Napoli Kaiser Bern is a well known class action law firm that is currently said to be breaking apart with melodramatic reports of sexual escapades, lack of fidelity and general ennui.  Whether the partners will make up, or part ways, they all face some problems in the Fen-Phen litigation, as many of the clients allege that they misstated expenses, and referring attorneys claim fraud. 

In Appel-Hole v Wyeth-Ayerst Labs.  2014 NY Slip Op 33170(U)  November 21, 2014  Supreme Court, New York County  Docket Number: 105122/09  Judge: Charles E. Ramos discusses some of the pleading issues and the Judiciary Law 487 applications.

"This action arises out of the settlement of mass tort litigation known as New York Diet Drug  itigation. In the original action (Original Action) , 1 plaintiffs asserted claims of personal injury due to the ingestion of ~fen-phen" diet drugs. In November 2001, the Original Action was settled, and the settlement approved by a predecessor court, by Justice Helen Freedman. At or around this time, the concern was raised that the settlement and disbursements obtained had been  manipulated.

Shortly after approval of the settlement, P&W commenced an action against NKB alleging  misrepresentations in connection with that settlement, entitled P&W v Napoli, and bearing the index number 605388/01 (P&W Action) . This Court largely dismissed the action on the ground that P&W lacked standing to assert claims of breach of contract between the referred clients and NKB, and because it constituted a collateral attack on the settlement, which was affirmed (Parker & Waichman, 29 AD3d 396 [1st Dept 2006]). A claim for an accounting remains in the pending P&W
Action.  and misallocated by settling counsel, defendants herein, Napoli Bern & Kaiser, LLP (NKB), to clients other then those referred to by Parker & Waichman, LLP (P&W). At the time that P&W referred clients, NKB agreed to represent them and to share attorneys’ fees with P&W.

P&W alleges that NKB committed fraud to deprive it of its contractual share of attorneys’ fees, by deliberately allocating more settlement funds to its own direct clients then to comparable referred cases in order to minimize fee-splitting with P&W, and assessed bogus disbursements and expenses to the referred clients, which decreased the net settlement amount used to calculate P&W’s fees. 

The Court has reviewed the allegations contained in Exhibit A annexed to the third amended  Intervenor complaint that the intervenor defendants maintain do not meet the heightened pleading standards of CPLR 3016 (b). For instance, the third amended intervenor complaint alleges
that John Bagglio repeatedly expressed dissatisfaction with the settlement amount being offered via NKB, and requested that NKB renegotiate a better settlement offer. Nonetheless, in a series
of communications with John Bagglio, NKB misrepresented that he "had no case," that his case faced "serious consequences" if he did not return the release form and accept the settlement amount being offered, and that he would "get nothing" if his case went to court. NKB also allegedly misled him concerning the settlement procedure, how the settlement offer was arrived at, and falsely put him in fear of losing any potential recovery if he did not accept a lower settlement amount, which the complainant relied upon in accepting a low settlement amount. The allegations of the remaining intervenor plaintiffs which defendants maintain are insufficient contain either a greater or lesser level of detail, describing the manner in which the defendants misrepresented how each individual settlement was arrived at, and how plaintiffs were pressured into settling the
case based on terms which were false. Taking the allegations in the light most favorable to the
plaintiffs, the Court concludes that, under the circumstances,  sufficient facts are alleged to permit a fact-finder to infer that the intervenor defendants falsely represented how each settlement was arrived at and the settlement process itself. True, with respect to many of the complainants, intervenor plaintiffs have not alleged specific details of each individual intervenor defendants’ conduct. Nonetheless, the third amended intervenor complaint alleges the basic facts to establish the elements of fraud, and adequately informs the defendants of the complained-of incidents (see Eurycleia Partners, L.P., Seward & Kissel, LLP, 12 NY3d 553, 559 [2009]). "

Plaintiff hires an attorney to handle a NJ accounting proceeding.  The case is dismissed on failure to engage in discovery.  The other side is granted costs and attorney fees if the case is brought once again.  Client hires attorney 2 to bring the action again.  Attorney 2 warns client of penalties which might accrue on second case.  Client goes ahead nevertheless. 

