A win at trial and a loss on Appeal in this legal malpractice case was based upon Plaintiff’s potential comparative fault.  Hattem v Smith    2013 NY Slip Op 07791  Decided on November 21, 2013  Appellate Division, Third Department is the story of a fairly straight-forward sale of a business coupled with the failure to file liens and UCC-1s.  Seller was found by the 3d Department to be sophisticated enough to potentially share in some of the blame.

"In September 2007, plaintiff commenced this legal malpractice action. Following a trial, the jury was asked whether Smith was negligent in failing to file a UCC-1 prior to NBT’s filing, and in failing to file DMV liens. The jury answered both questions in the affirmative and awarded damages to plaintiff. Supreme Court denied defendants’ cross motion to set aside the verdict, and judgment was entered thereon. Defendants appeal from the order denying the cross motion and from the judgment.

We agree with defendants’ contention that Supreme Court erred in refusing to charge the jury regarding plaintiff’s comparative fault. The culpable conduct of a plaintiff client may be asserted as an affirmative defense in a legal malpractice action in mitigation of damages (see CPLR 1411, 1412; Schaeffer v Lipton, 243 AD2d 969, 971 [1997]; Caiati v Kimel Funding Corp., 154 AD2d 639, 639-640 [1989]; see also Shapiro v Butler, 273 AD2d 657, 658 [2000]). Here, the evidence was sufficient to support a finding that plaintiff could reasonably have been expected to understand the underlying obligations and formalities (compare Cicorelli v Capobianco, 90 AD2d 524, 524 [1982], affd 59 NY2d 626 [1983]). Plaintiff was experienced in commercial transactions, including secured loans, understood that loans such as the one from NBT to OSC generally require collateral, and testified that his purpose in retaining Smith was to protect his security interest in the vehicles and equipment. He acknowledged that none of the discussions among the parties and their counsel leading up to the execution of the sale documents had included any mention of outside loans to OSC, and that he introduced OSC’s owners to the NBT officer who later approved the loan.

Plaintiff’s testimony as to his purpose in making this introduction and his personal knowledge regarding the owners’ intention to obtain financing for the purchase of JMF was contradictory and inconsistent. The loan officer testified that plaintiff introduced OSC’s owners to him for this specific purpose, and one of the owners testified that their plan to obtain a loan was discussed with plaintiff before the sale documents were signed; both the owner and the loan officer testified that plaintiff was present during transactions pertaining to the loan. Plaintiff never advised Smith that he had signed the sale documents, nor did he contact Smith after engaging in these transactions. As this evidence provided "a valid line of reasoning and permissible inferences from which rational people can draw a conclusion of negligence," the [*3]question of plaintiff’s comparative fault should have been submitted to the jury (Bruni v City of New York, 2 NY3d 319, 328 [2004]; see Gotoy v City of New York, 94 NY2d 812, 814 [1999]; Klingle v Versatile Corp., 199 AD2d 881, 882 [1993]). Accordingly, the matter must be remitted for a new trial.

In light of this determination, we need only briefly address defendants’ remaining assertions relative to Supreme Court’s denial of the cross motion to set aside the verdict. Defendants assert that it was impossible for Smith to file a UCC-1 before the date of NBT’s filing, as he neither possessed the executed security agreement nor knew that it had been executed until several weeks thereafter (see UCC 9-509 [b] [1]; see generally McDaniel v 162 Columbia Hgts. Hous. Corp., 21 Misc 3d 244 [2008]). However, upon defendants’ cross motion, Supreme Court analyzed the issue more broadly, and denied the cross motion upon the ground that the evidence established that the transaction could have been structured differently. This finding based upon the evidence was properly within Supreme Court’s power (see CPLR 4111 [b]; Siegel, NY Prac § 399 at 696 [5th ed 2011]). Plaintiff’s expert testified that plaintiff’s security interest could have been protected by instructions to OSC’s attorney precluding release of the sale documents, which Smith did not provide. Thus, it cannot be said that there was "simply no valid line of reasoning and permissible inferences which could possibly lead rational [people] to the conclusion reached by the jury on the basis of the evidence presented at trial" (Cohen v Hallmark Cards, 45 NY2d 493, 499 [1978]; accord Popolizio v County of Schenectady, 62 AD3d 1181, 1183 [2009]). In light of this very high standard, we further find that the evidence sufficiently established that Smith’s failure to file DMV liens was the proximate cause of loss to plaintiff. Accordingly, the court did not err in denying the cross motion to set aside the verdict insofar as it addressed liability. Defendants’ remaining claims need not be addressed, as they pertain to the sufficiency of proof of the quantum of damages and are thus encompassed within the issues that will necessarily be presented upon retrial. "

