The First Department delved into a legal malpractice case with several unusual affirmative defenses.  In Whitney Group, LLC v Hunt-Scanlon Corp. 2013 NY Slip Op 03929  Decided on May 30, 2013  Appellate Division, First Department  we see affirmative defenses of "in pari delicto", comparative fault and a question of whether there must be joint and several liability with other defendants.
 

The underlying case, one corporation against another arose after the CFO began causing the plaintiff corporation to lend money to the defendant corporation.  Twice, the CFO asked Jaspan Schlesinger, outside corporate counsel for plaintiff for advice.  They advised him that the loans were improper but did nothing more.

"The record presents an issue of fact whether, as the Jaspan defendants contend, plaintiff knew as of January 2006 that loans had been extended to Hunt-Scanlon and did nothing to prevent Sussman from issuing additional loans, and therefore whether the Jaspan defendants’ failure to notify plaintiff of the loans in February 2007 was a proximate cause of plaintiff’s losses (see e.g. AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 435-436 [2007]; GUS [*2]Consulting GmbH v Chadbourne & Parke LLP, 74 AD3d 677, 679 [1st Dept 2010], lv denied 16 NY3d 702 [2011]). Thus, the motion court properly denied the Jaspan defendants’ motion for summary dismissal of the plaintiff’s malpractice claim. It also correctly held that "[t]he apportionment of liability among alleged tortfeasors is a matter for trial" (Greenidge v HRH Constr. Corp., 279 AD2d 400 [1st Dept 2001]).

Turning to the Jaspan defendants’ affirmative defenses, we find that there is a question of fact as to whether the Jaspan defendants have established that the doctrine of in pari delicto defeats plaintiff’s claims (see Kirschner v KPMG LLP, 15 NY3d 446, 466 [2010]). As already noted, whether plaintiff knew of Sussman’s conduct and allowed him to continue loaning monies for several years remains a question of fact. Further, the Jaspan defendants allege that plaintiff received allegedly significant and substantial benefits during the time that Sussman made the unauthorized loans. Plaintiff disputes this claim, but failed to establish as a matter of law, that Sussman acted solely for his own or Hunt-Scanlon’s purposes, totally abandoning plaintiff’s interests. Plaintiff therefore failed to demonstrate that the adverse interest exception to the doctrine of in pari delicto applies (Center v Hampton Affiliates, Inc., 66 NY2d 782, 784-785 [1985] [insufficient to allege only that agent had a conflict of interest or was not acting primarily for the principal]; Concord Capital Mgt., LLC v Bank of Am., N.A., 102 AD3d 406, 406 [1st Dept 2013] [quoting Kirschner, supra at 468 (" So long as the corporate wrongdoer’s fraudulent conduct enables the business to survive — to attract investors and customers and raise funds for corporate purposes, — ‘ the adverse interest exception does not apply")]).

However, the Jaspan defendants’ affirmative defenses seeking to bar or reduce plaintiff’s damages based on plaintiff’s alleged comparative fault must be dismissed because plaintiff’s alleged failure to discover or prevent ongoing fraud by its fiduciary, Sussman, did not prevent or interfere with the Jaspan defendants’ performance of their own professional duties to plaintiff (see National Sur. Corp. v Lybrand, 256 AD 226, 235-236 [1st Dept 1939]; see also Collins v Esserman & Pelter, 256 AD2d 754, 757 [3d Dept 1998] [although the record was "replete with evidence" that the company’s bookkeeper was able to exploit the lack of internal controls to embezzle from the company, none of this interfered with the defendant accounting firm’s ability to complete the review for which it had been hired to perform; comparative fault was not applicable]).

To permit an affirmative defense of comparative negligence in a legal malpractice case, there must be a showing that the client did or did not do something that hindered the law firm from performing its duties toward its client. The Jaspan defendants’ reliance on cases addressing the application of comparative negligence in the context of alleged accountant malpractice, or breach of fiduciary duty, are not squarely on
point (see e.g. Hall & Co. v Steiner & Mondore, 147 AD2d 225, 227-228 [3d Dept 1989]; Lippes v Atlantic Bank of N.Y., 69 AD2d 127 [1st Dept 1979]). Here, none of the examples of plaintiff’s alleged internal weaknesses could rationally lead a factfinder to conclude that plaintiff interfered with the Jaspan defendants’ ability to carry out their fiduciary duties toward plaintiff. Thus, on the extant record, there is no valid line of reasoning that could lead rational people to conclude [*3]plaintiff was negligent, and that such negligence was a substantial factor in causing the losses attributed to the Jaspan defendants’ negligence. "