Client then sues both attorney 1 and 2.  Here are the results in  Bivona v Danna & Assoc., P.C.
2014 NY Slip Op 08948  Decided on December 24, 2014 Appellate Division, Second Department  along with    Bivona v Danna & Assoc., P.C.   2014 NY Slip Op 08947  Decided on December 24, 2014  Appellate Division, Second Department,

Legal Malpractice part of the case?  "Here, the defendants did not establish, prima facie, that the plaintiffs will be unable to prove at least one of the elements of legal malpractice (see Gershkovich v Miller, Rosado & Algios, LLP, 96 AD3d 716, 717; Bey v Flushing Hosp. Med. Ctr., 95 AD3d 1152, 1153). The defendants could not sustain their burden merely by pointing out gaps in the plaintiffs’ proof (see Kempf v Magida, 116 AD3d 736, 736; Alizio v Feldman, 82 AD3d 804, 805). Accordingly, contrary to the defendants’ contention, the Supreme Court properly denied their motion for summary judgment dismissing the complaint."

As to the Contribution and Indemnity:  ""In considering a motion to dismiss for failure to state a cause of action pursuant to CPLR 3211(a)(7), the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Alva v Gaines, Gruner, Ponzini & Novick, LLP, 121 AD3d 724, 724 [internal quotation marks omitted]; see Leon v Martinez, 84 NY2d 83, 87-88). "A motion to dismiss a cause of action pursuant to CPLR 3211(a)(1) may be granted only if documentary evidence utterly refutes [the] plaintiff’s factual allegations, thereby conclusively establishing a defense as a matter of law’" (Indymac Venture, LLC v Nagessar, 121 AD3d 945, 945, quoting Whitebox Concentrated Convertible Arbitrage Partners, L.P. v Superior Well Servs., Inc., 20 NY3d 59, 63).

The Supreme Court erred in denying that branch of the motion of the third-party defendant Minchew & Santner, LLP (hereinafter M & S), which was pursuant to CPLR 3211(a)(7) to dismiss the contractual indemnification cause of action in the third-party complaint insofar as asserted against it. The defendants third-party plaintiffs Danna & Associates, P.C., and Anthony S. Danna (hereinafter together the Danna defendants) did not allege the existence of such a contractual relationship, and it is undisputed that no contractual relationship existed between the Danna [*2]defendants and M & S (see Galvin Bros., Inc. v Town of Babylon, N.Y., 91 AD3d 715, 716; see also Reimold v Walden Terrace, Inc., 85 AD3d 1144, 1146). Accordingly, the Supreme Court should have granted that branch of M & S’s motion which was pursuant to CPLR 3211(a)(7) to dismiss the contractual indemnification cause of action in the third-party complaint insofar as asserted against it.

