It’s unusual to see a firm like Marcum LLP suing its attorneys. In this particular setting, the claim was rejected by the Appellate Division.

In Marcum LLP v L’Abbate, Balkan, Colavita & Contini, L.L.P. 2023 NY Slip Op 06443 [222 AD3d 486] December 14, 2023 Appellate Division, First Department the accounting firm claimed that its defense lawyers were negligent.

“Supreme Court correctly concluded that defendants, L’Abbate, Balkan, Colavita & Contini, L.L.P. (LBCC) and Marianne S. Conklin, who represented plaintiff in an underlying action alleging accounting malpractice, among other things, were entitled to dismissal of the complaint given that plaintiff failed to allege that defendants were negligent or that they proximately caused any damages (see Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Fielding v Kupferman, 65 AD3d 437, 442 [1st Dept 2009]). Plaintiff alleged that in the underlying action, defendants’ supplemental discovery production, which included responsive documents that had been inadvertently withheld, such as declarations submitted in connection with a federal investigation into one of plaintiff’s clients, precipitated a coverage dispute with its insurers. That dispute led to plaintiff having to retain other coverage counsel and to ultimately contribute to the settlement in the underlying action.

Although plaintiff contends that the declarations were subject to grand jury secrecy rules, plaintiff did not allege that either of the employees who composed the declarations testified before a federal grand jury, or that the declarations were entered into evidence. Thus, the declarations were not subject to the general rule of grand jury secrecy because they were not “evidence actually presented to [the grand jury]” nor “anything that may tend to reveal what transpired before it” (see United States v Eastern Air Lines, Inc., 923 F2d 241, 244 [2d Cir 1991], citing Fed Rules Crim Pro rule 6 [e] [2]). Accordingly, plaintiff failed to allege that defendants’ conduct breached its duty of care.”

“Supreme Court also correctly dismissed that part of the legal malpractice claim seeking disgorgement of attorneys’ fees paid to LBCC, which is, essentially, a claim for monetary damages in connection with its legal malpractice claim (see Access Point Med., LLC v Mandell, 106 AD3d 40, 44 [1st Dept 2013]). Defendant was not discharged for cause, nor did it charge legal fees for any work associated with the motion practice ensuing from the supplemental disclosures (see Decolator, Cohen & DiPrisco v Lysaght, Lysaght & Kramer, 304 AD2d 86, 91 [1st Dept 2003]). Since the underlying legal malpractice claim is dismissed, the claim for disgorgement must be dismissed as well (see Cambridge Capital Real Estate Invs., LLC v Archstone Enter. LP, 137 AD3d 593, 596 [1st Dept 2016]).

Plaintiff did not establish that it incurred litigation expenses as a result of defendants’ conduct to minimize or correct defendants’ mistakes (see Rudolf, 8 NY3d at 443), and this portion of the complaint seeking additional damages also should have been dismissed. Plaintiff failed to specifically allege what attorneys’ fees, if any, it paid to co-counsel to remedy any alleged shortcomings by defendants in the wake of the supplementary disclosures and defendants’ motion to withdraw from the representation. Concur—Kapnick, J.P., Friedman, González, O’Neill Levy, JJ.”