formal retainer agreement (see e.g. Swalg Dev. Corp. v Gaines, 274 AD2d 385, 386). To establish an attorney-client relationship there must be an explicit undertaking to perform a specific task (see Wei Cheng Chang v Pi, 288 AD2d 378; Volpe v Canfield, 237 AD2d at 283).

Here, Reich failed to establish, as a matter of law, that an attorney-client relationship was not formed and did not exist during the time that the alleged acts of negligence occurred. Reich's submissions demonstrated that it consulted with the plaintiff, advised her of her chances of success, and negotiated a settlement with a bankruptcy trustee. Contrary to Reich's arguments, the fact that it was purportedly not the attorney of record at the time of a hearing before the United States Bankruptcy Court to determine whether the particular asset at issue qualified as an exemption, is not dispositive of the existence of an attorney-client relationship during the period of the alleged negligence. "

In the past six months, new life has been breathed into Judiciary law 487.  It may well be the oldest statute in Anglo-American jurisprudence.  Dating from1275  the statute provides that an attorney who is guilty of any deceit or collusion, may be guilty of a misdemeanor and held for treble damages.

Since the Court of Appeals decided Amalfitano v Rosenberg   12 NY3d 8 a rise in the acceptance of, and application of the statute has been seen.  Here, in a Fourth Department case, Scarborough v Napoli, Kaiser & Bern, Llp ;2009 NY Slip Op 04475 ;Decided on June 5, 2009 ;Appellate Division, Fourth Department  we see summary judgment being denied to the target attorney defendants,

"The medical malpractice action was dismissed against the underlying medical defendants after defendants failed to file a timely note of issue. Following the dismissal of that action, defendants asked plaintiff to sign a stipulation of discontinuance with respect to the underlying action, which in fact had already been dismissed. According to plaintiff, he was informed that he could not prevail in his underlying action but was never informed that the action already had been dismissed as a result of defendants' failure to file [*2]a timely note of issue. Subsequently, a member of defendants' firm telephoned plaintiff and told him the actual basis for the dismissal of the underlying action.

Plaintiff thereafter commenced this action asserting causes of action for legal malpractice and for treble damages pursuant to Judiciary Law § 487. Defendants moved for summary judgment dismissing the amended complaint in its entirety on the ground that no acts or omissions by the underlying medical defendants were the proximate cause of the death of plaintiff's father, an essential element of a cause of action for legal malpractice.

Contrary to the further contention of defendants, the court properly determined that none of the defendants is entitled to summary judgment dismissing the Judiciary Law § 487 cause of action. That statute provides in relevant part that an attorney who is "guilty of deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party . . . [i]s guilty of a misdemeanor, and . . . he [or she] forfeits to the party injured treble damages, to be recovered in a civil action." "A violation of Judiciary Law § 487 may be established either by the defendant's alleged deceit or by an alleged chronic, extreme pattern of legal delinquency by the defendant' " (Izko Sportswear Co., Inc. v Flaum, 25 AD3d 534, 537; see Amalfitano v Rosenberg, 12 NY3d 8; Schindler v Issler & Schrage, 262 AD2d 226, lv dismissed 94 NY2d 791, rearg denied 94 NY2d 859). Here, the documents submitted by defendants in support of their motion establish that some of the attorneys at defendant law firm engaged in intentional deceit, and thus by their own submissions defendants defeated their entitlement to summary judgment dismissing that cause of action. "

In both Federal District Court and in State Court in New York attorneys have a "retaining lien" under Judiciary Law 475.  In Federal District Court the rule is set forth in Katz v. Image Innovations Holdings Inc., 06 Civ. 3707;Decided: May 27, 2009; District Judge John G. Koeltl

U.S. DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

"It is well settled in this Circuit that an attorney may claim a retaining lien for outstanding unpaid fees and disbursements on a client's papers and property that came into the attorney's possession as the result of his professional representation of that client. See Pomerantz v. Schandler, 704 F.2d 681, 683 (2d Cir. 1983) (per curiam) (citing In re San Juan Gold, Inc., 96 F.2d 60 (2d Cir. 1938)). This right to a retaining lien is grounded in common law, and is enforced in federal courts unless a specific federal law alters the parties' rights. See Allstate Ins. Co. v. Nandi, 258 F.Supp.2d 309, 311 (S.D.N.Y. 2003) (citing Rivkin v. A.J. Hollander & Co., Inc., No. 95 Civ. 9314, 1996 WL 633217, at *2 (S.D.N.Y. Nov. 1, 1996)). In this case, no federal law prevents the Court from fixing a retaining lien.

The decision to fix a retaining lien lies within the discretion of the district court. See Allstate, 258 F.Supp.2d at 311 (citing Pay Television of Greater New York, Inc. v. Sheridan, 766 F.2d 92, 94 (2d Cir. 1985) (per curiam)). A retaining lien attaches "when the action is commenced and remains in force when an attorney is discharged without cause." See Allstate, 258 F.Supp.2d at 312 (quoting Casper v. Lew Lieberbaum & Co., Inc., No. 97 Civ. 3016, 1999 WL 335334, at *8 (S.D.N.Y. May 26, 1999)). While an attorney who has been discharged for cause has no right to compensation or to a retaining lien, an attorney who has been discharged without cause is entitled to be paid a fee on a quantum meruit basis for the reasonable value of the legal services that were provided. See Viada v. Osaka Health Spa, Inc., No. 04 Civ. 2744, 2005 WL 3481196, at *2 (S.D.N.Y. Dec. 19, 2005) (citing Gurry v. Glaxo Wellcome, Inc., No. 98 Civ. 6243, 2000 WL 1702028, at *1 (S.D.N.Y. Nov. 14, 2000)). When counsel is granted leave to withdraw by the court, the discharge is not for cause. See Viada, 2005 WL 3481196, at *2. Absent a defendant's urgent need for the papers subject to the retaining lien, such as for a criminal trial, the Court of Appeals for the Second Circuit has held it an abuse of discretion to require withdrawing counsel to turn over papers subject to a retaining lien without conditioning it on payment or posting bond for payment of outstanding legal fees. See Pomerantz, 704 F.2d at 683-684."
 

How are "inefficiencies" such as intra-office conferences and duplication of effort handled?

"There is some duplication caused by McCarter's employment of 14 attorneys in this matter, and its billing for internal conferences. (See generally Ex. A, Moran Decl., Jan. 21, 2009.) A deduction of 5 percent from the attorney's fees adequately compensates for this inefficiency. See New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1146 (2d Cir. 1983) (endorsing percentage reductions as a practical means of reducing a fee application to avoid an excessive fee, and noting percentage reductions of 5 percent to 22 percent ); Mr. X v. New York State Educ. Dept., 20 F.Supp.2d 561, 564 (S.D.N.Y. 1998) (reducing requested attorney's fees award by twenty percent for, among other considerations, duplicative work)."

The collapse of a hedge fund gives rise to a legal malpractice claim by various of the investors.  The hedge fund impresario is convicted of securities fraud, and then turns around to help the investors sue the funds' attorney. 

In Eurycleia Partners, LP v Seward & Kissel, LLP ; 2009 NY Slip Op 04299 ; Decided on June 4, 2009 ; Court of Appeals ; Graffeo, J. we see that there is not enough connection between the attorneys and plaintiffs, and that plaintiffs cannot show the requisite relationship between the attorneys and the funds.
 

"The July 2007 amended complaint presents three main allegations against S & K. First, plaintiffs assert S & K learned at some point in 2005 that Wood River invested more than 10% of its assets in Endwave stock in violation of the 10% restriction contained in the offering memoranda. According to plaintiffs, S & K nonetheless persisted in drafting offering memoranda falsely representing that Wood River was adhering to the 10% cap as part of its investment policy. Second, plaintiffs claim that S & K falsely stated in the offering memoranda that TBS was Wood River's auditor even though S & K knew from the inception that TBS had not been retained to perform any auditing work. Third, plaintiffs allege S & K learned in January 2005 that Wood River had violated securities laws by failing to file required notices when Wood River obtained 5% and, later, 10% of Endwave's stock [FN5]. Plaintiffs maintain that S & K breached fiduciary duties owed to them, as limited partners, by failing to disclose the SEC violations to them.

Here, whether the claim is labeled fraud or aiding and abetting fraud, we conclude that neither the allegations in the complaint nor the surrounding circumstances give rise to a reasonable inference that S & K participated in a scheme to defraud or knew about the falsity of the two contested statements in the offering memoranda. The amended complaint conclusorily alleges that at some unspecified point in 2005 S & K became aware that more than 10% of Wood River's holdings were invested with Endwave but, nonetheless, S & K continued to issue offering memoranda falsely representing that Wood River would not invest more than 10% of its assets in any given security.

We likewise find the amended complaint's alternative allegation of fraud or aiding and abetting fraud — that S & K knew TBS was not Wood River's auditor yet continued to list TBS in the offering memoranda — to be similarly conclusory. As the Appellate Division recognized, the complaint elsewhere alleges that in the summer of 2005 TBS falsely represented that it was the fund's auditor and would conduct an audit. In short, although we are mindful that a plaintiff need not produce absolute proof of fraud and that there may be cases in which particular facts are within a defendant's possession, it is also true that the strength of the requisite inference of fraud will vary based on the facts and context of each case.

A fiduciary relationship arises "between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation" (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005] [internal quotation marks and citation omitted]). Put differently, "[a] fiduciary relation exists when confidence is reposed on one side and there is resulting superiority and influence on the other" (AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d 146, 158 [2008] [internal quotation marks and citation omitted]). Ascertaining the existence of such a relationship inevitably requires a fact-specific inquiry. [*6]

Here, plaintiffs do not allege that they had direct contact or any relationship — contractual or otherwise — with S & K. Indeed, plaintiffs acknowledge that the offering memoranda advised prospective limited partners to consult their own legal counsel prior to investing in Wood River. Plaintiffs nevertheless contend that S & K's attorney-client relationship with Wood River in and of itself created a fiduciary relationship between S & K and the limited partners themselves. We disagree. "

Aside from the precatory "You've got to be crazy...", 

" on occasion, true mental incompetence does collide with questions of legal malpractice, and in this case, criminal conviction.  In ALLEN WOLFSON, -v- AVRAHAM MOSKOWITZ,  08 Civ. 8796 (DLC);UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK'; 2009 U.S. Dist. LEXIS 45822;  May 29, 2009, Decided   we see the result:
 

"Allen Wolfson has filed suit against Avraham Moskowitz, Wolfson's former attorney in a criminal matter. Moskowitz moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. . For the following reasons, the Report is adopted, and the motion is granted.

Following trial, Wolfson moved for a new trial and to vacate his conviction, as well as to vacate his guilty plea entered in another case, arguing, inter alia, that the jury instructions were defective, that he was incompetent at the time of his trial and plea, and that his counsel was ineffective. The Honorable John G. Koeltl, United States District Judge, denied these motions in two separate opinions issued on the same day.  Judge Koeltl did find that Wolfson was not competent to be sentenced. Wolfson, . Wolfson was therefore provisionally sentenced and ordered to a facility for treatment, and will be given a final sentence when he is deemed competent.

The Report states that in a diversity action such as this case, a federal court applies the choice-of-law rules of the state in which the court sits. See Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 147 (2d Cir. 2008). Finding that the complaint against Moskowitz for failure to inform Wolfson that the indictment failed to charge a crime was a claim for the tort of legal malpractice, the Report applied New York's "interest analysis," see White Plains Coat & Apron Co., Inc. v. Cintas Corp., 460 F.3d 281, 284 (2d Cir. 2006), and concluded that New York's interest was paramount and therefore [*6] New York law applied. See, e.g., LNC Inv., Inc. v. First Fidelity Bank, N.A., 935 F. Supp. 1333, 1350-51 (S.D.N.Y. 1996).

The Report correctly concluded that under New York law, a party cannot maintain a cognizable claim for legal malpractice in connection with representation provided in a criminal case when his conviction still stands. See Britt v. Legal Aid Soc, Inc., 95 N.Y.2d 443, 447, 741 N.E.2d 109, 718 N.Y.S.2d 264 (2000); Carmel v. Lunney, 70 N.Y.2d 169, 173, 511 N.E.2d 1126, 518 N.Y.S.2d 605 (1987). Thus, because Wolfson has not had his conviction vacated and remains incarcerated, he fails to state a claim for malpractice and his complaint must be dismissed."


 

This recent Court of Appeals Case, Wyly v Milberg Weiss Bershad & Schulman, LLP
2009 NY Slip Op 03628 ; Decided on May 7, 2009 ; Court of Appeals  discusses the rights of a client to "its" case file for use in a later proceeding...which is often a legal malpractice action.  Wyley is the offshoot  of the Computer Associates class actions, and one in which millions of dollars were at stake.
The rule in New York concerning whether a client is entitled to look at and copy a file  is generally set forth in Matter of Sage Realty Corp. v Proskauer Rose Goetz & Mendelsohn, 91 NY2d 30 [1997]  The Court of Appeals held that the joined the "majority of courts and State legal ethics advisory bodies," which take the position that "upon termination of the attorney-client relationship, where no claim for unpaid legal fees is outstanding," a client is "presumptively accord[ed] . . . full access to the entire attorney's file on a represented matter with narrow exceptions" (Sage Realty, 91 NY2d at 34).

"The petitioners in Sage Realty retained Proskauer to represent them in a multi-million dollar mortgage financing and a restructuring of ownership interests, all involving New York City properties. After a falling out with Proskauer, the petitioners retained a different firm to represent them in the transaction. Proskauer refused to turn over certain documents relating to its representation of the petitioners, prompting them to commence a special proceeding to recover the documents. "
 

A recurring theme in legal malpractice is how to obtain the documents from the underlying representation.  A confounding factor is that often there is a fee dispute between the plaintiff and its prior counsel, and the prior counsel refuse to allow plaintiff a copy of the file under the authority of a Judiciary Law retaining lien.  Sage remains the authority in this area.

In Leone v Silver & Silver, LLP ; 2009 NY Slip Op 04204 ; Decided on May 26, 2009
Appellate Division, Second Department we see that merely settling a case does not deprive plaintiff of the right to sue the attorney, so long as the settlement was effectively compelled by the acts of the target attorney. If the attorney's acts caused plaintiff to be in a position where settlement was the correct choice, there may still be liability for the attorney.
 

"The gravamen of the plaintiff's complaint is that the defendants failed to protect her interest in connection with the fraudulent conveyance of certain real property. In order to prevail on this claim, the plaintiff must establish both that the defendants "failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442; see Davis v Klein, 88 NY2d 1008, 1009-1010) and that their breach of this duty proximately caused her actual and ascertainable damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; see Hearst v Hearst, 50 AD3d 959, 963; Bauza v Livington, 40 AD3d 791, 792-793). To succeed on their motion for summary judgment, the defendants were required to establish, through the submission of evidentiary proof in admissible form, that the plaintiff is unable to prove at least one of the essential elements of the cause of action (see Suydam v O'Neill, 276 AD2d 549; Ostriker v Taylor, Atkins & Ostrow, 258 AD2d 572). The Supreme Court correctly concluded that the defendants failed to do so here. Contrary to the defendants' contention, the plaintiff's decision to settle an action to recover the property, rather than risk dismissal on the basis of the defense of laches allegedly caused by their conduct, does not preclude the plaintiff from maintaining a subsequent action against them to recover damages for legal malpractice (see N.A. Kerson Co. v Shayne, Dachs, Weiss, Kolbrenner, Levy & Levine, 45 NY2d 730, 732; Tortura v Sullivan Papain Block McGrath & Cannavo, 21 AD3d 1082, 1083; Rau v Borenkoff, 262 AD2d 388, 389; Lattimore v Bergman, 224 AD2d 497). The Supreme Court, therefore, properly denied the defendants' motion for summary judgment dismissing the complaint. "
 

Slip and fall cases are a major part of the personal injury oeuvre, and personal injury litigation remains a large part of the world of the bar.  Accordingly the laws of personal injury, and specifically those relating to trips and falls are widely known and highly important.  Mistakes and bad outcomes in personal injury litigation often lead to legal malpractice litigation.

One perennial problem in trips and falls is causation. The problem arises in the tension between whether one should have seen a defect, and proving that the defect was significant enough to cause the fall.  In sidewalk negligence, there is the principal of a defect that is "de minimus" and as a matter of law insufficient to support a negligence claim.

In Hamoudeh v Mandel ;2009 NY Slip Op 04195 ;decided on May 26, 2009 ; Appellate Division, Second Department we see the effect of plaintiff stating in a deposition [likely in the underlying action] that  he did not see what caused him to fall.  Whether this was the result of the attorney's affirmative coaching, the attorney's negligence failure to prepare plaintiff for a deposition, or the truth, it was fatal to both the underlying personal injury action and the legal malpractice action.
 

"During a deposition, the plaintiff stated that he did not know what had caused him to fall. The defendants moved for summary judgment, contending that the plaintiff would not have prevailed in the underlying action even if they had timely commenced an action. The Supreme Court denied the motion. We reverse.

To establish a cause of action to recover damages for legal malpractice, a plaintiff must prove that the attorney "failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that the attorney's breach of this duty proximately caused the plaintiff actual and ascertainable damages" (Maiolini v McAdams & Fallon, P.C.,AD3d, 2009 NY Slip Op 02755, *2 [2d Dept 2009] [citations omitted]). "To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence" (id. [citations omitted]; see also Pedro v Walker, 46 AD3d 789; Lichtenstein v Barenbaum, 23 AD3d 440; Porello v Longworth, 21 AD3d 541; Dimond v Kazmierczuk & McGrath, 15 AD3d 526; Iannarone v Gramer, 256 AD2d 443, 444).

Here, the defendants established, prima facie, that even if they had commenced a timely action, the plaintiff would not have been successful on the merits, since he could not identify what had caused him to fall (see Costantino v Webel, 57 AD3d 472; Karwowski v New York City Tr. Auth., 44 [*2]AD3d 826; Manning v 6638 18th Ave. Realty Corp., 28 AD3d 434; Golba v City of New York, 27 AD3d 524; Tejada v Jonas, 17 AD3d 448). In opposition, the plaintiff failed to raise a triable issue of fact (see Denicola v Costello, 44 AD3d 990; Tejada v Jonas, 17 AD3d 448; Sanchez v City of New York, 305 AD2d 487). "

Some time ago the legislature passed a statute of limitations for legal malpractice, overruling the Court of Appeals which permitted both a 3 year and a 6 year statute.  Of course, now there is but a single 3 year statute.  At the same time, it was determined that no matter whether one calls the attorney's mistakes fraud, breach of fiduciary duty or something else, there is a single 3 year statute, and it's all called legal malpractice except in certain unusual circumstances.

Here in Kullahsi v. Marengo, NY Slip Op 31154, Justice Tolub, Supreme Court, New York County, Mary 27, 2009, we see a more detailed explanation.  The allegation of fraud must be separate and distinct from the allegation of malpractice.  There must be damages separate and different from those which were caused by the malpractice.  The fraud must be independent, intentionally tortuous conduct.

Retainer agreements or letters of engagement are required in New York, and there is a large body of law concerning attorney fees and the necessity of retainer agreements.  On a different dimension, the question of what work an attorney has agreed to perform, and the limits of that attorney's liability may well be determined by the scope of the retainer agreement.  May one, for example, limit representation to a single issue, and not be responsible for other issues?

in Douglas v Dashevsky ;2009 NY Slip Op 04187 ; Decided on May 26, 2009 ;Appellate Division, Second Department we see this issue illustrated.  Plaintiff retains attorney in a wrongful termination case, and alleges that he told her not to file a disability claim with the employer.  He says that his sole obligation was the wrongful termination matter. Is he responsible?
 

"To demonstrate entitlement to dismissal of a complaint pursuant to CPLR 3211(a)(1), the documentary evidence submitted must conclusively establish a defense to the asserted claims, as a matter of law (see Leon v Martinez, 84 NY2d 83, 87-88; Williams v Williams, 36 AD3d 693, 695; New York Community Bank v Snug Harbor Sq. Venture, 299 AD2d 329, 330). Here, the retainer agreements submitted by the defendant do not establish, as a matter of law, that the defendant's obligation was to advise the plaintiff solely with respect to her wrongful termination action against her employer. The one page of the disability carrier's policy along with the complaint from the action alleging wrongful termination fails to conclusively establish that the plaintiff would not otherwise have been entitled to receive benefits under the policy, had she filed a timely claim.

Further, "in reviewing a motion pursuant to CPLR 3211(a)(7) to dismiss a complaint for failure to state a cause of action, the facts as alleged in the complaint must be accepted as true, the plaintiff is accorded the benefit of every possible favorable inference, and the court's function is to determine only whether the facts as alleged fit within any cognizable legal theory" (Kupersmith [*2]v Winged Foot Golf Club, Inc., 38 AD3d 847, 848; see Leon v Martinez, 84 NY2d at 87-88; Board of Educ. of City School Dist. of City of New Rochelle v County of Westchester, 282 AD2d 561, 562). Here, the plaintiff has pleaded sufficient facts to fit within a theory of legal malpractice.

The action is not barred by the doctrine of judicial estoppel since the plaintiff's action predicated upon wrongful termination was settled and did not result in a judgment (see Kimco of New York, Inc. v Devon, 163 AD2d 573, 575). "
 

One might not expect a legal malpractice case such as this to take place in Brooklyn.  It would be far more plausible in a small upstate hamlet, where everyone knows everyone else, and there are strongly intersecting lines of business and social life.  But, even here in the big city, attorneys are fiduciaries and must bring all their knowledge and experience to the table.

In this case , Romano v Ficchi , 2009 NY Slip Op 51011(U) , Decided on May 22, 2009 , Supreme Court, Kings County , Rivera, J. plaintiff sought to buy a condo with a view.  She found one, and hired an attorney to handle the closing.  In a big city/small town twist, it turns out that the attorney had dealings with the next door real estate and knew that there were plans to build up next door, and that the plans would eventually block plaintiff's view.

From the decision: "Plaintiff alleges that defendant knew that the purchaser of an adjoining property was going to build on the land in a way that would obstruct her view from her condominium. She further alleges that he gained this knowledge by representing the seller of the adjoining property in the sale to the new owner. She contends he did not inform her of this fact to her detriment and damage. The damage was the loss of the market value of the unit caused by the loss of the view and not having the opportunity to take into consideration the anticipated loss of the view before making a decision to buy the unit for the price she paid. Accepting all of the plaintiff's allegations fact as true, and according her every favorable inference, the remaining question is whether these facts support a claim for legal malpractice.

It is well settled that the relationship of client and counsel is one of "unique fiduciary reliance" (Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1 [1st Dept.,2008] citing Matter of Cooperman, 83 NY2d 465 at 472 [1994] and that the relationship imposes on the attorney "[t]he duty to deal fairly, honestly and with undivided loyalty ... including maintaining confidentiality, avoiding conflicts of interest, operating competently, safeguarding client property and honoring the clients' interests over the lawyer's"(Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, supra).

The attorney's obligation is to exercise professional judgment "solely for the benefit of the client and free of compromising influences and loyalties" (Code of Professional Responsibility EC 5-1) to represent the client zealously within the bounds of the law ( see Code of Professional Responsibility Canon 7), and "to seek the lawful objectives of the client through reasonably available means permitted by law and the Disciplinary Rules" (Code of Professional Responsibility DR 7-101 [A] [1], (Sedore v. Epstein, 56 AD3d 60 [2nd Dept.,2008]).

Defendant's knowledge of the intention of an adjoining buyer to develop his property in a way that would obstruct the view of the condominium unit plaintiff was considering to purchase and his failure to inform the her that she was going to lose the very view which induced her to purchase it may support a claim of legal malpractice. It cannot be said as a matter of law that it does not. A lawyer should look out for his client's interest and inform his client of those matters within his knowledge that are material to the client's informed decision making process. Plaintiff's contention that she would not have bought the unit had she known this fact is reasonable. Her claim that the unit has lost value because of the loss of her view is also reasonable and supports the damage element of a legal malpractice claim. Whether or not the plaintiff can ultimately establish the truth of their allegations before the trier of fact is irrelevant (Campaign for Fiscal Equity, Inc. v. State, 86 NY2d 307 [1995]). [*4]"

Legal Malpractice cases frequently involve a series of attorneys, each of whom comments or gives advice concerning the acts of a predecessor.  When will these communications be protected and when will the protection be waived ?  A simple answer would be that all communications are protected, forever.  The wise commentator amongst us knows that some communications will be protected, and some placed "at issue," and thus lose their attorney-client privilege.

Here, in Nomura Asset Capital Corp. v Cadwalader, Wickersham & Taft LLP ; 2009 NY Slip Op 04099 ; Decided on May 26, 2009 ; Appellate Division, First Department we see a well reasoned discussion of the difference. 
 

"We find no merit to defendant's argument that privileged materials relating to and created after commencement of the Doctor's Hospital Action have been put "in issue" by this litigation and are therefore discoverable. Such argument fails to recognize that nothing that plaintiff's attorneys could have said or done in the prior lawsuit could have possibly affected plaintiff's reliance on defendant's allegedly erroneous advice given years earlier in connection with the [*2]formation of the D5 Trust. " At issue' waiver of [the attorney-client] privilege occurs where a party affirmatively places the subject matter of its own privileged communication at issue in litigation, so that invasion of the privilege is required to determine the validity of a claim or defense of the party asserting the privilege, and application of the privilege would deprive the adversary of vital information" (Deutsche Bank Trust Co. of Ams. v Tri-Links Inv. Trust, 43 AD3d 56, 63 [2007]). While any communications between plaintiff and its attorneys in the Doctor's Hospital Action that evaluated defendant's prior advice in the allegedly bungled D5 Trust transaction are certainly relevant to the issue of defendant's alleged malpractice, plaintiff disavows any intention to use such communications and defendant fails to show that any such communications are necessary to either plaintiff's claim or its defense (see id. at 64 [relevance alone insufficient to put privileged materials "at issue"; "if that were the case, a privilege would have little effect"]; see also Veras Inv. Partners, LLC v Akin Gump Strauss Hauer & Feld LLP, 52 AD3d 370, 374 [2008]). "

Taken verbatim from the New York Law Journal by Andrew Longstreth
 

"McDermott Will Settles Malpractice Claim

McDermott, Will & Emery has settled a malpractice claim brought by the litigation trustee in the bankruptcy of Saint Vincent's Catholic Medical Centers of New York, according to court records. News of the settlement, which is filed under seal at the request of the trustee, was first reported by Crain's New York.  The trustee alleged that the law firm purposefully delayed the bankruptcy filing of Saint Vincent's to keep members of the hospital's restructuring team in place and run up its own bills, which delayed the hospital's emergence from bankruptcy. (St. Vincent's substituted McDermott with Weil, Gotshal & Manges as its debtor's counsel in September 2005.) One of the reasons cited in the trustee's motion to file the settlement under seal is to protect McDermott Will from competitors. "MWE has a strong interest in maintaining the confidentiality of the proposed settlement agreement because it contains confidential information about MWE, disclosure of which could adversely affect its commercial activities," it states. "Specifically, disclosure of the terms of the proposed settlement agreement could provide a road map for any disgruntled current or former client of MWE for the pursuit of litigation against the firm, giving an unfair advantage to MWE's competitors in the marketplace."

In this Albany County case, via the Third Department, Bixby v Somerville ;2009 NY Slip Op 03821
Decided on May 14, 2009   we see the unraveling of a marriage, and the eventual custody dispute, now played out in legal malpractice.  Father fights with mother over sole custody, ending in a shared custody decision, later modified by the Appellate Division to joint custody.  Unhappy, plaintiff sues his law firm, both in his name and in the name of his daughter, and disputes fees paid and fees still owing.  Plaintiff loses on the judgment rule and plaintiff's daughter loses on the privity rule. 

 "Here, plaintiffs cite extensive proof, including the transcript of the Family Court custody hearing, to demonstrate that their conduct was a reasonable exercise of professional judgment. In the alternative, plaintiffs assert that any shortcomings in their representation did not proximately cause defendant's alleged damages because he would not have been successful on the merits of the underlying proceeding. In our view, plaintiffs amply met their initial burden of establishing a prima facie case for summary judgment (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). "

Here is a most unusual case.  Legal Malpractice case in State Court follows personal injury  case in Federal Court and the State Court Judge effectively second guesses the Federal Court judge in  whether plaintiff was subject to North Carolina law or that of another state.

DiTondo v Meagher ;2009 NY Slip Op 29178 ;Decided on April 22, 2009 ;Supreme Court, Broome County  ends by determining that defendant may not have summary judgment.  The enjoyment is in the travel to that decision.  We have not seen a discussion of choice of law cases [car accident in state 1, plaintiff live in State 2, Car owners are corporations of state 2, etc] since law school.
"This is a legal malpractice action. Plaintiffs Joseph N. DiTondo and Caralynn M. DiTondo allege that defendants Frederick J. Meagher, Jr. and Meagher & Meagher committed legal malpractice in an underlying federal case by failing to, among other things, research and advocate the legal proposition that the federal court sitting in diversity should have applied either California or New York's comparative negligence laws, rather than North Carolina's contributory negligence law.

Defendants Frederick J. Meagher, Jr. and Meagher & Meagher (hereinafter collectively "defendant") move for an order pursuant to CPLR § 3212 determining that the laws of North Carolina were properly applied in the underlying federal action, on the grounds it was the site of the underlying accident and has the strongest interest in the outcome of the underlying federal litigation.

Plaintiff [FN1] cross-moves for partial summary judgment for a finding that, had defendant brought the proper facts and law to the attention of the federal court, that the federal court would have been constrained to apply California or New York's comparative negligence rule to the underlying federal case. "

"Under the third Neumeier Rule proviso, plaintiff argues that when the law of the domiciliaries is essentially the same as here (both New York and California have comparative negligence rules) and only the law of situs is different (North Carolina has contributory negligence), courts prefer to apply the law of the domiciliaries because the situs state would have "[n]o interest in the application of its [loss allocation] law in an action between nondomiciliaries" (Marillo v Benjamin Moore & Co., 32 AD3d 1313, 1314 [2006]; King v Car Rentals, Inc., 29 AD3d 205, 209-210 [2006]). This court agrees and finds that had defendant Meagher brought to the federal court's attention the correct facts and law as set forth herein, then Chief Judge Scullin would have been constrained to find that California or New York's comparative negligence rules [*6]applied.

In view of the foregoing, the court finds "[b]ut for defendant's alleged negligence, there would have been a more favorable outcome in the underlying action" (Ellsworth v Foley, 24 AD3d 1239 [2005], lv denied 6 NY3d 712 [2006]; Williams v Kublick, 302 AD2d 961 [2003]). "

We have been following this story of the intersection of legal malractice and the sub-prime morrgage crisis.  Today, Susan Beck in the New York Law Journal reports that Cadwalader Wickersham & Taft faces a continued legal malpractice case for their work in servicing and securing loans worth $1.8 billion.  Cadwalader's motion to dismiss was denied, and the case continues.  From the NYLJ:
"Nomura sued Cadwalader in 2006, claiming that it had botched a 1997 assignment to advise and assist Nomura on the origination and securitization of 156 commercial loans totaling $1.8 billion. (Cadwalader had signed a tolling agreement that extended the statute of limitations.) The most significant claims arose from a $50 million loan made to a doctors hospital that went into default in 2000. Cadwalader, representing Nomura, had drafted documents that asserted that the trust that held these loans qualified for special tax treatment as a Real Estate Mortgage Investment Conduit (REMIC), which required that the fair market value of the real property securing each loan be at least 80 percent of the loan amount. In fact, the doctors hospital loan did not meet this 80 percent test, according to Nomura's own appraisal.
 

Acting Supreme Court Justice Melvin Schweitzer in Nomura Asset Capital Corporation and Asset Securitization Corporation v. Cadwalader Wickersham & Taft, 116147/2006, ruled on April 28 that Nomura's position in the LaSalle litigation did not bar it from bringing claims against Cadwalader, especially since its earlier arguments had failed. Perhaps most significantly, the judge ruled that Cadwalader's reliance on language in the Standard & Poor's manual did not create a defense for a motion to dismiss. The judge also ruled that even if Dechert was primarily responsible for assuring that the loan met the REMIC test, Cadwalader had not established that it did not have a duty to verify this fact."

Here is a case in which plaintiff's attorneys sued for $1 Million Dollars [this reminds one of Austin Powers] and eventually won a verdict in excess of $ 2 Million on a personal injury case.  The question is whether they were negligent in setting the ad damnun clause and whether the defense attorneys might be held in Judiciary Law 487 claims for failing to disclose excess insurance.