The Supreme Court also erred in denying that branch of M & S’s motion which was pursuant to CPLR 3211(a)(1) to dismiss the cause of action for common-law indemnification in the third-party complaint insofar as asserted against it. "The principle of common law, or implied, indemnification permits one who has been compelled to pay for the wrong of another to recover from the wrongdoer the damages it paid to the injured party" (Bedessee Imports, Inc. v Cook, Hall & Hyde, Inc., 45 AD3d 792, 796, quoting Tiffany at Westbury Condominium v Marelli Dev. Corp., 40 AD3d 1073, 1077). "Common-law indemnification is warranted where a defendant’s role in causing the plaintiff’s injury is solely passive, and thus its liability is purely vicarious" (Bedessee Imports, Inc. v Cook, Hall & Hyde, Inc., 45 AD3d at 796, quoting Balladares v Southgate Owners Corp., 40 AD3d 667, 671). "Thus, a party which has actually participated in the wrongdoing is not entitled to indemnification" (Bedessee Imports, Inc. v Cook, Hall & Hyde, Inc., 45 AD3d at 796; see 17 Vista Fee Assoc. v Teachers Ins. & Annuity Assn. of Am., 259 AD2d 75, 80). Here, the plaintiffs’ claims against the Danna defendants in the instant legal malpractice action are based upon the Danna defendants’ representation of the plaintiffs in an accounting proceeding they commenced in the Superior Court of New Jersey (hereinafter the New Jersey proceeding). In support of that branch of its motion which was pursuant to CPLR 3211(a)(1) to dismiss the Danna defendants’ cause of action for common-law indemnification in the third-party complaint insofar as asserted against it, M & S submitted copies of orders issued by the court in the New Jersey proceeding, which revealed that several claims asserted by the plaintiffs were dismissed because of the Danna defendants’ failure to conduct discovery. Those orders gave the defendants in the New Jersey proceeding the right to seek an award of costs and an attorney’s fee in the event that any of the plaintiffs commenced a new action against any of them for the same or similar relief. M & S also submitted a copy of its retainer agreement with the plaintiffs, in which M & S expressly advised the plaintiffs that the defendants in the New Jersey proceeding had the right to seek an award of costs and fees in the event a new action was commenced against them. The plaintiffs expressly acknowledged in the retainer agreement that they were nonetheless willing to retain M & S to recommence an action or proceeding against one or more of the defendants in the New Jersey proceeding. Thus, the documentary evidence submitted by M & S in support of its motion conclusively established that any liability on the part of the Danna defendants for legal malpractice was not solely passive and purely vicarious. Accordingly, the Supreme Court should have granted that branch of M & S’s motion which was pursuant to CPLR 3211(a)(1) to dismiss the cause of action for common-law indemnification in the third-party complaint insofar as asserted against it.

As to the contribution cause of action, " [i]n determining whether a valid third-party claim for contribution exists, the critical issue is whether the third-party defendant owed a duty to the plaintiff which was breached and which contributed to or aggravated plaintiff’s damages’" (Rehberger v Garguilo & Orzechowski, LLP, 118 AD3d 765, 766, quoting Rosner v Paley, 65 NY2d 736, 738; see Raquet v Braun, 90 NY2d 177, 183). " [T]he remedy may be invoked against concurrent, successive, independent, alternative and even intentional tortfeasors’" (Rehberger v Garguilo & Orzechowski, LLP, 118 AD3d at 766, quoting Raquet v Braun, 90 NY2d at 183). "A defendant attorney may seek contribution from a subsequently retained attorney, to the extent that the subsequently retained attorney’s negligence may have contributed to or aggravated the plaintiff’s injuries" (Rehberger v Garguilo & Orzechowski, LLP, 118 AD3d at 766; see Schauer v Joyce, 54 NY2d 1, 3-6; Soussis v Lazer, Aptheker, Rosella & Yedid, P.C., 66 AD3d 993, 995; cf. Northrop v Thorsen, 46 AD3d 780, 783). Contrary to M & S’s contentions, the Supreme Court properly denied those branches of its motion which were pursuant to CPLR 3211(a) to dismiss the contribution cause of action in the third-party complaint insofar as asserted against it, since the defendants third-party plaintiffs properly stated a cause of action alleging that M & S’s legal malpractice contributed to the plaintiff’s damages, and documentary evidence did not conclusively establish a complete defense to that cause of action.

Borges v Placeres  2014 NY Slip Op 08910  Decided on December 23, 2014  Appellate Division, First Department is a compendium of mistakes in a legal malpractice.  This case was tried in Civil Court, was appealed to the Appellate Term, and from there to the Appellate Division.  Plaintiff lost in all spheres. 

Mistakes:  Failure to raise statute of limitations defense ;  bringing a motion for summary judgment too late, failure to enunciate a winning theory of liability, and failure to raise the issue of pecuniary damages at the trial. 

From the decision:  "Defendant’s motions to amend his answer to assert a statute of limitations defense and for summary judgment dismissing the complaint, made on the eve of trial eight years after the answer was served, were properly denied for lack of any excuse for the delay (see Van Damme v Gelber, 111 AD3d 408, 409-410 [1st Dept 2013], lv denied 23 NY3d 904 [2014]). The motion for summary judgment did not seek relief against a party whose timely motion for summary judgment was returnable the same day, and therefore did not fall within the exception permitting a court to entertain an untimely summary judgment motion (see Kershaw v Hospital for Special Surgery, 114 AD3d 75, 87-89 [1st Dept 2013]; Genger v Genger, 120 AD3d 1102 [1st Dept 2014]).

