What does a client do when faced with an attorney fee demand?  As is true with most things in life, a reflexive response is precisesly the wrong move.  Many clients [and unfortunately many attorneys] advise or choose to arbitrate the fee dispute.  Bravely, they go to the arbitration and argue piecemeal against the fee.

Let’s look at an example.  In a matrimonial action, attorney for wife bills $ 150,000.  Husband is required to pay $ 100,000 and wife is billed for $ 50,000.  Let’s assume that she is really really  unhappy with the outcome, and believes that there has been malpractice.  What should she do?

The first thought is fee arbitration.  Many think that the fee can be trimmed, or trimmed significantly, and go in to the arbitration arguing that there has been malpractice.  Why is this bad?

A recent case, Pickard v Tarnow ,2007 NY Slip Op 52377(U) [18 Misc 3d 1102(A)] ,Decided on December 3, 2007 ,Supreme Court, New York County ,Madden,  illustrates the problem.

In a nutshell, if the arbitrators allow any fees,  even a dollar, they have implicitly determined that there is no legal malpractice, and there can be no future legal malpractice case brought.

"Although the court has jurisdiction over the defendants, the action against them must be dismissed as barred under the doctrine of collateral estoppel based on the determination in the arbitration that Tarnow was entitled to recover fees for his legal services despite Pickard’s assertion in that proceeding of defects in Tarnow’s representation of her.

Collateral estoppel or "issue preclusion" prevents a party from relitigating an identical issue which has previously been decided against it in a prior action in which it had a fair opportunity to fully litigate the issue. See Allied Chemical v Niagara Mohawk Power Corp., 72 NY2d 271 (1988), cert denied, 488 US 1005 (1989). The party seeking to invoke the doctrine of collateral estoppel must show that the issue was necessarily decided in the earlier action, while [*3]the party who opposes the application of collateral estoppel must demonstrate that it did not have a full and fair opportunity to contest the prior determination. Buechel v Bain, 97 NY2d 295, 303-04 (2001).

Here, defendants have met their burden of demonstrating that the issue of malpractice was necessarily decided during the arbitration of the fee dispute in which Pickard contested the fee based on substantially the same alleged acts of malpractice that provide the basis for this action. See Weinstein v. Cohen, 2007 WL 3407107,AD2d(2d Dept 2007)(holding that plaintiff’s action alleging that defendants charged her excessive fees and committed legal malpractice in connection with their representation of her in a matrimonial action was precluded by prior determination that defendants were entitled to a substantial portion of the total fees they sought in a fee arbitration requested by plaintiff pursuant to 22 NYCRR Part 136); Altamore v Friedman, 193 AD2d 240, 244 (2d Dept 1993), lv dismissed, 83 NY2d 906 (1994) (holding that client was barred from bringing a legal malpractice action against his attorney after an arbitration award was issued in attorney’s favor in connection with a fee dispute since both the fee arbitration and the legal malpractice action shared "at the core, claims of attorney malpractice"); Kinberg v. Garr, 28 AD3d 245, 246(1st Dept 2006)("[p]laintiff’s adverse determination in defendants’ prior action to recover fees for the rendering of professional services precludes a finding of malpractice with regard to the same services); Djeddah v. Starr, 306 AD2d 59 (1st Dept), lv denied, 100 NY2d 516 (2003)(client’s arguments based on claims of malpractice were barred by prior unappealed order recognizing attorney’s charging lien and referring the matter for an assessment).

Moreover, although the arbitrators did not directly state whether their determination included the malpractice issues, all of the allegations set forth by Pickard in her Fee Dispute Application and in her supporting documentation focus on Tarnow’s alleged misconduct in his representation of her in her divorce case. In addition, it can inferred from the arbitrators’ statement that their decision was "based on a voluminous record," that they reviewed and considered all of the evidence before them.

Furthermore, Pickard does not argue that she did not have a full and fair opportunity to litigate the issue of Tarnow’s alleged malpractice in the arbitration. In fact, the exhibits submitted by defendants in support of this motion, indicate that Pickard provided the arbitrators with detailed submissions to support her assertion that Tarnow had committed malpractice and therefore should not be awarded a fee.