Ambra v Awad ;2009 NY Slip Op 03853 ; Decided on May 12, 2009; Appellate Division, Second Department tells us that plaintiff's attorney might be held in, but that notice problems to the carrier will rule out a series of causes of action, and will let the defense attorney out of the case.
 

"In his amended complaint against SA & M, the plaintiff alleges four causes of action: SA & M negligently and incorrectly told him that Makko lacked sufficient assets to pay the full jury verdict; SA & M should have moved to increase the ad damnum prior to trial, but negligently failed to do so, so the plaintiff was required "to settle his claim for less than fifty percent of the amount of the jury award;" SA & M's failure to file an appropriate motion to increase the ad damnum resulted in a one million dollar cap on the plaintiff's recovery and the loss of Makko's excess insurance coverage; and SA & M coerced him into accepting Makko's one million dollar settlement offer. SA & M then impleaded HFD & M, alleging that it violated Judiciary Law * 487 and fraudulently concealed from SA & M the fact that Makko had excess insurance coverage, and that SA & M was entitled to both indemnification and contribution.

Dismissal of the second cause of action, as well as the remaining portion of the third cause of action, was also warranted, albeit for reasons other than those articulated by the Supreme Court. The plaintiff cannot establish that Bellantone's failure to file a pretrial motion to increase the ad damnum amount resulted in a one million dollar cap on his recovery and forced him to settle with Makko under unfavorable terms. Due to a supplemental bill of particulars filed in October 2001, HFD & M was aware long before trial that the plaintiff's damages could far exceed the one million dollar amount in the ad damnum clause. Under the peculiar circumstances of this case, Makko would not have been prejudiced by a post-trial increase in the ad damnum amount, so SA & M's post-trial motion to increase the ad damnum amount would likely have been granted if the case had not settled before the motion could be decided (see Loomis v Civetta Corinno Constr. Corp., 54 NY2d 18, 23).

Although the court correctly noted that issues of fact exist as to what Feretic knew about the excess insurance policy and when he knew it, these issues are not relevant to the question of whether contribution is warranted. Nothing in the record suggests that HFD & M's actions caused or exacerbated in part the injuries alleged in the plaintiff's remaining causes of action (see Nassau Roofing & Sheet Metal Co. v Facilities Dev. Corp., 71 NY2d 599, 60

Broadway and Barry Manilow...it seemed destined for success, but lack of investors doomed the production of Harmony.  The case revolved around alleged wrong advice on the date of the second option payment, which plaintiff has argued could have been made with the correct date advice.

The option lapsed, an arbitration with Manilow and others ensued, and plaintiffs sued attorney Robert Barandes of Beckman, Lieberman & Barandes for malpractice. In Snorkel Prods., Inc. v Beckman Lieberman & Barandes, LLP ; 2009 NY Slip Op 03840  Decided on May 14, 2009
Appellate Division, First Department  we see that plaintiffs have salvaged [in the second act], a small part of the case, in which it is determined that although they cannot proceed on a theory of lost profits in the non-production, they may sue for the costs of arbitration, said by Tom Hyland of Wilson Elser, to be in the $ 200,000 range.
 

"The only loss proximately caused by defendants' negligent advice was plaintiff Snorkel's loss of its right to produce the play. While there is no nonspeculative basis for valuing [*2]that right, Snorkel may seek to recover as damages the expenses it incurred in connection with the arbitration commenced by Manilow and Appoggiatura to recover their rights. "
 

This morning's Law Journal revealed a pair of cases in which just about the same thing happened.  Attorneys acted badly, and the client suffers.  Clients depend on their attorneys, and can do just about nothing without the attorney acting as intermediary.  Clients, too, suffer when their attorney is punished by the court.

In Pacheco v Zenobio ;2009 NY Slip Op 50882(U) ; Decided on May 8, 2009 ;Supreme Court, Kings County ;Battaglia, J. we see that "In short, Plaintiffs' counsel persisted in frivolous motion practice after having been clearly and specifically warned by the Court that a further motion on the same grounds would be sanctionable.

Plaintiffs filed a Note of Issue and Certificate of Readiness on April 25, 2008. At that time, a significant amount of disclosure was outstanding, including the injured Plaintiff's medical examinations and all disclosure with respect to the third-party actions. While it appeared that some items of disclosure were completed after the filing of the Note of Issue, including the [*2]injured Plaintiff's medical examinations, it was undisputed that no disclosure had been conducted with respect to the third-party actions, and that defendant Michael Zenobio's examination before trial had not been held." 

After one losing motion to restore the case to the trial calendar, and then a second, the court wrote: "In the event that Plaintiffs file a disclosure motion without attaching a proper good-faith affirmation or prematurely file a motion involving disclosure, counsel may be subject to sanctions pursuant to 22 NYCRR 130-1.1 or costs pursuant to CPLR 8303(a)."

Perhaps needless to state, the Court's warnings were not heeded.

Plaintiffs again moved for an order "restoring the plaintiffs [sic] matter to the active trail [sic] calender [sic] by restoring the plaintiffs(s) [sic] Calender [sic] number." Incredibly, the motion was served on the same day as the compliance conference, February 13, 2009. The cross-motion for costs and sanctions followed. "  Plaintiff suffers sanctions and a long delay in the case.

In Jameson v. City of New York  1:07-01312 [subscription] we see worse.  As Mark Fass of the NYLJ reports: "A federal judge has thrown out a lawsuit against New York City filed by a man who was shot several times by his wife, a city police officer, with her city-issued gun.

Eastern District Judge Roslynn R. Mauskopf dismissed the case with prejudice, citing the failure of the plaintiff's attorney, Michael P. Mays, to comply with a series of court orders demanding his "meaningful participation" in the case.

Judge Mauskopf also ordered Mr. Mays to pay $1,000 in unpaid contempt fines that have accrued over the last month.  Plaintiff has had a bad few years already.

"In April 2006, the plaintiff, 43-year-old retired police officer Todd Jamison, was sitting in his parked Mercedes-Benz in East New York, Brooklyn, when his estranged wife, Officer Alison Jamison, pulled up along side him in a rental car, shot him several times, then sped to the next corner. She then made a u-turn, fired several more shots and sped off.

Ms. Jamison was arrested later that day when she returned the car to a rental agency at Newark International Airport.

Mr. Jamison survived the shooting, though he was hospitalized for several months. According to subsequent news reports, Ms. Jamison shot her husband in a pique of anger over his many affairs. The tabloids soon dubbed Mr. Jamison "Officer Romeo" and the "Casanova Cop."

Ms. Jamison was convicted of attempted murder and sentenced to up to seven years in prison."

Now, plaintiff's case is dismissed, and his attorney is unlikely to have a very good excuse.

Is this legal malpractice?



 

Henry Gottlieb at Law.Com reports this $10.6 million Legal Malpractice settlement between Buchanan Ingersoll and RCM Technologies over a stock registration agreement, today.  Here is the news article:

" A lawyer and two Philadelphia firms have agreed to pay $10.6 million to settle a claim that they botched work on a New Jersey company's stock transactions and failed to alert the company to the errors.

Buchanan Ingersoll & Rooney, the wind-down committee of defunct Clark, Ladner, Fortenbaugh & Young, and a former partner of both firms, Stephen Cohen, agreed to settlements of a malpractice complaint by computer and engineering consultant RCM Technologies of Pennsauken, N.J.

RCM accused Cohen of preparing a stock registration agreement that failed to memorialize a plan to restrict the rights of two key shareholders to sell their RCM holdings. That drafting, plus an alleged failure to alert RCM in time for remedial action, cost the company millions of dollars, according to the Morris County, N.J., suit.

How much the defendants paid was not included in stipulations of dismissal filed with the court. But RCM did disclose the sums in its March 27 annual report filed with the Securities and Exchange Commission.

A comparison of the dates of the stipulations of dismissal and the SEC filing shows that the Clark Lardner settlement in 2007 was worth $800,000 to RCM and that the company recovered $9.8 million -- $5.9 million after taxes -- in a March 16 settlement with Buchanan Ingersoll."

Real Estate sales and the plummeting economic scene have dominated the news cycles for months now.  Legal Malpractice litigation often follows economic disturbances, and this case, Walker v. Berman, 2009 NY Slip Op 50887(U) ; Decided on May 4, 2009 ; Supreme Court, New York County ; Stallman, J. is an example.  In this case plaintiff wanted to buy an apartment house, but got something different.
Unsophisticated buyer purchases a building at 151 West 76th Street, and relies on broker and attorney to guide buyer through what would turn out to be a difficult process.  In the end, buyer bought a "Class "B" Multiple Dwelling. Ex. G. A Class "B" Multiple Dwelling is a dwelling that is intended for use as the temporary abode of individuals and families; the classification includes hotels, lodging houses, rooming houses, boarding houses, boarding schools, furnished room houses, lodgings, club houses, colleges, and dwellings designated as private dwellings but occupied by one or two families with five or more transient boarders, roomers or lodgers in one household. Multiple Dwelling Law § 4. The Class "B" Multiple Dwelling designation also appears on the certificate of occupancy search ordered by plaintiff prior to agreeing to the purchase (Ex. N), and on the listing notice provided to plaintiff by defendant ."

Plaintiff sues attorney who defaults. [A quick look at the Lawyer's Diary shows no entry for this attorney.  A search of the OCA attorney directory shows that Ira L. Berman is disbarred.]  Plaintiff now tries to go after the broker, with negative results.

"After the contract was signed, but prior to closing, plaintiff informed Robin that there were some problems with the Certificate of Occupancy, and, allegedly, Robin advised plaintiff to confer with her attorney regarding the legal ramifications associated with the Certificate of Occupancy.

After the closing, plaintiff discovered that the Class "B" Multiple Dwelling classification is used for buildings operated as a Single Room Occupancy (SRO) dwelling, not a regular apartment building (i.e., a Class A multiple dwelling). Consequently, plaintiff asserts that she paid far more for the building that it is worth, believing it to be an apartment building, not an SRO. "

Result?  Plaintiff seems to lose all the way around.  Attorney defaults, has been disbarred, has no insurance defense, and broker is not liable.

Questions of attorney billing, expenses and disbursements often surface in the guise of a legal malpractice defense.  Did the attorneys over bill ?  Did they over-charge for expenses?  May a law firm use Lexis or WestLaw as a profit center?  For example, if the law firm is paying a flat fee for legal research, may it charge hourly legal research rates to the client [not the attorney's time...legal research fees]

Here is a case from California, which arose after a NY legal malpractice case.  From the National Law Journal:

"A California plaintiffs' attorney has filed a lawsuit against a New York-based law firm on a behalf of a former client of the firm for what she claims is a hidden but widespread practice within the legal profession: law firms secretly profiting off legal research fees by overcharging clients.

Consumer protection attorney Patricia Meyer filed a suit against New York's Chadbourne & Parke on March 2 for allegedly overcharging J. Virgil Waggoner, a Texas businessman, by several thousands of dollars for computerized legal research. His bill was roughly $20,000 for the research, she said, but it should have been closer to $5,000. Waggoner v. Chadbourne & Parke, No. BC408693 (Los Angeles Co., Calif., Super. Ct.).

She did not serve the firm until May 1 because, she said, she did not want to compromise other investigations alleging similar claims.

Meyer of San Diego's Patricia Meyer & Associates said that many similar lawsuits are in the pipeline, noting that she has amassed evidence that shows at least a dozen other law firms are overcharging clients for legal research, but not telling them.
 

According to Meyer, profiting off fees, such as computerized legal research fees, without the clients' knowledge violates rules of professional conduct set forth by both the California and American bar associations, which limit the recovery of legal fees. She said that law firms can charge clients more for services than what they actually cost — they just have to let the client know upfront. "
 

This case has been widely reported, and we covered it a month ago, too.  Here, from the Blog of Legal Times we read about the $ 72 million legal malpractice verdict based upon patent law.

"Yesterday, a federal jury in San Antonio slapped Akin Gump Strauss Hauer & Feld with a $72.6 million judgment for botching a patent application filed by a Texas-based company and an inventor.

Akin Gump had been hired in 1995 to handle a series of patent applications for Air Measurement Technologies, a company created by Louis Stumberg Jr. and his partner, James Fulton, who had invented an automatic “man down alarm” for firefighters and other emergency personnel. Stumberg currently lives in San Antonio, and Fulton died in 2001.

In their complaint, AMT, North-South Corp., which held a license on the invention, and Stumberg accused the firm of failing to disclose information to the U.S. Patent and Trademark Office. Plaintiffs also accused former Akin Gump partner Gary Hamilton, now a name partner at Hamilton & Terrile in Austin, of withholding information with the intent to deceive the PTO.

AMT and Stumberg initially sued six parties for infringement, and received settlements totaling $9 million. "

"In a statement, Akin Gump says, “A judgment has not yet been entered on the verdict against Akin Gump. However, if a judgment is entered, Akin Gump will appeal because the evidence does not support the jury's verdict.”

Two of the hardest causes of action to prove and prevail upon in legal malpractice are the "failure to appeal" claim and one under Judiciary Law 487.  Failure to appeal claims are difficult because one must not only prove that the attorneys could have and failed to file an appeal, but one must also prove [to a judge and not to a jury] that the appeal would have prevailed.  Judiciary Law 487 claims, although recently cited with approval by the Court of Appeals in Amalfitano v. Rosenberg, remain in general disfavor.  Here is a case which illustrates both: McCluskey v Gabor & Gabor ;
2009 NY Slip Op 02757 ;Decided on April 7, 2009 ;Appellate Division, Second Department .
 

"Here, the plaintiff alleged, inter alia, that the defendants committed malpractice by failing to take an appeal in the underlying age discrimination action from so much of an order as dismissed his causes of action alleging fraud. We find, however, that, inasmuch as the causes of action alleging fraud were properly dismissed (see Kaufman v Torkan, 51 AD3d 977, 980; Weitz v Smith, 231 AD2d 518), the plaintiff cannot establish that the defendants committed malpractice by failing to take an appeal from that order (see Suffolk Ave. Car Wash & Lube v Oberman, 256 AD2d 75; Saferstein v Klein, 250 AD2d 831). Consequently, the Supreme Court should have granted that branch of the defendants' cross motion which was for summary judgment dismissing so much of the complaint as alleged that they committed legal malpractice by virtue of their failure to take an appeal from the portion of the order in the underlying action dismissing the fraud causes of action.

The defendants' alleged misconduct, even if it were proven, did not rise to a violation of Judiciary Law § 487 that would warrant the imposition of treble damages (see Gelmin v Quicke, 224 AD2d 481, 483). Consequently, that branch of the plaintiff's cross motion which was for leave to amend the complaint to add causes of action alleging a violation of Judiciary Law § 487 was properly denied as patently devoid of merit (see Lucido v Mancuso, 49 AD3d 220, 226-227, lv granted AD3d, 2008 NY Slip Op 68750[U][2d Dept 2008]; Glorioso v DeBlasio, [*3]227 AD2d 588, 589). "

Originally dismissed in Supreme Court, this case was re-instated by the Appellate Division, First Department last week. Mortenson v Shea ;2009 NY Slip Op 03611 ;Decided on May 5, 2009
Appellate Division, First Department is a situation in which a New Jersey law firm was retained to sue a New York law firm for legal malpractice.
 

"This action was dismissed on the erroneous grounds that the New Jersey defendants were not and could not be retained to actually commence a legal malpractice action against an attorney in New York State, and that the limited services provided by defendant law firm in attempting to settle the underlying claim did not include a duty to advise plaintiff about the applicable New York statute of limitations. A legal malpractice claim may arise out of the giving of faulty advice to a client (see Scheller v Martabano, 177 AD2d 690 [1991]). Furthermore, an attorney may be liable for his ignorance of the rules of practice, his failure to comply with conditions precedent to suit, his neglect to prosecute an action, or his failure to conduct adequate legal research (see McCoy v Tepper, 261 AD2d 592 [1999]). "

This case took several readings to try and sort out the story.  Plaintiff in this legal malpractice case, Citrin v Baratta & Goldstein ;2009 NY Slip Op 03597 ;Decided on May 5, 2009 ;Appellate Division, First Department  was a defendant in the underlying action. There, "Following a five-day jury trial in a prior action alleging fraud and conspiracy against plaintiff Citrin and three codefendants, the jury reached a verdict in favor of the plaintiffs and awarded substantial compensatory and punitive damages. A motion by Citrin for judgment notwithstanding the verdict was denied by the trial judge, who noted in his memorandum decision that the verdict had been supported by the evidence and also rejected Citrin's other claims, including conflict of interest based on the fact that the same attorney had represented her and a codefendant."
 

Somehow, [through a money payment in settlement?] plaintiff then obtained a stipulation turning the verdict on its head.  "Citrin, through a successor counsel, then settled the matter pursuant to a stipulation, so-ordered by the trial judge, who vacated his prior order "as it pertains to any and all liability against Rita Citrin, directly and/or indirectly, in law and/or based on equitable claims, including all findings of fact supporting such liability."

Citrin then commenced the instant action against her trial attorneys for legal malpractice and breach of contract, alleging a conflict of interest in their representation of both her and a codefendant in the prior action."
 

So, plaintiff obtained a stipulation [sort of like an indulgence] which turned it all around, and allowed her to sue her attorneys.  Motion to dismiss denied.

In Byron Chem. Co., Inc. v.  Groman;  2009 NY Slip Op 03465 ;  Decided on April 28, 2009 ;  Appellate Division, Second Department  plaintiff employer sued its attorneys for an employee benefit provision which was drafted by attorney firm 1, which was then taken over by attorney firm 2.  At issue was whether the doctrine of continuous representation tolled the statute of limitations, and if it did, were the two law firms to be held in the case. The Second Department held that while the law firms continued to intermittently represent the employer, such was not sufficient to toll the statute of limitations.
 

"Contrary to the plaintiff's contention, the statute of limitations was not tolled by the continuous representation doctrine (see Dignelli v Berman, 293 AD2d 565; cf. Shumsky v Eisenstein, 96 NY2d at 168; see also Maurice W. Pomfrey & Assoc., Ltd. v Hancock & Estabrook, LLP, 50 AD3d 1531; Zaref v Berk & Michaels, P.C., 192 AD2d 346). The defendants' subsequent representation in matters unrelated to the specific matter that gave rise to the alleged malpractice was insufficient to toll the statute of limitations (see Dignelli v Berman, 293 AD2d at 565). Accepting the facts alleged in the plaintiff's complaint as true, there was a nine-year lapse between the defendants' representation as to the employment agreements. The continuous representation doctrine does not contemplate such intermittent representation (see Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 9; Shumsky v Eisenstein, 96 NY2d at 167-168; Loft Corp. v Porco, 283 AD2d 556). Accordingly, the Supreme Court correctly granted the defendants' motions to dismiss the complaint insofar as asserted against them as time-barred. "

From time to time we forget that Louisiana is a completely different environment.  Its laws are different, its emphasis is different, and even its terms are wholly different.  Here is an article from Hinshaw & Culbertson on the case of McGuire v. Mosley Rogers Title Co., L.L.C., 997 So.2d 23 (La. App. 2008) in which plaintiffs had to admit that they received a letter from their attorney following a closing of the sale of their house [in which they obtained a purchase money secutity interest] and didn't open the envelope for a year.

"Plaintiffs retained attorney Lance Mosley to help them with the sale of commercial real estate. The sale involved a mix of seller financing and a traditional loan. As a part of the deal, plaintiffs agreed to subordinate their mortgage to the lender’s mortgage. For protection, plaintiffs sought personal guarantees from the buyers and allegedly obtained Mosley’s assurance that he would secure such guarantees. After signing, plaintiffs received copies of the closing documents in the mail but did not even open the envelope, much less review the documents. Over one year later, when the buyers began to have trouble paying, plaintiffs discovered the absence of personal guarantees.

Plaintiffs then sued Mosley for legal malpractice for failure to obtain the personal guarantees. Mosley filed an exception based on prescription, or the statute of limitations. The trial court granted this exception and dismissed the case because the prescriptive period for legal malpractice is one year from when the malpractice should have been discovered. The trial court held that plaintiffs should have discovered the malpractice when they received the closing documents in the mail. Plaintiffs appealed.

Attorneys gnash their teeth when litigating against pro-se parties.  The thought is that the pro-se gets an advantage; they are not held to tight deadlines, are not the subject of rule-specific dismissal, nor are they required to hew to the line of traditional court procedure.

As an example, this pro-se plaintiff in  Kleinser v Astarita; 2009 NY Slip Op 03401; Decided on April 28, 2009; Appellate Division, First Department amended the complaint without leave of court, and then after the decision dismissing the complaint against the amendees, moved for leave to add them and succeeded.  Adding individual defendants to the caption when they were partners in the already named defendant law firm may or may not have collateral benefits to the pro-se.  In this case, law of the case was not an issue.
 

"The law of the case doctrine, however, is not implicated because the court did not alter a ruling by another court of coordinate jurisdiction but rather its own ruling (Wells Fargo Bank, N.A. v Zurich Am. Ins. Co., 59 AD3d 333 [2009]). "[E]very court retains continuing jurisdiction to reconsider its [own] prior interlocutory orders during the pendency of the action" (Liss v Trans Auto Sys., 68 NY2d 15, 20 [1986]), and may do so "regardless of statutory time limits concerning motions to reargue" (id.). Thus, even if plaintiff's motion for leave to add the four partners were a belated motion to reargue the prior order dismissing the action as against those partners for failure to state a cause of action, the court had discretion to [*2]reconsider its prior order, sua sponte, and correct it. Such discretion was properly exercised here in view of plaintiff's pro se status. "

The informal way some people go about hiring an attorney is well documented in a new case decided by Justice Ling-Cohan in Camone v. Levy, 2009 Slip Op 30843(U).  Here plaintiff trustee is of a generation skipping trust, and attorney is shown materials in order for him to tell plaintiff whether a federal estate tax return must be filed. 

Plaintiff and others met with an accountant and Levy, but did not retain Levy.  They were told that if the estate had to file a tax return there was a specific cutoff.  Plaintiffs never spoke directly with Levy again.  Plaintiff's claim is that he directed the accountant to hire Levy, but did not do so directly.  Plaintiff did not even follow up to see if Levy was actually retained.  Levy reviewed the trust documents, which did not include the current financial records and told the accountant that a tax return had to be filed by December 6.  On December 7, one day late, financial records were faxed to Levy.  He prepared a tax return and sent it to the accountant for signature.

Case was dismissed against Levy on the basis that he was never retained to act for plaintiff, and that he received materials only after the deadline.

Here, in an article from NY Lawyer is the shocking outcome of a huge London legal malpractice case.  Linklatters, on trial for $ 55 Million ends up paying $ 5 [actually 5 pounds] as a nominal verdict.  Queery: no motion for summary judgment?  In NY courts, we see such outcomes in pre-answer motions and in motions for summary judgment.

Fromthe article: "Linklaters has staved off paying out a $55 million negligence claim -- one of the largest made against a U.K. law firm in recent years -- having instead to pay out 5 pounds ($7.50) in nominal damages to telecom company Levicom.

In the judgment, handed down in the Royal Courts of Justice Tuesday, Mr Justice Andrew Smith ruled that, despite finding Linklaters' early advice to the claimant was expressed negligently, it did not bear any loss to the client and therefore awarded nominal damages of just 5 pounds.

On all other issues, Smith found Linklaters had not acted negligently.

In his judgment, Smith said: "I conclude that Linklaters' advice was negligent in some respects, but the negligence did not cause [the claimant] Levicom any loss. Linklaters were therefore in breach of contract, but are liable for only nominal damages of 5 pounds."

The judgment follows a five-week trial which started in January after an unsuccessful mediation at the end of last year, over claims Linklaters gave negligent advice to the Baltic telecom company. "

Is an attorney required to perform more work that set forth in a retainer agreement?  If the attorney does not perform more work, will the statute of limitations be tolled by the client's insanity?  These two questions are partially answered in Turner v Irving Finkelstein & Meirowitz, LLP ;2009 NY Slip Op 03158 ;Decided on April 21, 2009 ;Appellate Division, Second Department .
 "The plaintiff allegedly was assaulted by a coworker at his place of employment in 1997. The defendant law firm represented the plaintiff in the ensuing claim before the Workers' Compensation Board (hereinafter the Board). The claim was disallowed, the Board affirmed that decision, and full Board review was denied. No later than May 2002, the defendant informed the plaintiff that its representation was complete."

Plaintiff unsuccessfully appealed, and then years later, sued the attorneys.  "In November 2006, the plaintiff, pro se, commenced the instant action, alleging that after he was [*2]denied full Board review, the defendant failed to advise him of "any other legal remedies" relating to the workplace incident. The defendant moved to dismiss the complaint ....In opposition, the plaintiff asserted that he suffered from a mental illness for which he had been hospitalized several times and, thus, he was entitled to a tolling of the statute of limitations pursuant to CPLR 208. The Supreme Court rejected the plaintiff's claim because the medical records he relied on were not in admissible form.

Although the evidentiary facts alleged by the plaintiff reveal the existence of an issue of fact as to applicability of the insanity toll, we nevertheless affirm on other grounds. "
 

This story from Law.Com by Zusha Elinson tells of the aftermath of a $ 82 million Sony Patent case, with its reports of witness buying, false testimony and unreliable evidence.  From the Legal Malpractice perspective here is the nugget:

"Craig Thorner was the key witness in the Sony legal team's effort to overturn an $82 million patent infringement verdict in a case against Immersion Corp. over vibrating video game controllers. Sony claimed that Immersion paid Thorner to keep quiet about inventions of his that could have invalidated Immersion's patents.

But U.S. District Judge Claudia Wilken wouldn't retry the case, concluding in 2006 that Thorner was an unreliable witness and that there was strong evidence -- supported by testimony and internal Sony documents -- that Sony paid $150,000 for Thorner's testimony.

The patent fight between Silicon Valley's Immersion and Sony, and its salacious post-trial motions, were followed closely by local lawyers.

In a wide-ranging suit filed Tuesday in New Jersey District Court, Thorner accuses Sony's outside and in-house lawyers of snookering him into the $150,000 deal, which came in the form of convoluted agreement to license his patents. He also accuses Sony's outside counsel -- Gregory Gewirtz of New Jersey firm Lerner David Littenberg Krumholz & Mentlik -- of malpractice for allegedly acting as his lawyer in the deal, but for Sony's benefit.

The lawsuit claims that the lawyers "contrived to take advantage of Thorner's inexperience and lack of resources in order to (i) obtain a patent license from Thorner on extremely favorable terms, and (ii) induce Thorner to testify against Immersion."

Reached Thursday afternoon, Gewirtz denied the allegations.

"In my view, all the allegations against me and my firm are reckless and false and all, of course, denied," he said. "We will very vigorously defend against all the claims."

The way the deal at issue worked, according to the lawsuit, was this: Electro Source -- a video game company also being sued by Immersion -- would pay Thorner $150,000 to license his patents. The deal, however, was actually being funded by Sony, which in turn got a license from Electro Source according to the lawsuit and court hearing transcripts.

Thorner claims that Gewirtz agreed to be his lawyer in the negotiations with Electro Source, but was actually looking out for Sony's interest
 

California corporation retains New York law firm to process a trademark application, which fails.  California plaintiff sues New York defendant  for legal malpractice in Federal District Court, SDNY.  Case is dismissed on jurisdictional basis.  Case is later brought in State Court in New York.  Does California or New York statute of limitations apply?

In Kat House Productions v. Paul Hastings Janofsky & Walker, Justice York determines that California law applies, based upon CPLR 202.  The borrower statute's purpose is to prevent forum shopping between states and [as the Court of Appeals favors, have a "bright line rule".]

"CPLR 202 is designed "to prevent forum shopping by plaintiffs and to adhere to the generally accepted definition." Global Fin. Corp, v. Triarc Corp., 93 NY2d 525. 

"CPLR 202 is designed to add clarity to the law and provide the certainty of uniform application to litigants.  This goal is better served by a rule requiring the single determination of a plaintiff's residence than by a rule dependent on a litany of events relevant to the `center of gravity' of a contract dispute." Global  at 530.

Justice York then decided that since the "place where investors resided and sustained the economic impact of the loss" was the state for borrowing purposes, that the California one year statute of limitations applied.

When may the representation of a client  end, what work does an attorney have to do for a contingent fee client, and how do legal malpractice considerations filter in?  Those questions are answered, in this context, in Matter of Mill Creek Phase 1 , Supreme Court, Kings County, Gerges, J.  Must a law firm perform appellate tasks under a contingent fee arrangement with no further legal fees due it, and what happens if the law firm refuses to perform ?

There, "Non-party Goldstein, Goldstein, Rikon & Gottlieb, P.C. (the Firm) moves for an order awarding it legal fees and disbursements in accordance with the retainer agreement executed by claimants Joseph Vigliarolo and Frank J. Vigliarolo and the closing statement that it prepared. Claimants cross move for an order: (1) directing the Firm to turn over the entire disputed amount of $11,506.46, plus interest; (2) directing the Firm to pay the bill of costs awarded to the City of New York Law Department with respect to the NYCTL 1998-1 Trust appeal in the amount of $1,860; and (3) awarding sanctions in the amount of $2,500 pursuant to 22 NYCRR 130-1.1(a).
 

Claimants further allege that the Firm agreed to accept a contingency fee to represent them in this matter and that the retainer agreement provided that the fee included the cost of defending any appeal taken by the condemnor. Accordingly, claimants did not object to the Firm's decision to continue to litigate the issue of the amount of interest due on the lien because they did not believe that they were incurring any costs. Moreover, claimants contend that they would not have agreed to pay $11,500 to oppose the appeal, since the lien would have been reduced by only $8,000 if they had been successful. It is their opinion that the Firm chose to use the instant proceeding as a test case in an effort to establish that the interest rate applicable to a tax lien is 6 percent, and not the 18 percent claimed by the lienor. Further, since the additional interest that accrued was only $5,200, while the lien at the time of the commencement of the appeal was $7,000, the financial benefit of pursuing such an appeal was minimal.

Herein, the Firm's retainer agreement with claimants unquestionably provides that the contingency fee agreed to "shall include the defense of any appeal taken by the condemnor but does not include appeals taken by the client for which, if the attorneys agree to their retention for that purpose, additional compensation will be required." It is equally clear that the appeal at issue herein was taken by the City and defended by claimants. From this it follows that the Firm is not entitled to charge additional fees to defend the appeal...."

We're continuing to discuss the Howard S. Davis article in the New York Law Journal on April 17, 2009.  How does the written attorney retainer agreement relate to an attorney malpractice case?  Is the attorney responsible for handling an appeal, a wrongful death proceeding in Surrogate's Court, a supplemental trust?   Is a fee earned when there is a successful appeal after an adverse outcome?

Davis writes: "The leading case in New York on the interpretation of attorney retainer agreements is Shaw v. Manufacturers Hanover Trust, 68 N.Y.2d 172, 499 N.E.2d 864, 507 N.Y.S.2d 610 (Oct. 14, 1986). In Shaw, the plaintiff's attorney had a signed retainer agreement that provided for a contingent fee for prosecuting or settling a claim for personal injury, but was silent regarding appeals. After a trial and a defendant's verdict, the attorney sought litigation expenses for an appeal, which the plaintiff refused to advance. The attorney was replaced, and an appeal was taken, resulting in a reversal and remand for a new trial. On the retrial, the case was settled for $1.5 million, against which the original attorney sought to collect a fee.

The client objected to the fee application on two grounds: first, that the retainer had ended with the adverse verdict; second, that the attorney had breached the agreement by refusing to proceed with the appeal except on new terms. The New York State Court of Appeals agreed that both arguments were reasonable and denied the fee request.

The Court said, "The importance of an attorney's clear agreement with a client as to the essential terms of representation cannot be overstated. The client should be fully informed of all relevant facts and the basis of the fee charges, especially in contingent fee arrangements . . . an agreement between client and attorney [must] be construed most favorably for the client . . . . Had the client maintained that the retainer agreement required respondent's representation through conclusion of the matter . . . that would have been the mandated interpretation. But where, as here, the client has asserted that the contract terminated upon entry of an adverse judgment we hold that the agreement must be construed so to provide."