The charge and verdict sheet appropriately required that defendant’s negligence in this attorney malpractice action be a substantial factor in causing plaintiff’s harm (see Barnett v Schwartz, 47 AD3d 197, 204-205 [2d Dept 2007]). Contrary to defendant’s contention, the gravamen of plaintiff’s claim is not that defendant’s departures caused plaintiff to be denied an adjusted immigration status, tantamount to losing a case, but that those departures resulted in a deportation order and the failure to vacate it due to bad advice. Defendant’s argument that the damages awarded for the harm resulting from plaintiff’s 14 months in detention constitute non-pecuniary damages that are not recoverable in a legal malpractice action is unpreserved."

Just as in Legal Malpractice, the principal of continuing representation tolls the three year statute of limitations in accounting malpractice.  The rules of burden shift from defendant to plaintiff are similar too.

Schwartz v Leaf, Salzman, Manganelli, Pfiel, & Tendler, LLP    2014 NY Slip Op 08823  Decided on December 17, 2014  Appellate Division, Second Department discusses the rule.

"In an action, inter alia, to recover damages for negligence, accounting malpractice, fraud, breach of fiduciary duty, and unjust enrichment, the defendants appeal, as limited by their brief, from so much of an order of the Supreme Court, Nassau County (Driscoll, J.), dated May 13, 2013, as denied those branches of their motion which were pursuant to CPLR 3211(a)(1), (5), and (7) to dismiss the second cause of action, and the plaintiff Madeleine E. Schwartz cross-appeals, as limited by her brief, from so much of the same order as granted those branches of the defendants’ motion which were pursuant to CPLR 3211(a)(7) to dismiss the first, third, fourth, fifth, sixth, seventh, eighth, and ninth causes of action.

ORDERED that the order is affirmed insofar as appealed and cross-appealed from, without costs or disbursements.

On a motion to dismiss a cause of action pursuant to CPLR 3211(a)(5) on the ground that it is time-barred, a defendant bears the initial burden of establishing, prima facie, that the time in which to sue has expired (see Bill Kolb, Jr., Subaru, Inc. v LJ Rabinowitz, CPA, 117 AD3d 978; Kennedy v H. Bruce Fischer, Esq., P.C., 78 AD3d 1016, 1017). The burden then shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or was otherwise

inapplicable or whether the action was actually commenced within the applicable limitations period (see Ritty Jie Yuan v 2368 W. 12th St., LLC, 119 AD3d 674; Beizer v Hirsch, 116 AD3d 725; Williams v New York City Health & Hosps. Corp., 84 AD3d 1358, 1359). Here, the defendants established their prima facie entitlement to dismissal of the complaint based on the expiration of the three-year statute of limitations applicable to the cause of action, inter alia, to recover damages for accounting malpractice (see CPLR 214[6]; Regency Club at Wallkill, LLC v Appel Design Group, P.A., 112 AD3d 603). In opposition, however, the plaintiffs raised a question of fact as to whether the statute of limitations was tolled by the doctrine of continuous representation (see Howish v Perrotta, 84 AD3d 1312; Symbol Tech., Inc. v Deloitte & Touche, LLP, 69 AD3d 191, 196; Rehberger v Garguilo & Orzechowski, LLP, 50 AD3d 760)."

Litigation, and legal malpractice litigation in particular is subject a vast number of technical rules, any of which can upset an otherwise meritorious case.  Attorneys make mistakes in these technical rules, hence legal malpractice.  Pro-se litigants make even more mistakes.  Hyman v Schwartz  2014 NY Slip Op 33274(U)  December 17, 2014  Supreme Court, New York County
Docket Number: 2014-1193 Judge: Eugene D. Faughnan is an example.

