Law firms traditionally wait three years and a day before suing for unpaid legal fees, and fall into the gap between the three year statute for a feared legal malpractice counterclaim and the six year statute for contract claims.  So was the case in Lewis, Brisbois, Bisgaard & Smith, LLP v Law Firm of Howard Mann  2016 NY Slip Op 05487  Decided on July 13, 2016  Appellate Division, Second Department.  The statute of limitations for legal malpractice ran out on December 29, 2012.  The fee action was commenced in January, 2013.  However, that is not the end of the question.  CPLR 203[d] applies, and permits the counterclaim while it limits the amount of recovery to an offset only.

“The Supreme Court properly denied those branches of the motion of the plaintiff and the third-party defendants (hereinafter collectively the appellants) which were pursuant to CPLR 3211(a)(5) to dismiss, as time-barred, the second, fourth, fifth, sixth, and eighth counterclaims, as well as the first and third causes of action in the third-party complaint, all of which allege legal malpractice, breach of contract, or breach of fiduciary duty, as well as the ninth counterclaim and the fourth cause of action in the third-party complaint, which allege a violation of Judiciary Law § 487. “[C]laims and defenses that arise out of the same transaction as a claim asserted in the complaint are not barred by the Statute of Limitations, even though an independent action by defendant might have been time-barred at the time the action was commenced” (Bloomfield v Bloomfield, 97 NY2d 188, 193; see CPLR 203[d]). In the instant matter, the subject counterclaims and third-party causes of action all arise from the transactions and occurrences upon which the complaint depends. Accordingly, they are not time-barred to the extent of the demand in the complaint (see CPLR 203[d]). Since the appellants’ motion did not address the applicability of CPLR 203(d), the appellants did not establish their entitlement to dismissal pursuant to CPLR 3211(a)(5).

However, the Supreme Court should have granted that branch of the appellants’ motion which was to dismiss the second, fourth, fifth, and eighth counterclaims and the third cause of action in the third-party complaint pursuant to CPLR 3211(a)(7). Those claims are each duplicative of the sixth counterclaim and the first cause of action in the third-party complaint, which alleged legal malpractice, as they arise from the same set of facts and do not allege any distinct damages (see Comprehensive Mental Assessment & Med. Care, P.C. v Gusrae Kaplan Nusbaum, PLLC, 130 AD3d 670, 672; Palmieri v Biggiani, 108 AD3d 604, 608; Soni v Pryor, 102 AD3d 856).”