OK, say you’re a law firm, and the client is a Board of Managers, and the President is an Attorney.  You do work for them, and things don’t go well.  You can blame the "micro-managing" President/Attorney, no?

Well, in Board of Mgrs. of Bridge Tower Place Condominium v Starr Assoc. LLP  2013 NY Slip Op 07684  Decided on November 19, 2013  Appellate Division, First Department  the answer is NO.  In fact, as rarely happens, Plaintiff obtains summary judgment on liability and dismissing the affirmative defense of comparative fault.

"This Court previously held that the stipulation drafted by defendants unambiguously stripped plaintiff of its right to amend its bylaws to attain a specific result in connection with the underlying action (see Luzzi v Bridge Tower Place Condominium, 52 AD3d 290 [1st Dept 2008]). Under those circumstances, no expert testimony was necessary to establish that defendants’ conduct fell below the standards of the profession generally (see S & D Petroleum Co. v Tamsett, 144 AD2d 849, 850 [3d Dept 1988]). Because the alternative to the stipulation was not, as defendants contend, to litigate the underlying action, but for plaintiff to exercise its right to amend the bylaws immediately, the motion court did not err in finding "but for causation" as a matter of law (cf. Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 271-272 [1st Dept 2004]).

Furthermore, although plaintiff’s president is an attorney, and did see drafts of the stipulation, the record does not raise a triable issue as to whether he arrogated to himself the role of drafting the stipulation, or micro-managed the negotiation. Rather, the record shows that plaintiff relied on counsel to effect the strategy of preserving in the stipulation the right to amend the bylaws. Accordingly, the defenses of comparative fault were properly dismissed (see Mandel, Resnik & Kaiser, P.C. v E.I. Elecs., Inc., 41 AD3d 386 [1st Dept 2007]). "

Settlements including pleas to criminal charges are the linchpin of an orderly system of justice.  As any prosecutor, and indeed, any litigator knows, only a very small portion of cases can be tried to a fact finder.  if 95% of all civil cases, and a similar amount of criminal cases were not subject to disposition by voluntary settlement, the staggering numbers of cases would quickly overwhelm the entire system.

So the Court of Appeals found in People v Peque 2013 NY Slip Op 07651   Decided on November 19, 2013   Court of Appeals   Abdus-Salaam, J. for criminal cases, and so it is in matrimonial cases.  In Peque   the question of deportation and the low level of understanding may constitute lack of due process, and in legal malpractice litigation after Katebi v. Fink. 51 AD3d 424 (1st Dept, 2008).   In criminal law, "the plea represents a voluntary and intelligent choice among the alternative courses of action open to the defendant" and requires that the defendant be told of the significant consequences of a plea.  No such obligation is found in settling a matrimonial case and being asked whether the attorney’s work is satisfactory. 
 It is customary in settlement of a matrimonial action to inquire of the litigants whether they are satisfied with the work of their attorneys.  When they are told (in rote fashion) to say "yes", the suffer the consequence of losing any legal malpractice rights later.  "While "[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" (Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1990]), here, the complaint is contradicted by the evidentiary material submitted on the motion to dismiss (see Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). Plaintiff testified that she did not wish to proceed with the trial of the matrimonial action, that she decided instead to enter into the stipulation of settlement because she wanted no further connection with her husband, that she understood that by settling the action before the completion of the trial she was foregoing the right to pursue the funds allegedly dissipated by him, and that she was satisfied with the services provided by her attorney. "

Plaintiff hires law firm to handle labor law case, Defendant is then hired to handle the appeal from dismissal of the case.  The appeal was dismissed for want of prosecution in 2006.  The law firm did not tell the client, and in 2008 wrote a letter telling him that the judgment was affirmed.  The legal malpractice case did not commence until 2012. 

