Who may sue an attorney for legal malpractice?  In most cases (and that means almost all the time) only the party that hired and contracted with the attorney.  East 51st St. Dev. Co., LLC v Lincoln Gen. Ins. Co.  2015 NY Slip Op 31245(U)  July 17, 2015 Supreme Court, New York County Docket Number: 150063/2010 Judge: Carol R. Edmead is an example of two very sophisticated consumers fighting over attorney fees and other problems.  These two insurance companies, which are on the hook for an extraordinarily bad crane accident, seem to have overlooked the question of privity.

“In this insurance d.eclaratory judgment action, Lincoln General Insurance Company
(“Lincoln General”) seeks, by separate motions, leave to supplement its affirmative defenses and
leave to assert a third party action against the lawfirm, O’Melveny and Meyers, LLP (“OMM”)
which defends plaintiff East 51″ Street Development Company, LLC (“East 51 “”) in numerous
tort and property damage cases.”

“Lincoln General’s claims premised on equitable subrogation lacks merit.
Lincoln General failed to assert sufficient “wrongdoing” on the part of OMM, or cite any
authority for the position that the fees charged by OMM, in and of themselves, constitute
‘\>TOngdoing” under any theory oflaw, let alone under the theory of equitable subrogation. Here,
Illinois Union retained OMM to defend East 51” in the Crane Collapse Litigation. The mere
allegation that OMM placed its interests in recovering a fee ahead of its duties of loyalty and care
to Illinois Union and East 51 st, to the detriment of Lincoln General who is obligated to pay the
defense costs incurred, is unsupported by the papers or the proposed third party complaint.
Notably, in reply, Lincoln General concedes that it is not asserting that OMM committed legal
ma! practice.  To apply the doctrine as urged by Lincoln General, Lincoln General, as the an insurer,who is duty bound to pay “losses” (defense costs) of its insured (East 5lst), seeks to be “placed in the position ofits insured” East 51 “,”so that it may recover from” OMM-the party Lincoln General claims is legally responsible forthe loss. OMM cannot be held liable for its own
“reasonable” defense costs. Therefore, application of the doctrine to Lincoln General  is nonsensical. And again, the “loss” Lincoln General claims it stands to suffer, is the payment
toward “reasonable” defense costs, which the First Department has already determined is
warranted.
As acknowledged by Lincoln General, the doctrine of equitable subrogation allows it to 1
“step into the shoe~” of Illinois Union and/or East 51 to assert claims they have a right to bring.
However, the only claim Illinois Union and/or East 51″ may have to bring against OMM, as
relevant to this instant action, concern the reasonableness of attorneys’ fees. No third-party cause
of action against OMM is warranted in this regard.
Lincoln General contends that to disallow it from proceeding against OMM “under the
principles of equitable subrogation would completely absolve OMM from liability associated
with its actions which deviated from fiduciary standards, and would place the loss for such
deviation on Lincoln General and the co-primary insurers.” However Lincoln General alleges no
specific conduct constituting a breach of fiduciary obligations. Again, it bears repeating that
Lincoln General concedes that it does not claim that OMM committed malpractice. “