In Friedman v. Park Cake, 34 A.D.3d 286, 825 N.Y.S.2d 11 (1st Dept. 2006), the Appellate Division upheld Supreme Court's denial of an application by the plaintiff to deny counsel fees to his attorney after his personal injury case was settled with his consent for $90,000, because allegedly the attorney failed to inform the client of a medical lien that reduced his share of the recovery. The attorney had not only a signed retainer agreement but also a form titled "General Instructions to Our Clients," which discussed plaintiffs' responsibility for liens and said that liens would be deducted from any recovery. Accordingly, the court held that the attorney had not breached any identifiable duty to instruct the client about liens and was entitled to his entire fee.

From an attorney's standpoint, the lesson taught by these cases is that a contingent fee retainer agreement should contain clear language stating that the legal services to be provided in prosecuting or adjusting a personal injury claim does not include legal services relative to the negotiation or litigation of any Medicaid lien under Ahlborn. In fact, to be safe, the retainer should list all those legal services the attorney will not provide - appeals, settlement or litigation of liens, creation and administration of supplemental needs trusts or guardianships, Surrogate's Court proceedings, collection and enforcement of judgments, withdrawal of funds deposited pursuant to an Infant Compromise Order, etc. - limited only by the Appellate Division's rules."
 

A bankruptcy trustee "steps into the shoes of the debtor" and obtains certain benefits from this power.  In Kirschner v. Grant Thornton we see that there are limits to that power. As Mark Hamblett writes in today's NYLJ: "Southern District Judge Gerard E. Lynch ruled Tuesday that the case brought by liquidation trustee Marc S. Kirschner, who is standing in the shoes of Refco, must be dismissed because "a trustee cannot sue to recover for a wrong undertaken by the debtor itself."

In addition to Mayer Brown, the judge in Kirschner v. Grant Thornton, 07 Civ. 11604, also granted motions to dismiss sought by Credit Suisse Securities and other investment banks, Ernst & Young U.S. and other accounting firms, and several third-party participants."

"The Wagoner rule, the circuit explained, "derives from the fundamental principle of agency that the misconduct of managers within the scope of their employment will normally be imputed to the corporation."

Because the trustee stands in the corporation's shoes, the court said, the rule "bars a trustee from suing to recover for a wrong that he himself essentially took part in."

The parties in Kirschner disagreed on whether a narrow exception to the Wagoner rule applied. The "adverse-interest" exception applies where the corporate officer has "totally abandoned" the corporation's interests and is "acting entirely for his own or another's purposes."

Here, Judge Lynch said, "The complaint is saturated by allegations that Refco received substantial benefits from the insiders' alleged wrongdoing."

"Indeed, the gravamen of the trustee's allegation is not that the insiders stole assets from Refco, but rather that the insiders fraudulent scheme was to steal for Refco - to inflate the value of Refco's interests on behalf of Refco itself by maintaining the illusion that Refco was 'fast-growing, highly profitable, and able to satisfy its substantial working capital needs without having to borrow money,'" he said.

Judge Lynch dismissed as "industrious, but without" merit, the plaintiffs' argument that the adverse-interest exception applied in any event because the insiders intended to benefit only themselves.

The trustee alleged that, in connection with the leveraged buyout and the initial public offering, the executives had wasted or "siphoned out" Refco assets.

But Judge Lynch said the insiders did not commit embezzlement. Rather, he said, they sold their interests in Refco "at fraudulently-induced prices."
 

In Arkansas Department of Human Services v. Ahlborn, 547 U.S. 268, 126 S. Ct. 1752,  it was "held that from a $550,000 negotiated settlement in a case arising from a car accident, the Arkansas Medicaid authority could recover only $35,581.47 (about one-sixth) of the $215,645.30 it had paid for treatment of Heidi Ahlborn's injuries, because the $550,000 settlement represented only about one-sixth of the reasonable value of the claim. "
 

Author Howard S. Davis, [disclosure:  HSD was a mentor of NYAMB} writes in today's New York Law Journal on this issue:  how does Ahorn affect plaintiff's settlement proceeds, what must an attorney do after settling or winning a case, and how does a retainer agreement's construction affect the attorney's fees and obligations?

HSD writes: "The Ahlborn decision answered many questions concerning Medicaid liens in personal injury litigation. In the process, by implication, it overturned well-established New York law allowing local Medicaid authorities to collect Medicaid liens in full from settlements in personal injury lawsuits. (See Cricchio v. Pennisi, 90 N.Y.2d 296 [1997]; Gold v. United Health Services, 95 N.Y.2d 683 [2001]; see also Lugo v. Beth Israel Medical Center, 13 Misc. 3d 681, 819 N.Y.S.2d 892 [July 21, 2006]; Harris v. City of New York, 16 Misc. 3d 674, 837 N.Y.S.2d 486 [March 29, 2007]; Chambers v. Jain, 15 Misc. 3d 1120, 839 N.Y.S.2d 432 [April 13, 2007].)2 But Ahlborn did not answer the question whether plaintiffs in tort cases can compel their attorneys, for no additional fee, to negotiate the allocation of the recovery - and even, if necessary, compel them to initiate court proceedings to fix the allocation.

In other words, in New York, after Ahlborn, the question remained whether attorneys, either plaintiffs' personal injury attorneys or outside counsel, were entitled to a fee, in addition to the fee permitted by the Appellate Division rules for prosecuting and settling personal injury cases, for negotiating an Ahlborn allocation or getting a court to set one."
 

A recent case Carl v. Cohen, Supreme Court, New York County, Justice Edmead 2009 NY Slip OP 30806(U), April 15, 2009 illustrates two distinct principals. The first is privilege and at issue communications which we discussed on April 15.  The second principal  is relation-back and the statute of limitations.

The statute of limitations in legal malpractice is three years, pursuant to CPLR 214(6)  An action may be commenced against a newly to-be added defendant if that newly related defendant is so closely related to prior defendants that there is no due process violation.

"Plaintiff now seeks to avoid the expiration of the statute of limitations by asserting that his belated adding of Greenberg as a defendant "relates back" to the commencement of this action, before the statute of limitations had run. The test for determining whether a claim asserted against a new party relates back to the date upon which the claim was interposed against the original named defendants is set forth in the case of Buran v. Coupal (87 NY2d 173, 178 [1995]). This test requires that the following three conditions be met:

(1) both claims arise out of same conduct, transaction or occurrence, (2) the party to be joined is united in interest with the original named defendant (s) and, by reason of that relationship, can be charged with notice of the commencement of the action so that the party to be joined will not be prejudiced in maintaining his or her defense due to the delay and (3) the party to be joined knew or should have known that, but for a mistake by the plaintiff as to the identity of the proper parties, the action would have been brought against him or her as well

(Matter of 27th St. Block Assn. v. Dormitory Auth. of State of N.Y., 302 AD2d 155, 163-164 [1st Dept 2002]; Buran v. Coupal, 87 NY2d at 181). "The burden is on the plaintiff to establish the applicability of the doctrine once a defendant has demonstrated that the statute of limitations has expired" (Nani v. Gould, 39 AD3d 508, 509 [2d Dept 2007]).

Here, plaintiff has met its burden to establish the applicability of the relation-back doctrine as to the first two prongs of the three-prong relation-back test. The asserted claims against Greenberg as Cohen's employer at the time of the alleged malpractice accrued, arise out of the same conduct, transaction or occurrence, and the two parties are united in interest. It should be noted that Greenberg has not challenged plaintiff's position that the first two prongs of the test have been established.

However, plaintiff has failed to establish the third element of the relation-back test, as he has not demonstrated that, but for an excusable mistake as to Greenberg's identity, the action would have been brought against Greenberg as well. "When a plaintiff intentionally decides not to assert a claim against a party known to be potentially liable, there has been no mistake . . . the plaintiff should not be given a second opportunity to assert that claim after the limitations period has expired" (Buran v. Coupal, 87 NY2d at 181)."
 

One of the more interesting memes in legal malpractice is the inevitable turnabout that is played out by the target attorney.  Once the advocate for plaintiff, the target attorney immediately turns around to show the holes in, and deficiencies of plaintiff's position.  The attorney, chameleonlike, turns into plaintiff's earlier opponent; at least the target attorney takes on their coloration.

As an example, Maiolini v McAdams & Fallon, P.C.   2009 NY Slip Op 02755   Decided on April 7,  2009    Appellate Division, Second Department  is instructive.  Plaintiff suffered from TMJ and filed, successfully, for short-term disability insurance payments.  Insurer then denied long term payments, and plaintiff had an opportunity to appeal.  No appeal was undertaken by the retainer [target] attorney.  Was there malpractice in failing to file the appeal?
 

The Appellate Division said no.  "The defendant established its entitlement to judgment as a matter of law by demonstrating that the plaintiff would not have succeeded on a second administrative appeal, even if one had been timely filed (see Alvarez v Prospect Hosp., 68 NY2d 320; Campbell v Tamsen, 37 AD3d 636, 636-637; Flinn v Aab, 167 AD2d 507). In opposition, the plaintiff failed to raise a triable issue of fact (see Teodorescu v Resnick & Binder, P.C., 55 AD3d at 721-722; Campbell v Tamsen, 37 AD3d at 637). Accordingly, the Supreme Court should have awarded summary judgment to the defendant dismissing the legal malpractice cause of action. "  Our bet is that the target attorney simply used the insurance companies medical report, and that plaintiff did not have a better report to show.  It's just a bet, though,  The decision does not describe the actual papers before it.

A recent case Carl v. Cohen, Supreme Court, New York County, Justice Edmead 2009 NY Slip OP 30806(U), April 15, 2009 illustrates two distinct principals. The first is privilege and at issue communications.  The second principal, to be discussed on Friday, is relation-back and the statute of limitations.

Plaintiff in this case was an employee at a mutual fund operation, and was embroiled in a market timing case in which it was alleged that someone was utilizing the time-zone differences between the east coast and California to make money in the mutual funds market.  He hired law firm 1, then fired it, and went on to law firm 2 and 3.  This case discusses the question of whether target attorney in the legal malpractice case may obtain otherwise privileged materials from the successor attorneys.

"The issue at bar in this case is whether Cohen may depose plaintiff's successor attorneys about the contents of and subject matter of these documents, as well as other communications "A waiver may also be found where the client places the subject matter of the privileged communication at issue, or where invasion of the privilege is required to determine the validity of the client's claim or defense and application of the privilege would deprive the adversary of vital information [internal citations omitted] (Jakobleff v. Cerrato, Sweeney & Cohn, 97 AD2d 834, 835 [2d Dept 1983] [plaintiff did not place her privileged communications with her present attorney at issue, nor was discovery of such communications required to enable defendants to assert a defense merely by bringing an action against her former attorney for legal malpractice]; Credit Suisse First Boston v. Ultrecht-American Fin. Co., 27 AD3d 253, 254 [1st Dept 2007]; Raphael v. Clune White & Nelson, 146 AD2d 762, 763 [2d Dept 1989] [attorney-client privilege between client and attorneys who had taken over case from law firm was not waived by client's initiating lawsuit. In addition, appellants failed to establish why the disclosure of privileged correspondence was vital to their defense in light of the broad range of materials already supplied by plaintiff]).

However, "that a privileged communication contains information relevant to issues the parties are litigating does not, without more, place the contents of the privileged communication at issue in the lawsuit; if that were the case, a privilege would have little effect [internal quotation marks omitted]" (Deutsche Bank Trust Co. Of Americas v. Tri-Links Inv. Trust, 43 AD3d 56, 64 [1st Dept 2007]; Veras Investment Partners, LLC v. Akin Gump Strauss Hauer & Feld LLP, 52 AD3d 370, 374 [1st Dept 2008] [Court found that it was error for the JHO to have found a waiver on the basis of relevance alone]). Thus, there is no "at issue" waiver where the party asserting privilege "does not need the privileged documents to sustain its cause of action" (Manufacturers & Traders Trust Co. v. Servotronics, Inc., 132 AD2d 392, 397 [4th Dept 1987]; (Deutsche Bank Trust Co. Of Americas v. Tri-Links Investment Trust, 43 AD3d at 64 [at issue waiver occurs when a claim or defense has been asserted by a party that he intends to prove by use of the privileged materials]).

Plaintiff asserts that the testimony of his successor attorneys is not discoverable in this case, as it cannot be said that plaintiff placed his privileged communications with his successor attorneys at issue, or that discovery of these communications is required to enable defendants to assert a defense (see Jakobleff v. Cerrato, Sweeney & Cohn, 97 AD2d at 834). Specifically, plaintiff asserts that, as he did not begin consulting with his successor attorneys until after his termination on November 14, 2003, and, as plaintiff's successor attorneys did not simultaneously counsel him with Cohen in any post-termination matters, there is no possibility that his successor attorneys have any information that Cohen requires in order to defend plaintiff's claims that Cohen had impermissible and undisclosed conflicts of interest, or that he failed to act in plaintiff's best interests regarding Alliance's defamatory U-5 form and subsequent misleading press releases. In addition, plaintiff notes that he concedes and will stipulate that his successor attorneys have not initiated a "whistleblower" cause of action on his behalf.
 

However, Cohen does not need further discovery of plaintiff's successor attorneys to determine whether or not these actions were timely taken, as these facts are plain on their face. Thus, plaintiff is entitled to a protective order denying defendant Cohen's third-party subpoena ad testificandum on his successor attorneys."

A NYC fact pattern in legal malpractice:  Plaintiff, a MD wishes to buy a co-op for use as a physician's office.  She finds a prior doctor's office and hires attorney and engineering company to do the deal. Plaintiff buys the unit only to find out that the certificate of occupancy is for residential use and not for professional space.  Quandary is how to fix. 

Plaintiff spends a considerable sum of money and succeeds.  She sues attorney , who then third-party the owner's corporation and engineer.  Result?

In Stackpole v. Cohen Ehrlich & Frankel, LLP  we see Justice Madden's decision, which permits a contribution and indemnity claim against the engineer but not the owner's corporation.  The complaint against the attorneys failed to advise her of the contents of the certificate of occupancy, failed to include in the contract of sale a provision that seller represented and warranted that the apartment could be used as a doctor's office, or for a cure provision, failed to advise plaintiff of Local Law 58 [a disability act], and that plaintiff had to spend hundreds of thousands of dollars to fix the situation.

The attorneys started a third party action against many parties, including the lender, the building corporation and the architectural and engineering service company.  In the end, the action against the bank was discontinued, and Justice Madden dismissed the action against the Owner's corporation.  Attorneys did not have a contribution or indemnity case against the Owner's corporation.  Pending discovery, the action against the engineer remains viable.

This recent appellate case McCluskey v Gabor & Gabor,  2009 NY Slip Op 02757 Decided on April 7, 2009 Appellate Division, Second Department illustrates the difference between malpractice at the trial level and at the appellate level. 
 

At the trial level one must prove the usual :"a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession' and that the attorney's breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442, quoting McCoy v Feinman, 99 NY2d 295, 301-302; see Noone v Stieglitz, 59 AD3d 505)."

However, at the appellate level [i.e.]  a claim that the attorneys failed to file an appeal, one must prove "that, had the attorney perfected that appeal, the appeal would have been successful, the cause of action would have been reinstated, and the plaintiff would have prevailed on that cause of action in the underlying action (see Suffolk Ave. Car Wash & Lube v Oberman, 256 AD2d 75; Saferstein v Klein, 250 AD2d 831). "

In McClusky the court dismissed legal malpractice claims: "Here, the plaintiff alleged, inter alia, that the defendants committed malpractice by failing to take an appeal in the underlying age discrimination action from so much of an order as dismissed his causes of action alleging fraud. We find, however, that, inasmuch as the causes of action alleging fraud were properly dismissed (see Kaufman v Torkan, 51 AD3d 977, 980; Weitz v Smith, 231 AD2d 518), the plaintiff cannot establish that the defendants committed malpractice by failing to take an appeal from that order (see Suffolk Ave. Car Wash & Lube v Oberman, 256 AD2d 75; Saferstein v Klein, 250 AD2d 831). "

From theLaw Profession Blog we report on this Arizona Disciplinary Case in which the exitence of attorney malpractice insurance was published.  The attorney was disciplined as we see in the order.

"An Arizona hearing officer has recommended the disbarment of an attorney for misconduct in several matters. The lawyer was no stranger to the bar discipline system. He had been the subject of two informal reprimands, censure with probation, and had been suspended in Decemeber 2008. Here, among other things, he responded to a lawsuit against him that alleged legal malpractice by falsely claiming that he had insurance coverage.

The hearing officer found that he had "violated his duty to the legal system by not being honest about his lack of legal malpractice insurance and by delaying the litigation....[t]he most serious misconduct involves the Respondent making false statements to the court." He also had failed to maintain accurate trust account records, refused to provide medical records authorizations to opposing counsel leading to the dismissal of a client's case, and obstructed court proceedings. (Mike Frisch
 

Cruise Ship Season comes and goes, and even in poor economic times, the ships carry many people to their vacations.  As in all events human, there will be accidents and injury.  The very nature of cruise ships, their location and the mere fact that they travel on water, complicates the legal horizon.  Nautical law is different from terrestrial law, and many times [for legal advantage] the ships themselves are registered in other countries.

All this leads to mistakes when a passenger is physically injured.  Whom does one sue, the travel agent or the cruise ship line?  Where does one sue?  How does one effect service of process?  These are just some of the smaller questions.  How do you line up the witnesses, now back in their many different homes?  How do you get the medical testimony, which was taken far, far away?

Here is a legal malpractice case from such an occurrence.  Engler v Kalmanowitz ;2009 NY Slip Op 02237   Decided on March 24, 2009   Appellate Division, First Department .  Here, the legal malpractice claim is not set forth.  Was it service of process?  Was it failure to bring the action in a timely fashion?  We do not know.  What we do know is that Supreme Court determined that there were questions of fact still existing and that the Appellate Division found, as a matter of law, that the cruise ship, who was not a party to the legal malpractice action, had no notice of the defective carpet.
 

Nature abhors a vacuum, they told us in high school and the law abhors a wrong without a remedy. One particular area of legal malpractice where this occurs is criminal defense, in which no legal malpractice action might be brought by a convicted defendant, no matter whether the attorney's mistakes contributed, or caused the conviction.

Another area is the estates-peri-death area.  One example is the will beneficiary who does not receive a legacy or bequest because of attorney mistakes, but has no privity.  The attorney's mistake may not be litigated by the will beneficiary.  Here is another example:

Estate of Saul Schneider v Finmann ;  2009 NY Slip Op 02319   Decided on March 24, 2009
Appellate Division, Second Department .  Assume here for this example that the attorney mishandled the insurance transfer.  Money is lost to the estate because of it.  May the estate successfully sue?  No.
""The well-established rule in New York with respect to attorney malpractice is that absent fraud, collusion, malicious acts or other special circumstances, an attorney is not liable to third [*2]parties, not in privity, for harm caused by professional negligence" (Estate of Spivey v Pulley, 138 AD2d 563, 564). Inasmuch as the estate was not in privity with Finmann, and there is no allegation that one of the exceptions to the privity requirement is applicable here, the estate may not maintain an action for legal malpractice against Finmann in its own right (see Deeb v Johnson, 170 AD2d 865; cf. Estate of Nevelson v Carro, Spanbock, Kaster & Cuiffo, 259 AD2d 282, 285). Moreover, Schneider himself did not have a claim during his lifetime against Finmann for legal malpractice, since the only alleged damage suffered from the malpractice was the increase in estate tax liability, which could not have been incurred while Schneider was alive. Consequently, the estate may not maintain this action under EPTL 11-3.2(b) (see EPTL 11-3.2[b]; Deeb v Johnson, 170 AD2d at 866; Rutter v Jones, Blechman, Woltz & Kelly, P.C., 264 Va 310, 314; cf. Nembach v Giaimo & Vreeburg, 209 AD2d 222, 222-223). "
 

"The best defense is a strong offense"..."Tyranny shall not go unopposed!"  which of these two opposing story lines will succeed in a legal fee / legal malpractice case.  Here is one example where the fee side wins out.    Duane Morris LLP v Astor Holdings Inc. ,  2009 NY Slip Op 02544
Decided on April 2, 2009   Appellate Division, First Department  permits the attorneys to collect their fee, and the malpractice claims to die. 
 

"The record shows that in December 2003, each defendant signed an agreement with plaintiff, acknowledging that it owed plaintiff a certain sum of money for their legal representation and agreeing to pay it within a certain amount of time. Although defendants contend that there is a triable issue of fact as to whether these agreements were signed under duress, "[r]epudiation of an agreement on the ground that it was procured by duress requires a showing of both (1) a wrongful threat, and (2) the preclusion of the exercise of free will" (Fred Ehrlich, P.C. v Tullo, 274 AD2d 303, 304 [2000]).  The affidavit of defendants' principal, which claimed that he orally protested plaintiff's services, does not serve to defeat plaintiff's motion. A client's "self-serving, bald allegations of oral protests [a]re insufficient to raise a triable issue of fact as to the existence of an account stated" (Darby & Darby v VSI Intl., 95 NY2d 308, 315 [2000])

The part of defendants' malpractice counterclaim that dealt with the action against Edward Roski III was properly dismissed. "A legal malpractice action is unlikely to succeed when the attorney erred because an issue of law was unsettled or debatable" (Darby, 95 NY2d at 315 [internal quotation marks and citation omitted]). When the Southern District of New York found that some of Astor's claims in the Roski Action were barred, it noted that "there appears to be no federal authority directly on point" (Astor Holdings, Inc. v Roski, 325 F Supp 2d 251, 262 [SD NY 2003]), and relied on a California state case that was decided in 2002 (see id.), which was after the Roski action was filed...."

Taking over a pro-se case can be dangerous, as an attorney in NJ has recently found out.  In this story from Law.com recounts the attorney took over after a pro-se college professor started a employment discrimination law suit:

"A lawyer who prevailed in a Title VII suit three years ago has been engaged since then in an unusual fee fight: against her own client, who says his pro se work entitles him to keep the fees awarded.

Worse for the lawyer, Antonia Kousoulas, the client is asserting his right to the $144,462 in fees and interest -- now sitting in a court registry -- through a malpractice counterclaim that a federal judge on Monday refused to throw out.

The underlying suit, Kant v. Seton Hall University, 00-Civ.-5204, was filed pro se in October 2000 by Chander Kant, a tenured assistant professor of economics at Seton Hall University's Stillman School of Business. Kousoulas, who heads an eponymous New York firm, entered her appearance as Kant's lawyer the following March.

Kant, born in India, claimed national-origin discrimination in the school's failure on three occasions to promote him to full professor. He also alleged he was denied promotion in retaliation for complaining of discrimination. The discrimination claim was dismissed on summary judgment."

Judiciary Law sec. 487 is perhaps our oldest statute, certainly the oldest statute in existence concerning legal malpractice.  Recently the Court of Appeals decided Amalfitano v. Rosenberg.  Now we are seeing a resurgence of interest, and in this particular case a court reconsidering its earlier decision to dismiss a Judiciary Law 487 case based upon the Court of Appeals Decision.  Amalfitano has two very important holdings: 

    a.  Plaintiff did not have to bring the 487 claim in the underlying action;

    b.  Attorney fees paid to combat the deceit are sufficient damages for a 487 claim.

In  Dupree v Voorhees , 2009 NY Slip Op 29121   Decided on March 23, 2009   Supreme Court, Suffolk County Palmieri, J. Here Supreme Court reconsidered its earlier decision:

"However, the Court's analysis of the Judiciary Law cause of action was based not on the merits of the facts alleged in support of such a claim, but rather on Appellate Division cases decided before the recent Court of Appeals determination in Amalfitano v Rosenberg, supra. A reading of that case indicates that, contrary to what this Court concluded in the May 1 decision, it should not be fatal to a plaintiff that the misrepresentation(s) upon which the Judiciary Law claim is based became known during the course of the underlying litigation, and that attorneys' fees alone may be considered damages proximately caused by the wrongful conduct.

Therefore, reading the plaintiff's complaint and submissions in the present action favorably to the plaintiff, as it must on a motion to dismiss (Guggenheimer v Ginzbrug, supra), it is apparent that the plaintiff here is not attempting to collaterally attack a judgment in a concluded action. As limited by this Court's determination regarding the absence of any other potential damages, the plaintiff here is seeking to recover the additional legal fees made necessary in her matrimonial action because of the alleged misrepresentation by Villar. "

The Court of Appeals decided an interesting attorney fee sharing case today, in which the successful attorneys called their referring attorneys "unethical" and then promptly lost the case.  Samuel v Druckman & Sinel, LLP   2009 NY Slip Op 02447   Decided on March 31, 2009
Court of Appeals   Pigott, J. determined the following problem.  Attorney A refers a medical malpractice case to Attorney B.  Client agrees to fee and responsibility sharing in writing.  Attorney B later brings in Attorney C to help.  Med mal case is settled and Attorney A is paid his 1/3.  Attorney
B and C ask the court, successfully, for enhanced fees, and get them.  Attorney A asks for his 1/3 and is rebuffed.

"Moreover, contrary to the holding of the Appellate Division, it is of no moment that Sinel did not contribute to that part of the work that resulted in the award of the enhanced fee. In the realm of fee-sharing disputes, "courts will not inquire into the precise worth of the services performed by the parties" (Benjamin v Koeppel, 85 NY2d 549, 556 [1995]). DR 2-107 also makes clear that, regardless of any division of services, where "by a writing given to the client, each lawyer assumes joint responsibility for the representation", attorneys are free to negotiate such division of fees as they deem appropriate (Code of Professional Responsibility DR 2-107 [a] [2] [22 NYCRR 1200.12 [a] [2]; see Lynn v Purcell, 40 AD3d 729, 730-731 [2d Dept 2007]; see also Simon's New York Code of Professional Responsibility Annotated at 439 [2008]). Further, Samuel, who is bound by the same Code of Professional Responsibility as Sinel, cannot be heard to argue that the fee-sharing agreement and the obligations thereunder must be voided on ethical grounds, when he freely agreed to be bound by and received the benefit of the same agreement, particularly where, as here, there is no indication that the client was in any way deceived or misled (see Benjamin, 85 NY2d at 556).

Based on the foregoing, Sinel is entitled to one-third of the entire legal fee of $1.9 million, with interest from June 10, 2005, the date of the entry of the compromise order, the "earliest ascertainable date" the claim existed ..."
 

Among the many weapons a court has is the rarely used injunction against future case filings.  After all, it's a citizen's right to sue.  One of our favorite New Yorker cartoons is the young child asking her mom when she will be old enough to sue someone.  Plaintiff in this case won't be suing anyone until Justice James gives permission. 

In Capogrosso v. Kansas ;2009 NY Slip Op 01916 ; Decided on March 19, 2009 ; Appellate Division, First Department  we see plaintiff's case dismissed on statute of limitations grounds.  Plaintiff is herself an attorney.  The Appellate Division agreed that prior approval was necessary in the future.
 

"Judgment, Supreme Court, New York County (Debra A. James, J.), entered July 24, 2007, in an action for legal malpractice, dismissing the complaint pursuant to an order, which, inter alia, granted defendant's motion to dismiss the complaint and enjoined plaintiff from initiating any further litigation without prior approval of the administrative judge of the court in which she seeks to bring a further motion or future action, unanimously affirmed, with costs.

Plaintiff's action for legal malpractice is barred by the statute of limitations, which began to run no later than the day the order dismissing her underlying medical malpractice action was entered (see McCoy v Feinman, 99 NY2d 295, 298 [2002]). The injunction barring plaintiff from initiating further litigation without prior court approval was justified in light of the evidence of plaintiff's repeated abuse of the judicial process
and her penchant for vexatious conduct (Sassower v Signorelli, 99 AD2d 358 [1984]).

In this particular case, it is possible to read through the entire Appellate decision and not even know what was alleged against the attorneys.  Rather, on summary judgment, the court determines that plaintiff could not have won against the insurer, hence, legal malpractice case is dismissed.  Unlike other types of cases, the fight is usually on the "case within a case" or on a more basic issue such as statute of limitations.  In this case, Schorsch v. Moses Singer, 2009 NY Slip Op 02293 ,Decided on March 26, 2009 , Appellate Division, First Department  we see:
 

"The court properly found that Margaret Schorsch's affidavit failed to create an issue of material fact as to whether her brother David was responsible for the 1995 inventory loss, or whether he was an "authorized representative" of M.R.S. Antiques so as to defeat coverage under the "dishonest acts" exclusion in the policy. Her affidavit contradicts detailed statements she previously made under oath in a 1995 case she brought against David wherein she alleged that he, as an integral member of the family business, had stolen company inventory and was thus responsible for the loss. This contradiction negated the authority of her affidavit as a basis for defeating defendant's motion for summary judgment (see Sugarman v Malone, 48 AD3d 281 [2008]).

Plaintiffs' assertion that the insurance policy did not contain an exclusion for dishonest acts is contrary to the record evidence. It is true that the insurer's counsel, in the February 14, 1997 letter denying coverage, mistakenly cited to a different policy it had issued to M.R.S. Antiques. However, the slight differences between the language of the Fine Arts Coverage dishonest acts exclusion and the one incorrectly cited by counsel in the letter do not affect the [*2]material terms of the applicable exclusion. The basic scope is the same: coverage is excluded for dishonest acts by "you" or the insured's "employees" or "authorized representatives" or "anyone entrusted with the property." Since the inventory loss was caused by the dishonest acts of David, who qualified as an authorized representative of M.R.S. Antiques or a person otherwise entrusted with the missing property, coverage was properly denied. "

Law.Com reprints an interesting article from the Texas Lawyer on the relationship between the economy and legal malpractice litigation.  One theory is that plaintiffs are more in need of recovery, and will either bring more legal malpractice law suits, or are willing to sue over smaller sums.  A second theory is that the economic downturn causes attorneys to take on too much work, which will in any economy create more mistakes, hence later legal malpractice litigation.

From the article; "Economic downturns often increase the risk that lawyers will face unhappy clients complaining of legal malpractice. While some lawyers may think they have nothing to fear since their practices do not involve areas of law many blame for the economic collapse, such a belief is unfounded. Some legal malpractice risks are not tied to any one specialized practice area but simply become more common when the economy goes bad.

Trouble sometimes arises because scenarios lawyers did not consider occur, or difficult economic circumstances test tough-to-draft language. Similarly, insignificant conflicts of interest -- either between the lawyer and the client or between clients in multiple representation situations -- take on heightened importance as clients face difficult financial circumstances.

Clients, desperate to stay afloat, may be more inclined to sue their lawyers, taking a chance that malpractice litigation will solve their financial problems. Lawyers, too, are more likely to sue clients for fees in a recession. Since legal malpractice is a mandatory counterclaim to a suit for fees, clients often elect to pursue a legal malpractice counterclaim rather than lose their opportunity to do so.

Some legal malpractice issues are simply an inevitable outcome of activity occurring more frequently in a bad economy. A spike in the number of foreclosures often means more people are unhappy with related legal services. People often sue lawyers who act as trustees in foreclosures, alleging failure to conduct the sale in a proper manner, though the more likely scenario is a suit to enjoin foreclosure."

As collection activities rise, more people will seek relief under the Fair Debt Collection Practices Act. Various state and federal fair debt collection practices laws may apply to lawyers involved in collection activities, including foreclosures and collection litigation, so all such lawyers should understand and abide by these laws' requirements if there is any doubt as to their application.

Lawyers, regardless of specialty, are more likely to have to consider the application of bankruptcy law and related issues applicable to insolvent adversaries in a tough economy. Failure to warn a client of the potential application of voidable preferences easily can trip up attorneys. Lawyers are sometimes sued for failing to make sure that a bankruptcy trustee completes the actions necessary for clients not in bankruptcy to consummate deals with debtors. Any time a lawyer is dealing with an adversary in bankruptcy, understanding the bankruptcy angles is critical.

We do not have firm statistics in this area, but from a general overview of litigation it seems to us that a higher percentage of legal malpractice cases are subject to motions to dismiss under CPLR 3211(a)(1) than are other types of cases.  We have thought about why this might be.  A benign explanation is that since there is always a "case within a case", there is a greater source of dispositive documents which might early derail a case.  A less benign explanation is that the defense bar realizes that the bench does not hold legal malpractice cases in high regard [laws written to legislate behavior of attorneys by attorneys, judged by attorneys], or that plaintiff's bar is a largely disparate group of practitioners.

In any event, this is a recent case from the Fourth Department on the issue: Younis v Martin
2009 NY Slip Op 02118 ;Decided on March 20, 2009 ; Appellate Division, Fourth Department.
 

