The statute of limitations for legal malpractice is three years. There is a whole bible of case law on when the S/L commences (at the mistake) and how it might be tolled (continuous representation). Strategic practitioners generally wait for expiration of the three year period before bringing fee claims (subject to a 6 year statute). However, Lieb at Law, P.C. v Lodato 2021 NY Slip Op 51089(U) [73 Misc 3d 1219(A)] Decided on October 28, 2021 District Court Of Suffolk County, Fourth District Matthews, J. illustrates the quirky CPLR 203(d) offset situation.
“In excess of three years later, plaintiff commenced the instant lawsuit in District Court dated 11/25/2019, against defendants Lodato and Rosswaag (collectively “defendants”), for actions alleging breach of contract, unjust enrichment, quantum meruit, and an account stated, demanding judgment in the sum of $10,405.00 for its unpaid invoices for legal services rendered, together with statutory interest from 11/04/2016.
After a consent adjournment, defendants filed a Verified Answer dated 03/13/2020, which denied the allegations, and alleged a first counterclaim for legal malpractice, noting although plaintiff waited over 3 years before filing the instant claims to allow expiration of the 3 year statute of limitations, defendants are seeking to offset as a shield for equitable recoupment purposes, a sum equal to any damages asserted by plaintiff for legal fees, pursuant to CPLR 203(d); a second counterclaim for breach of contract to perform legal services under the retainer agreements; and a third counterclaim for breach of fiduciary duty owed to defendants by plaintiff. Defendants demand damages for the full refund of the legal fees paid to plaintiff (disgorgement of legal fees), as well as dismissal of plaintiff’s complaint.”
“The Court further finds that the part of plaintiff’s motion seeking to dismiss defendants’ first counterclaim (and sixth defense) alleging legal malpractice, as being time-barred by the three-year statute of limitations (see CPLR 214; Stewart v Berger, 137 AD3d 1103 [2nd Dept 2016]), is granted, except to the extent that the first counterclaim seeks to offset as a shield for equitable recoupment purposes, a sum equal to an award of legal fees to the plaintiff, and not to the extent that it seeks affirmative relief, which is time-barred (see CPLR 203[d]; Balanoff v Doscher, 140 AD3d 995 2nd Dept 2016]; Carlson v Zimmerman, 63 AD3d 772 [2nd Dept 2009]. “The defendants’ counterclaim alleging legal malpractice relates to the plaintiff’s performance under the same retainer agreement pursuant to which the plaintiff would recover and therefore this counterclaim falls within the permissive ambit of CPLR 203[d]” (see Balanoff v Doscher, supra at 996]).”