Kagan Lubic Lepper Findelstein & Gold LLP v 325 Fifth Ave. Condominium  2015 NY Slip Op 31470(U) August 6, 2015   Supreme Court, New York County  Docket Number: 151878/15  Judge: Cynthia S. Kern is an example which will likely be cited in this years Legal Malpractice continuing legal education seminars as a reason not to sue clients over fees.  Fee suits invite legal malpractice counterclaims.  This one survived motions to dismiss.

“Specifically, defendants’ answer alleges as follows. Defendants hired Kagan Lubic in October 2012 to represent them as general counsel and in an action against the sponsor of 325 Fifth and certain subcontractors arising from the defective design, constr~ction, sale, marketing ·! ‘ and management of the condominium building located at 325 Fifth Avenue, New York, New York (the “building”), which was allegedly plagued with defects from th~ outset. Defendants allege that Kagan Lubic failed to take even the most basic steps to secure remedies against those responsible for the defective design and construction of the Building and that for nearly two  years, Kagan Lubic “churned the file” and generated enormous legal bills.through prolonged  negotiations and other pre-litigation tactics that were time consuming, costly and entirely ineffective, including, inter alia, (i) retaining duplicative, superfluous experts which caused defendants to incur thousands of dollars in additional fees; (ii) engaging in futile settlement discussions for nearly eighteen months; (iii) generating enormous legal fees by spending countless hours addressing inconsequential maintenance issues in the building which, in many instances, cost less to remediate than the time spent addressing them; (iv):frustrating any progress  toward reaching a settlement with the sponsor with respect to the maintenance issues by delaying nearly four months before responding to the sponsor’s offer to remediate certain conditions; (v) routinely raising additional maintenance issues which resulted in further delay and costs; and (vi) allowing nearly two years to lapse without filing a complaint in the action. Defendants further allege that “[b]ut for Kagan Lubic’s dilatory tactics, the defects in the Building would have been remediated by now, and the impaired value of the Condominium units in the Building resulting from the design and construction defects and ongoing litigation would have been restored.”

“In the instant action, defendants’ answer sufficiently states a claim for legal malpractice. The first counterclaim alleges that plaintiff committed legal malpractice.by failing to exercise the skill and ability reasonably to be expected from a duly licensed attorney and/or law firm engaged in the practice of law within the State of New York by, among other things, engaging in self serving dilatory tactics that were ineffective and designed to impede settlement discussions and timely resolution of the dispute in order to generate enormous legal fees and that as a result of said breach, defendants have been damaged. Specifically, defendants’ answer alleges that plaintiff negligently delayed the resolution of their claims against the sponsor and subcontractors only to increase their legal fees and that as a result, defendants have sustained damages, including, but not limited to, enormous legal fees and increased costs to investigate and address the defective conditions throughout the building, which include expert fees and rental fees for safety bridges and construction equipment. Additionally, defendants allege that as a direct result of plaintiffs willful delay of the underlying claims, the building’s defects have yet to be remediated and that the building’s value and defendants’ access to credit financing has been impaired. It is well-settled that allegations that an attorney unreasonably delayed the resolution of his client’s claims are grounds for malpractice sufficient to defeat a motion to dismiss. See Lappin v. Greenberg, 34 A.D.3d 277, 280 (1st Dept 2006)(“the complaint sufficiently asserts that defendants inordinate delay … resulted in a loss of principal attributable to defendants’ lack of professional diligence”); see also VDR Realty Corp. v. Mintz, 167 A.D.2d 986, 986-87 (4th Dept 1990)(“[factual allegations of the complaint to the effect that defendant attorney unreasonably delayed the prosecution of a landlord-tenant holdover proceeding and engaged in dilatory tactics, thereby increasing the attorney’s fee and causing other consequential damages, state a cause of action for legal malpractice.”) ”

“Here, defendants’ answer sufficiently states a claim for a violation of Judiciary Law§ 487(2). The second counterclaim alleges that plaintiff, instead of diligently and vigorously pursuing defendants’ legal claims against the sponsor and the subcontractors, engaged in selfserving dilatory tactics that were designed to impede settlement discussions and the timely resolution of the dispute “in order to generate enormous legal fees with a ;view to its own gain.” Specifically, defendants allege that they retained plaintiff in October 2012, after an action had been commenced by Summons with Notice in July 2012, and that from the outset of the representation, plaintiff”failed to take even the most basic steps to resolve [defendants’] claims” and that “[i]nstead, for nearly two years, [plaintiff] simply churned the file and generated enormous legal bills through prolonged negotiations and other pre-litigation tactics that were time consuming, costly, and entirely ineffective,” such as requiring additional unnecessary expert investigations, delaying filing a complaint for almost two years, stalling all opportunities to settle the underlying matter and continuing to attempt to settle the matter despite the knowledge that settlement attempts were futile. As these allegations are sufficient to state a claim for a violation of Judiciary Law§ 487, plaintiffs motion to dismiss the second counterclaim is denied. ”