McDonald v Edelman & Edelman, P.C.  2013 NY Slip Op 07432   Decided on November 12, 2013
Appellate Division, First Department  holds that the case was brought too late, but that an accounting of disbursements can be held.
"Defendants argue that the second cause of action, which seeks an accounting, is based on breach of fiduciary duty, in light of the attorney-client relationship, and seeks money damages, and is therefore barred by the three-year statute of limitations set forth in CPLR 214(6). They improperly raised this argument for the first time in reply on their motion (see Caribbean Direct, Inc. v Dubset LLC, 100 AD3d 510 (1st Dept 2012]). In any event, the argument is unavailing. Plaintiff’s claim for an accounting so that he can recoup disbursements allegedly improperly charged against his jury award has little to do with whether defendants performed their legal services in a non-negligent manner (see Matter of R.M. Kliment & Frances Halsband, Architects [McKinsey & Co.], 3 AD3d 143 [1st Dept 2004], affd 3 NY3d 538 [2004]). It has to do with whether defendants owe plaintiff a fiduciary duty to account for money or property allegedly belonging to him, and is therefore governed by the "residual" six-year statute of limitations set forth in CPLR 213(1) (see Hartnett v New York City Tr. Auth., 86 NY2d 438, 443 [1995]; Bouley v Bouley, 19 AD3d 1049, 1051 [4th Dept 2005]).

The first cause of action, alleging legal malpractice, accrued at the time that plaintiff’s appeal from the order that granted summary judgment dismissing his underlying Labor Law claims was dismissed for want of prosecution, in July 2006, notwithstanding his lack of knowledge of the dismissal (see McCoy v Feinman, 99 NY2d 295, 301 [2002]). Plaintiff then had three years to commence a malpractice action against defendants (see CPLR 214[6]), absent an applicable ground for tolling the limitations period. He did not commence this action until March 2012.

Plaintiff relies on the continuous representation doctrine. However, in June 2008, defendants sent him a letter enclosing the Second Department’s affirmance of the underlying judgment and formally closing their representation of him. The letter, which plaintiff did not [*2]object to, demonstrates that the parties lacked "a mutual understanding of the need for further representation on the specific subject underlying the malpractice claim" (see Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 9-10 [2007] [internal quotation marks omitted]). Even accepting that defendants concealed from plaintiff the fact that his appeal was dismissed as abandoned, their letter placed him on notice that his attorney-client relationship with them had ended. "

In a professional malpractice case, be it legal malpractice or accounting malpractice, plaintiff must be able to show proximate cause.  Might a firm be liable for damages based upon issues that arose before its retention?  It might be, but in Cannonball Fund, Ltd. v Marcum & Kliegman, LLP
2013 NY Slip Op 32891(U)  November 14, 2013  Supreme Court, New York County  Docket Number: 651674/2011  Judge: Bernard J. Fried it was not.

"Plaintiffs bring this action against Marcum & Kliegman, LLP ("M&K"), alleging professional malpractice stemming from M&K’s engagement as an auditor of Dutchess Private Equities Fund, L.P. and Dutchess Private Equities Cayman Fund, Ltd. (the "Funds") in 2008. Defendant M&K moves to dismiss the complaint pursuant to CPLR 321 l(a)(l) and (7).

Briefly, the allegations giving rise to this action are as follows. According to the Complaint, the Funds were hedge funds with a similar stated strategy of investing in companies with positive cash flow and in fully secured or liquid securities. (Complaint paras 27, 36). The Funds’ common investment manager was Dutchess Capital Management LLC. (Complaint para 16). Between 2004 and 2007, Plaintiffs invested over $13 million in the Funds, with the bulk of the investments made in 2006 and 2007. (Complaint para 6-11).

