Paul J. Israelson writes in todays NYLJ about a pitfall, which while well settled and recognized, is often overlooked. If plaintiff files for bankruptcy, in any chapter, between the date of the malpractice and the inception of the legal malpractice case, the cause of action really belongs to the bankruptcy estate, which is controlled by Trustee in Bankruptcy and no longer by the plaintiff. Details
“If it is the case that the plaintiff filed for bankruptcy under Chapter 7 or Chapter 11 of the Bankruptcy Code (but not Chapter 13) during that same period, I then determine whether or not the plaintiff’s cause of action for malpractice was listed as an asset when filing for bankruptcy. In the event the plaintiff did not list his claim for malpractice as an asset when filing for bankruptcy (which is often the case), then the plaintiff will not have standing to pursue his malpractice claim”
One possible remedy is to seek Bankruptcy Court approval to amend the schedules to add the cause of action, and then seek a “sale” of the asset by the trustee.