While negligent selection of experts has been rejected as a legal malpractice claim many times on the explanation that selection of experts is a strategy choice, in Moncho v Miller 2021 NY Slip Op 06960
Decided on December 14, 2021, Appellate Division, First Department determined that selection of a litigation funder can be the basis for a legal malpractice claim.
“The eighth cause of action (malpractice against Pasternak based on his failure to conduct due diligence on Sprei and defendant Harry Miller) and the ninth cause of action (malpractice against Pasternak based on his breach of the duty of loyalty) should not have been dismissed. Plaintiffs allege that Pasternak recommended that they use Sprei as their bankruptcy plan funder, discouraged them from using an alternate funder, and received a $25,000 kickback from Sprei for successfully recommending him. They further allege that before 2014 there were at least seven lawsuits filed against Sprei and/or Miller based on causes of action similar to the instant causes of action and that most if not all of the suits resulted in judgments adverse to Sprei and Miller.
Pasternak accurately notes that the actions involving Sprei and/or Miller were a matter of public record. However, a lawyer like Pasternak is in a better position than nonlawyers like plaintiffs to discover whether someone (e.g., Sprei and/or Miller) has been sued and judgment entered against them. Moreover, a client is entitled to trust his/its lawyer when the latter recommends a plan funder (see Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 9 [1st Dept 2008]). Pasternak is also correct that recommending one among several reasonable courses of conduct does not give rise to a legal malpractice claim. However, we cannot conclude as a matter of law that recommending Sprei — who had the above-discussed litigation history and gave Pasternak $25,000 for recommending him to plaintiffs — was a reasonable course of conduct.
With respect to whether Pasternak’s negligence was a proximate cause of plaintiffs’ losses, we cannot conclude as a matter of law, — in view of Pasternak’s urging plaintiffs to use Sprei — that Sprei’s misconduct was independent of Pasternak’s (compare Excelsior Capitol LLC v K&L Gates LLP, 138 AD3d 492 [1st Dept 2016] [malpractice claim dismissed for lack of proximate cause where trial court’s error in underlying action was an intervening cause, breaking any proximate cause by defendant attorneys], lv denied 28 NY3d 906 ).
As for the damages element of malpractice, it is reasonable to infer that if Pasternak had not pushed plaintiffs to use Sprei, they would have used the alternate funder and would not have sustained injury (see Fielding v Kupferman, 65 AD3d 437, 442 [1st Dept 2009]). At the motion to dismiss stage, this is not speculative (see id.).”