Plaintiffs allege that they suffered damages as a result of M&K’s negligence.(Complaint if 238). Plaintiffs allege that had M&K performed a proper audit, or, I
alternatively, refused to certify the Funds’ financial statements, then Plaintiffs would have been alerted to the Funds’ problems. (Complaint if 238). Plaintiffs allege that, armed with this  knowledge, they could have made an informed decision as to whether they should remain invested in the Funds or put in requests for "gated redemptions, in which investors could request redemption, subject [to] an amount and timing to be determined by" the Funds. (Complaint if 60). Alternatively, Plaintiffs allege that they could have removed the Funds’ management or changed the Funds’ investment strategy. (Complaint if 238). M&K moves to dismiss the complaint pursuant to CPLR 3211 (a)( 1) and (7). M&K argues that the allegedly negligent Audit Opinion could not have proximately caused the Plaintiffs’ injuries. The Audit Opinion was issued on June 16, 2008. (Complaint if 60). However, all of the redemptions from the Funds were suspended in February 2008 and since that time the Plaintiffs were effectively prohibited from withdrawing their investments. (Complaint , 174). Plaintiffs have demanded full redemption from the Funds, and their
demands have been denied. (Complaint , 183). Thus, M&K argues that even ifthe Audit Opinion had disclosed different information, the resulting losses to the Plaintiffs would have been the same.

However, any new management hired after the Audit Opinion was issued could not have done anything to rectify the losses incurred by the Funds’ prior to the time the Audit Opinion was issued in June 2008. For example, in April 2008, two months prior to the issuance of the M&K Audit Opinion, the Funds reported a 33% loss, partially due to the decline in value of the Funds’ investment in Challenger. (Complaint ,-i 177). Any new management hired after June 2008 could not have prevented this loss.

Accordingly, Plaintiffs have failed to allege that M&K’s negligence was the proximate cause of  laintiffs damages and thus the Complaint fails to state a cause of action for accounting malpractice.

We believe that legal malpractice cases are more harshly reviewed, and held up to a higher standard, almost always in the "but for" portion of the case.  Engelke v Brown Rudnick Berlack Israels LLP   2013 NY Slip Op 07419   Decided on November 12, 2013   Appellate Division, First Department is no exception.  Plaintiff can demonstrate a conflict, but cannot show proximity.  Plaintiff can claim a conflict, but it was already "extinguished."  Plaintiff can show spoliation of electronic evidence, but, hey…he had the material anyway.
 

"The motion court properly dismissed the claim of legal malpractice. Even if plaintiff established the requisite conflict based on the existence of a prior attorney-client relationship, which relationship the parties do not dispute, plaintiff failed to establish that he incurred any damages attributable to defendant’s breach of duty (Kodsi v Gee, 100 AD3d 437, 438 [1st Dept 2012]; Leder v Spiegel, 31 AD3d 266, 268 [1st Dept 2006], affd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008]; Estate of Steinberg v Harmon, 259 AD2d 318 [1st Dept 1999]). Plaintiff argues that, by exclusion from the settlement between Pinnacle and Athle-Tech, he was forced to incur more than $1 million in attorney’s fees in defending against the second Athle-Tech litigation. However, plaintiff cannot show with sufficient certainty that he would have been able to settle with Athle-Tech and thereby have avoided or reduced his costs. Nor can any alleged damages be attributed to a breach of duty of loyalty based on defendant’s prior representation of plaintiff in connection with the Montage SPA. By the time the settlement was made final, plaintiff’s indemnification obligations under the Montage SPA were extinguished.

The court also properly denied plaintiff’s motion to strike defendant’s answer based on the destruction of electronic evidence. Plaintiff had all of the disputed documents and cannot claim any prejudice in pursuing his claim (see Suazo v Linden Plaza Assoc., L.P., 102 AD3d 570, 571 [1st Dept 2013]; McMahon v Ford Motor Co., 34 AD3d 263, 264 [1st Dept 2006]). Plaintiff further fails to establish that any failure to produce the emails was willful (CPLR 3126)."
 

We’ve always thought that a retainer agreement between an attorney and a client had some meaning, real meaning.  Emery Celli Brinckerhoff & Abady, LLP v Rose   2013 NY Slip Op 07428 Decided on November 12, 2013  Appellate Division, First Department  disabuses us of that notion, and has two other interesting things about it.  It’s the first appeal we’ve seen from the Law office of Richard Lerner, long an appellate star with Wilson Elser.  The decision also sets forth that an "account stated" cannot be successful if the fees claimed are "intertwined" with the asserted malpractice.
 

