May the defendant attorney collect attorney fees for the successful defense of a legal malpractice case?  One would immediately think not. The "American Rule" is that each side pays for its own attorneys, and the blackletter rule in NY is that absent an agreement or a statute, attorney fees are not collectible.

Here is a case, Lok Praknashan LTD v. Berman, Kern, Davidoff & Mallito04 Civ. 7212 (BSJ)(AJP);
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK     2008 U.S. Dist. LEXIS 101756 which determines the meaning and validity of a retainer agreement which gives the law firm attorney  fees for collection of unpaid fees, but does not mention attorney fees to defend a legal malpractice action.
 

"Defendants move for summary judgment on their counterclaim for (1) unpaid legal fees from their underlying representation of Plaintiff, (2) costs and attorneys’ fees associated with their efforts in bringing their counterclaim, and (3) costs and attorneys’ fees associated with their efforts to defend themselves pro se against the legal malpractice action. For the reasons that follow, the Court concludes that while Defendants are entitled to recover the unpaid legal fees and expenses incurred in bringing the instant counterclaim, Defendants are not entitled to the additional costs and fees for the time spent in defending the legal malpractice action.

As an initial matter, Plaintiff does not contest the terms of the Retainer Agreement or the time spent and bills for Defendants’ underlying representation. Because this Court has already granted summary judgment dismissing the claims of [*6] legal malpractice against Defendants, and because there are no disputed issues of material fact on this point, the Court concludes that Defendants are entitled to judgment on their counterclaim for $ 24,265.31, including legal fees and interest through December 20, 2004, as well as $ 4,267.75 in additional interest for the period of December 21, 2004 through December 20, 2005. (See Pl.’s R. 56.1 Stmt., at No. 11.)

Next, pursuant to the Retainer Agreement, Fed. R. Civ. P. 54(d)(2), and 28 U.S.C. § 1927, Defendants move for summary judgment for costs and attorneys’ fees expended in making the instant counterclaim to collect their underlying legal fee, and in defending against the legal malpractice action. The Retainer Agreement provides in relevant part: "If it is necessary to institute litigation to collect our fee . . . you will be responsible for all costs and legal fees associated with such action []." (Kern Decl. P 10.) Under the plain language of the Agreement, Defendants are entitled to the costs and legal fees associated with bringing this counterclaim. Defendants are directed to submit a declaration within thirty (30) days of this Memorandum and Order, detailing this precise [*7] amount.

Contrary to Defendants’ assertions, however, the plain language of the Retainer Agreement does not enable Defendants to recover costs and fees incurred in defending against the legal malpractice action. The Retainer Agreement nowhere mentions defense against litigation. Further, although the Agreement refers to the collection of costs and legal fees, the Court does not believe that this reference encompasses expenses incurred in an ensuing malpractice suit. As described above, the language instead refers to the expense of litigation to recover the fee for the services covered by the Retainer Agreement. Accordingly, the Court concludes that the Retainer Agreement does not authorize the award of costs and legal fees for the defense of the instant action."