"The instant action was commenced by the filing of a Verified Complaint on March 10,2014. The complaint was filed against the three attorney defendants and their law firm (Schwartz, Licthen and Bright, PC or "SLB")). The firm has subsequently dissolved, and defendants Licthen and Bright have formed their own firm and defendant Arthur Schwartz (hereinafter "Schwartz") has his own practice. Defendant Schwartz filed a motion on April 4, 2014 seeking to dismiss the Complaint on res judicata grounds. Oral argument was heard on that motion on May 9, 2014. The Court granted the motion and dismissed the Complaint as against Schwartz and SLB. Defendants Licthen and Bright now also seek to dismiss the complaint as against them. They claim that Plaintiffs complaint is based on the same fact as another complaint she filed in 2012, bearing Index 2012-1186, which was dismissed for failure to state a cause of action. Accordingly, and similar to Schwartz and SLB, Licthen and Bright argue it should be dismissed as against them. Plaintiff contends that she should be allowed to amend her complaint to cure any defects in the sentences characterizing her claim. She also argues in her memorandum of law that the Court’s May 9, 2014 decision should be reversed in the interest of justice. However, that matter was not raised in the motion, and cannot be considered at this juncture. She also argues that Defendants Licthen and Bright should be found in default.
The Plaintiff commenced an action in March, 2012 against Schwartz, his two law partners, Licthen and Bright, and SLB. That case is Index No: 2012-1186. That complaint contained four causes of action: 1) a fee dispute, 2) negligent infliction of emotional distress, 3) intentional infliction of emotional distress, and 4) legal malpractice. In a Decision and Order filed December 20, 2012, this Court (Hon. Donald Cerio) concluded, with respect to Schwartz and the firm, that the motion to dismiss the fee dispute was denied, the claims for Negligent Infliction of Emotional Distress and Intentional Infliction of Emotional Distress were dismissed, and the claim for malpractice would not be dismissed. The Third Department, in a Memorandum and Order dated February 27, 2014, affirmed dismissal of the 2 causes of action and also granted dismissal of the fourth cause of action for legal malpractice. Hyman v. Schwartz et al. 114 AD3d 1110 (3rd Dept. 2014 ). Plaintiff thereafter made a motion to the Third Department, for reargument, or in the alternative, leave to amend the complaint, or permission to appeal to the Court of Appeals. The motion was denied by the Third Department on May 1, 2014. Plaintiff thereafter filed a motion with the Court of Appeals for leave to appeal, which was denied. Hyman v. Schwartz et al., 24 NY3d 930 (September 4, 2014).
Plaintiff filed another complaint (Index 2014-1059) on January 22, 2014 against Schwartz only for intentional infliction of emotional distress. That case was dismissed by this Court in a Decision and Order filed on September 3, 2014. The Court found that 2014-1059 arose out of the same facts and circumstances as the 2012 case, and was therefore barred by res judicata. The Court also denied Plaintiffs motion to re-plead in that case. 

After the Third Department’s decision of February 27, 2014, the Plaintiff filed another action against Schwartz, his two law partners and their firm. That is this case, Index No.: 2014- 1193, and was filed on March 10, 2014. There are two causes of action alleged in the March, 2014 suit, for legal malpractice and breach of contract. This Court determined that the claims against Schwartz and SLB in 2014-1193 arose from the same set of facts and circumstances as 2012-1186, and that since the 2012 case had been brought to conclusion, any other claims arising from the same transaction or series of transaction are barred, even if based upon a different theory. The allegations of the current complaint deal with the same set of facts as the 2012 case ,and recount a chronology of events from 2008 up to February, 2014. Thus, the complaint encompasses all the actions from the time from the inception of representation up to the filing of 2014-1193, in March 2014. This Court previously determined that 2014-1193 was barred by res judicata as against Schwartz and SLB, concluding that since the earlier claim in 2012 had been brought to a conclusion, all other claims arising from the same transaction or series of transactions are barred, even if based on a different theory. See, O’Brien v. City of Syracuse, 54 NY2d 353 (1981); Tovar v. Tesoros Prop. Mgt, LLC, 2014 NY Slip Op 5233 (3rd Dept. July 10, 2014).
The Court again concludes that this case, Index 2014-1193 is barred by the doctrine of res judicata, in that it contains the same core set of facts as those contained in Index 2012-1186.
That is true regardless of the theory advanced, be it legal malpractice or breach of contract.
Therefore, the motion of Defendants Lichten and Bright will be granted. "