"Plaintiff established its entitlement to judgment as a matter of law on its claim for an account stated "by showing that its client received, retained without objection, and partially paid invoices without protest" (Scheichet & Davis, P.C. v Nohavicka, 93 AD3d 478, 478 [1st Dept 2012] [internal quotation marks omitted]; see Miller v Nadler, 60 AD3d 499 [1st Dept 2009]).

Defendant’s argument that plaintiff failed to make a prima facie case because it submitted no expert opinion that its retainer agreement and the legal services it rendered were fair and reasonable is unpreserved. Were we to reach the merits, we would find it unavailing. It is not part of a plaintiff’s prima facie case on a claim for an account stated to show the reasonableness of the retainer agreement or its legal services (see e.g. Scheichet & Davis. P.C. at 478; Miller at 499). Indeed, in Miller, we found that "[p]laintiff’s failure to comply with the rules on retainer agreements … does not preclude it from suing to recover legal fees for the services it provided" (Miller at 500), and "[i]n the context of an account stated pertaining to legal fees, a firm does not have to establish the reasonableness of its fee" (Lapidus & Assoc., LLP v Elizabeth St., Inc., 92 AD3d 405, 405-406 [1st Dept 2012] [internal quotation marks omitted]).

If a defendant client’s legal malpractice claim is intertwined with a plaintiff law firm’s claim for legal fees, the plaintiff will not be entitled to summary judgment on its account stated claim. However, if the malpractice claim is not so intertwined, courts are not precluded from [*2]granting the plaintiff summary judgment (see Morrison Cohen Singer & Weinstein v Ackerman, 280 AD2d 355, 356 [1st Dept 2001]).

Here, it was not an improvident exercise of the motion court’s discretion to rule, in effect, that defendant had waived his right to raise malpractice by not filing an amended answer by the deadline set by the court (see Quintanna v Rogers, 306 AD2d 167, 168 [1st Dept 2003]). Furthermore, the record shows that plaintiff performed a great deal of work that was unrelated to the purported malpractice.

People question whether "they" like us?  Do "they" treat us fairly?  We wonder whether legal malpractice is treated differently than all other law suits? Fielding v Kupferman, 2013 NY Slip Op 02008 Appellate Division, First Department raises the question once again. Compare this case to a garden or varietal slip and fall. Example: plaintiff trips over a defective step and breaks his leg. Would the Appellate Division then discuss whether breaking a bone was better than what might have happened, were plaintiff to fall down an entire flight of stairs and break his neck? We believe that it would not.
 

Nevertheless, this is what happens regularly in a legal malpractice case. Take Fielding as an example. "Defendants established their entitlement to judgment as a matter of law in this action alleging legal malpractice. Defendants submitted evidence showing that the divorce settlement, in which plaintiff achieved his goal of retaining the parties’ marital residence, was advantageous to plaintiff, and resulted in his receiving consideration that more than compensated him for the allegedly unforeseen tax consequences of liquidating his Keogh account (see e.g. Kluczka v Lecci, 63 AD3d 796, 798 [2d Dept 2009]). Defendants also submitted evidence demonstrating that the subject tax consequences were discussed with plaintiff during the course of the settlement negotiations.

In opposition, plaintiff failed to raise a triable issue of fact. His argument that if he had been properly advised on the tax consequences, he would have reached a better settlement or outcome after trial, is speculative (see Klucka at 798). Plaintiff failed to take into account the benefits he received in the actual settlement, including buying out his wife’s share of the marital residence based on an outdated appraisal that assigned a value that was significantly lower than the actual value at the time the agreement was executed. Moreover, plaintiff failed to provide proof of any ascertainable actual damages sustained as a result of the alleged negligence (see Lavanant v General Acc. Ins. Co. of Am., 212 AD2d 450 [1st Dept 1995]). [*2]

Under the circumstances presented, plaintiff’s claim for disgorgement of legal fees already paid was properly dismissed."