"In determining such a motion, "[t]he facts pleaded are to be presumed to be true and are to be accorded every favorable inference, although . . . factual claims flatly contradicted by the record are not entitled to any such consideration" (Gershon v Goldberg, 30 AD3d 372, 373; see Parola, Gross & Marino, P.C. v Susskind, 43 AD3d 1020, 1021-1022). Although we agree with defendant that some factual claims by plaintiff in the complaint were contradicted by evidentiary material that he appended to the complaint, the record establishes that the court's decision to deny the motion was not predicated upon those factual claims. "
 

In the high flown world of patent infringement, large legal fees are the norm.  Here, from law.Com we see the story of $ 10 million in legal fees, all spent in a fruitless effort to enforce a patent infringement case against Palm.  In the end, plaintiff paid its attorney $ 7 million plus in fees, and paid the opposing attorney $ 2.6 million and all for naught.

"E-Pass Technologies is trying to recover millions it paid to Moses & Singer and Squire, Sanders & Dempsey in an ill-fated patent infringement suit by going after the two firms with a negligent misrepresentation lawsuit.

E-Pass originally sued Palm Inc. and others in the Northern District of California in 2000. But U.S. District Judge D. Lowell Jensen dismissed the litigation in 2006, found the German patent holding company had committed litigation misconduct, and awarded attorney fees to the defendants.

"In advising E-Pass to file and maintain their patent infringement claim, they spent $10 million in legal fees and costs without a sound basis to make the elemental case of patent infringement," said James Rosen of Rosen Saba, which filed the suit for E-Pass against its former lawyers at Moses & Singer and Squire Sanders.

The suit against the law firms (.pdf) was filed in San Francisco Superior Court in January, but Rosen Saba didn't serve it then because it was waiting for a decision on E-Pass' appeal of the underlying case, Rosen said. On Friday the U.S. Circuit Court of Federal Appeals affirmed Jensen's decision, and Rosen said the law firms will now be served.

The suit names E-Pass' primary trial counsel, Moses & Singer, and a partner at the New York firm, Stephen Weiss. It also targets Squire Sanders and San Francisco partner Mark Dosker.  "
 

We reported on this case last week; it's an example of big law legal malpractice.  The general view of legal malpractice limits its reach to small cases involving personal injury and blown statutes of limitation.  However, cases such as this one are huge.

From Law.Com and the Blog of Legal Times: "A team of lawyers representing Hogan & Hartson has filed a motion to dismiss a suit that alleges the firm committed legal malpractice, breach of contract and breach of fiduciary duty.

Prestige Brands Inc. sued the Washington, D.C., law firm, claiming lawyers at Hogan used attorney-client communication to help a competitor bring a product to the market quicker than it could have without Hogan's representation. Prestige and the competitor, DenTek Oral Care Inc., are both the makers of an over-the-counter mouth guard designed to prevent people from grinding their teeth while they sleep.

The motion to dismiss, which was filed by Zuckerman Spaeder in D.C., Superior Court Friday afternoon, claims that Prestige did not plead sufficient facts to establish Hogan was guilty of a conflict of interest and a breach of duty. The motion states that Prestige "does not allege facts to establish that the alleged conflict or possession of confidential information proximately caused a reduction in Prestige's market share."

The motion also says that Prestige did not plead any facts against the two lawyers named in the suit, Hogan partner Howard Holstein and former Hogan partner Jeffrey Shapiro, that would show either lawyer committed malpractice or a breach of fiduciary duty. (Shapiro is now a partner with Hyman, Phelps & McNamara.)

The motion also states that the court should dismiss Prestige's request for punitive damages because the company does not allege Hogan acted with "malicious intent." "

The principal that attorneys may not be held in legal malpractice over questions of judgment, strategies at trial and the like is given especial prominence in this case.  Client is found liable for $ 7 Million in patent infringement and $20 million in punitives, for "especially reprehensible " behavior.  On appeal, attorneys succeed in reducing liability to $ 520.00, a stunning victory.  They did not appeal the punitive award of $ 20 million.  On remand the district court whittled the punitives way down , but the appellate court determined that they would stay at $20 million.  From Law.Com:

"A federal appeals court ruled Thursday that a major Washington law firm did not commit malpractice when it represented a client found liable for $20 million in punitive damages — and just $520 in actual damages.

The District of Columbia Court of Appeals determined that Finnegan, Henderson, Farabow, Garrett & Dunner's decision not to initially appeal the punitive damages award was a reasonable, tactical litigation strategy involving an unsettled point of law.

As a result, the appeals court affirmed a lower court's grant of summary judgment to the 350-attorney intellectual property law firm.

The three-judge panel's decision stems from an underlying patent infringement and fraud lawsuit against Biomet Inc. involving the company's manufacture of orthopedic devices. Following a 1996 jury verdict, a trial court found Biomet liable for $7.1 million in compensatory damages and $20 million in punitive damages. After the trial, Biomet hired Finnegan Henderson to handle post-trial motions and the appeal.

On appeal, the law firm did not challenge the punitive damages award as unconstitutional because the ratio of punitive to compensatory damages was only three-to-one, and because rearguing the issue would have required another examination of Biomet's conduct, which the lower court found was particularly reprehensible, the March 19 decision said.

The appeals court in the underlying case eventually reversed the lower court's finding of infringement against Biomet and remanded the case for recalculation.

On remand, the lower court held that Biomet was liable only for $520 in compensatory damages. At that point, Finnegan Henderson challenged the punitive damages award as excessive. It asserted that the 38,000:1 ratio of punitive to compensatory damages violated of due process. The lower court agreed, and reduced the punitive amount to $52,000.

But the appeals court determined that because Biomet had not initially appealed the punitive damages, it had waived its right to seek relief from the $20 million award. "

It's the rare case in which attorney and judge are both defendants, and the rarer case still in which allegations of stalking, habeas corpus, child custody, contempt are joined with legal malpractice.  What makes this case even more unique is that it is set in Federal District Court.  This is a legal malpractice trifecta. Legal malpractice litigation, as we often say, is found everywhere.

The case is LOUIS PISANI, Plaintiff, VERSUS ASHLEY L. DIENER, ESQ., ET AL., Defendants.No 07-CV-5118 (JFB) (ARL) UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK 2009 U.S. Dist. LEXIS 21352  March 17, 2009, Decided  [no link]

Here are some of the facts from the complaint:  "Plaintiff and his ex-wife, America Lopez ("Lopez"), were married in New Jersey in 1993. (Amended Complaint ("Am. Compl.") P 1.) Lopez had a daughter from her first marriage, Tatiana Prats, and wanted two more children in her marriage [*3] with plaintiff. (Id. P 4.) On or about April 2000, Lopez "left on one of her many trips to visit her mother in Miami, FL." (Id. P 10.) "After three months, on or around July 2000 Plaintiff obtained a petition of habeas corpus to have the two children brought back to New York, their home state, in Nassau County venue." (Id. P 11.) The amended complaint does not make clear who the "two children" were, though he is presumably referring to Anthony Pisani and Gabriella Pisani, who are referenced later in the amended complaint. (Id., Exs. A-B.)

Plaintiff alleges that, on advice of counsel, plaintiff began divorce proceedings in New York on October 11, 2000. (Id. P 13.) In January 31, 2001, Lopez filed a petition for dissolution of marriage in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida. (Plaintiff's Addendum of Exhibits filed July 7, 2008, Ex. G.) Around this time, Lopez began a proceeding in Miami-Dade County before Judge Deborah White-Labora to obtain a temporary injunction for protection against domestic violence against plaintiff. (Id. PP 16-17; Plaintiff's Memorandum of Law in Opposition, Ex. 6.) The injunction was entered on agreement between [*4] counsel for the parties on October 27, 2001. (Plaintiff's Memorandum of Law in Opposition, Ex. 6.) Plaintiff alleges that his counsel, Ashley Diener, "intentionally, negligently was in breach of duty to me when he 'agreed' to the temporary injunction," and "plaintiff requests that Ashley Diener be disbarred." (Id. P 17.) Plaintiff alleges that the result of the injunction in Florida was "the parental alienation syndrome." (Id. P 18.)

The amended complaint alleges that Lopez then took the children to California and then Mexico. (Id. P 19.) Plaintiff alleges that Lopez then retained Kutner to represent her, and that Kutner is a contributor to the election campaign of Judge White-Labora. (Id. P 20.) Plaintiff alleges that Kutner made defamatory statements about plaintiff and the children. (Id. P 22.)

The complaint alleges that plaintiff was concerned about the well-being of his children and, therefore, tried to contact the Lopez family. (Id. P 23.) Though the amended complaint is unclear about this, it appears that this was in violation of his injunction and led to proceedings against plaintiff. (Id. PP 23-24.) Plaintiff retained Gale for the evidentiary hearing held before Judge Harnables. [*5] Plaintiff alleges that, "through [Gale's] negligence I was arrested in Feb. 2001. He failed then to defend me at the 2nd evidentiary hearing. 'I should have expected that' was Gales' comment!" (Id. at 24.)

Florida State Attorney Katherine Fernandez-Rundle charged the plaintiff with aggravated stalking on or around July 2001 in Florida state court. (Id. P 25.) The plaintiff alleges that he did not commit aggravated stalking, but rather was just trying to find out where his children were. (Id. PP 26-28.) In December 2002, plaintiff alleges that he went to a day care center "presumably with authority to see his children and give them gifts for Christmas." (Id. P 29.) Plaintiff alleges that he was "arrested for violating the injunction even though according to Ken Kaplan Esq plaintiff had permission to see children. He was negligent." (Id. P 30.) Plaintiff further alleges that "Judge Deborah White-Labora has acted maliciously with no finding of fact to cause plaintiff and children pain and suffering." (Id. P 31.) In December of 2007, plaintiff filed a motion to vacate the injunction against him, but his motion was denied by Judge White-Labora. (Id. P 32.)

Plaintiff alleges that he has not [*6] had any unsupervised contact with his children for the past seven years, that he has had his house taken from him, and that he was imprisoned "because of the negligent, malicious intentions of these defendants." (Id. P 33.) Specifically, Plaintiff alleges that Rogers accused plaintiff of disparaging remarks against Cubans, is a campaign contributor to Judge White-Labora, and communicated ex parte with Judge White-Labora. (Id. PP 34-35.) Plaintiff alleges that Judge White-Labora discriminated against him on the basis of his national origin and gender, in that she "did not vacate injunction based on 'mistreatment' of day care worker who spoke only Spanish. I don't speak Spanish." (Id. P 36.) Plaintiff generally alleges that defendants have discriminated against him on the basis of gender and national origin, in violation of 42 U.S.C. § 1983.
 

Legal Malpractice actions often start with the termination of the target attorney, and even more of them have the common aspect of take-overs by successor attorneys.  What happens to the file, how does it get transferred and who pays for the transfer?

This weeks decision in Moore v. Ackerman, Supreme Court, Kings County is a thoughtful discussion of how transition of attorneys interacts with charging liens, retaining liens, termination for cause and without cause.  While it does not really deal with charging liens [the right of an attorney to have his fees paid for with the client's successful award] it does deal with the question of disbursements made both during and after the representation ends.

There are only a handful of cases which deal with this matter, even though it is a frequent occurrence.  We'll let Justice Jack M. Battaglia, Kings County Supreme Court  explain:

""[A] client may at anytime, with or without cause, discharge an attorney." (Demov, Morris, Levin & Shein v. Glantz, 53 NY2d 553, 556 [1981].) As the Court of Appeals has noted, an attorney's discharge does not in itself imply a lack of competence or diligence on the part of the attorney.

"Attorney-client relationships frequently end because of personality conflicts, misunderstandings or differences of opinion having nothing to do with any impropriety by either the client or the lawyer. Others end because of unexpected conflicts of interests or changes in litigation strategy that require different lawyering skills. In some of those situations, the client may ask the attorney to withdraw. In others, it may be the attorney who initiates the termination process by offering to withdraw in order to avoid embarrassment, avert further conflict, preserve the relationship on a long-term basis or simply save the client from the discomfort of having to fire the attorney. Importantly, in many such cases, the decision to terminate the relationship is the product of a mutual choice." (Klein v. Eubank, 87 NY2d 459, 463 [1996].)

"The three remedies of an attorney discharged without cause - the retaining lien, the charging lien, and the plenary action in quantum meruit - are not exclusive but cumulative." (Levy v. Laing, 43 AD3d 713, 715 [1st Dept 2007]; see also Schneider, Kleinick, Weitz, Damashek & Shoot, v. City of New York, 302 AD2d 183, 186-89 [1st Dept 2002].) "[I]n disputes between attorneys, the discharged attorney may elect to receive compensation based on quantum meruit or on a contingency basis, whereas as against a former client, the discharged attorney is entitled to quantum meruit only, unless the client and attorney agree otherwise." (Levy v. Laing, 43 AD3d at 715.)

The instant dispute concerns only the retaining lien. "A common-law retaining lien, also known as a general possessory lien, entitles the attorney 'to retain all papers, securities or money belonging to the client' that come into the attorney's possession in the course of representation as security for payment of attorneys' fees." (Hope v. Ortiz, 83 NY2d 323, 311 [1994] [quoting People v. Keefe, 50 NY3d 149, 155 (1980)].) "[A]n attorney's rendition of services and expenditure of disbursements on behalf of the client entitles him to a common-law retaining lien on the client's file." (Theroux v. Theroux, 145 AD2d 625, 626 [2d Dept 1988].) "A retaining lien remains in force until the client's account is paid in full." (Id.)
 

For present purposes, and in the first instance, "disbursements" must be understood as amounts "advanced" on behalf of the client. (See Lansky v. Easow, 304 AD2d at 533; Madison v. Spancrete Machine Corp., 278 AD2d 867, 868 [4th Dept 2000]; Silverstein v. National Auto Renting Corp., 4 AD2d 869, 869 [1st Dept 1957].) But in the only New York decision this Court has found that provides insight on the issue, the Court of Appeals has suggested that the outgoing attorney may seek more.

In Matter of Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn (91 NY2d 30 [1997]), the Court of Appeals was asked to resolve a dispute between the former counsel for corporate clients and the clients' successor counsel about material in the clients' files that successor counsel requested and former counsel refused to deliver. Successor counsel asked former counsel "to turn over its files in their entirety on the financing and restructuring matters, and tendered a check for [former counsel's] bindery expenses for those transactions, that being the only remaining outstanding claim of [former counsel] for payment with respect to services and disbursements arising out of those matters." (See id. at 33.)

The Court of Appeals adopted the majority view: "A majority of courts and State legal ethics advisory bodies considering a client's access to the attorney's file in a represented matter, upon termination of the attorney-client relationship, where no claim for unpaid legal fees is outstanding, presumptively accord the client full access to the entire attorney's file on a represented matter with narrow exceptions." (See id. at 34-37.) "Barring a substantial showing by [former counsel] of good cause to refuse client access, [former clients] should be entitled to inspect and copy work product materials, for the creation of which they paid during the course of the firm's representation." (Id. at 37 [emphasis added].)
 

In addition, with respect to specified claims or actions, including those for personal injury, property damage, or wrongful death due to negligence, the Second Department requires that "[a]ttorneys for both plaintiff and defendant . . . shall preserve, for a period of seven years" virtually the entire file of the attorney. (See 22 NYCRR §691.20 [f].) Specifically, the retention requirement includes

"the pleadings and other papers pertaining to such claim or cause of action, including but not limited to, letters or other data relating to the claim of loss of time from employment or loss of income; medical reports, medical bills, X-ray reports, X-ray bills; repair bills, estimates of repairs; all correspondence concerning the claim or cause of action; and memoranda of the disposition thereof as well as canceled vouchers, receipts and memoranda evidencing the amounts disbursed by the attorney to the client and others in connection with the aforesaid claim or cause of action." (Id.)

Neither the Disciplinary Rules nor the Second Department's rules make any exception to the retention requirements where the attorney withdraws from representation or is discharged. As to the "bookkeeping records," however, the applicable Disciplinary Rule provides that, upon dissolution of a law firm, "the former partners or members shall make appropriate arrangements for the maintenance by one of them or by a successor firm of the [bookkeeping] records." (See Disciplinary Rule 9-102 [H]; 22 NYCRR §1200.46 [h].) "A lawyer, upon termination of his practice may properly cause the closed files to be delivered to another lawyer, but the receiving lawyer will hold them only as custodian." (See N.Y. St. Bar. Assn. Comm. Prof. Eth. 460, 1977 WL 15688, * 2.) In any event, the obligations of a lawyer upon termination of a practice and a lawyer continuing in practice would, presumably, be different.

In short, there is no clear authority as to whether a charge for copying the client's file is appropriate as a "disbursement" for purposes of a retaining lien, or whether for purposes of general ethical obligations a lawyer may charge for copying a file before releasing it to the client ...."

We've written in the past on the collateral estoppel trap in legal malpractice.  While fee arbitrations in State Court proceedings probably have the greatest absolute number of applications, bankruptcy court fee awards may well cover a greater dollar figure.  Here, in In re D. A. ELIA CONSTRUCTION CORP., Debtor.  07-CV-754,08-CV-103  UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK  2009 U.S. Dist. LEXIS 20443   March 14, 2009, Decided we see a result.  Law firm handles a 10 year bankruptcy for debtor, and is awarded several interim fees.  Law firm then applies for final fee award, and for the first time, debtor raises issue of legal malpractice.  Court considers the fee application, and awards fees.
 

When debtor later sues in State Court, result is: dismissed on the basis of collateral estoppel/res judicata.

"Upon finding that no merit to Elia's claims of malpractice, this Court observed:
As is readily apparent from this Decision and Order, the Court finds Elia's arguments in favor [of] remand and against the motion for summary judgment to be completely without merit. In opposing the motion to dismiss on res judicata grounds, Elia did not even attempt to [*5] distinguish the most obviously relevant case law against it -the First, Fourth and Fifth Circuit rulings holding that a bankruptcy court's grant of fees under 11 U.S.C. § 330 bars any subsequent malpractice claims premised upon those same services. See Grausz v. Englander, 321 F.3d 467 (4th Cir. 2003); In re Iannochino, 242 F.3d 36 (1st Cir. 2001); In re Intelogic Trace, Inc., 200 F.3d 382 (5th Cir. 2000). Instead, Elia attempts to mischaracterize the record by suggesting that the bankruptcy court never considered its claims of malpractice and attorney misconduct. Both this Court and the Second Circuit have expressly rejected that argument and have found that the bankruptcy court gave adequate consideration to Elia's claims of postpetition malpractice. See In re D. A. Elia Constr. Corp., 04-CV-975, Dkt. No. 21, at 20 (this Court's Decision and Order stating that "[t]he bankruptcy court fully considered [Elia's] allegations of misconduct but found them to be without merit"); and id. at Dkt. No. 33, at 3 and 4 (Second Circuit Summary Order stating that the bankruptcy court gave Elia "more than ample opportunity to present its arguments" regarding its claims of "conflicted and negligent [*6] representation").

In light of those express findings, it is difficult to believe that the state court action was filed by Elia in good faith. Even if Elia did have some good faith basis for initially filing its state court claims, it should have been clear that its position was meritless upon reviewing the cases cited in Damon & Morey's motion to dismiss. This is particularly true where, as here, Elia's principal is also an attorney and therefore presumably understood the res judicata arguments being raised. Nevertheless, Elia chose to oppose the motion and filed its own motion to remand.

The foregoing certainly provides sufficient evidence for this Court to conclude that the instant action was brought in bad faith and for the purpose of harassment and delay."

Burt Pugach and Linda Riss are a staple of the blogosphere and the Page Six world.  He was a lawyer who was convicted in 1959 for blinding Linda Riss by use of lye, went to jail ,came out of jail to marry her ,and then was disbarred.  He was determined to have practiced law through the use of a front man-lawyer in 2008.  But that is all part of the Page 6 portion of their lives.

Here, the two sold their life story to HBO for use in a film called "Crazy Love" and this is where the legal malpractice portion of their life comes in.  Was the deal fair, and did HBO owe them more money?

In Pugach v. HBO Pictures Inc., Slip Op. 2009 30489U we see that their legal malpractice action fails. Judge Kitzes of Supreme Court, Queens County writes: 

"This action arises out of an agreement between plaintiffs and defendant Shoot the Moon, dated May 11, 2004, whereby, in consideration of the payment of the sum of $ 2,000, plaintiffs granted Shoot the Moon an option to purchase all rights to their life stories...."  Plaintiff's argument that Linda Pucach could not read the contract because of her blindnes was disallowed on the basis that "if the party could not read it, "not to procure it to be read was equally negligent."

The legal malpractice action was dismissed as the attorney defendants represented Shoot the Moon and not plaintiffs, thus lacking privity.

Our meme on this blog is that Legal Malpractice litigation is ubiquitous and omnipresent.  All right, what exactly does that mean?  It's not just blown statutes in personal injury, and it's not just unanswered questions in matrimonial suits, and it's not even just bankruptcy trustees and ponzi schemes.  It's the basis commercial transactional world too.  Here in an article from Law.Com, by Brian Katkin, we see:

"Hogan & Hartson is being sued for malpractice by a client who alleges the firm used attorney-client information to boost a competitor.

In the complaint, filed in Washington, D.C., Superior Court last month, Prestige Brands Inc., makers of household products like Comet and Compound W, claims lawyers at Hogan & Hartson breached their retainer agreement and committed legal malpractice by helping another company get a competing product on the market.

Hogan has yet to respond to the allegations, but the firm has hired Mark Foster, a partner at Zuckerman Spaeder, to defend the action. Last year, Foster successfully battled malpractice allegations against Wiley Rein when the firm was sued by former client Blackwater Security Consulting. Foster and J. Warren Gorrell Jr., Hogan's chairman, declined to comment.

Prestige is using Marianne Roach Casserly, a partner in the D.C. office of Alston & Bird, along with lawyers from the firm's Atlanta and New York offices. Casserly did not return calls seeking comment.

Charles Jolly, Prestige's general counsel, says he found out Hogan was working for a competitor from the Food and Drug Administration's Web site. "I've been practicing for 40 years, and I can think of only one time when I've gotten in a dispute with a firm that I hired for outside counsel," Jolly says."

In the law, "attorney's fees are awarded..." carry awesome power.  Traditionally, the American rule is that each side bears its own attorney fees unless there is an agreement or a statute which grants attorney fees to the prevailing party.  Attorney fees are awarded in L & T litigation, based upon the usual rental lease; in discrimination cases by statute, and so on.

Then there is the unique New Jersey legal malpractice fee shifting rule.  In a story by the National Law Journal, we see:

"A New Jersey appeals court ruled Feb. 18 that a plaintiff who won a $20,000 settlement from a lawyer and two business entities can pursue the lawyer for the entire $144,000 legal fee expended in the case, even though the non-lawyers paid two-thirds of the settlement.

The three-judge panel ruled in Geranio v. FEC Mortgage Corp. , A-4839-06, that under New Jersey's unique fee-switching rules, West Orange, N.J., lawyer Anthony Gualano is liable for the entire legal fees of the plaintiff in the underlying case, which alleged malpractice in the handling of a property refinancing. The new and old mortgage holders were also defendants.

The suit by Steven Geranio alleged that Gualano, as lawyer for FEC Mortgage Co. -- and as the only attorney at the closing -- failed to spot a $15,000 error in the payoff statement. Geranio also sued FEC for not noticing the error and claimed that the mortgage company being paid off, LHW Development Corp., unjustly enriched itself by accepting the $15,000.

The case settled for $20,000 -- the full substantive damages plus interest -- but that didn't end the matter.

Under Saffer v. Willoughby , 143 N.J. 256 (1996), the costs of pursuing errant lawyers are considered consequential damages of malpractice and can be recovered. That meant a malpractice liability trial was necessary to determine that a fee award was warranted.

Bergen County Superior Court Judge Lawrence Smith found Gualano liable and a subsequent judge, Richard Donohue, set the damages at $38,000 -- not the $144,000 requested -- on the principle that much of the plaintiffs fees were caused by the pursuit of the business entities.

That was wrong, the appeals court said. "The judge failed to consider the legal fees plaintiffs incurred in having to litigate claims against FEC and LHW in order to recoup the $15,000 overpayment," Judges Michael Winkelstein, Jose Fuentes and William Gilroy said in a per curiam opinion.

The judges said Gualano was negligent in various ways that caused the plaintiffs to pay off their mortgage. "Thus, were it not for Gualano's negligence, plaintiffs would not have had to file suit against FEC and LHW to recoup the overpayment," they said. "The motion judge, therefore, should have considered plaintiffs' counsel's legal work [performed] before the $20,000 settlement was reached."

There have been rulings that lawyers can be assessed only the percentage of the plaintiffs fees attributed to the lawyers' negligence if the percentage is apportioned at a trial.

In this case, the defendants agreed on a three-way split before the end of the trial. Gualano's lawyer, Allan Maitlin of Sachs, Maitlin, Fleming & Green in West Orange, argued that the one-third split should apply to the fee as well or that there should be a retrial to apportion liability among the defendants.

But the court said Gualano agreed to the settlement knowing there was no court determination of percentage of liability and that he is on the hook for the cost of the pursuit of all the defendants."

Plaintiff owns property, plaintiff borrows money on property, plaintiff and lender reach a complicated right of first refusal agreement, lender and plaintiff enter into new lending agreements for different businesses, and then it all falls apart.  The transactions end in mutual law suits in Nassau and Suffolk and a legal malpractice and Judiciary Law 487 case before Justice Cohalan, in Suffolk County. In Rozen v. Russ & Russ we see not only Legal Malpractice and Judiciary Law 487 claims, but debtor-creditor and Champerty under Judiciary Law 488 and 489.  When we see Champerty claims we think Marbury v. Madison, our own way of saying, wow, what an uncommon pleading. Remembering, however, the 750 year + history of Judiciary Law 487, this should not surprise.

In this case, the law firm took an assignment of plaintiff's rights to the property, in a most complicated fashion, triggering law suits in two counties when defendants found out that plaintiff's law firm had in interest in how the real property case, with its rights of first refusal came out.

it is instructive to read Justice Cohalan's 15 pp decision, which is linked but cannot be excerpted here.

We have noted the trend towards legal malpractice cases issuing out of Bankruptcy proceedings.  We believe the trend arises from the greater number of large bankruptcy filings in the corporate world, and the smaller pool of assets available to the creditors.  In this case, Law Com reports that Pillsbury Winthrop will re-pay and forego $ 10 million for violating Bankruptcy rules and being an interested creditor while representing debtor.

"Pillsbury Winthrop Shaw Pittman has reached a $10 million settlement in a malpractice dispute with bankrupt client SonicBlue, a court filing Tuesday shows.

The firm will pay $7.6 million and forgo $2.4 million in outstanding fees to SonicBlue's estate, according to the filing, which awaits approval by a bankruptcy judge at a hearing slated for March 31.

SonicBlue's estate had sued Pillsbury for malpractice and breach of fiduciary duty, demanding the firm return $4.2 million in fees and pay $11 million in damages.

"The creditors committee is pleased with the terms of the settlement," said Ron Oliner, a partner at Duane Morris who represents the creditors committee in the bankruptcy.

Pillsbury General Counsel Ronald Van Buskirk declined to comment beyond pointing at language in the settlement saying the deal had been reached to the parties' mutual satisfaction. Pillsbury represented the SonicBlue estate from the filing of its bankruptcy petition in 2003 until 2007 when it came to light that the firm had failed to disclose to the court a 2002 pre-bankruptcy promise to creditors. The firm promised in a letter to three hedge funds, which had invested in a $75 million bond issue, that they would be repaid in full should SonicBlue enter bankruptcy protection.

Pillsbury attorneys later described the letter as a "scrivener's error." The hedge funds threatened to sue for repayment in September 2006.

In a 2005 internal e-mail sent by Pillsbury partner William Freeman about the retainer SonicBlue had paid, he told partner Craig Barbarosh that the firm had "major exposure here."

Citing the potential conflicts, the bankruptcy judge removed Pillsbury from the case in March 2007. "

How and when does the attorney-client relationship end?  Does CPLR 321 have anything to do with calculating the date for statute of limitations purposes?  Is there a bright-line rule?

In this Supreme Court case  Frenchman v. Queller Fisher, authored by Justice Carol Edmead, we see all sides of the arguments. The opinion reproduces the arguments of all litigants. The story is that plaintiff had a medical malpractice case and went to Queller Fisher.  At the time, they had Harvey F. Wachsman of counsel to the firm.  Wachsman left the firm and took this case with him.  Not three months later he told plaintiff that he was no longer interested in the case.  The case shuttled between several attorneys until the last attorney took the case to trial and had a moderate win.  It was claimed that two additional defendants were not named in the case, and had they been, the award would have been much greater.

Discussion swirls around how an when an attorney disengages.  Is it the date of a consent to change attorneys?  Is it in the dueling letters from attorney to client to attorney?  Is is the day that trust no longer reposes in the attorney?  Here, Supreme Court chooses the Aaron v. Roemer course, and analyzes when trust no longer resided in the attorney, foregoing the more clear "consent to change attorney" date which is fixed on paper.

To read all the arguments, see: Frenchman v. Fisher, Slip Op 2009 30483(u)

Today's Outside Counsel Column in the New York Law Journal is "The Use of Lawyer-Targeted Judiciary Law 487.  It discusses the 740 year history of what may be the oldest statute in Anglo-
American jurisprudence, and certainly the oldest to affect attorney conduct in and out of court.

As a treble damage statute, it has been sparsely used in its long history, and as as the article argues, may be trending higher.  This month's The Court of Appeals decision  in Amilfatano v, Rosenberg will likely boost litigator's awareness of the statute. 

"As the District Court correctly observed, however, Judiciary Law § 487 does not derive from common law fraud. Instead, as the Amalfitanos point out, section 487 descends from the first Statute of Westminster, which was adopted by the Parliament summoned by King Edward I of England in 1275. The relevant provision of that statute specified that

"if any Serjeant, Pleader, or other, do any manner of Deceit or Collusion in the King's Court, or consent [unto it,] in deceit of the Court [or] to beguile the Court, or the Party, and thereof be attainted, he shall be imprisoned for a Year and a Day, [*3]and from thenceforth shall not be heard to plead in [that] Court for any Man; and if he be no Pleader, he shall be imprisoned in like manner by the Space of a Year and a Day at least; and if the Trespass require greater Punishment, it shall be at the King's Pleasure" (3 Edw, c 29; see generally Thomas Pitt Taswell-Langmead, English Constitutional History 153-154 [Theodore F.T. Plucknett ed, Sweet & Maxwell, 10th ed 1946]).
Five centuries later, in 1787, the Legislature adopted a law with strikingly similar language, and added an award of treble damages, as follows:

"And be it further enacted . . . [t]hat if any counsellor, attorney, solicitor, pleader, advocate, proctor, or other, do any manner of deceit or collusion, in any court of justice, or consent unto it in deceit of the court, or to beguile the court or the party, and thereof be convicted, he shall be punished by fine and imprisonment and shall moreover pay to the party grieved, treble damages, and costs of suit" (L 1787, ch 36, § 5).

In 1836, the Legislature carried forward virtually identical language in section 69 of the Revised Statutes of New York, prescribing that
"[a]ny counselor, attorney or solicitor, who shall be guilty of any deceit or collusion, or shall consent to any deceit or collusion, with intent to deceive the court or any party, shall be deemed guilty of a misdemeanor, and on conviction shall be punished by fine or imprisonment, or both, at the discretion of the court. He shall also forfeit to the party injured by his deceit or collusion, treble damages to be recovered in a civil action" (2 Rev Stat of New York, chap III, art 3, § 69 [1836]).
 

Right now the legal press centers around attorney lay-offs and the general economic situation.  In this case homeowners were completely unable to either pay the mortgage or obtain new financing.  Eventually they went to a lender whose interest rate exceeded 25%.  Will we be seeing more of this type of case as the mortgage market continues to fester?

In Abir v Malky, Inc. ;2009 NY Slip Op 01432 ; Decided on February 24, 2009 ;Appellate Division, Second Department  we see that even while battling with the lenders over usury, they have also sued the attorney.  For the moment, he seems to have dropped out, but the decision does not say that his action has been terminated.  In the meantime we see:
 

"In an action, inter alia, to recover damages for legal malpractice, the plaintiffs appeal, as limited by their brief, from so much of a judgment of the Supreme Court, Nassau County (Winslow, J.), entered September 12, 2007, as, upon an order of the same court entered August 15, 2007, which, upon reargument, among other things, adhered to a determination in an order entered May 10, 2007, denying those branches of their cross motion which were for summary judgment declaring that a certain judgment of foreclosure and sale entered August 10, 2000, is null and void.