In automobile accident cases, injured parties are due no-fault coverage and payments.  Insurance companies have the right to refuse to pay for medical treatment which is unrelated to the accident, and often refuse to pay.  Sometimes, the insurance company is correct,and sometimes it is incorrect.  The injured party’s remedy is a no-fault arbitration.  A no-fault arbitration has a hidden trap of collateral estoppel.  If the arbitration of a wrongful no-fault denial is lost, the entire personal injury case can be lost too.  Often, practitioners wait, resolve the personal injury case, and then arbitrate.

In Levy v Fischman  2014 NY Slip Op 51749(U)  decided on December 15, 2014  Appellate Term, First Department and Levy v Fischman  2014 NY Slip Op 51750(U)  Decided on December 15,   2014  Appellate Term, First Department we see the result.

"This legal malpractice action arises from defendants’ representation of plaintiffs in connection with personal injury and insurance claims relating to an automobile accident. Insofar as relevant to this appeal, plaintiffs allege that defendants, a law firm and its principal, agreed to "handle all medical bills and payments, including No-fault insurance and personal health insurance claims that related" to the underlying accident.

Defendants demonstrated entitlement to partial summary judgment dismissing so much of plaintiffs’ legal malpractice claim as alleged a failure by defendants to pursue arbitration of the denial of plaintiff Susan Levy’s claim for first-party no-fault benefits. Defendants demonstrated that their decision to forgo arbitration represented a reasonable litigation strategy (see Rodriguez v. Lipsig, Shapey, Manus & Moverman, P.C., 81 AD3d 551 [2011]), explaining that had the arbitration been pursued, any negative finding made therein as to Susan’s injury and/or condition could have negatively affected plaintiffs’ then-pending personal injury action (see Clemens v Apple, 65 NY2d 746 [1985]). "Attorneys are free to select among reasonable courses of action in prosecuting clients’ cases without thereby exposing themselves to liability for malpractice" (Iocovello v Weingrad v Weingrad, 4 AD3d 208 [2004]).

"

Christine Simmons in the New York Law Journal reports today on Stock v Schnader Harrison Segal & Lewis LLP  2014 NY Slip Op 33171(U)  December 5, 2014  Supreme Court, New York County  Docket Number: 651250/13  Judge: Melvin L. Schweitzer.  The case raises a "novel" question of intra-law office attorney privilege, and whether the client is able to pierce communications which become "at issue."  The answer from Supreme Court is "Yes."

"The Court has reviewed letters from counsel for the parties regarding defendants’ withholding of 24 documents listed on defendants’ privilege log as attorney-client communications, and as to one document, attorney work product. Plaintiff argues that the documents are not privileged as to him because defendants were representing him at the time, the subject of the communications was that very representation, the participants did not consider the communications to be confidential as to plaintiff, and they were aware that the continued representation would be conflicted. Defendants oppose, arguing that the communications are protected by the in-house attorney-client privilege. The court finds that the attorney-client and work product privileges do not protect any of the documents. Stock is suing law firm Schnader Harrison Segal & Lewis LLP. (Schnader), and partner Christine Carty (Carty) for malpractice and breach of fiduciary duty. The lawsuit arises from
defendants’ representation of Stock in connection with his departure from employment with
MasterCard International Incorporated (MasterCard) in 2008. Stock alleges that defendants
failed to advise him that his departure would accelerate the expiration date for his stock options
worth $5 Million from ten years to between ninety and one hundred and twenty days. "

