This intra-family dispute pitted brother against brother and mother against son for control of a very close corporation.  When the case was settled, one party had not successfully analyzed the potential tax liabilities and sue the attorney.

Benishai v Epstein  2014 NY Slip Op 02404 [116 AD3d 726]  April 9, 2014  Appellate Division, Second Department examines what happens when you win the case, but the results are more difficult than you expected.

"In 2004, the plaintiff, as attorney-in-fact for his mother, Bella Benishai (hereinafter Bella), commenced an action in the Supreme Court, New York County (hereinafter the New York County action), against his brother, David Benishai (hereinafter David). The plaintiff, inter alia, alleged that David had mismanaged the corporate funds of Ilan Properties, Inc. (hereinafter Ilan), a corporation in which, at that time, Bella and David were each 50% shareholders. Ilan’s primary assets were two residential properties located on West 76th Street in Manhattan. After commencing the New York County action against David, the plaintiff retained the defendant attorney to represent Bella, but Bella died during the pendency of that action. Nonetheless, the plaintiff apparently directed the defendant to continue the prosecution of the New York County action against David. On March 31, 2009, the plaintiff, David, Ilan, and Bella’s estate entered into a written settlement agreement, pursuant to which the plaintiff became a 50% shareholder in Ilan and agreed to release David from any claims for costs, taxes, and penalties.

In October 2011, the plaintiff commenced this legal malpractice action against the defendant, alleging, among other things, that the defendant failed to undertake an analysis of Ilan’s financial status in order to determine the plaintiff’s exposure to tax liabilities, fines, penalties, and other charges.

To recover damages in a legal malpractice action, a plaintiff must establish "that the attorney ‘failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a [*2]member of the legal profession’ and that the attorney’s breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007], quoting McCoy v Feinman, 99 NY2d 295, 301, 302 [2002] see Held v Seidenberg, 87 AD3d 616, 617 [2011] Kennedy v H. Bruce Fischer, Esq., P.C., 78 AD3d 1016, 1018 [2010]). "To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer’s negligence" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442). " ‘A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel’ " (Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083 [2005], quoting Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1990]). Nonetheless, a plaintiff’s conclusory allegations that merely reflect a subsequent dissatisfaction with the settlement, or that the plaintiff would be in a better position but for the settlement, without more, do not make out a claim of legal malpractice (see Boone v Bender, 74 AD3d 1111, 1113 [2010] Holschauer v Fisher, 5 AD3d 553, 554 [2004])."