In 1995 the plaintiffs, Fereydoon Abir and Flora Abir (hereinafter together the Abirs) stopped repaying the mortgage loan referable to their home. Their mortgagee, Bank of America (hereinafter the Bank) sought, and in 2000 obtained, a judgment of foreclosure and sale against them, which included a deficiency judgment in the approximate sum of $2,100,000. Subsequently, the Abirs negotiated a settlement in which the Bank agreed, inter alia, to accept the sum of $1,300,000 from the Abirs, or their designee, in full satisfaction of the judgment. The Abirs then sought a bridge loan from Hamerkaz, a not-for-profit entity, in the principal sum of $1,300,000, and thereafter attempted to secure a conventional loan. However, after entering into a contract with the plaintiffs, Hamerkaz was unable to provide the necessary funding and, sometime in mid-December 2001, the plaintiffs received notice that the Bank had scheduled a foreclosure sale of their home for December 18, 2001. The Abirs then contacted the defendant Malky, Inc. (hereinafter Malky), which agreed to provide them with the necessary funds for the bridge loan.

On December 18, 2001, Malky entered into an agreement with the Abirs (hereinafter the Abir/Malky agreement) which, inter alia, provided that the Abirs had 8 to 10 months to repay the debt, at an annual interest rate, including assorted charges, that ranged from 25.6% to 28.5%. The Abir/Malky agreement also provided that if the Abirs did not repay this obligation at the end of that 10-month period, Malky would have the right to enforce the judgment of foreclosure and sale, and take possession of the Abirs' house. The Abirs entered into the Abir/Malky agreement despite the fact that the Bank had yet to sell the judgment of foreclosure and sale to Malky since the Abirs understood that the sale of the judgment of foreclosure and sale was imminent. Moreover, the Abirs never designated Malky as their agent for the purpose of repaying their obligation to the Bank. "

 Refund Plus Life Insurance policies were purchased by Long Island attorneys including Daniel Buttafuoco.  When Boston Life refused to refund the premiums litigation erupted.  In the Virgin Islands, the insurance company asked for a declaratory judgment that it did not have to refund the premiums.  Things spiraled downward, and ended in EDNY legal malpractice litigation.  From the decision in Law Practice Management Consultants LLC v. M & A Counselors & Fiduciaries LLC, 08-CV-4557; Decided: February 28, 2009; District Judge Arthur D. Spatt;U.S. DISTRICT COURT. EASTERN DISTRICT OF NEW YORK
 

"In 2006, Boston Life terminated the Policies and allegedly refused to return the premiums paid by the Plaintiffs. In March of 2006, Boston Life commenced a suit in the British Virgin Islands ("the BVI Litigation") seeking a declaratory judgment that it properly terminated the Policies and was not required to repay any of the premiums. The Plaintiffs in the present action were among the 63 defendants ("the BVI defendants") that Boston Life named in the BVI Litigation. In April of 2006, the BVI defendants retained Hoilman, a member of M & A Counselors & Fiduciaries, to represent them in the BVI litigation.
 

Buttafuoco's deposition was scheduled for October 13, 2008 at his office in Woodbury, New York. The night before the deposition, Hoilman met with Buttafuoco at his office to prepare him for his testimony. The Plaintiffs allege that during this meeting, Hoilman advised Buttafuoco not to provide certain information in his deposition. On the day of the deposition, to Hoilman's surprise, the Plaintiffs discharged him and his local counsel from representing them in the Miami Litigation. At the conclusion of the deposition, Hoilman was served with the summons and complaint that initiated the instant lawsuit.

The complaint, filed in New York State Supreme Court, Nassau County, alleged that Hoilman committed legal malpractice by failing to timely file the opposition papers in the BVI Litigation. The essence of the Plaintiffs' legal malpractice claim is that although the British Virgin Islands Court of Appeal ultimately permitted them to file their opposition papers, the delay caused by the missed filing deadline prevented them from any meaningful recovery because Boston Life went into liquidation while the appeal was pending. In other words, the Plaintiffs contend that if Hoilman did not missing the filing deadline, they would have been able to obtain a judgment against Boston Life before it went into liquidation.

On November 11, 2008, the case was removed to this Court. Shortly thereafter Hoilman and his firm moved to dismiss the Plaintiffs' cause of action for malpractice contending, among other things, that they have failed to state a claim under Fed. R. Civ. P. 12(b)(6). The Court finds that the Plaintiffs have failed to state a claim for legal malpractice, and therefore, it need not address the issue of whether personal jurisdiction is lacking in this case."
 

One may lose the right to bring a legal malpractice case based on earlier attorney fee dispute resolution.  In this case , Margrabe v. Sexter & Warmflash, PC,  07-CV-2798, District Judge Kenneth M. Karas, SDNY, we see just how the process operates.  Plaintiff retains attorneys to represent her in a shareholder derivative matter.  Attorneys were successful in obtaining a significant amount of money for her, but from then on things went badly.  Attorneys were terminated, fees were disputed, escrow accounts started, and a defamation action commenced over the termination letter.  Eventually the attorneys smartly started an attorney fee dispute action under Judiciary Law 475, and were awarded fees.  This was the end of the issue, although plaintiff did not yet know it.

From the Court: "Plaintiff claims that Defendants failed to exercise the degree of skill and knowledge commonly possessed by members of the legal profession in their representation of her in the Rusciano Lawsuit. (Compl. ¶27.)

In the R&R, Magistrate Judge Yanthis recommended that the Court grant Defendants' Motion to Dismiss Plaintiff's legal malpractice claim on res judicata and collateral estoppel grounds. (R&R 4-5.)

Although Plaintiff initially objected to Magistrate Judge Yanthis's recommendation (Pl.'s Objections to R&R ("Pl.'s Obj.") 4), Plaintiff has since acknowledged to the Court that, based on the Court of Appeals' denial of Plaintiff's appeal, her legal malpractice claim "is barred under New York State law by the doctrine of res judicata." (Letter from William Greenberg, Esq. to the Court (Jan. 30, 2009).)

The Court agrees that, in New York, a judgment "fixing the value of a professional's service necessarily decides that there was no malpractice." Lipani v. Collins, Collins & Dinardo, P.C., No. 90-CV-5278, 1992 WL 168267, at *3 (S.D.N.Y. June 25, 1992) (quoting Nat Kagan Meat & Poultry, Inc. v. Kolter, 416 N.Y.S.2d 646, 647 (App. Div. 1979)); accord Best v. Law Firm of Queller & Fischer, 718 N.Y.S.2d 397, 397 (App. Div. 2000) (holding that plaintiffs were "precluded from asserting a cause of action alleging malpractice" against the defendant law firm inasmuch as the New York Supreme Court had found that law firm was entitled to its agreed-upon legal fee).5 Here, it is undisputed that the Plaintiff's legal malpractice claim is precluded by the state supreme court decision that Sexter & Warmflash was entitled to its reasonable legal fees. Accordingly, Plaintiff's malpractice claim is dismissed as barred by the doctrines of res judicata and collateral estoppel."
 

On first blush this decision is a tad confusing.  Legal malpractice plaintiff sues his former defense attorney who defended him in a cross-over head-on car crash.  Plaintiff in legal malpractice case had driven the cross-over car, and had no memory of the accident.  After he loses the car crash case on summary judgment, and then sued the other driver in a second case, he sues the attorneys. The case is Luscher v One Beacon Ins. Group ;2009 NY Slip Op 29076 ;Decided on February 25, 2009 ;Supreme Court, Kings County ;Kramer, J. 
 So far, simple.

Attorneys seek to depose victim of car crash case, in legal malpractice case.  Theory against target attorneys is that they failed adequately to oppose summary judgment with an affidavit of a person with knowledge.  It appears from this decision that only the two drivers have actual knowledge.

Court denies deposition.  One might think this a defeat for attorneys?  We don't think so. Once it is determined that no one has actual knowledge of how the accident occurred, we think the defense has undermined the plaintiff.  Here is the court:

"Defendants argue that they need to depose Arrua in the instant action because he was never actually deposed with respect to liability in the predicate action and the affidavit he submitted with his summary judgment motion did not provide any information about the details of the collision; the lights on the road, the traffic signs, the speed of the vehicles or whether he uses glasses or contacts and whether he is familiar with the area. Defendants argue that this information cannot be obtained from other sources because their former client, Luscher, did not have any memory of the accident.[FN4] The witness argues that the facts and circumstances of the underlying accident were already decided in the predicate action and consequently the defendants are barred by the doctrine of collateral estoppel from taking his testimony.

In order to defend a legal malpractice action, the defendants must show that they were not negligent or that their negligence was not the but for cause of the plaintiff's failure to prevail in the underlying action. (Wray v. Mallilo & Grossman, 54 AD3d 328[2d Dept. 2008]). The appropriate analysis in a legal malpractice case does not include or permit a collateral attack upon the underlying judgment. Thus although New York's liberal discovery rules require "disclosure upon request of any facts bearing on the controversy," Allen v. Crowell-Collier Publishing Co., 21 NY2d 403[1968], the discovery of facts and circumstances whose sole purpose is to launch a collateral attack on the underlying judgment by revealing possible defenses to the predicate action does not fall within this rubric. The information sought to be obtained from this witness with respect to the circumstances attendant at the time of the collision would serve only to undermine the judgment in the predicate action and thus is not relevant [*3]here. "

Here is a rare case in which attorney represents farm owners on a wrongful death case, which does not settle within policy limits.  Instead of settling for $ 300,000 there is a verdict of $ 4.2 million.  Afterwards, everything turns upside down.  The farmer's insurance company approached the attorney's legal malpractice carrier and from there on in the versions diverge:

"After the trial ended, Claverack approached Zurich with six "contemporaneous memorializations" of phone conversations among Mr. Roche and Ms. Hess and Ms. Buckley purporting to show that Mr. Roche had ignored Claverack's instructions and fumbled the case. Claverack requested that Zurich, as holder of the attorney's professional liability insurance policy, contribute to the judgment.

Mr. Roche argued that Ms. Hess and Ms. Buckley misstated their conversations with him and that the memos are defamatory fakes.

According to Claverack's brief before the appellate court, Zurich eventually paid $193,750 toward the verdict and then canceled its policy with Mr. Roche.

Spencertown attorney David Seth Michaels said the dispute between Mr. Roche and Claverack ended a 25-year relationship in which Mr. Roche represented Claverack's insureds. Of the panel's ruling, Mr. Michaels said, "I am delighted and so is my client."

Mr. Roche's action does not specify the damages he is seeking.
After the trial ended, Claverack approached Zurich with six "contemporaneous memorializations" of phone conversations among Mr. Roche and Ms. Hess and Ms. Buckley purporting to show that Mr. Roche had ignored Claverack's instructions and fumbled the case. Claverack requested that Zurich, as holder of the attorney's professional liability insurance policy, contribute to the judgment.

Mr. Roche argued that Ms. Hess and Ms. Buckley misstated their conversations with him and that the memos are defamatory fakes.

According to Claverack's brief before the appellate court, Zurich eventually paid $193,750 toward the verdict and then canceled its policy with Mr. Roche.

Spencertown attorney David Seth Michaels said the dispute between Mr. Roche and Claverack ended a 25-year relationship in which Mr. Roche represented Claverack's insureds. Of the panel's ruling, Mr. Michaels said, "I am delighted and so is my client."

Mr. Roche's action does not specify the damages he is seeking."
 

In the law, "attorney's fees are awarded..." carry awesome power.  Traditionally, the American rule is that each side bears its own attorney fees unless there is an agreement or a statute which grants attorney fees to the prevailing party.  Attorney fees are awarded in L & T litigation, based upon the usual rental lease; in discrimination cases by statute, and so on.

Then there is the unique New Jersey legal malpractice fee shifting rule.  In a story by the National Law Journal, we see:

"A New Jersey appeals court ruled Feb. 18 that a plaintiff who won a $20,000 settlement from a lawyer and two business entities can pursue the lawyer for the entire $144,000 legal fee expended in the case, even though the non-lawyers paid two-thirds of the settlement.

The three-judge panel ruled in Geranio v. FEC Mortgage Corp. , A-4839-06, that under New Jersey's unique fee-switching rules, West Orange, N.J., lawyer Anthony Gualano is liable for the entire legal fees of the plaintiff in the underlying case, which alleged malpractice in the handling of a property refinancing. The new and old mortgage holders were also defendants.

The suit by Steven Geranio alleged that Gualano, as lawyer for FEC Mortgage Co. -- and as the only attorney at the closing -- failed to spot a $15,000 error in the payoff statement. Geranio also sued FEC for not noticing the error and claimed that the mortgage company being paid off, LHW Development Corp., unjustly enriched itself by accepting the $15,000.

The case settled for $20,000 -- the full substantive damages plus interest -- but that didn't end the matter.

Under Saffer v. Willoughby , 143 N.J. 256 (1996), the costs of pursuing errant lawyers are considered consequential damages of malpractice and can be recovered. That meant a malpractice liability trial was necessary to determine that a fee award was warranted.

Bergen County Superior Court Judge Lawrence Smith found Gualano liable and a subsequent judge, Richard Donohue, set the damages at $38,000 -- not the $144,000 requested -- on the principle that much of the plaintiffs fees were caused by the pursuit of the business entities.

That was wrong, the appeals court said. "The judge failed to consider the legal fees plaintiffs incurred in having to litigate claims against FEC and LHW in order to recoup the $15,000 overpayment," Judges Michael Winkelstein, Jose Fuentes and William Gilroy said in a per curiam opinion.

The judges said Gualano was negligent in various ways that caused the plaintiffs to pay off their mortgage. "Thus, were it not for Gualano's negligence, plaintiffs would not have had to file suit against FEC and LHW to recoup the overpayment," they said. "The motion judge, therefore, should have considered plaintiffs' counsel's legal work [performed] before the $20,000 settlement was reached."

There have been rulings that lawyers can be assessed only the percentage of the plaintiffs fees attributed to the lawyers' negligence if the percentage is apportioned at a trial.

In this case, the defendants agreed on a three-way split before the end of the trial. Gualano's lawyer, Allan Maitlin of Sachs, Maitlin, Fleming & Green in West Orange, argued that the one-third split should apply to the fee as well or that there should be a retrial to apportion liability among the defendants.

But the court said Gualano agreed to the settlement knowing there was no court determination of percentage of liability and that he is on the hook for the cost of the pursuit of all the defendants."

Anecdotally, we see major economic changes in the US.  It changed the course of the Presidential elections, and it has changed the climate in legal malpractice.  Viewed through the lens of daily layoffs of attorneys, daily firing of staff, and realignments of law firms, this story from the American Bar Association underlines the trend.

"Attorney malpractice claims are escalating in numbers and intensity, making us wonder if clients, anxiously looking to recoup the hefty sums of money lost because of the struggling economy, are recalling the literal interpretation of Shakespeare’s well-known verse.

“Over the past several months, we have seen a dramatic increase in legal malpractice filings, a trend that would never been seen in a better economic environment,” Fisher, Rushmer, Werrenrath, Dickson, Talley & Dunlap shareholder John E. Fisher told the ABA Journal. “Now, more than ever, attorneys need to be mindful of their actions when dealing with clients."

In Florida, the depressed real estate market is driving many distressed buyers to look for any way out of housing contracts, including blaming their lawyers for their financial issues, said Mike Downey, a partner at Hinshaw & Culbertson.

“People are feeling a bit more desperate,” Downey said. Lawyers are delving into unfamiliar practice areas, and some clients are being less honest, putting attorneys at risk for professional liability issues, he added.

It’s not only clients who are spiteful. Downey said his phone is ringing with phone calls from lawyers complaining about malicious conduct from opposing counsel.

Chicago-based lawyer George B. Collins of Collins, Bargione & Vuckovich, agrees there is a meaner spirit to the recent spate of malpractice suits—and it’s aimed at unexpected targets. “The nastiness is hitting lawyers in substantial law firms, not the type of people you would expect to be in a malpractice suit,” Collins said. “It’s savage the way big firms are attacking each other.”

This intriguing story from New Jersey has several unique aspects to it.  The first is an idea alien to New York litigation and legal malpractice. This attorney was still in practice, and still representing buyers and sellers of the same residential property in the same neighborhood twenty years after the first transaction.  More unique is that he represented buyer in the first transaction and the next door seller in the second transaction, and was adverse to his own early client in the next door house. 

From Law.Com: "Tuckerton, N.J., solo Howard Butensky represented Stanley Shu in the purchase of a parcel at 113 West Main St. in Tuckerton from Earl and Maria Peterson. The Nov. 10, 1986, contract gave Shu a 30-day right of first refusal on the adjoining lot, also owned by the Petersons, and stated "[t]hese terms shall survive the passage of time."

Earl Peterson died, and Maria Peterson transferred the adjoining lot to her children, Lawrence Peterson and Donna Marie Jones.

When Peterson and Jones went to sell the lot in 2005 to Robert Gaudiosi, they hired Butensky to represent them.

Gaudiosi's lawyer, Alphonse DeSimone, learned that a structure on Shu's West Main Street property encroached on the lot and told Butensky that Gaudiosi would go ahead only if $10,000 of the purchase price was held in escrow to reimburse him for any legal fees he might incur in getting the encroachment removed.

Butensky wrote to Shu and told him of the impending sale and the encroachment problem on May 20, 2005.

A second letter from Butensky to Shu on May 27, 2005, warned of possible legal action if Shu did not remove the encroachment. Taking note of his past representation of Shu, Butensky said if a lawsuit was needed, some other lawyer would handle it.

Shu refused to remove the encroachment. Gaudiosi went ahead and bought the parcel.

In March 2006, Gaudiosi sued Shu in Camden County's Chancery Division. Shu counterclaimed for trespass. In his pleading he made no mention of the right of first refusal or Butensky, but in a letter dated June 16, 2006, Shu's lawyer, David Anderson, told Butensky that Shu intended to enforce that right.

Butensky responded on June 20 that when the Peterson children sold the property to Gaudiosi, neither side was aware of Shu's right of first refusal and he had not recalled it and thus did not intend to interfere with Shu's exercise of his rights. Shu, however, was aware of it and should have addressed it when the encroachment issue arose, he said.

Shu settled the encroachment case for an undisclosed amount in July 2006 and on May 4, 2007, sued Butensky for malpractice. He claimed Butensky was negligent in failing to record the right of first refusal provision and had a conflict of interest when he represented the Petersons in selling the adjoining lot. He also alleged that when Butensky informed him about the sale of the neighboring lot in May 2005, he told Butensky at that time that he intended to enforce his right of first refusal.

The National Law Journal reports that an Appellate Court has reversed and remanded a $30 million legal malpractice case against the law firm Seyfarth Shaw based upon issues of jury instructions. "Blanks  filed a legal malpractice lawsuit against Seyfarth Shaw and Lancaster, alleging that the attorney's failure to file the action on time before the labor commissioner caused Blanks to lose millions. In addition, Blanks asserted that [his accountant] Lancaster purposely delayed filing in order to generate fees. "

"Seyfarth Shaw will get a new trial in a legal malpractice case brought by the creator of a popular exercise program, who won a $30 million verdict against the law firm in 2005.

A California state appeals court has thrown out a jury verdict, which found that the Chicago-based law firm committed malpractice when one of its lawyers representing Tae Bo creator Billy Blanks failed to file court papers on time in the right venue.

The Feb. 20 decision from the California Court of Appeal Second District remands the case back to the lower court. It calls for the lower court to change the instructions it gave the jury related to how much Blanks could recover for the firm's alleged wrongdoing.

Seyfarth Shaw Chairman Stephen Poor said in a written statement that the firm "look[ed] forward to being fully vindicated in this matter."

Blanks' attorney, James R. Rosen, called the decision "a major disappointment," but he said that the overriding conclusion regarding the law firm's malpractice remained intact. "
 

From the National Law Journal:

Legal Malpractice Cases May Surge as Economy Tanks

New York Lawyer
February 23, 2009
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By Karen Sloan
The National Law Journal

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With the economy tanking, experts say the stage is set for a surge in legal malpractice lawsuits, as clients look to recoup their losses from third parties.

Insurance carriers and attorneys haven't seen a tidal wave of legal malpractice suits yet, but they anticipate a spike later in the year and into 2010.

National insurance provider CNA Financial Corp. predicts that legal malpractice claims will be up by 5% in 2009, said Vice President Shauna Reeder, who oversees the large law firm professional liability group. CNA has already seen an increase in claims related to fee disputes, wherein a firm steps up its collection efforts only to see its client turn around and sue for legal malpractice.

"Legal malpractice is a money-driven area of the law — more so than other areas," said Andrew Lavoott Bluestone, an attorney who represents plaintiffs in legal malpractice cases and the author of the New York Attorney Malpractice Blog. "It has a very strong connection to the economic situation. In a downturn, you will see more people suing their attorneys over things like estates and divorces. Now, $200,000 is life or death."

Bluestone and others also expect legal malpractice lawsuits to crop up in connection with failed financial deals; foreclosures; fraud, such as the Madoff scandal; and bankruptcy cases.

Legal malpractice claims were on the rise even before the economy hit the skids in 2008.

A 36% hike

A recent American Bar Association (ABA) study that looked at legal malpractice claims filed between 2004 and 2007 found that the total number of claims increased by more than 36% compared to the previous three-year period. Those numbers don't reflect the current recession, however.

"Markets go down, deals fall apart and some people look to place blame," said Stephen Novack, a partner and co-founder of Chicago-based Novack and Macey, which defends attorneys in legal malpractice cases. "Scapegoating heightens in bad economic times, and I think there will be a spike as dissatisfied investors and dealmakers look for deep pockets to try to recoup losses."

In a downturn, legal malpractice lawsuits aren't typically filed immediately, said Brad Dantic, vice president and general counsel of ALPS Corp. in Missoula, Mont., which provides legal malpractice coverage to attorneys in 24 states. Instead, historical data suggests that increases in legal malpractice lawsuits occur in the year or two after the economy hits bottom.

"When you look at the downturn we had in 1990 and 1991, the spike in claims started in 1992 and went into 1993," he said.

For one thing, it takes time for a potential attorney error to be discovered and analyzed in advance of filing a claim, Dantic said. Additionally, plaintiffs often choose to wait until the economy has bottomed out and their losses have peaked before they attempt to recover anything through a malpractice lawsuit, he said.

"The client's assets are going down as the economy worsens, so the extent of their damages increases during a recession," Dantic said.

Robert J. Muldoon Jr., a partner at Boston-based Sherin and Lodgen, represents attorneys in malpractices suits. Muldoon said there are two general categories of legal malpractice lawsuits generated in a down economy. One category covers claims that attorneys provided negligent legal advice in financial matters, and clients lost money or assets as a result. For example, an attorney who advised a client to invest with Bernard Madoff could potentially be sued for malpractice, Muldoon said.

The second category includes "groundless claims" filed by clients who would not sue their attorney under better economic circumstances.

"That's kind of a dark scenario, but people might be so pressed for money that they sue," Muldoon said.

Bluestone predicts an increase in legal malpractice suits initiated by bankruptcy trustees that target attorneys who worked for the bankrupt entity. Bankruptcy trustees have a fiduciary responsibility to collect as many assets as possible to distribute to creditors, and that includes funds from a potential legal malpractice suit, Bluestone said.

CNA also is concerned about an increase in bankruptcy-related malpractice claims. "As corporate institutions begin to fail, we expect to see scrutiny from bankruptcy trustees and state-appointed receivers," Reeder said. "They will be investigating the professionals with regard to the advice they provided to their bankrupt client."

In Barber v. Siller Wilk we seen an interesting anomaly of legal malpractice, which is the recurring lawsuit against the target attorney, which is lost, and then against the attorney who sued the target attorney, then.... reminiscent of the reducio ad adsurdum metaphysical argument one learns in philosophy.  In this case, plaintiff successfully sued for a PhenFen injury, in New York, through a New York class action firm, and was unhappy with the result.  Winning $200,000 as a class action member, plaintiff believed that he was due more, as an individual. 

California has a one year statute of limitations, and when plaintiff sued defendant, was shut out on a borrowing statute issue.  The argument was over when the statute of limitations started to run, and whether continuous representation kicked in.  Plaintiff lost, and then sued the legal malpractice attorneys, only to lose on collateral estoppel.  Judge James found that defendants proved all that needed to be proved:  identity of issue and a full and fair opportunity to be heard.

Result: plaintiff loses.

The Labor Law and its connection with union contracts, employment at will and whistle blower statutes is complicated.  Clients are well advised to go to an attorney who concentrates in this area.  Here is a case in which plaintiff's case went awry, and ended in legal malpractice.

Hayes v Bello   2009 NY Slip Op 29065   Decided on February 11, 2009  Supreme Court, Richmond County illustrates the complicated nature of these interacting statutes, and what happens when a claim in one cancels out the other claims.
 

"By way of background, plaintiff's employment at SIUH began in April 1996 and ran through April 1997 pursuant to a one-year employment contract. Her contract was subsequently renewed in December 1997 for a three-year term, and was thereafter renewed twice more for a period of three years each. Her employment was terminated in July 2003. Each of plaintiff's contract renewals was retroactive to the expiration date of the previous contract. According to plaintiff, prior to her termination, she had notified her superiors of the illegal activities of another employee in conjunction with the clinical trial of a drug named "Tysabri". Plaintiff contends that her employment was terminated as of July 31, 2003 as a result of her having reported this information to her superiors."

"In September 2003, plaintiff retained the legal services of defendant THOMAS F. BELLO, Esq. (hereinafter BELLO) to represent her in a wrongful termination action against SIUH. An action was subsequently commenced by BELLO on her behalf in July 2005. The complaint alleges five causes of action, one each for breach of contract, promissory estoppel, breach of implied contract, specific performance and violation of Labor Law §740, also known as New York's "Whistleblowers Act". In September 2005, SIUH moved to dismiss the first four causes of action on the ground that an action under Labor Law §740 constitutes an exclusive remedy such that the assertion of a cause of action thereunder precludes plaintiff from pursuing any other causes of action related to the alleged wrongful termination of his or her employment. In addition, dismissal of plaintiff's Labor Law cause of action was sought on the basis that the one-year statute of limitations applicable thereto had expired in or about July 2004, one year from the date of plaintiff's termination. In response, BELLO served an amended complaint withdrawing the cause of action under Labor Law §740. "

"On appeal, however, the Appellate Division, Second Department dismissed the complaint in its entirety on the ground that (1) the assertion of a claim under Labor Law §740 operated as a waiver of all rights and remedies available to plaintiff under any contract, collective bargaining agreement, law, rule or regulation or under the common law, and (2) BELLO's attempt to amend the complaint to exclude the time-barred Labor Law §740 cause of action was insufficient to nullify the waiver (see Hayes v. Staten Island University Hospital, 39 AD3d 593). "
 

An attorney is free to utilize a reasonable trial strategy for its client without a risk of legal malpractice.  So goes the "judgment" principal in legal malpractice.  What constitutes a reasonable trial strategy?

As an example, Noone v Stieglitz ;2009 NY Slip Op 01093 ;Decided on February 10, 2009 ; Appellate Division, Second Department  is instructive.  Attorneys win in this case, having demonstrated a "reasonable" trial strategy:
 

"The defendants Michael Steiglitz and Sobel, Ross, Fleigel & Suss, LLP (hereinafter the respondents), represented the plaintiff in an underlying personal injury action to recover damages she sustained in an automobile accident, which occurred when the defendant in the underlying action drove his truck into her lane. The defendant in the underlying action testified that he was forced into the plaintiff's lane by a yellow car which drove into his lane from the side of the road. The plaintiff relied upon the testimony of a nonparty eyewitness, who stated there was no yellow car.

During jury deliberations at the trial on the issue of liability in the underlying action, the plaintiff accepted a "high-low" settlement offer whereby she would receive $1,000,000 if the jury found in her favor on the issue of liability and $500,000 if the jury found in favor of the defendant. The jury returned a verdict for the defendant.

The plaintiff then commenced the instant action to recover damages for legal malpractice against the respondents alleging, inter alia, that they committed legal malpractice by failing to present at the trial a map of the area of the road where the accident occurred and related records of [*2]recent highway construction demonstrating that there was no shoulder or entrance on the side of the road from which the yellow car could have come. The plaintiff further alleged that the respondents failed to advise her of the consequences of the high-low settlement.

The respondents moved for summary judgment on the grounds, inter alia, that the plaintiff was advised of the consequences of the high-low settlement on the record in the underlying action, their strategy was to rely upon the favorable testimony of a nonparty eyewitness, and submitting a map of the road would not have helped the plaintiff's case. The respondents noted that at the trial in the underlying action, the plaintiff's position was that if there was no shoulder, there was no place for the yellow car to come from, but if there was some sort of shoulder, the defendant in the underlying action should have used the shoulder rather than the plaintiff's lane to avoid the yellow car. "

"

We predict a change in the focus of legal malpractice cases reflecting the economic changes going on today.  Here is a case more indicative of the former red-hot real estate market in Manhattan.  Plaintiffs buy two apartments, plan to combine them, are told that some outside space on a setback will be theirs, and then it all goes sour.  Plaintiffs sue the brokers and their attorneys.  They hit .500 with the brokers out and the attorneys in.  In Pappas v. New 14 West LLC we see how the court treated the broker defendants differently from the attorney defendants, essentially saying that plaintiffs could not show writings which would support a fraud claim against the brokers, not withstanding any sales pitches which did not pan out, and that it was the attorney's responsibility to make sure the clients got what they expected.  In addition, the attorneys seem to have provided the title insurance company as well as the mortgage lending.

The decision is not reproducible here, but we do love the huge number of Mattone names in the defendant law firm's name: Mattone, Mattone, Mattone, Mattone, Mattone, Magna & Todd.

It's not the 10 Commandments, and it's not the Magna Carta, but as this Court of Appeals case demonstrates, it's not far off.  Amalfitano v. Rosenberg is a new Court of Appeals decision which traces Judiciary Law section 487 all the way back to 1275. 

Deceit, or a chronic pattern of extreme deceptive practice is the touchstone of this almost 750 year old law.  The Court of Appeals found "remarkable" how consistent it has remained in the incarnations between the First Statue of Westminster (1275) to the deceit statute of 1787, to the 1836 Revision, through the 1881 Penal Code to Section 79 of the Code of Civil Procedure, to the Penal Code of 1909 to the Penal Code of 1965 to today's Judiciary Law.

Running as a thread through the entire history of this law is the concept that attorneys have a higher duty to truth and honest dealings, and in their absence, pay not only a criminal but an enhanced financial penalty.  There is little to scare an attorney more than jail and a treble fine.

We've written about Judiciary Law section 487 before, and have an article in the New York Law Journal awaiting publication.  Like an appellate litigant who reads a new and important case the morning of oral argument, we came across the Amalfitano v. Rosenberg case from the Court of Appeals today.  It is an opinion that traces the statute back to 1275 and the time of the Magna Carta (1215)  Remembering that our law derives from the Norman conquest (1066);  that's really a long time ago.

In Amalfitano v. Rosenberg the court first re-itereated the ancient origins of this statute, which they determined was "the modern day counterpart of a statute dating from the first decades after Magna Carta, its language virtually (and remarkably) unchanged from that of a law adopted by New York's Legislature two years before the United States Constitution was ratified."

They traced the law from the First Statute of Westminster, adopted by the "Parliament summoned by King Edward of England in 1275."  500 years later, the NY Legislature adopted a law almost identical in 1787.  (L 1787, ch 36, section 5)

The statute followed, and continued through a series of statutory revisions to today's Judiciary Law section 487.

Tomorrow:  the history through the 1800's to today and application in state and federal courts.

Rounding out the week in legal malpractice, this article caught our eye.  Law firm represents company seeking to go national in the cable market.  Advises in a transaction so large it gets its own nickname.  In one of probably hundreds of document drafts two paragraphs go missing, and everything falls apart. 

What secondarily caught the eye was a month long mediation.  That's longer than many trials.  Here is the story from the National Law Journal:

"LOS ANGELES – Irell & Manella has settled a $150 million legal malpractice lawsuit with one of its largest clients, Charter Communications Inc., according to a Feb. 10 filing in the case.

The settlement was reached following two months of mediation, according to court documents. Charter Communications Inc. v. Irell & Manella LLP, No. 07-cv-00402 (C.D. Calif.). No details of the settlement, including the dollar amount, were provided.