"According to Stock, after his options expired, defendants advised him to assert claims against MasterCard and its options plan administrator Morgan Stanley Smith Barney (MSSB). during the ensuing arbitration, at which Schnader attorneys other than Carty represented Stock, MSSB’s counsel notified Schnader that it planned to call Carty as a fact witness concerning whether Schnader’s failures in its representation of Stock contributed to the monetary losses he was seeking from MSSB. Carty consulted with Schnader partner and General Counsel Wilbur Kipnes regarding her anticipated testimony, and possible ethical issues. She was prepared for the arbitration by Schnader attorney Cynthia Murray (Murray). Murray and Schnader attorney
Thomas Hecht (Hecht) were assigned to simultaneously represent Stock in the arbitration.
The deposition transcript excerpts, attorney notes, and additional exhibits submitted by
plaintiff show that when Carty, Kipnes, Hecht and Murray were communicating about Carty’s
upcoming testimony, they did not expect their communications to be confidential as to their
current client, Stock. Carty testified at her deposition that: she understood that anything she
stated to Murray would be disclosed to Stock; and she had no expectation one way or the other
that Hecht would keep her forwarded e-mail with Kipnes confidential as to Stock."

"Finally, the documents fall under the "at issue" waiver, and defendants cannot selectively disclose self-serving documents regarding the same subject matter. The "at issue" waiver of the privilege occurs where a party affirmatively places the subject matter of its own privileged communication at issue in litigation, so that invasion of the privilege is required to determine the validity of a claim or defense of the party asserting the privilege, and application of the privilege 3 [* 3]would deprive the adversary of vital information. Credit Suisse First Boston v Utrecht-America Fin. Co., 27 AD3d 253, 254 (1st Dept 2006). "

This case illustrates the potential mess a law firm can get itself into when it allows employees and their families to do business with them.  This particular case, Rodolico v Rubin & Licatesi, P.C.
2014 NY Slip Op 01308 [114 AD3d 923]  February 26, 2014  Appellate Division, Second Department led to legal malpractice litigation, commercial litigation, and most likely, a change of employees at the law firm.

"The plaintiff’s sister worked for the defendant law firm, in which the individual defendants are partners. During his sister’s employment, the plaintiff came to learn of an investment opportunity being organized by the defendants, which involved providing high interest, short-term loans for the development of real estate. The plaintiff and his wife decided to participate. Two bank checks, one of which was purchased by the plaintiff’s wife and bore only her name, were forwarded to the defendants for the purpose of making two loans. When these two loans were not repaid in full, the plaintiff commenced this action seeking to recover from the defendants the money that he was owed, claiming that the defendants effectively borrowed the money from him (first and second causes of action). In the alternative, the plaintiff sought damages for legal malpractice (third cause of action). "

"The Supreme Court also properly denied that branch of the defendants’ cross motion which was to dismiss the complaint pursuant to CPLR 3211 (a) (1). A motion pursuant to CPLR 3211 (a) (1) to dismiss a complaint on the ground that a defense is founded on documentary evidence "may be appropriately granted only where the documentary evidence utterly refutes [the] plaintiff’s factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; see Parkoff v Stavsky, 109 AD3d 646 [2013]; Benson v Deutsche Bank Natl. Trust, Inc., 109 AD3d 495 [2013]). Further, the evidence submitted in support of a motion pursuant to CPLR 3211 (a) (1) to dismiss a complaint on the ground that a defense is founded on documentary evidence "must be documentary or the motion must be denied" (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d 713, 714 [2012], quoting Fontanetta v John Doe 1, 73 AD3d 78, 84 [2010] [internal quotation marks omitted]; see Rodolico v Rubin & Licatesi, P.C., 112 AD3d at 610). " ‘[N]either affidavits, deposition testimony, nor letters are considered documentary evidence within the intendment of CPLR 3211 (a) (1)’ " (Cives Corp. v George A. Fuller Co., Inc., 97 AD3d at 714, quoting Granada Condominium III Assn. v Palomino, 78 AD3d 996, 997 [2010]; see Rodolico v Rubin & Licatesi, P.C., 112 AD3d at 610; Suchmacher v Manana Grocery, 73 AD3d 1017 [2010]; Fontanetta v John Doe 1, 73 AD3d at 86)."