Pickard maintains, however, that the arbitrators did not have authority to consider the issues of legal malpractice, such that there was no adjudication of those issues in the fee arbitration. Specifically, Pickard contends that the arbitration was conducted pursuant to 22 NYCRR 137 (Part 137), which "establishes the New York State Fee Dispute Resolution Program, which provides for the informal and expeditious resolution of fee disputes between attorneys and clients through arbitration and mediation," and which excludes "claims involving substantial legal questions, including professional malpractice or misconduct." (22 NYCRR 137.1(b)(3)).

This argument is unavailing. Since Part 137 is applicable to cases "where representation has commenced on or after January 1, 2002" (22 NYCRR 137.1(a)), it does not apply to the parties’ fee arbitration, as it is undisputed that defendants commenced their representation of [*4]Pickard prior to that effective date. Rather, the provisions of 22 NYCRR 136 (Part 136) continue to apply to fee disputes in all domestic relations matters subject to that Part in which representation began prior to January 1, 2002.

Unlike the bar to adjudicating legal malpractice claims contained in Part 137, Part 136 contains no such limitation. Pursuant to Part 136.4 (b), "[t]he Administrative Judge may decline to accept or continue to arbitrate a dispute in which substantial legal questions are raised in addition to the basic fee dispute." Here, as the arbitration was held despite the issues of malpractice raised by Pickard, the arbitrators were entitled to consider these issues.

Accordingly, as defendants have met their burden of demonstrating that the identical issue of malpractice was necessarily decided in connection with the arbitration, and as Pickard has not shown that she did not have a full and fair opportunity to be heard on the issue, the doctrine of collateral estoppel bars this action for legal malpractice. "

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Andrew Lavoott Bluestone

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened his private law office and took his first legal malpractice case.

Since 1989, Bluestone has become a leader in the New York Plaintiff’s Legal Malpractice bar, handling a wide array of plaintiff’s legal malpractice cases arising from catastrophic personal injury, contracts, patents, commercial litigation, securities, matrimonial and custody issues, medical malpractice, insurance, product liability, real estate, landlord-tenant, foreclosures and has defended attorneys in a limited number of legal malpractice cases.

 

Bluestone also took an academic role in field, publishing the New York Attorney Malpractice Report from 2002-2004.  He started the “New York Attorney Malpractice Blog” in 2004, where he has published more than 4500 entries.

Mr. Bluestone has written 38 scholarly peer-reviewed articles concerning legal malpractice, many in the Outside Counsel column of the New York Law Journal. He has appeared as an Expert witness in multiple legal malpractice litigations.

Mr. Bluestone is an adjunct professor of law at St. John’s University College of Law, teaching Legal Malpractice.  Mr. Bluestone has argued legal malpractice cases in the Second Circuit, in the New York State Court of Appeals, each of the four New York Appellate Divisions, in all four of  the U.S. District Courts of New York and in Supreme Courts all over the state.  He has also been admitted pro haec vice in the states of Connecticut, New Jersey and Florida and was formally admitted to the US District Court of Connecticut and to its Bankruptcy Court all for legal malpractice matters. He has been retained by U.S. Trustees in legal malpractice cases from Bankruptcy Courts, and has represented municipalities, insurance companies, hedge funds, communications companies and international manufacturing firms. Mr. Bluestone regularly lectures in CLEs on legal malpractice.

Based upon his professional experience Bluestone was named a Diplomate and was Board Certified by the American Board of Professional Liability Attorneys in 2008 in Legal Malpractice. He remains Board Certified.  He was admitted to The Best Lawyers in America from 2012-2019.  He has been featured in Who’s Who in Law since 1993.

In the last years, Mr. Bluestone has been featured for two particularly noteworthy legal malpractice cases.  The first was a settlement of an $11.9 million dollar default legal malpractice case of Yeo v. Kasowitz, Benson, Torres & Friedman which was reported in the NYLJ on August 15, 2016. Most recently, Mr. Bluestone obtained a rare plaintiff’s verdict in a legal malpractice case on behalf of the City of White Plains v. Joseph Maria, reported in the NYLJ on February 14, 2017. It was the sole legal malpractice jury verdict in the State of New York for 2017.

Bluestone has been at the forefront of the development of legal malpractice principles and has contributed case law decisions, writing and lecturing which have been recognized by his peers.  He is regularly mentioned in academic writing, and his past cases are often cited in current legal malpractice decisions. He is recognized for his ample writings on Judiciary Law § 487, a 850 year old statute deriving from England which relates to attorney deceit.