Irell, based in Los Angeles, had represented Charter and its chairman, Paul Allen, while both were looking to acquire cable systems to build a nationwide cable television company. In 2000, while working on an acquisition dubbed "the Bresnan Transaction," an unnamed Irell associate deleted two important paragraphs of the contract, giving Allen an unintended type of stock. No one noticed the mistake until 2002, after which Charter was forced to negotiate with Allen over millions of dollars to rectify the deal.

Charter then sued Irell for legal malpractice, breach of fiduciary duty, breach of contract and other claims. "
 

Much litigation arises from the "deep pocket" theory.  Put in the best light, it might be said that a plaintiff has really been wronged, and now the search is on for the usual suspects.  Put another way, someone has lost a lot of money, due to no fault of his own, and he would like to be reimbursed.  Who is available to reimburse plaintiff?

Here, in Winter v. Dowdall a New York County case, we see how this unwinds. Will it be the attorneys who handled a transaction?   Justice Tolub analyzes the following:

Plaintiff wants to sell property and do a 1031 like-kind exchange.  He hires attorneys who correctly tell him that a third-party must hold the proceeds of the sale in a designated account, and then give the proceeds back to purchase the second property.

The sale goes correctly, the money is delivered to a company which specializes in like-kind exchanges, and apparently it disappears while it is supposed to be in the company's accounts.

Is Citibank responsible?  Is the attorney responsible?  From the caption and the opinion, it seems that the actual holder of the funds is no longer a defendant, and probably [we are guessing] no longer is of any use to plaintiff.  Lost, stolen or missing?

In the event, both attorneys are out of the case, because they are not responsible for the independent torts of the third party funds holder.  Although not specifically stated, there does not seem to be a theory of negligence in the selection of the fund holder, which was probably just another company without apparent faults.

Attorney Referrals are a significant part of the attorney compensation field, and some attorneys derive considerable fees from their practice of taking in a large catchment population, and then referring the cases out to attorneys in specialized fields.  What is their potential liability?

Bloom v Hensel ;2009 NY Slip Op 00884 ;Decided on February 6, 2009 ;Appellate Division, Fourth Department discusses this issue.
 

""[A]n attorney-client relationship may exist in the absence of a retainer or fee" (Gardner v Jacon, 148 AD2d 794, 795) and, "[i]n determining the existence of an attorney-client relationship, a court must look to the actions of the parties to ascertain the existence of such a relationship" (Wei Cheng Chang v Pi, 288 AD2d 378, 380, lv denied 99 NY2d 501; see McLenithan v McLenithan, 273 AD2d 757, 758-759). The unilateral beliefs of plaintiffs, without more, do not render them Calandra's clients (see e.g. Volpe, 237 AD2d at 283; Jane St. Co., 192 AD2d 451). Here, plaintiffs submitted evidence that Calandra referred the personal injury action to Hensel and that plaintiffs met with Hensel in Calandra's office for the initial meeting and on another occasion as well. Plaintiffs also [*2]submitted evidence that Calandra's staff arranged for the initial meeting, that both defendants met with plaintiffs during that meeting, and that, at the conclusion of the meeting, Hensel stated that "they would call [Robert W. Bloom, Jr. (plaintiff)] . . . if they were going to take the case." In addition, plaintiffs submitted the affidavit of Hensel in which he stated that he had previously engaged in fee-sharing arrangements in several cases referred to him by Calandra and that there was an oral agreement to split the fee with respect to the instant personal injury action. Hensel also stated that Calandra inquired with respect to the progress of the underlying action several times, and plaintiff testified at his deposition that Hensel informed him of that fact. Several of the pleadings or proposed pleadings in the personal injury action list both defendants as plaintiffs' attorneys, and plaintiffs also submitted evidence establishing that Hensel sent Calandra copies of certain of his correspondence with plaintiffs. Viewed as a whole, we conclude that the evidence submitted in opposition to the motion raises a triable issue of fact whether there was an attorney-client relationship between plaintiffs and Calandra (see Tropp, 23 AD3d 550; cf. Jane St. Co., 192 AD2d 451). "

The Fourth Department handed down four legal malpractice decisions this week, which is surely a record. Three were decisions without reasoning.  The fourth, KEITH LONG, , v CELLINO & BARNES, P.C., THE BARNES FIRM, P.C., STEPHEN E. BARNES, ESQ., RICHARD J. BARNES, ESQ., ROSS M. CELLINO, JR., ESQ., 1620 CA 07-01737;SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FOURTH DEPARTMENT;2009 NY Slip Op 910; 2009 N.Y. App. Div. LEXIS 968
 

permits a look at how the Appellate Division peels away the layers of a case.  The facts seem simple.  Plaintiff was a construction worker who fell from a height while working.  Defendants were his attorneys, and the appellate decision says that they sued the wrong parties.  Plaintiff had three causes of action, negligence, contract, fraud and he asked for punitive damages.

"Contrary to plaintiff's contention, Supreme Court properly granted those parts of the first cross motion of defendants seeking summary judgment dismissing the breach of contract and fraud causes of action against them as duplicative of the malpractice cause of action. The breach of contract cause of action arises from the same facts and alleges the same damages as the malpractice cause of action (see InKine Pharm. Co. v Coleman, 305 AD2d 151, 152, 759 N.Y.S.2d 62). With respect to the fraud cause of action, defendants met their initial burden by establishing that plaintiff failed to allege fraud "premised upon one or more affirmative, intentional misrepresentations--that is, something more egregious than mere [*2] concealment or failure to disclose [defendants'] own malpractice' . . . --which have caused additional damages, separate and distinct from those generated by the alleged malpractice" (White of Lake George v Bell, 251 AD2d 777, 778, 674 N.Y.S.2d 162, [**3] appeal dismissed 92 NY2d 947, 704 N.E.2d 230, 681 N.Y.S.2d 477; see Tasseff v Nussbaumer & Clarke, 298 AD2d 877, 878, 747 N.Y.S.2d 621). Plaintiff failed to raise a triable issue of fact in opposition to those parts of the first cross motion (see generally Zuckerman v City of New York, 49 NY2d 557, 562, 404 N.E.2d 718, 427 N.Y.S.2d 595).
Contrary to the contention of defendants on their [**4] cross appeal, the court properly denied that part of the first cross motion seeking summary judgment dismissing the malpractice cause of action. Defendants' own submissions raise triable issues of fact whether plaintiff would have succeeded in the underlying action absent defendants' negligence (see generally Phillips v Moran & Kufta, P.C., 53 AD3d 1044, 862 N.Y.S.2d 875).
 

How much money can be made in the business of incarcarating juviniles?  Apparently, quite a bil.  This Pennsylvania judge was suspended upon "accusations that two now-suspended Pennsylvania judges accepted $2.6 million in kickbacks in exchange for incarcerating juveniles at specific detention facilities "  That's bad.  Now, from the ABA Journal,  the spillover:

"Accusations that two now-suspended Pennsylvania judges accepted $2.6 million in kickbacks in exchange for incarcerating juveniles at specific detention facilities have spilled over into another multimillion-dollar case.

A law firm seeking to overturn a $3.4 million legal malpractice award says in a motion for a new trial yesterday that it should be allowed to introduce evidence of the judges' alleged criminal conduct and plea agreements in the federal kickbacks case, reports the Wilkes-Barre Times Leader.

Because one of the two judges, former Luzerne County President Judge Mark Ciavarella Jr., presided over the legal malpractice case—and a lawyer representing the malpractice plaintiff was then an owner of a juvenile detention facility central to the criminal case—information about the federal criminal case is relevant to show bias on the judge's part in the legal malpractice case, contends Laputka Bayless Ecker & Cohn in the motion."

Here is the story of a three-way deal in a legal malpractice / overpayment of fees / municipal negligence case which we reported at the onset.  In Lodi, California [I must admit that the CCR song quickly comes to mind] target attorney had represented the city in litigation, especially an underground pollution case, and claimed he was owed $ 7 million or more.  Here, from Recordnet.com is the story:

"Lodi officials called lawyer Michael C. Donovan incompetent and a fraudster.

Over the course of seven years, they paid Donovan and his firms $16 million to pursue a legal strategy that was later discredited.

After they fired him in 2004 and abandoned his failed legal tactics in a behemoth underground pollution ordeal, officials said they did not owe him a penny more.

Now, after already spending millions more fighting him in court, it will cost the city another $1 million to make Donovan go away for good.

A divided City Council on Wednesday approved settlement agreements that end a back-and-forth legal battle:

The city will drop its 2005 lawsuit against Donovan, in which it claimed he committed fraud and legal malpractice, and receive $200,000 from the attorney's legal insurance.

Donovan, in turn, will get $1.2 million to drop his countersuit"

If one were to peruse the legal press, headlines seem limited to merger, layoffs and legal fee disputes.  There is a definite tie-in to legal malpractice litigation.  Lesson one by legal malpractice insurers to attorneys is that legal fee cases engender legal malpractice defenses.

Here, from Legal Profession Blog is yet another example:  attorney who has the benefit of an arbitration clause in its retainer agreement sues for fees.  Client defends with malpractice claim.  Outcome?  Attorney gets no fees, client recovers fees. 

"A Maryland lawyer retained to handle a custody suit filed suit against the client for unpaid fees. The client counterclaimed alleging that the lawyer had breached the retainer contract by failing to properly represent him and sought the return of fees that had been paid. Counsel for the lawyer then sought but did not get arbitration of the dispute, as contemplated by the retainer agreement. The jury gave the lawyer nothing; the client won the return of almost $25,000 in previously paid fees."

"The lawyer appealed, claiming that the arbitration provision should have been applied and that the breach of contract counterclaim was a veiled claim of legal malpractice. The Maryland Court of Special Appeals rejected these contentions, "

For some reason, it seems legal malpractice cases are subject to an inordinately high percentage of motions to dismiss, more so than other categories of cases.  Here in SHAHRAM DAVID LAVIAN,  -v.- IRA DANIEL TOKAYER, ESQ., 08 Civ. 938 (PAC) (GWG);
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 6066

we have a primer on the law of 12(b)(6) motions:  "A party may move for judgment pursuant to Fed. R. Civ. P. 12(b)(6) where the opposing party has "fail[ed] to state a claim upon which relief can be granted." Separately, Fed. R. Civ. P. 8(a)(2) requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Under this rule, a complaint "must simply 'give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.'" Kassner v. 2nd Ave. Delicatessen Inc., 496 F.3d 229, 237 (2d Cir. 2007) (quoting Swierkiewicz v. Sorema N. A., 534 U.S. 506, 512, 122 S. Ct. 992, 152 L. Ed. 2d 1 (2002)). When considering motions [*4] to dismiss the claims of a plaintiff proceeding pro se, pleadings are construed liberally. See, e.g., Haines v. Kerner, 404 U.S. 519, 520-21, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972)."

Nonetheless, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level . . . ." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1964-65, 167 L. Ed. 2d 929 (2007) (citations, internal quotation marks, and brackets omitted); see also 127 S. Ct. at 1966 (pleading must "possess enough heft to show that the pleader is entitled to relief") (citations, internal quotation marks, and brackets omitted). Thus, "a complaint must allege facts that are not merely consistent with the conclusion that the defendant violated the law, but which actively and plausibly suggest that conclusion." Port Dock & Stone Corp. v. Oldcastle Ne., Inc., 507 F.3d 117, 121 (2d Cir. 2007) (citation omitted). As one case puts it, the factual allegations of a complaint must be sufficient to render the claim "plausible." Boykin v. KeyCorp, 521 F.3d 202, 213 (2d Cir. 2008) [*5] (citing Iqbal v. Hasty, 490 F.3d 143, 158 (2d Cir. 2007)) (emphasis omitted).

On a motion to dismiss for failure to state a claim, all factual allegations in the complaint are accepted as true. See Swierkiewicz, 534 U.S. at 508 n.1. While a court normally examines only these allegations on a motion to dismiss, "[d]ocuments that are attached to the complaint or incorporated in it by reference are deemed part of the pleading and may be considered." Roth v. Jennings, 489 F.3d 499, 509 (2d Cir. 2007) (citations omitted). In addition, matters of public record, such as court filings, may also be considered. See, e.g., Blue Tree Hotels Inv. (Can.), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 217 (2d Cir. 2004).
 

The principal of "continued representation" in Legal Malpractice is that the statute of limitations does not start to run upon the making of a mistake,  while the attorney continues to represent the client.  "The statue of limitations sounding in legal malpractice is tolled until the completion of the attorney's ongoing representation concerning the matter out of which the malpractice claim arises. Pellati v. Lite & Lite, 290 AD2d 544 (2d Dept. 2002).

Here is an example of a case in which there was no continued representation.  Mark v Dechert, LLP ;  2009 NY Slip Op 00437 ;  Decided on January 27, 2009 ;  Appellate Division, First Department .  The court does not explain why, but it appears that the attorneys represented the client in the run up to a merger, and then may have represented the entire entity, once merged.
 

In this case, "Plaintiffs' legal malpractice claim is barred by the statute of limitations (CPLR 214[6]), which began to run in January 2000, when the merger of the corporate plaintiffs was completed and defendant law firm filed the merger documents. Even assuming plaintiffs could sustain their allegations that defendant represented them with respect to the merger, the complaint would have to be dismissed because their claim of continued representation is without merit (see West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni Maldonado & Ver Dan Tuin, PC, 49 AD3d 270, 270 [2008]). [*2]"

The poor deserve an adequate criminal defense as much as anyone else.  While everyone gets an attorney when arrested, even if they cannot afford one, publicly funded legal Aid or 18b attorneys don't always get sufficient funding to handle large caseloads/  Who suffers? 

Here is a case from Seattle in which an innocent man sat in jail for months after his accuser recanted.  Apparently, [we really don't have the details] his publicly funded public defender did nothing to handle his case.  The Seattle Times reports: "A Grant County man has been awarded $3 million for spending months in jail because of poor work by his public defender.

Felipe G. Vargas was awarded more than $3 million payable by his public defender by a U.S. District Court jury in Spokane after spending more than seven months in the Grant County Jail, falsely accused of child molestation.

Grant County public defender Thomas Earl allegedly pocketed much of his fee for representing Vargas, instead of spending it to mount an adequate defense, the jury decided. Vargas' alleged victim recanted three days after Vargas was arrested in November 2003, but authorities took no steps to free Vargas from jail."

The Washington Injury Blog reports: "Vargas was arrested and placed in jail in November 2003 where he remained for seven months although his accuser recanted three days later. Vargas' court-appointed attorney was Grant County Public Defender Thomas Earl. Earl was working under a contract which paid him $500,000 annually. In finding Earl negligent in his representation of Vargas, the court heard testimony that Earl did not hire experts and investigators to clear Vargas, in part because of his case load, but also because he had a financial incentive not to spend money on services to defend Vargas. Earl was eventually disbarred.

A legal ethics professor at Seattle University, John Strait, testified in the trial calling flat fee contracts, "illegal and unethical for any attorney to enter into." Court watchers across Washington State believe that flat fee contracts for people needing court-appointed lawyers does not provide indigents a fair representation because defenders like Earl may not properly defend a client due to their own profit motive. In September, the Washington State Supreme Court barred any Washington lawyer from working under a contract such as Earl's."

Judges handle hundreds of cases a year, many more during a career.  what happens when a judge is removed from the bench for criminal acts?  Can the cases presided over by this particular judge unravel?

In this Pennsylvania legal malpractice case, the judge recused himself during trial when an attorney accused him of showing favoritism.  The attorney nevertheless lost, and in a facially unrelated coincidence, the judge was removed from the bench.  Now the judge faces criminal charges, and the attorney is the target in a legal malpractice case arising from that trial.  How do these intersect?

"A Hazleton law firm seeking to overturn a $3.4 million legal malpractice award wants to use information regarding criminal charges against two Luzerne County judges in its appeal.

Attorneys for the Laputka, Bayless, Ecker and Cohn law firm filed a motion Thursday asking a judge to allow them to use information released this week regarding the plea agreements of former judges Mark Ciavarella and Michael Conahan.

The Laputka firm is seeking to negate a jury verdict entered in favor of Bernadette Slusser. Slusser’s family filed a legal malpractice case against the Laputka firm alleging it provided faulty legal representation in a series of lawsuits related to land transactions.

The Slussers were represented by the Powell Law Firm.

In the motion filed on Thursday, Jeffrey McCarron, an attorney for the Laputka firm, said the recent allegations against Ciavarella and Conahan should be included in their post-trial motions. The two former jurists, who were removed from the county bench by the state Supreme Court this week, face federal charges in an ongoing public corruption probe. They are accused of taking $2.6 million in kickbacks in connection with a juvenile detention center."

May the defendant attorney collect attorney fees for the successful defense of a legal malpractice case?  One would immediately think not. The "American Rule" is that each side pays for its own attorneys, and the blackletter rule in NY is that absent an agreement or a statute, attorney fees are not collectible.

Here is a case, Lok Praknashan LTD v. Berman, Kern, Davidoff & Mallito04 Civ. 7212 (BSJ)(AJP);
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK     2008 U.S. Dist. LEXIS 101756 which determines the meaning and validity of a retainer agreement which gives the law firm attorney  fees for collection of unpaid fees, but does not mention attorney fees to defend a legal malpractice action.
 

"Defendants move for summary judgment on their counterclaim for (1) unpaid legal fees from their underlying representation of Plaintiff, (2) costs and attorneys' fees associated with their efforts in bringing their counterclaim, and (3) costs and attorneys' fees associated with their efforts to defend themselves pro se against the legal malpractice action. For the reasons that follow, the Court concludes that while Defendants are entitled to recover the unpaid legal fees and expenses incurred in bringing the instant counterclaim, Defendants are not entitled to the additional costs and fees for the time spent in defending the legal malpractice action.

As an initial matter, Plaintiff does not contest the terms of the Retainer Agreement or the time spent and bills for Defendants' underlying representation. Because this Court has already granted summary judgment dismissing the claims of [*6] legal malpractice against Defendants, and because there are no disputed issues of material fact on this point, the Court concludes that Defendants are entitled to judgment on their counterclaim for $ 24,265.31, including legal fees and interest through December 20, 2004, as well as $ 4,267.75 in additional interest for the period of December 21, 2004 through December 20, 2005. (See Pl.'s R. 56.1 Stmt., at No. 11.)

Next, pursuant to the Retainer Agreement, Fed. R. Civ. P. 54(d)(2), and 28 U.S.C. § 1927, Defendants move for summary judgment for costs and attorneys' fees expended in making the instant counterclaim to collect their underlying legal fee, and in defending against the legal malpractice action. The Retainer Agreement provides in relevant part: "If it is necessary to institute litigation to collect our fee . . . you will be responsible for all costs and legal fees associated with such action []." (Kern Decl. P 10.) Under the plain language of the Agreement, Defendants are entitled to the costs and legal fees associated with bringing this counterclaim. Defendants are directed to submit a declaration within thirty (30) days of this Memorandum and Order, detailing this precise [*7] amount.

Contrary to Defendants' assertions, however, the plain language of the Retainer Agreement does not enable Defendants to recover costs and fees incurred in defending against the legal malpractice action. The Retainer Agreement nowhere mentions defense against litigation. Further, although the Agreement refers to the collection of costs and legal fees, the Court does not believe that this reference encompasses expenses incurred in an ensuing malpractice suit. As described above, the language instead refers to the expense of litigation to recover the fee for the services covered by the Retainer Agreement. Accordingly, the Court concludes that the Retainer Agreement does not authorize the award of costs and legal fees for the defense of the instant action."

ROBERTO BERAS, Plaintiff-Appellant, -v.- STEPHANIE M. CARVLIN, ROBERT C. GOTTLIEB, MARK STEIN, THE FIRM FRIED, FRANK, HARRIS, SHRIVER, AND JACOBSON, CHARLES A. ROSS, THE FIRM OF BRAFMAN & ROSS, Defendants-Appellees.;No. 07-2514-cv;UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT;2008 U.S. App. LEXIS 19805

is a prime  example of  pro-se litigation in legal malpractice.  It seems that there are two tiers of litigation; one has real substance, and is brought within the accepted norms and rules of legal malpractice litigation; the second is a pro-se tier where there is much procedural fuss, but little traction or success.  This case and its predecessor are examples of a pro-se case doomed from the start..

"On January 28, 2001, Beras was convicted of multiple counts of money laundering following a trial by jury, during which he was represented by Charles A. Ross. See United States v. Dinero Express, Inc., 57 Fed. Appx. 456, 457 (2d Cir. 2002). Beras then filed an action on November 14, 2003 (the "2003 Action") in the Southern District of New York (Charles L. Brieant, J.) against Ross for legal malpractice, breach of fiduciary duty, breach of contract, and fraud.

Adopting the report and recommendation of a magistrate judge, the District Court dismissed the complaint because (1) the "malpractice claim fail[ed] at the outset as [Beras] has not secured a reversal of his criminal conviction [as required by New York law];" [*3] (2) "[Beras] fail[ed] to show that [Ross] breached his fiduciary duty;" (3) the breach of contract claim was "not supported by any facts in the record" and was "completely without merit;" and (4) because Beras "simply repeat[ed] his [breach-of-duty] claims" as the basis for his fraud claim, his pleadings were "insufficient to support a claim of fraud." Beras appealed the dismissal of his complaint, and on June 20, 2006, our Court dismissed his appeal "because it lack[ed] an arguable basis in fact or law."

Three months later, Beras commenced the instant action (the "2006 Action") against Ross, Ross's law firm, the attorneys representing Beras's co-defendants, and one of their law firms. He alleged legal malpractice, a violation of his due process rights, breach of fiduciary duty, breach of contract, and fraud, all arising from the criminal proceedings that resulted in his 2001 conviction.

Because the 2006 Action constitutes an attempt to relitigate issues that were or could have been raised in the 2003 Action, it is barred by the doctrine of res judicata. See Rivet v. Regions Bank, 522 U.S. 470, 476, 118 S. Ct. 921, 139 L. Ed. 2d 912 (1998). HN1Res judicata applies when "1) the previous action involved an adjudication on [*4] the merits; 2) the previous action involved the [same parties] or those in privity with them; and 3) the claims asserted in the subsequent action were, or could have been, raised in the prior action." Monahan v. New York City Dep't of Corrections, 214 F.3d 275, 285 (2d Cir. 2000). Each of these elements has been satisfied here.

Collateral Estoppel and Legal Malpractice have an interesting intertwining existence.  Put briefly, once an attorney is awarded a legal fee [by a court, an arbitrator, or a judicial hearing officer] a subsequent legal malpractice case fails on the basis that a court has already implicitly determined that there can be no legal malpractice, because no fee may be awarded in the face of legal malpractice.  This principal has been criticized as circular, and basely favoring attorneys. 

Here, in York v Landa ;2008 NY Slip Op 10614 ;Decided on December 30, 2008 ;Appellate Division, Second Department we see a rare variation on the theme.  Attorney represents plaintiff in a matrimonial and agrees with the client that she will pay a compromised fee of $ 75,000, for which he obtains a lien.  When she does not pay, he enforces that lien.  Later she sues him for legal malpractice, and surprisingly, does not have her suit dismissed.
 

"The doctrine of collateral estoppel "bars relitigation of an issue which has necessarily been decided in [a] prior action and is decisive of the present action' if there has been a full and fair opportunity to contest the decision now said to be controlling'" (Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195, 199, quoting Buechel v Bain, 97 NY2d 295, 303-304 [emphasis added]). Pursuant to this doctrine, a legal malpractice action generally will be barred by the defendant's "successful prosecution of a prior action to recover fees for the same legal services which the [plaintiff] presently allege[s] were negligently performed" (Pirog v Ingber, 203 AD2d 348, 348-349; see Blair v Bartlett, 75 NY 150; Altamore v Friedman, 193 AD2d 240, 244-248).

Here, in support of his motion to dismiss the complaint, the defendant failed to establish that the services for which he secured payment through the November 2002 settlement agreement with the plaintiff were "the same legal services" as those which are the subject of the instant legal malpractice action (Pirog v Ingber, 203 AD2d at 348; see Blair v Bartlett, 75 NY at 154 [medical malpractice action barred where defendant physician's complaint in prior action to collect payment for his services involved "the same services which are set forth in the complaint in the action now before us, as the malpractice sued for"] [emphasis added]).

Moreover, only those facts which "must have been proved" by the defendant in the underlying matrimonial action can be deemed to have been necessarily decided in that action (Blair v Bartlett, 75 NY 150, 154). Regardless of how the defendant's motion in the underlying action was denominated, the true nature of the relief sought in that motion was not payment for services rendered to the plaintiff, but the enforcement of the November 2002 settlement agreement, which fixed the amount owed to the defendant at $75,000. Thus, in procuring the order dated March 13, 2007, the defendant was not required to prove that he performed legal services for the plaintiff, or that those services were worth $75,000 (see Resnick v Resnick, 24 AD3d 238; cf. Chisholm-Ryder Co. v Sommer & Sommer, 78 AD2d 143, 145-146). Rather, the only issue actually before the court was whether the defendant and the plaintiff had entered into a valid, enforceable agreement requiring the plaintiff to pay the defendant $75,000.

Thus, the issue of whether the defendant committed legal malpractice was not necessarily decided in the underlying action, and the plaintiff is not precluded from raising that issue in the instant action. Accordingly, the Supreme Court properly denied the defendant's motion to dismiss the complaint as barred [*3]by collateral estoppel. "

Here is a pdf version of the Oxman v Herman Sloan Robarge & Sullivan, LLP  case, which is a not unusual matrimonial legal malpractice case, As in many of these cases, plaintiff-wife believes that her attorney has insufficiently investigated the assets of her husband, to the extent that she has been significantly short-changed in equitable distribution.  The wife alleges that she was shortchanged $ 300,000 in the guitar alone.

In this particular case, there was a guitar collection, including a very valuable Eric Clapton guitar, a house in Greenwich, CT, jewlery and stocks.  What will be at issue will be the attorney's investigation, whether he retained a forensic accountant, and to what extent her attorney acquiesced in the husband's valuations.

Motion to dismiss denied and the case continues.

Legal malpractice is a world within itself.  Beyond the obvious small universe of defendants, all attorneys of course, and the unique rules, the serious questions are almost always how the underlying case was lost, and could it have been won.  While much litigation today centers on meta data and electronic discovery, most of legal malpractice centers on metaphysics, or the ultimate nature of proofs and hypothetical outcomes.

Here is an example from the West Virginia Record.  "A 2005 legal malpractice case against a Ritchie County attorney has a new twist, as the attorney hired to help with the suit has himself been sued for legal malpractice.

On Jan. 8, James and Frances Arthur filed suit against James M. Bradley Jr. in Wood Circuit Court. In their complaint and suit, filed with the assistance of Bruce L. Freeman, with the Charleston law firm of Freeman and Chiartas, the Arthurs allege Bradley failed to properly represent them in a suit against Rodney C. Windom.

According to court records, the Arthurs retained Bradley on Jan. 5, 2004 to pursue a legal malpractice suit against Windom, an attorney in Harrisville. In their suit filed a year later, the Arthurs accused both Windom and Edward R. Coakley, a Pennsboro certified public accountant, of not protecting their interests in a 2000 condemnation proceeding.

At the time, the Arthurs were owners of Artie's Exxon and Mini-Mart on U.S. 50 near the Interstate 77 interchange. Along with several other businesses, Artie's Exxon was taken by eminent domain by the state Division of Highways as part of the Corridor D project in Wood County.

In their first malpractice suit, the Arthurs allege Windom and Coakley informed them so long as their property was replaced they would not have to pay any recognizable tax on the gain they received from DOH for three years after conclusion of the condemnation proceeding. However, the Arthurs allege they received a call from Windom on Dec. 23, 2003, saying he and Coakley were mistaken about the timetable."
 

Legal Malpractice in Hollywood should come as no surprise.  We've commented on the widespread omnipresence of legal malpractice litigation, but had no idea we would be quoting Variety on the subject.  Here is their report on legal malpractice and the "9 to 5" screen, stage and trust saga as well as the cult classic Harold and Maude.

"The trust representing the late writer-director Colin Higgins has sued attorney Barry Hirsch for failing to properly represent his interests in the "9 to 5" stage musical.
Colin Higgins Prods. filed suit on Jan. 14 against Hirsch and his law firm in L.A. County Superior Court, accusing Hirsch of legal malpractice and breach of fiduciary duty. The trust seeks damages to be determined in a jury trial.

Among the many charges in the filing: Hirsch failed to adequately secure Higgins' rights to a live stage show from Patricia Resnick, the original scribe for the movie, and failed to advise the trustee in 2006 that the firm was representing Resnick at the time she was writing the book for "9 to 5: The Musical."

When the trustee asked how such a musical could be mounted without stage rights from Higgins Prods., Hirsch supposedly stated, "It may not be ethical, but it is legal."

According to the suit, Higgins, best known for penning "Harold and Maude," inked his deal with Fox to rewrite Resnick's "9 to 5" screenplay in 1979. Hirsch represented the writer-director and his shingle on various entertainment matters, including that contract.

As the economy has sunk, it is expected that legal malpractice cases will increase.  One reason is that cases previously thought to be unworthy will garner new luster; another is that in commercial circumstances there will be opportunities for cases.  Here is one example which did not work out for plaintiff.  As more sub-prime lending practices surface, we may expect to see further examples of this litigation, both in bankruptcy court and in district courts.

Law.Com reports the Dorsey saga.  "What started off as a run-of-the-mill loan arrangement turned into a decade of litigation for Dorsey & Whitney that could have cost the firm up to $4 million in malpractice verdicts -- until the 8th U.S. Circuit Court of Appeals tossed out the entire case Thursday.In 1999, a now-defunct investment bank in Minneapolis, Miller & Schroeder, packaged about $12 million in bonds and sold them to 32 banks. The banks then became the direct lenders to a Mohawk tribe in upstate New York which used the money to open a casino.

There was a problem, though. Miller & Schroeder hadn't gotten the go-ahead on the loan for the casino project from the National Indian Gaming Commission. Internal documents showed Dorsey lawyers knew this could jeopardize the entire project. They told Miller & Schroeder to go ahead with the financing anyway.

The casino was a huge failure and its management defaulted on the loans starting in 2000. The banks sued, but the casino administrators said they didn't have to repay the loans. Why? Because without the gaming commission's approval, the casino project itself wasn't valid -- and neither were the loans.

Litigation ensued. Miller & Schroeder, Dorsey's client, sued the casino management and the Mohawk tribe in bankruptcy court. Dorsey advised Miller & Schroeder to drop the tribe from the lawsuit, a strange decision. A federal district court in 2007 concluded that Dorsey made that decision only to prevent the disclosure of its mistake in advising Miller to proceed with the loans without getting the gaming commission's approval.

There was more: One of the banks involved, Bremer Business Finance Corp., sued Miller & Schroeder. Dorsey lawyers badly wanted to keep representing Miller, especially because a rival firm was pushing for the business, court records show. But could they ethically do so if their own error would be at the heart of Bremer's claim? Dorsey decided they could, and continued on the case. Finally, Bremer sued Dorsey, claiming that, in effect, Dorsey, by representing the arranger of the loan, also indirectly represented all the banks who eventually bought those loans.

Two federal courts -- a bankruptcy court and a federal district court -- basically agreed and ruled against Dorsey in judgments that added up to $900,000, according to stories in The National Law Journal. Those judgments also kept the door open for larger judgments in the future. But the Minnesota Supreme Court went the opposite way in a parallel case brought against Dorsey by the banks. That court ruled that Dorsey's conduct didn't amount to malpractice, and it discredited the idea that the banks, as third parties, were Dorsey clients all along. "

This case illustrates the difference between legal malpractice and all other litigation, the "case within a case."  Defendant attorneys admitted that they allowed a case to go into default, yet were successful in avoiding liability.  Their defense?  Even if we made the mistake, plaintiff could not have won the case after all.

From NY Lawyer comes this story:

"The 6th U.S. Circuit Court of Appeals dismissed a legal malpractice suit against a Cincinnati law firm that acknowledged its error for failure to prosecute a civil suit over the sale of a race horse, but argued that its client's suit would have failed on the merits anyway.

The 6th Circuit agreed on Jan. 12 that White, Getgey & Meyer Co., though it stipulated to legal malpractice, showed that the underlying suit by its client, Leonard Pivnick, would not have succeeded on the merits.

Pivnick purchased a one-year-old thoroughbred horse for $410,000 in a 1997 New York auction but failed to pay the auction house for the horse despite repeated demands, according to the ruling. Pivnick v. White, Getgey & Meyer Co., No. 07-4304 (6th Cir.).

The auction house, Fasig-Tipton Co., subsequently recovered the horse and sold it privately for $375,000. Eventually, the horse sold, after training as a racehorse, for $800,000, according to the court.

Pivnick sued the auction house, arguing that demand notices from Fasig-Tipton regarding the default did not make clear that it planned to sell the horse, and violated Kentucky's commercial code.

For an attorney, being sued is a traumatic event.  Ones advice and acts are being criticized, and a former client is claiming injury as a result of your professional work.  Not a good feeling.  What could be worse?  How about being arrested for giving advice to a client?

In this case, Vinluan v. Doyle, we see that the attorney defendant gave a group of nurses from the Philippines advice that they could resign.  He gave that advice based upon an analysis that the hospital had already breached their contract.

The New York Law Journal reports that attorney Oscar Michelen was successful in an Article 78 proceeding ending the prosecution.

The Appellate Division [and incidentally, the State Education Department) ultimately cleared the nurses of professional misconduct after taking into account that "no children were deprived of nursing care."  determined that     "We cannot conclude that an attorney who advises a client to take an action that he or she, in good faith, believes to be legal, loses the protection of the First Amendment if his or her advice is later determined to be incorrect," Justice Randall T. Eng wrote.

"Indeed, it would eviscerate the right to give and receive legal counsel with respect to potential criminal liability if an attorney could be charged with conspiracy and solicitation whenever a District Attorney disagreed with that advice," the panel said. 
 

From the NYLJ article: "In yesterday's ruling, Justice Eng pointed out that the nurses "did not abandon their posts in the middle of their shifts." Rather, he wrote, they resigned "after the completion of their shifts, when the pediatric patients at Avalon Gardens were under the care of other nurses and staff members."

Justice Eng also noted that the state Education Department ultimately cleared the nurses of professional misconduct after taking into account that "no children were deprived of nursing care."

Next, the judge turned to the role Mr. Vinluan played as an advocate.

"It cannot be doubted that an attorney has a constitutional right to provide legal advice to his clients within the bounds of the law," the judge wrote, citing Matter of Primus, 436 US 412, among others. Here, the indictment "seeks to punish Vinluan for providing legal advice, which he avers was given in good faith." "
 

We've noted in the past that many legal malpractice cases arise when attorneys work outside of their zone of experience.  As an example, there are unique rules for medical malpractice which do not exist elsewhere.  A certificate of merit is required to be filed with the complaint, and the failure to file it can have serious ramifications.  That obligation does not exist elsewhere.

Experienced medical malpractice attorneys know this; one-timers may not.  Beyond a special filing, an experienced practitioner has a bevy of experts and techniques to obtain the medical records, to review for deviations, to understand the case law in the area.  One-timers do not, and trouble may well ensue.

Injuryboard.com brings us this insight:  when the economy dips and attorneys take cases outside of their core areas, legal malpractice claims show an uptick. "Experts predict that the current economic downturn will give rise to an increasing number of legal malpractice lawsuits. Historically, claims against lawyers escalate during economic downturns.

There are several different reasons for the increase in malpractice claims: (1) assets lose value; (2) deals go sideways; and (3) attorneys start practicing outside of their core competence. This last reason is perhaps the most interesting.

Lawyers feeling economic pressure are more likely to retain work they would otherwise refer out to someone with more specific knowledge. We see this with increasing frequency when it comes to personal injury claims.

Instead of referring personal injury claims to personal injury attorneys, business and real estate and family law attorneys are starting to handle these claims to prop up their own sagging practices. This leads to a host of problems.

While personal injury claims can see simple on their faces, they are laced with complexities and really only can be competently handled by experienced practitioners. There are just too many "hidden" traps for the occasional practitioner."

This case Tavarez v Hill ;2009 NY Slip Op 29002 ;Decided on January 5, 2009 ;Supreme Court, Bronx County ;Victor, J.     recently partially decided covers two areas. The first area is disqualification of counsel because of multiple representation of four car accident victims, all in one car. "Should the court, sua sponte, stay the motion made for summary judgment until there is a final resolution of a potential "conflict of interest" issue arising from plaintiffs' counsel's representation of multiple parties in the same action? "

"The court's records reflect that no additional motion on the issue of liability has been made; and thus, there is a meaningful risk that counsel for plaintiffs may be burdened with a conflict of interest, since the issue of liability of each driver is yet to be determined, and, in this proceeding, the passenger plaintiffs may have interests adverse to those of their driver."

"An attorney who chooses to represent multiple parties in the same action will risk being held to have violated the Code of Professional Responsibility (and its applicable Disciplinary Rules); as well as sanctioned for having engaged in a conflict of interest; and in addition thereto, suffer the indignity and cost of becoming a defendant in a malpractice action. "

The second area is shortcomings in opposition to a motion for summary judgment.  "In support of the motion, the defendants have submitted, among other things, numerous affirmations from physicians in various specialties. In opposition, counsel for the plaintiffs has submitted only unaffirmed medical reports and test results; and in adddition, failed to address arguments made by the defendants as to "gaps in treatment" and the failure to provide evidence of "recent" examinations supporting the serious injury claims made by each said plaintiff. "

Here is a fascinating case from the Fourth Department.  Lawfirm refuses to pay expert for his trial testimony [what has happened to the demand that a certified check be handed over prior to taking the stand?] and expert sues for his fee.  Law firm turns around and sues for loss of case based upon expert's testimony.  In Kane v Shapiro, Rosenbaum, Liebschutz, & Nelson, L.L.P. ;2008 NY Slip Op 10422 ;Decided on December 31, 2008 ;Appellate Division, Fourth Department  we see just the tip of an iceberg.  In this portion plaintiff was directed to obtain his own copy of the transcript in order to oppose a motion.  "Memorandum: Plaintiff commenced this action seeking to recover fees allegedly due from defendant law firm for his services as an expert witness in a medical malpractice action, and defendant asserted a counterclaim seeking the contingent legal fees that it allegedly lost as a result of plaintiff's expert testimony in the underlying action. Supreme Court erred in granting in part plaintiff's motion seeking disclosure sanctions by directing defendant to provide plaintiff with that portion of the trial transcript in the underlying action consisting of the direct testimony of plaintiff as well as his testimony on cross-examination. The affidavit submitted by plaintiff's attorney in support of the motion failed to demonstrate "that counsel has conferred with counsel for [defendant] in a good faith effort to resolve the issues raised by the motion"
 

Is it legal malpractice to lose a case because of an expert's testimony?  It depends on which side of the prism one stands.  If the mere selection of an expert is claimed to be negligence, then the judgment rule is largely applied.  If it is failure to cross-examine that expert, then a wholly different analysis ensues.  We'll follow on with this analysis in a later entry.

This case discusses three important concepts in legal malpractice.  Standing, immunity  and proximate cause. Cangro v. Solimon  2008 Slip Op. 33345. holds that  under Rule 1(h) of Part 36 of the Rules of the Chief Judge, a guardian ad litem's attorney requires judicial appointment, and is immune from suit, absent permission from the court. The same is true of trustees, referees and receivers.

Beyond this interesting tidbit, the case is worth reading for questions of proximate cause, emotional damages in legal malpractice and qualified immunity for attorneys in litigation.

There is a traditional cadence to the start of a legal malpractice case.  First comes a dispute, retention of an attorney, initial success, then a downturn into failure followed by a legal malpractice case.  With the real estate market very troubled, and foreclosures on the rise, a prediction of legal malpractice/foreclosure actions is warranted. Here is one such possibility.Greenpoint Mtge. Funding, Inc. v Valentin ; 2009 NY Slip Op 50002(U) ; Decided on January 5, 2009 ; Supreme Court, Kings County ; Lewis, J.  
 

Defendant home owner had several opportunities to fix the foreclosure situation, but failed in the end to stave off the foreclosure sale.There is a tantalizing clue that an attorney was retained and was unable to fix the situation.

"Calixte Valentin, one of the named defendants herein, has moved this court by Order to Show Cause, dated the 2nd day of October, 2008 to vacate the judgment of foreclosure auction and sale of his home, located at 3510 Avenue L, Brooklyn, NY, and to void and reverse the transfer of title to said premises from Rafael Badalov, the successful bidder at the mentioned sale, to him and his wife, Marie Valentin. Mr. Valentin represents that he and his wife executed a Greenpoint mortgage on the subject property for $93,750.00 on December 16, 1992 on which a foreclosure action was commenced in 2006. In October of said year, a reinstatement letter was received by him calling for payment of $11,045.49 ($9,806.75 in loan defaults plus $1,238.74 in legal fees) to restore the mortgage, which sum he withdrew from his checking account and sent to plaintiff's attorneys on November 18, 2006. Approximately six weeks later the check was returned to him, whereupon he and his wife consulted with an attorney who advised them that he was in contact with Greenpoint's lawyer. Thereafter, he ceased receiving monthly mortgage statements, and thereafter received court documents which were turned over to the lawyer that he had retained whom he assumed was negotiating a payment plan with the bank until receiving notice that a foreclosure sale had taken place and the property deeded over to Rafael Badalov on or about June 13, 2008. "
 

Might we be seeing a legal malpractice case now that the house has been sold, and the owner won't take his surplus funds? "In addition, counsel[ for the foreclosure sale purchaser] stresses the injustice of the current situation in that although his client acquired title to the subject premises on June 13, 2008, is making monthly payments of $2,620.00, the defendant and his family continue to occupy the premises without paying rent or use and occupancy despite the fact that surplus funds of $213,569.91 are due him from the auction sale
 

As yet another example of why legal malpractice is a difficult discipline, here is a case in which there was a failure to file a counterclaim,  The legal malpractice case ends in dismissal, because the Appellate Division determines that the counterclaim, even if made would have failed. Ginther v Rosenhoch ;2008 NY Slip Op 10292 ;Decided on December 31, 2008 ;Appellate Division, Fourth Department
 

"One necessary element of such a cause of action is that, " but for the [defendants'] negligence, the plaintiff[] would have been successful in the underlying action' " (Oot v Arno, 275 AD2d 1023, 1023). Here, plaintiff alleges that defendants committed legal malpractice by, among other things, failing to assert a counterclaim in the underlying action, for recovery of premiums paid by plaintiff under a disability insurance policy. We note, however, that the Second Circuit affirmed the judgment of the District Court in favor of the plaintiff insurer in the underlying action on the sole ground that the claim for benefits made by defendant, the plaintiff herein, was untimely under the policy (Provident Life & Cas. Ins. Co. v Ginther, 51 Fed Appx 72). Thus, it cannot be said that, but for defendants' negligence, plaintiff would have been successful on a counterclaim for recovery of premiums in the underlying action (see Oot, 275 AD2d 1023).
 

The matter of Chen v. Mt. Sinai was handled by attorney Steven F. Goldman, and settled just after depositions for $ 2.4 million.  Mt. Sinai was represented by Martin Clearwater & Bell, a premiere NY med-mal defense firm.  One would think that was good news for Mr. Goldman.  However, he ends up, after a Second Circuit decision, with no fee at all.  Legal Malpractice litigation might follow had he garnered a fee.  It might still if one scrutinizes the question of whether sufficient provision was made for a severely injured child. From the opinion: "The circuit noted that Mr. Goldman provided no real assistance to Judge Korman in his effort to determine whether the settlement was reasonable."Equally disturbing, the record suggests that Goldman himself had made only limited inquiries into David's condition and the nature and extent of David's future medical needs,"

Law.Com writes: "A federal judge acted within his authority when he denied all fees to a lawyer who won a $2.4 million medical malpractice case but who failed to investigate the future needs of a child disabled at birth and overcharged his client, a federal appeals court has ruled.

The U.S. Court of Appeals for the Second Circuit on Monday upheld the discretion of Eastern District Judge Edward Korman to refuse Steven F. Goldman's application for $388,000 in fees.

Mr. Goldman obtained a settlement with the Mt. Sinai-NYU Medical Center Health Systems, NYU Downtown Hospital and the doctors involved. He then filed a stipulation of settlement and infant compromise order directing that he be paid $408,000 in fees and $20,000 in expenses, and that Ms. Chen be paid $250,000 for her loss of services claim, and $1.7 million as trustee for her son's special needs trust.

But Judge Korman said he was unable to analyze the reasonableness of the settlement because Mr. Goldman failed to provide documentation for his fees and for David's current medical condition and a projection of his expenses for future medical care.

Saying the attorney's information was "totally unhelpful," the judge appointed a special master, attorney Steven North, who was told by Mr. Goldman that he had applied the sliding scale fee system set forth in New York Judiciary Law §474-a for medical malpractice compensation.

When Mr. North inquired as to the fee, Mr. Goldman claimed he had miscalculated it under the sliding scale, and it was actually $388,000."
 

Law.Com reports [as does the BLT Blog] that a legal malpractice case by Blackwater Security Consulting has been dismissed, now for the second time against Wiley Rein.    The legal malpractice case arises from the horrible death of Blackwater employees in Falugia, Iraq.

The fact of deaths in Iraq ending in US litigation brings to mind a recent speech which attributed the idea to Alexis de Tocqueville that all serious issues in the US ultimately end in courts.  If it ends in court, look for legal malpractice litigation to follow.

"On Dec. 29, Judge Jennifer Anderson of D.C. Superior Court dismissed the $30 million malpractice suit brought against the firm by Blackwater Security Consulting on summary judgment. She's the second judge to throw out the case since it was filed last January.

"They have the right to ask more judges to look at it," says Zuckerman Spaeder partner Mark Foster, who represents Wiley Rein in the matter. But if Blackwater's lawyer, Barry Nace of Paulson & Nace, chooses to do so, Foster says, "I think he'd be wasting his time." (Nace is on overseas travel and could not immediately be reached for comment.)

Blackwater alleged that Wiley botched its defense of the security contractor in a wrongful death case brought on behalf of four Blackwater guards killed in Iraq in 2004. Blackwater claimed the suit would have been dismissed if it had been heard in federal court, instead of in a North Carolina trial court. Blackwater said the Wiley lawyers failed to get a venue change because they didn't invoke the federal officer removal statute, which grants federal jurisdiction to claims involving federal officers."

A recurring theme of these entries is the ubiquitous nature of legal malpractice.  All roads, it seems, require attorneys to mix a metaphor.  Downturns in the real estate marketplace are no exception.  Here is a story from Law.Com about a legal malpractice case against Quinn Emanuell, a biglaw litigation firm.  This one is from California:

"Quinn Emanuel Urquhart Oliver & Hedges has been hit with a malpractice lawsuit that claims the firm botched a $48.8 million settlement even as it took in some $12 million in contingency fees.

Former client Todd Kurtin, a one-time principal at the real estate concern SunCal Cos., filed the claim earlier this month in Los Angeles Superior Court. In his complaint, Kurtin accuses Quinn Emanuel of negligence for failing to advise him of "the meaning and ramifications of all terms of the settlement agreement" he reached with a former business partner, Bruce Elieff, that unwound their co-ventures.

Under the 2005 settlement, Kurtin was to receive his payout in four installments, but, according to the complaint, wound up getting only two payments and is still owed nearly $23 million not including interest. Kurtin is pursuing claims against Elieff for reneging on the settlement agreement.

The complaint against Quinn Emanuel highlights how -- as a result of a contingency agreement that essentially guaranteed Quinn Emanuel half of any amount recovered up to $20 million and 20 percent thereafter -- the firm has received approximately $12 million in fees for representing Kurtin. That amount is equal to what Kurtin himself has gotten to date from the settlement, which was reached a little more than four months after Quinn Emanuel took on the case.

SunCal, like other real estate development companies, has been hit hard by the downturn in the economy. The company has been plagued with cash flow issues and has had to back out of several projects. Lehman Brothers Holding Inc. was a major backer of the company."

Asbestos settlements have changed the landscape of tort law, and especially mass tort law.  Back in the mid '90s asbestos cases started to cascade and overwhelm the system.  The defense bar's response was to try to streamline the process.  While this may seem counter intuitive, the intersection between defense costs and settlement costs, especially when insurance/limited insurance coverage was factored in, required litigation committees, typology of injury and the like.  On occasion, good claims were lost and bad claims were paid.

This article from the venerable Madison County Record tells the story of the aftermath of an asbestos case.  Aftermaths often mean legal malpractice litigation.

"Asbestos lawyer John Simmons, facing trial on a widow's malpractice claim, boasts that he obtained $100,000 from W.R. Grace & Co. after the statute of limitations ran out, plus $214,000 from other businesses despite "sketchy product identification."

Simmons offered these examples in hopes of winning summary judgment and escaping a trial that Madison County Circuit Judge Barbara Crowder has set for Feb. 9.
 

Buckles hired Simmons in 1999, when he worked at Hopkins Goldenberg, to represent the estate of her late husband Charles Buckles, she claims. When Simmons left Hopkins Goldenberg, he retained her case and others.

Roy Dripps of the Lakin firm alleges in Buckles' complaint that Hopkins Goldenberg entered into secret agreements with asbestos defendants to classify claims of clients and settle them "in accordance with predetermined figures of money for each such classification."

The complaint stated that Hopkins Goldenberg settled claims "for amounts of money which were manifestly inadequate and which bore no reasonable relationship to the actual loss sustained by the clients."

It stated that Hopkins Goldenberg "fabricated, exaggerated, or otherwise manipulated the bookkeeping" and wrongly ascribed advanced costs to Buckles, and that Hopkins Goldenberg settled groups of claims without obtaining consent of each client.

Simmons failed to provide timely, aggressive and zealous representation to Buckles, according to Dripps.

For Simmons, A.J. Bronsky of St. Louis moved in 2007 for summary judgment.

Bronsky attached an affidavit in which Simmons wrote, "Even though the statute of limitations had run with respect to W.R. Grace, I was able to, with Judy Buckles' consent, obtain a settlement for $100,000 in October of 2000."
 

The question of when a legal malpractice claim belongs to the debtor and when it belongs to the debtor's estate is of strong significance.  If the former, plaintiff may hire his own attorney and proceed; if the latter, then the trustee in bankruptcy or debtor's estate holds the reins.  Here, from Bankruptcy Law Network is a case in which the legal malpractice included a claim of negligently advising a Chapter 11 filing rather than a Chapter 13 filing.

"A recent New Jersey case, In re Hussain, 2008 WL 5102458 (Bky.D.N.J. Dec. 5, 2008), held that a bankruptcy debtor’s legal malpractice claim against his former bankruptcy attorney was property of the estate, to be administered by the bankruptcy trustee for the benefit of creditors.

The bankruptcy court observed that the legal malpractice claim involved the alleged failure to advise the debtor that he could have filed a Chapter 11 case rather than a Chapter 13 case, and the failure to propose a Chapter 13 plan which could be confirmed by the court. These were actions involving pre-bankruptcy conduct. Accordingly, the legal malpractice claim accrued on the date the bankruptcy petition was filed, and it was therefore property of the estate under bankruptcy code section 541(a)(1). Although the filing of the legally inadequate chapter 13 plan was a post-petition event, it served only to magnify the malpractice claim, and not to create a new malpractice claim belonging to the debtor."

Thank you for reading our commentary this year.  We wish a wonderful holiday season to all.  We'll be returning on January 2, 2009.

A sole shareholder of a closely held corporation hires an attorney.  The retainer agreement does not always reflect that the attorney is representing both the individual and the corporation, and at the begining it probably means little.  After a progression into a legal malpractice case it may well take on epic porportions.  Here, in this caseLeach v. Bailey we see the confusion and trouble it can cause:

"Leo Wells sought specific performance of an agreement to convey real property or, in the alternative, money damages (Wells v Ronning, 269 AD2d 690 [2003]). Defendants represented plaintiff at the trial level in the underlying action. In brief, Wells obtained summary judgment on liability against both plaintiff and a corporation of which plaintiff was the sole shareholder and, after the corporation was dissolved, the successor in interest. Upon plaintiff's appeal, this Court reversed the judgment against plaintiff but concluded that judgment could be entered against the corporation because it neither opposed the summary judgment motion at the trial level nor appealed (id. at 691-693). The judgment was later satisfied after the sale of real property that remained titled in the corporation. Plaintiff then commenced this action.

Supreme Court (Spargo, J.) granted defendants' motion for partial summary judgment dismissing that part of the complaint that sought damages arising out of the sale of the [*2]corporation's property. The court concluded that defendants had demonstrated that they did not represent the corporation and, thus, could not be liable to plaintiff for losses suffered by the corporation. This Court reversed, finding that plaintiff had raised questions of fact regarding whether defendants represented the corporation (37 AD3d at 898-899).

The parties subsequently stipulated that defendants did not represent the corporation, but did commit malpractice in their representation of plaintiff individually. They further elected to proceed to a nonjury trial on certain stipulated issues of proximate causation and damages. At trial, plaintiff presented expert testimony and an appraisal report from real estate appraiser James Edward Beatty to rebut the testimony given on Wells' behalf by real estate appraiser Bruce Bauer in the underlying action. Supreme Court (Lynch, J.) determined that defendants' malpractice did not cause the unfavorable result against the corporation in the underlying action, and dismissed the complaint. Although one of the stipulated issues was whether plaintiff may recover counsel fees both paid to defendants and incurred on his appeal in the underlying action, the court made no findings regarding whether plaintiff could recover such fees from defendants. Plaintiff now appeals.

Plaintiff asserts that the focus in this action is the issue of defendants' failure to call an expert to value the real property at issue in the underlying action. Specifically, plaintiff asserts that Beatty's appraisal testimony offered herein establishes that the value of the real property at issue in the underlying action was $30,000 and, thus, "but for" defendants' failure to challenge the $90,000 appraised value offered by Wells, judgment in the amount of $30,000 plus interest, rather than $90,000 plus interest, would have been entered against him and the corporation. Plaintiff's argument misses the mark.

As noted above, the judgment in the underlying action was reversed insofar as it imposed personal liability on plaintiff (Wells v Ronning, 269 AD2d at 692-693) and, ultimately, the judgment as against the corporation was satisfied from the sale of the corporation's assets. Thus, any damages arising out of the entry of the judgment in the prior action were suffered by the corporation, not plaintiff. Generally, a shareholder has no cause of action "[f]or a wrong against a corporation . . . [even] though he [or she] loses the value of his [or her] investment" (Abrams v Donati, 66 NY2d 951, 953 [1985]). While exceptions to the general rule exist, they are inapplicable inasmuch as the parties have stipulated that defendants did not represent the corporation and there are no allegations of fraud, collusion or malicious acts herein. Accordingly, defendants cannot be liable for any losses suffered by the corporation (see Griffin v Anslow, 17 AD3d 889, 892 [2005]; C.K. Indus. Corp. v C.M. Indus. Corp., 213 AD2d 846, 847 [1995]; see also Abrams v Donati, 66 NY2d at 953-954; cf. Lawrence Ins. Group v KPMG Peat Marwick, 5 AD3d 918, 919 [2004]; Benedict v Whitman Breed Abbott & Morgan, 282 AD2d 416, 418 [2001]; Weiss v Salamone, 116 AD2d 1009, 1010 [1986]). In any event, even assuming that plaintiff could recover based upon the $90,000 judgment entered against the corporation, he failed to demonstrate that the corporation would have prevailed or that the amount of the judgment would have been lower "but for" the failure to submit an appraisal report in the underlying action (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434-436 [2007]; Antokol & Coffin v Myers, 30 AD3d 843, 845 [2006]). "

The answer to this question is a qualified yes.  Attorney fees, which are unearned by virtue of the malpractice, or other fees which are spent to rectify the situation may be collected.  Here is a case from the Third Deparment on the issue. LEACH  Appellant, v.BAILLY et al., Respondents.

"Finally, turning to plaintiff's arguments regarding the malpractice committed against him individually, we reject plaintiff's assertion that he is entitled to fees incurred in subsequent litigation unattributable to that malpractice. We conclude, however, that he is entitled both to [*3]counsel fees paid to defendants and to counsel fees incurred upon the appeal of the adverse determination in the underlying action, which resulted from the admitted malpractice committed against plaintiff individually (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 443-444; Harris v Bonacci, 65 NY2d 876 [1985], affg on op below 109 AD2d 1072, 1073-1074 [1985]). Unearned fees may be recovered in a malpractice action, and "plaintiff's damages may include 'litigation expenses incurred in an attempt to avoid, minimize, or reduce the damage caused by the attorney's wrongful conduct'" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 443, quoting DePinto v Rosenthal & Curry, 237 AD2d 482, 482 [1997]; see 3 Mallen and Smith, Legal Malpractice § 21:6 [2008]). The record establishes in particular, the parties' stipulation that defendants committed malpractice in representing plaintiff that such fees and expenses total $15,342.43, and plaintiff is entitled to interest from the date that his damages were incurred, i.e., the date that the fees were paid (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442; Harris v Bonacci, 109 AD2d at 1074; CPLR 5001 [b]). "

We want to take this occasion to wish everyone a Merry Christmas and  a Happy New Year.

This holiday season has been one long story about bad economic news, swindles, bad investments, and hedge funds.  One meme of this blog has been that legal malpractice litigation is ubiquitous, and intertwined with all aspects of our world.  This is simply a reflection of the integration of law and lawyers in all aspects of our social and economic lives.

Here is another example.  An attorney is accused of pocketing $ 18 million.  The Kansas City Star reports:

"The trustee of bankrupt Ethanex Energy Inc. has sued a major multinational law firm over an alleged multimillion-dollar fraud scheme by a former partner that contributed to Ethanex’s demise.

The trustee, Eric Rajala, is seeking unspecified damages from 900-lawyer McGuireWoods, which is based in Richmond, Va., and has 17 offices worldwide. Rajala’s complaint says that McGuireWoods “was aware of, supported and profited” from the activities of the former partner, Louis W. Zehil.

"[Louis] Zehil, of Ponte Vedra Beach, Fla., was forced out of McGuireWoods in February 2007 after his alleged scheme was uncovered. Shortly afterward, federal prosecutors in New York brought criminal fraud charges against him, and the Securities and Exchange Commission brought parallel civil charges."

The criminal case is pending, with Zehil scheduled to make his next appearance in court in late April. The SEC case is also pending, awaiting resolution of the criminal case.

The SEC charged that Zehil made more than $17 million in illegal profits by selling the unregistered shares of seven energy companies, including those of Ethanex and Kansas City-based Alternative Energy Sources Inc.

“We believe that McGuireWoods is responsible for Zehil’s conduct,” said Kansas City attorney John M. Edgar, who filed the complaint on Rajala’s behalf.

William Allcott, a partner with McGuireWoods, said the firm did not believe the suit had merit."

Arbitration and legal malpractice form an uneasy fit.  One reason is that discovery is limited; another is that the case is decided by a panel of attorneys.  While in many ways a panel of "wise men" may be preferable, in legal malpractice plaintiff will generally prefer a jury.

Juries trend towards a less highly technical view of departures and damages than do a panel of attorneys.  As an example, the case of Kaminsky v Herrick, Feinstein LLP , 2008 NY Slip Op 09934 ,Decided on December 18, 2008 ,Appellate Division, First Department  provides an example.
 

Plaintiff offered evidence of $ 3.25 million damages, and eventually won about $ 300,000.  Plaintiff's claim was that his attorneys failed to offer testimony about the share value of the case and failed to offer an expert on the direct arbitration case, relying on a rebuttal witness, which the arbitrators did not heed.

In the Appellate Division, plaintiff lost. "In this action for legal malpractice, plaintiff claims that his attorneys' failure to offer [*2]sufficient expert testimony concerning the valuation of his damages resulted in an inadequate arbitration award. However, plaintiff fails to offer any viable legal basis upon which the arbitration panel could have reached a substantially different result. Thus, plaintiff cannot establish that the outcome of the proceedings would have been more favorable but for defendants' asserted failure to present evidence, and the complaint must be dismissed. "

It was always a first year economy class aphorism that hemlines were positively correlated with the state of the economy.  Better finances led to brighter prospects, led to more sprightly dresses, with higher hemlines.  A downturn in the economy leads to a similar sartorial downturn.

This article from NY Lawyer  "As Economy Worsens, More Lawyers Being Targeted in Malpractice Suits" seems to say the same thing is true of legal malpractice suits.  "With financial losses piling up in the downturn, real estate lawyers have increasingly become a target of legal malpractice claims, said Bill Loucks, president of Orlando-based Florida Lawyers Mutual Insurance. He said the firm has had a 13 percent increase in real estate-related claims since January. But he said that isn’t entirely related to the real estate market collapse.

“The economy has had an indirect impact on claims, primarily on the real estate practice area,” he said. “Attorneys whose primary practice is centered around real estate went through a real estate boom. ... When the real estate market fell apart, then there was a lot of very close inspection of lawyer-prepared documents.”

Clients of the insurer, which writes legal malpractice insurance, tend to be firms with small numbers of lawyers and solo practitioners.

An American Bar Association study of legal malpractice claims supports Loucks’ observations. Claims in real estate work grew 4 percent from 2004 to 2007 compared with the previous four-year period, according to the report released in September, "

Many claims against lawyers include allegations of errors in transactions ranging from conflicts of interest and closing mistakes to poorly drafted contracts and zoning and escrow issues, the study said.

“Certainly real estate problems are coming out of the woodwork in all kinds of areas. That will continue,” Trazenfeld said. “The rising market covered up a lot of legal malpractice. Now that there’s a downturn in the market all of the malpractice,” claims are sprouting.

One group of clients that are suing real estate attorneys are title insurance firms that have been accused of making legal errors in transactions. Title insurers often turn around and sue their title insurance agents, who typically are lawyers.

This is the same heading, but relates to a totally different set of circumstances.  Is an attorney/law firm united in interest with its former client, when the former client is sued, but the attorney is not?  May plaintiff [or a third-party plaintiff] rely upon the relation-back principal in order to bring in the attorneys late in the case?  We see a well reasoned opinion of Justice Warshawsky in the matter of Arbor Secured Funding v. Just Assets NY 1,  in which the answer, as far as Davidoff, Maliito & Hutcher LLP is concerned.  We cannot import the actual text, but the court found that a statute of limitations in defamation might related back to a claim "previously asserted against a codefendant for statute of limitations purposes where the two defendants are `united in interest.'  The proponent must show that both claims arose from "the same conduct, transaction or occurrence, that the new defendant is united in interest with the original defendant..."

Legal Malpractice litigation succeed es earlier litigation, by its very definition, and all know that "but for" refers to the first case.  An unfortunate corollary to this definitional fact is that clients and some attorneys turn to legal malpractice litigation as a default mode of trying to rectify all wrongs, whether caused by the attorney or not. 

In this duo of related cases, we see the skein running from the earlier cases, through a second series of cases, through legal malpractice all the way to defamation for the way the attorneys defended themselves.Adamski v Lama ;2008 NY Slip Op 09308 Decided on November 26, 2008
Appellate Division, Third Department  and 2008 NY Slip Op 09312.
 

"As Supreme Court concluded, defendants' allegedly libelous statements in affidavits and a letter are absolutely privileged inasmuch as they were made in the course of a judicial proceeding and pertinent to that litigation (see Martirano v Frost, 25 NY2d 505, 507-508 [1969]; Cavallaro v Pozzi, 28 AD3d 1075, 1077 [2006]; Black v Green Harbour Homeowners' Assn., Inc., 19 AD3d 962, 963 [2005]; Grasso v Mathew, 164 AD2d 476, 479 [1991], lv dismissed 77 NY2d 940 [1991], lv denied 78 NY2d 855 [1991]). With respect to plaintiff's remaining claims, he has failed to state a cause of action for fraud, and no private right of action exists for perjury, tampering with documents, obstruction of justice, and frivolous pleadings (see [*2]Newin Corp. v Hartford Acc. & Indem. Co., 37 NY2d 211, 217 [1975]"

"Plaintiff has commenced a series of lawsuits against his former employer, nonparty Schuyler Hospital, as well as both his former counsel and counsel for various prior defendants. In this action, his fifth lawsuit, plaintiff asserts a variety of claims, including legal malpractice and breach of fiduciary duty, against defendants, his counsel in the third and fourth lawsuits, in which he claimed that the various defendants therein had violated the settlement agreement between plaintiff and Schuyler Hospital that resolved plaintiff's first action [FN1]. Upon this appeal, [*2]plaintiff challenges an order of Supreme Court granting defendants' motion for partial summary judgment, dismissing all causes of action except plaintiff's conversion claim and granting defendants' motion to strike plaintiff's demand for punitive damages."

"Inasmuch as plaintiff's submissions in response failed to raise any issues of fact regarding negligence, proximate cause or damages, Supreme Court properly dismissed plaintiff's legal malpractice cause of action (see Guiles v Simser, 35 AD3d 1054, 1055-1056 [2006]; Antokol & Coffin v Myers, 30 AD3d 843, 845-846 [2006]; Lichtenstein v Barenbaum, 23 AD3d 440, 440-441 [2005]; Brodeur v Hayes, 18 AD3d 979, 980-981 [2005], lv dismissed and denied 5 NY3d 871 [2005]). Finally, plaintiff's breach of fiduciary duty claims are, essentially, claims of legal malpractice and, thus, they fail for the reasons detailed above (see Guiles v Simser, 35 AD3d at 1055; Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 271-272 [2004]). "
 

There are certain stays of the statute of limitations, universally.  Here, in this legal malpractice case plaintiff offered the testimony of a psychologist, probably to prove that plaintiff was unable to commence an action, or protected from the running of the statute of limitations.  It did not work here.Nickel v.  Goldsmith & Tortora, Attorneys at Law, P.C.,2008 NY Slip Op 09570
Decided on December 2, 2008 ,Appellate Division, Second Department .
 

"The Supreme Court correctly, in effect, granted that branch of the defendant's motion which was to dismiss the complaint pursuant to CPLR 3211(a)(5) as time-barred. The plaintiff's cause of action to recover damages for legal malpractice is subject to a three-year statute of limitations (see CPLR 214[6]). Since the cause of action accrued no later than May 2002 and was not interposed until June 2007, it was time-barred (see McCoy v Feinman, 99 NY2d 295, 301; Glamm v Allen, 57 NY2d 87, 93). The toll of the limitations period provided by CPLR 208 is available "to only those individuals who are unable to protect their legal rights because of an over-all inability to function in society" (McCarthy v Volkswagen of Am., 55 NY2d 543, 548; Santo B. v Roman Catholic Archdiocese of N.Y., 51 AD3d 956, 958). The conclusory assertions of the plaintiff's psychologist, who first treated the plaintiff in May 2005, are insufficient to satisfy this standard. "

We ran acrossthis story today.  Prior restraint of a blog, a legal malpractice case, and a question of who is actually posting the blog.

"Mystery Blogger Caught Up in First Amendment Flap
Posted December 3rd, 2008 by Sam Bayard
in Massachusetts Anonymity Legal Threat Prior Restraints
On Monday, the blog-hosting service Blogger took down a blog called "Jeffrey Denner's ineffective assistance of counsel" after Jeffrey Denner notified Blogger that a Massachusetts court had issued a restraining order prohibiting one Derrick Gillenwater from using the words "Jeffrey" or "Denner" or "Jeffrey Denner" in any blog postings. Blogger notified the anonymous operator of the blog, who goes by the moniker "Boston Bob." Yesterday, Boston Bob replied as follows:

The problem is, I'm not Derrick Gillenwater, nor do I operate under his
authority. I am an independent anonymous person.

Please repost my blog immediately.

Thank you.
Blogger promptly restored the blog and indicated that it would notify Mr. Denner.

This is where things get complicated. Boston Bob created the blog on October 15, after apparently meeting Derrick Gillenwater and discussing Gillenwater's malpractice lawsuit against Jeffrey Denner and Kevin Barron, two Boston lawyers. Gillenwater himself is a blogger, and at the time he also operated a blog dedicated to criticizing Jeffrey Denner and discussing the lawsuit at http://jeffreydenner.blogspot.com (now defunct).

At around the same time that Boston Bob started his blog, Denner and Barron obtained a restraining order and then a preliminary injunction prohibiting Gillenwater from blogging about Denner and from filing motions or pleadings without prior permission of the court. For details, see our database entry, Denner v. Gillenwater.

Denner and Barron convinced the court to issue a restraining order after Gillenwater apparently sent them a threatening email stating that he would "send his blog posting out to the media" and that he would raise his damages demand by $1 million if he had to "send a 93A letter." (Exactly what all this means, we do not know.) Because Gillenwater's blog has been removed, it is impossible to tell what Gillenwater had published (or had threatened to publish), but I can't imagine anything that would justify such a sweeping prior restraint on his speech.

As we've said before, even narrowly tailored prior restraints on speech are constitutionally suspect. See Nebraska Press Assn. v. Stuart, 427 U.S. 539, 559 (1976) (cautioning that "prior restraints on speech and publication are the most serious and the least tolerable infringement on First Amendment rights"). Under the circumstances, it's hard to see how Denner and Barron could have been complaining about anything more serious than allegedly false and defamatory statements. This comes nowhere near what is necessary to satisfying the exacting standard the Supreme Court applied in the famous Pentagon Papers case. See New York Times Co. v. United States, 403 U.S. 713 (1971) (holding that injunction against publication of illegally leaked classified documents from Defense Department was an impermissible prior restraint). Even putting aside the serious constitutional question, courts routinely refuse to enjoin defamatory speech because money damages are an adequate remedy. It looks like the court failed to brush up on some basics of defamation and First Amendment law before issuing its order.

The NYLJ reports a Judiciary Law 487 case today in which the claim survives.  Empire Purveyors, Inc. v. Brief Justice & Kleinman, [subscription necessary] which was written by Justice Solomon in Supreme Court,  New York County, holds that Judiciary Law 487 is applicable in both of its applications.  The first application, deceit in an ongoing legal proceeding was supported by defendant's representation that it was fully authorized to settle this commercial real estate case.  The second application was supported by the financial irregularities in the settlement transaction.

"Empire alleges that on or about November 2, 2004, unbeknownst to Plaintiff, Cook executed a Stipulation of Settlement (the "Stipulation") on behalf of Plaintiff which obligated Empire to pay $17,230.48 to settle the dispute. Complaint at ¶¶14, 15. Empire claims that Cook did not inform Empire of the terms of the Stipulation or obtain Empire's consent prior to Cook's execution of the Stipulation.2 Complaint at ¶29; Pinto Affidavit at ¶¶20, 29. The Stipulation was "so ordered" by the Court. Affirmation of David J. Fischman at ¶28. According to Plaintiff, Cook represented to Empire that "the judge ruled that we had lost the case and that the landlord had prevailed in its claim for additional rent and other monies" and that Empire "had to give him a bank check, the next day, payable to the landlord in the amount of $17,230.48." Pinto Affidavit at ¶19. Empire asserts that it "never agreed to settle the case, especially for an amount which far exceeded any imaginable amount that could possibly be owed to the landlord." Pinto Affidavit at ¶20. Nevertheless, Empire provided a bank check dated November 3, 2004 to Cook based on Cook's representation that a judge had heard the case and ruled against Empire out of "fear of violating a court order." Pinto Affidavit at ¶21.

Empire alleges that the Stipulation "obligated the plaintiff to pay monies to the landlord in an inappropriate amount." Complaint at ¶29. Empire contends that the landlord was not entitled to receive the $17,230.48 payment from Empire as that payment included rent which was already paid, a payment for real estate taxes that were not due, and $3,000 for the landlord's attorney's fees when Empire was not required to pay the landlord's legal fees. Pinto Affidavit at ¶¶35-37. Empire contends that it informed Cook that no rent was due for the period of December of 2003 to March of 2004 and that a credit was due to Empire for tax payments that were made to the landlord because of a tax abatement that the landlord had received. Pinto Affidavit at ¶17.

Empire further contends that the Stipulation improperly did not provide for the return of Empire's security deposit. Complaint at ¶29; Pinto Affidavit at ¶38. Additionally, Plaintiff claims that Brief Justice waived Empire's right to pursue a refund of real estate taxes which had been overpaid and waived Empire's right to vacate any portion of the judgment. Pinto Affidavit at ¶39."
 

"With respect to the third cause of action, Defendants argue that Judiciary Law Sec. 487 is inapplicable because the alleged fraud was not committed during a legal proceeding. According to Defendants, this cause of action must be dismissed because Cook's alleged conversion of payments made to Empire occurred after the landlord-tenant proceeding had ended. It is true that a Judiciary Law 487(1) claim must fail if the alleged "deceit or collusion" is not directed at a Court and did not take place during the course of a pending judicial proceeding. Costalas v. Amalfitano, 305 A.D.2d 202, 204 (1st Dept. 2003). However, Empire contends that Cook deceived the Court in a proceeding when he represented in paragraph 11 of the Stipulation that he was "fully authorized" to "draft, negotiate and execute" the Stipulation on behalf of Empire when he in fact was not.

Furthermore, Judiciary Law Sec. 487(2) applies where an attorney "willfully receives any money or allowance for or on account of any money which he has not laid out, or becomes answerable for." Empire alleges that Cook received monies sent by the landlord in connection with the landlord-tenant proceeding for Empire's security deposit and converted and withheld them from Plaintiff. Based on the foregoing, Empire has stated a valid cause of action pursuant to Judiciary Law Sec. 487.

Defendants argue that Cook's alleged conduct is not serious enough to trigger Judiciary Law Sec. 487 and cite Gonzalez v. Gordon, 233 A.D.2d 191 (1st Dept. 1996) in support of their argument. However, that case is distinguishable because, as the Court noted, there was "no evidence that defendant defrauded plaintiff or engaged in conduct intended to deceive." Id. at 191. This case involves allegations of fraud and deceit which must be taken as true on this motion. Contrary to Defendants' argument, the allegations that Cook essentially settled a case without even informing his client, deceived the Court by representing that he had the requisite authorization, and then misappropriated monies that were paid to his client are serious enough to invoke Judiciary Law Sec. 487."
 

Because legal malpractice is always a "case within a case" it is a two step process.  The very nature of the two step process gives rise to defendant's ability to brag over winning either of the two legs.  An example is Orick's statement that they were vindicated, even after it was proven that the attorney violated his fiduciary duty.  It can be inferred that the jury determined that the attorney breached his fiduciary duty, but that the plaintiff would have lost control of her business anyway. Here, from the LA Legal Pad :

"The verdict on Tuesday came following a six-week trial and two days of deliberation in Benesch v. Tandler, No. 317187 (San Francisco Co., Calif., Super. Ct.). Plaintiff Fritzi Benesch, the founder of clothing company Fritzi California, claimed Hoisington didn’t make it clear she was giving up control of her company to her daughter and son-in-law.

Jurors did find that Hoisington failed his obligation to his client by breaching a fiduciary obligation, but that it was not a substantial factor in harm to the client. Hoisington spent more than 30 years as a trusts and estates attorney in the San Francisco office of Orrick prior to his retirement.

Note the difference in this report.  Here is a squib from theAmLaw Daily.:

"When a firm's professional reputation is at stake, going to trial is a nerve-racking proposition. But Orrick Herrington & Sutcliffe's insistence that it provided proper counsel to a multimillionaire businesswoman was vindicated on Tuesday: A San Francisco superior court jury found Orrick and retired trusts and estates partner William Hoisington not liable for legal malpractice and breach of fiduciary duty, according to a statement from the firm's lawyers at Keker & Van Nest.
The case was brought in 2000 by Fritzi Benesch, the founder of a clothing company called Fritzi California. In the 1980s, through a series of estate planning transactions, Benesch passed control of her clothing business to her son-in-law and daughter, with whom she said she had "a perfect relationship." But when Benesch later discovered that her husband had been unfaithful, the family fell apart. In a malpractice suit filed in 2000, Benesch claimed that she had been duped by Orrick and Hoisington into signing away her company."
 

Two huge names in the celebrity Blogosphere, Perez Hilton and Samantha Ronson along with Lindsay Lohan join together with lesser known attorney Martin Garbus to again demonstrate the ubiquitous nature of legal malpractice.  We are betting that most readers will know the facts of this case.  Disputes break out in every sphere, lawyers are called in, and often, legal malpractice complaints follow.  Here is a celebrity legal malpractice story:

From the LA Times:

"At the bottom of the failed libel suit and the pending malpractice action is a one-car crash: Lohan's Mercedes-Benz versus some shrubs in Beverly Hills on May 26, 2007. Police reported finding a small amount of cocaine in her car. The actress eventually entered rehab and pleaded guilty to driving under the influence.

About a week later, according to the libel suit, Hilton, whose real name is Mario Lavandeira, posted an item on his blog linking to a juicy story on an another blog called Celebrity Babylon. Citing unnamed sources, Celebrity Babylon reported the cocaine belonged to Ronson. Additionally, according to the suit, the story said Ronson "has accumulated a substantial side income taking her pal in front of paparazzi cameras for money."

"With friends like Samantha Ronson, Lindsay doesn't need enemies," Hilton blogged. Two weeks later, he posted a picture of himself on perezhilton.com wearing a sweatshirt emblazoned with "Blame Samantha" and referred to her as a "lezbot dj", according to the libel suit.

Ronson was irate, and on the recommendation of a friend, turned to Garbus. Then 72, he had a vaunted reputation -- Fortune called him "one of the country's most able 1st Amendment lawyers" last year -- and a practice that included high-profile clients. At the time he met Ronson, he was representing Don Imus in a suit against CBS.
 

Difficulties emerged early on. In court papers in the malpractice suit, Garbus alleged that Ronson often didn't return his calls or answer e-mails. She forgot meetings and kept him waiting. Garbus had represented many people whose fame was based on unquestionable achievement -- Andrei Sakharov, Samuel Beckett, Andy Warhol, Allen Ginsberg, Spike Lee -- but Ronson, whose celebrity was rooted in titillation and limited largely to consumers of pop culture, often didn't pick up the phone when he called, he alleged.

Regardless, the defamation suit progressed. Celebrity Babylon agreed to issue a retraction and an apology in exchange for Ronson dropping her claim, according to court filings in the malpractice suit. But that deal didn't interest Hilton, no stranger to defamation suits."

An attorney must carefully and assiduously guard his client's confidences, secrets and communications with the attorney.  This remains true until the attorney has to defend himself.  Must this defense be to criminal charges, or to ethical charges only?  The answer is set forth in a recently decided case in the First Department.Hélie v McDermott, Will & Emery ; 2008 NY Slip Op 09289 ; Decided on November 25, 2008 ; Appellate Division, First Department
 

"Code of Professional Responsibility DR 4-101(C) (22 NYCRR 1200.19[c]) provides: "A lawyer may reveal: . . . (4) Confidences or secrets necessary . . . to defend the lawyer . . . against an accusation of wrongful conduct." We decline to make defendants' invocation of this rule dependent on plaintiff's demonstration of a prima facie case of defendants' liability (see Justice Stallman's later ruling on a related matter in this case, 18 Misc 3d 673, 683 [December 17, 2007]). "

"Even if plaintiff were not defendants' client, DR 4-101(C)(4) does not require the non-client's allegation of wrongful conduct to involve criminal or regulatory charges rather than malpractice (see Restatement [Third] of Law Governing Lawyers § 64, Comment c)."
 

A tip of the blogging hat to Shareholder Oppression Blog which reports this Texas case in which business is looking for investors and plaintiff comes along.  His investment is somewhat complicated, and the company's attorney suggests some changes. Here is the opinion.  While the attorney was not held in this case, we expect that the company will be his next opponent.

From the blog:

"Triumph Healthcare, LLP was a startup venture seeking investors, and was formed as a limited liability partnership. Triumph reached an agreement with Span to invest $500,000, of which $200,000 would be capital and $300,000 would be a loan. Triumph was represented by attorney Ivan Wood. Triumph consulted with Wood prior to reducing the agreement with Span to writing. Woods suggested that Triumph issue span "Series A preferred partnership units" instead of incurring $300,000 in debt. The idea was proposed to Span, which agreed on the understanding that the $300,000 would be paid back, the preferred units would be converted to common units, and Span would end up with a 10% ownership interest in Triumph. Triumph and Span signed a "Preliminary Agreement" which stated that Triumph would incorporate the terms of the preliminary agreement into the partnership documents. Ultimately, when Wood drew up the final documents, however, he changed the terms to provide that Span's ownership would be diminished as the preferred units were paid off. The change was not disclosed to Span, which signed the final documents, apparently without reading or understanding the changes."

"The Court does not address the issue of fiduciary duties between Span and Triumph, but without question Triumph did owe its partner fiduciary duties under Texas law, and these duties would be violated by changing the terms of the partnership interests without disclosure and knowingly taking advantage of the partner's ignorance of the change. The question was whether the partnership's attorney could be held liable individually as the person who effected that change."
 

Typically, legal malpractice follows filing too late; here there may be legal malpractice in filing too early.  This situation is more common than one might imagine, and in the current economic circumstances, may re-occur needlessly.

The Southeast Texas Record reports the facts of a case similar to ones we have seen.  Plaintiff has a dischargable US tax debt and files a Chapter 7 Bankruptcy.  Problem is that the tax debt must have been in existence for a period certain, and too many attorneys calculate from April 15 of the tax year.  This may unfortunately not be the operative date, as the plaintiff may have filed for an extension, or in some other permitted way altered the onset of the tax obligation.

Result?  Tax debt not discharged.  Here is an example:

"Stacey R. Robinson Allison filed Chapter 7 bankruptcy on June 29, 2000, through attorney Frank J. Maida with the Maida Law Firm in order to discharge her 1996 federal income tax liability.

According to the suit filed Dec. 2 in Jefferson County District Court, the liability was created by Allison's husband at the time, and the IRS determined she was a co-debtor.

Allison claims that Maida knew one of her main reasons for filing bankruptcy was to discharge the income tax liability, the suit states. Maida is board certified in consumer bankruptcy law by the Texas Board of Legal Specialization.

However, Maida improperly filed the Chapter 7 bankruptcy petition and failed to tell Robinson, she claims.

The bankruptcy was filed in federal court in the Beaumont Division of the Eastern District of Texas on June 29, 2000.

"On Oct. 24, 2000, the plaintiff's Chapter 7 bankruptcy was finalized, and she was discharged by the Bankruptcy Court," the complaint states. "The defendants advised plaintiff that this discharge did in fact discharge her from the 1996 federal income tax liability, when in fact it did not."

After she began receiving letters from the IRS attempting to collect her 1996 federal income tax liability, Allison approached Maida who repeatedly told her she did not have to pay the bills, the suit states.

In 2006, Allison called another attorney to deal with the IRS, she claims.

Allison was told for the first time that her tax liability was not discharged because her Chapter 7 Bankruptcy Petition was filed too early, she claims.

It should have been filed after Oct. 15, 2000 --- not as early as June 29, 2000 -- for her tax liability to be discharged, according to the complaint.

"Even more incredible, the Plaintiff's then husband had his 1996 federal income tax liability discharge in bankruptcy, because his Chapter 7 bankruptcy petition was timely filed," the suit states.

Because of Maida's actions, Allison has sustained losses of at least $150,000, she claims.
 

Town buys property previously owned by bus company. They plan to remediate the property, and turn it into a park.  Town's Attorney is Democratic.  Town board is Republican majority, soon to change after election.  Result?  Attorney is potentially a legal malpractice defendant, solely dependent on whether Republicans or Democrats have the majority.

The Story, found at MyCentralJersey.com, is as follows:

"Just weeks before the Borough Council's political majority switches from Republican to Democrat, the Republicans next week are planning to hire a lawyer to sue former Borough Attorney Patrick J. Diegnan for malpractice.  The Republicans have placed a resolution on the agenda for the council's Monday, Dec. 8 meeting that would hire Somerville attorney Peter A. Ouda to represent the borough in the potential lawsuit against Diegnan. Diegnan was borough attorney for 25 years before retiring that post in 2007. He also is a Democratic state assemblyman and chair of the borough's Democratic organization.

Council President Robert Bengivenga Jr., a Republican, said the grounds for the malpractice suit are Diegnan's handling of a 2006 borough land purchase. Environmental reports showed the land — last used as a bus depot — was contaminated and could cost up to $450,000 to clean up. The land was purchased for $750,000 using funds from the Middlesex County Open Space Trust Fund. Seventy-five thousand dollars of the purchase price was set aside for environmental remediation. The borough signed a hold-harmless agreement absolving the former owner of the land, Suburban Transit Corp., of any liability for the contamination.

Bengivenga said the borough overpaid for the property because he said the appraisal that valued the land at $700,000 was contingent upon the land being clean. He said the borough should not have signed the hold-harmless agreement, and violated state statute by purchasing the land without passing an ordinance.

Bengivenga and fellow Republican Matthew Anesh lost re-election campaigns in November. When their victorious Democratic challengers are sworn in next month, the Democrats will have a 4-2 majority on the council. Bengivenga said the Republicans are acting now to stop the Democrats."
 

Continuing in the turnabout tradition of legal malpractice defense, wherein the defendant attorney takes on the coloration of its previous adversary in order to defeat a "case within a case' is this matter: Lederer de Paris Fifth Ave., Inc. v Jordan & Hamburg, LLP ; 2008 NY Slip Op 09462
Decided on December 2, 2008   Appellate Division, First Department .  Plaintiff apparently lost the case below, when its attorney failed to produce certain documents in discovery.  What is the defense to a preclusion order?
 

"The record supports the motion court's conclusion that Lederer failed to establish that its failure to produce certain documents in the underlying action, resulting in the preclusion order, was the result of defendants' negligence rather than the "intransigence" of plaintiff's principal. In [*2]any event, Lederer fails to show that it suffered any actual damages as a result of defendants' conduct (see Postel v Jaffe & Segal, 237 AD2d 127 [1997]"

One of the problems in figuring out a legal malpractice case by reading an appellate decision, is that even when the court gives a detailed set of facts, thee are many connections either not apparent or missing.  Here in Ito v. Suzuki, 2008 NY Slip Op 9437, Decided December 2, 2008, Appellate Division, 1st Department, the shenanigans of this real estate deal are dizzying.

"Plaintiff, who does not speak English, was induced to make an investment of $1 million to acquire a two-thirds interest in Keystone International LLC and to sign an operation agreement that gave defendant Sam Suzuki permanent managing control of its affairs. Keystone took title to a property consisting of 41 condominium units owned by an entity controlled by Hiroyoshi Hasegawa. The transaction was in derogation of "a clear and unequivocal court order" enjoining transfer of the property due to the pendency of divorce proceedings (Hasegawa v Hasegawa, 281 [*2]AD2d 594, 595 [2001]). The complaint adequately pleads a cause of action for fraud, alleging that Sam Suzuki used plaintiff's funds to obtain property with a cloud on its title (because of the injunction against transfer and the filing of a lis pendens), for an inflated price and under financing terms onerous to plaintiff. It further asserts that Suzuki diverted funds from Keystone to satisfy personal obligations, which included payment of a $1.7 million settlement of a fraudulent conveyance claim brought by Hiroyoshi Hasegawa's wife.

The complaint alleges that Suzuki, represented by Rich, defrauded plaintiff, who maintains that she was represented by Roshco during that period. A fair reading of the allegations against the attorney defendants is that they failed to disclose the extent to which the transaction was detrimental to plaintiff. Lacking, however, is the assertion of any misrepresentation by either Roshco or Rich that was calculated to induce plaintiff's detrimental reliance so as to support a claim of fraud (cf. Houbigant, Inc. v Deloitte & Touche, 303 AD2d 92, 100 [2003]) and, absent any underlying tort, the conspiracy claim is likewise without foundation

Given that the detailed facts concerning the extent of the attorney defendants' involvement in the fraudulent scheme are peculiarly within the knowledge of other parties (see Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187, 194 [1968]) and the substance of the alleged wrongdoing is set forth in the affidavits of plaintiff and her brother, the circumstances surrounding the proposed cause of action are sufficiently stated to support amendment of the complaint (Zaid Theatre Corp. v Sona Realty Co., 18 AD3d 352, 354-355 [2005]; cf. Non-Linear Trading Co. v Braddis Assoc., 243 AD2d 107, 116 [1998])."

During the campaign season, news reports ouline the amounts of money individuals donate to candidates, and there are websites which track donations by name.  Recently in West Virginia, a legal malpractice case involving the Massey Coal company there made news when the US Supreme Court decided to hear the question of whether campaign contributions required recusal of a State Supreme Court justice.

Here, different state, same issue. Debra Cassens Weiss reports in the ABA Journal. "A motion filed in a legal malpractice appeal contends that four of Illinois’ seven Supreme Court justices should recuse themselves because of campaign contributions by the defendant law firm, Corboy & Demetrio.

If the motion is granted, the court would not have enough votes to issue an official ruling, the Chicago Sun-Times reports. The Illinois Constitution has no provision for temporary judicial appointments.

The motion says Corboy & Demetrio has made donations ranging from $1,500 to $52,000 to campaigns of the four justices, according to the Sun-Times.""The underlying malpractice suit resulted in a $100,000 judgment against Corboy & Demetrio, the story says. The suit contends the well-known plaintiffs firm botched a suit filed on behalf of a Georgia woman killed in a 1995 car crash. The suit names former Corboy lawyer G. Grant Dixon III and managing partner Robert Bingle, the story says. The firm has admitted the suit was dismissed because it failed to follow a court order, but denies other allegations, according to the Sun-Times."

Plaintiff claimed pay and benefits from the Board of Education.  Apparently there is a two part process for such claims.  The first thing to do is to request a hearing.  Later, one may bring an Article 78 proceeding.

In Leticia Abreu v Jose A. Quesada,4489, 6884/05; SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT; 2008 NY Slip Op 8420; 866 N.Y.S.2d 571; 2008 N.Y. App. Div. LEXIS 8251  Defendant attorneys failed to serve notice for a hearing.  "The record contains no dispute that defendant failed to file a proper request for a hearing pursuant to Education Law 3020-a(2)(c) and that this failure resulted in the loss to plaintiff of pay and benefits to which she otherwise would have been entitled, pending a hearing, before termination"

Plaintiff then started an Article 78 proceeding, with some success.  This success did not rule out a legal malpractice case against the attorneys who did not notice the hearing.  "The partial grant of plaintiff's article 78 petition against the Board of Education does not collaterally estop plaintiff from asserting defendant's legal malpractice (see Weiss v Manfredi, 83 NY2d 974, 976-977, 639 N.E.2d 1122, 616 N.Y.S.2d 325 [1994]; Savattere v Subin Assocs., 261 AD2d 236, 236, 690 N.Y.S.2d 229 [1999])."

In STEPHEN F. BRUMMER, , v THE BARNES FIRM, P.C., CELLINO & BARNES, P.C., STEPHEN E. BARNES, ROSS M. CELLINO, AND RICHARD J. BARNES, SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FOURTH DEPARTMENT;2008 NY Slip Op 8831; 2008 N.Y. App. Div. LEXIS 8924 we see a discussion of legal malpractice cases centering on a failed appeal.  The rules are fundamentally different for legal malpractice cases centering on appeals and those centering on the underlying case.  One thing that is not mentioned by the court is that it remains a question of law and not a question of fact whether an appeal would succeed. Experts may not opine and no jury will be asked to answer this question; only the judge will answer it

Here, plaintiffs were defendants in the underlying case, and they sue their attorney for a failed appeal.  "Plaintiff commenced this action alleging that defendants committed legal malpractice by failing to take an appeal from an order granting the cross motion of the Town of Tonawanda (Town) for summary judgment dismissing the complaint against it in plaintiff's underlying Labor Law action. We conclude that Supreme Court properly granted defendants' motion for summary judgment dismissing the complaint in this legal malpractice action. ""Plaintiff failed to raise a triable issue of fact inasmuch as he "did not set forth the requisite factual allegations demonstrating that, but for defendants' alleged negligence, there would have been a more favorable outcome in the underlying action" (Ellsworth v Foley, 24 AD3d 1239, lv denied 6 NY3d 712; see generally Williams v Kublick, 302 AD2d 961), i.e., he failed to raise an issue of fact whether he would have prevailed on an appeal with respect to the dismissal of the complaint in the underlying action against the Town (see Lagana v Willner, 267 AD2d 210; see also Senise v Mackasek, 227 AD2d 184, 185). Indeed, the record establishes that the Town was not liable under the Labor Law because it was not the owner of the property where plaintiff was working, nor was it an agent of the owner because it did [**3] not have the authority to supervise and control the work ."

Attorney A refers a case to Attorney B, and agree that they will share in a contingent fee between them.  Ethical issues aside, may Attorney A, who has not committed malpractice nor taken an active role in the case, be held responsible for Attorney B's malpractice?

Rosenstrauss v Jacobs & Jacobs ;2008 NY Slip Op 08472 ;Decided on November 5, 2008
Appellate Division, Second Department  answers that question as follows:
 

"Moreover, the argument of the defendants Markovits & Markovits and Robert L. Markovits (hereinafter together the Markovits defendants), that they cannot be liable because they merely referred Purgess to the other defendants, is belied by the retainer agreement, in which the Markovits defendants agreed to share any contingency fee in the medical malpractice action. Accordingly, the Supreme Court properly denied the defendants' separate motions for summary judgment dismissing the complaint. "  Here is more:
 

"Patricia J. Purgess retained the defendants to represent her in an underlying medical malpractice action, which she commenced on November 4, 1993. In an order dated March 20, 1996, the Supreme Court, Orange County, dismissed that action pursuant to CPLR 3404. The defendants neither moved to [*2]vacate that order nor perfected an appeal therefrom. Nearly 11 years thereafter, Purgess moved to vacate the aforementioned order of dismissal. In an order dated April 24, 2007, the Supreme Court denied her motion as barred by the doctrine of laches. In a companion appeal, this Court is affirming the order dated April 24, 2007 (see Rosenstrauss v Women's Imaging Center of Orange County,AD3d [decided herewith]).

"In an action to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession' and that the attorney's breach of this duty proximately caused [the] plaintiff to sustain actual and ascertainable damages"
 

This case, reported by Noeleen Walder in the NY Law Journal is highly complicated, and represents the future of legal malpractice.  Greenberg Traurig is accused of becoming involved, through its attorney Robert J. Ivanhoe, in a Los Vegas convention/showroom development, in a competitor's similar project all of which is tied up in a California arbitration and legal malpractice case. 

"A state judge has refused to dismiss a suit alleging that Robert J. Ivanhoe, chairman of Greenberg Traurig's New York office and head of its real estate group, disregarded his "legal and fiduciary duties" by taking a personal financial stake in a competitor to a client that had invested in a multibillion-dollar real estate venture.

Supreme Court Justice Richard B. Lowe  of Manhattan held in Nama Holdings LLC v. Greenberg Traurig LLP, 601054/08, that the operating agreement of Alliance Network, LLC, which retained Mr. Ivanhoe in connection with a multi-phase development project in Las Vegas, permitted the company's principal investor, NAMA Holdings, to derivatively sue on behalf of Alliance.
 

Alliance was formed in connection with the WMC Project, an eight-phase development situated on the 57-acre World Market Center in downtown Las Vegas. The convention center and showroom campus, designed to compete with the furniture complex in North Point, N.C., ultimately is expected to contain eight buildings with 12 million square feet of exhibit space.

According to the complaint filed on behalf of it and Alliance, NAMA, a Nevada company, owns approximately a 70 percent equity interest in Alliance. A memorandum of law complaint says that Greenberg Traurig and Mr. Ivanhoe became involved with Alliance when the company's managers, Shawn Samson and Jack Kashani, offered Related Companies L.P. - allegedly the firm's largest real estate client - a 50 percent stake in the venture.

Soon after Greenberg Traurig and Mr. Ivanhoe were retained by Alliance, they allegedly embarked on a covert partnership with Messrs. Samson and Kashani to develop the competing Blue Diamond Venture, a proposed 100-acre convention center and furniture showroom situated "just miles" from the WMC project, which allegedly "seeks to exploit" ideas and infrastructure owed by Alliance.

In a memorandum of law, NAMA accuses Mr. Ivanhoe "and perhaps other Greenberg Traurig lawyers" of having a "personal financial interest" in Blue Diamond. The papers fail to identify other firm attorneys who might possess a stake in the allegedly competing venture."
 

"Turnabout is fair play"  This childhood aphorism describes the third-party practice in a newly reported case, 601 Realty Corp. v. Conway Farrell, Curtin & Kelly PC, NY Slip Op. 33076, from Supreme Court, Nassau County.  The case arises from a lead paint case, and features Conway Farrell's attempt to third-party plaintiff''s personal attorney which fails.

During the trial, Conway Farrell was representing the landlords in a lead paint case.  They seemed to have worked out a stipulation which would have avoided apportionment of damages between the individuals and the Realty Corp, and limited it to the Corporation. The stipulation was never signed, and in retrospect, its form probably precluded its signing.

The stipulation called for the attorney, not the client to sign it, and in the stipulation there was a representation of no insurance.  Attorney says that he could not make such a representation, and that his client would not have wanted him to sign, anyway.

Conway Ferrell says that the failure to sign the stipulation was malpractice, and excuses them from liability.

The case cannot be uploaded to this site, so read it at its original NYS posting.