Accounting malpractice, like any other variant of professional malpractice (attorneys, brokers, financial professionals) are all subject to a three year statute of limitations, which may be tolled for continuous representation.  In Ghiz v Schreck & Co.  2013 NY Slip Op 31869(U)  August 9, 2013
Sup Ct, New York County Docket Number: 158805/2012  Judge: Eileen A. Rakower we see a description of the application of continuous representation.

"A cause of action charging that a professional failed to perform services with due care and in accordance with the recognized and accepted practices of the profession is governed by the three-year statute of limitations applicable to negligence actions. (See, CPLR §214[6).
 

As set forth in ATC Healthcare Inc. v. Goldstein, Golub & Kessler LLP, 28 Misc. 3d 1237(A), *3 (N.Y. Sup. July 26, 2010):

The continuous representation doctrine is an exception to the Statute of Limitations and applies only where there is a mutual understanding of the need for further representation on the specific subject matter underlying the malpractice claim. Symbol Technologies, Inc. v. Deloitte & Touche, LLP, supra, at p. 195 (citation omitted). That is, "the continuous representation must be in connection with the particular transaction which is the subject of the action and not merely during the continuation of a general professional relationship." Zaref v. Berk & Michaels, P. c., 192 A.D.2d 346, 347-48 (1 st Dept. 1993) (citations omitted). "[T]he facts are required to demonstrate
continued representation in the specific matter directly under dispute." Zaref v. Berk & Michaels, P. c., supra, at p. 348.

ATC Healthcare Inc., 28 Misc. 3d 1237(A) at *3.

Schreck contends that Plaintiffs’ accounting malpractice claim is time barred because Plaintiffs filed the Complaint in the present action on December 12, 2012, more than three years after the embezzlement was allegedly discovered on August 27, 2009 and argues that it did not continue to represent Plaintiffs specifically with respect to the embezzlement because it "could not have done anything in any ongoing capacity to ‘correct’ or ‘mitigate’ the embezzlement." However, the Complaint alleges that "Defendant Schreck continuously represented plaintiffs regarding claims
by various government bodies as to said tax penalties and liabilities up and until September 2012 as well as rendered its usual and customary services to plaintiffs and attempted to restate and correct the mistakes made during the period of defendant Schreck’s malfeasance."

Legal malpractice, and its cousin deceit might be found anywhere attorneys tend problems.  One fairly startling setting is the Poly Prep sex abuse litigation.  Like the similar Horace Mann sexual abuse litigation, there are numerous claims of concealment and lying. Andrew Keshner writes in today’s New York Law Journal that former students have filed a Judiciary Law 487 claim against Poly Prep’s outside counsel O’Melveny & Myers.

‘Former students who settled a lawsuit alleging a prestigious private school in Brooklyn covered up a football coach’s years of sexual abuse are now suing the school’s outside counsel at O’Melveny & Myers for allegedly trying to "deceive" the court with "fraudulent evidence" and "materially false and fraudulent statements."

Naming O’Melveny and Jeffrey Kohn, managing partner of the firm’s New York office, as defendants, the action argues they "should not be allowed to escape sanction for their grievous and oft-repeated falsehoods."

The lawsuit, Zimmerman v. Kohn, 652826/2013, was filed Aug. 11 in Manhattan Supreme Court (See Complaint). It demands that, in addition to other things, O’Melveny reimburse the plaintiffs for $2 million in legal fees expended to achieve a confidential settlement. In addition, the plaintiffs are seeking that all fees paid to O’Melveny by Poly Prep Country Day School be turned over to the plaintiffs.

O’Melveny scoffed at the claims.

"The underlying case was concluded nine months ago with a settlement voluntarily entered into by the plaintiffs. These claims are completely baseless and without merit," the firm said in a statement.

The current suit arises from a lawsuit 10 alumni and two former summer camp participants filed against the school and its officials in 2009 for allegedly concealing abuse that occurred from 1966 to 1991 by coach Philip Foglietta. The coach died in 1998 after working 25 years at the school.

After Eastern District Judge Frederic Block (See Profile) ruled last August that some claims could proceed in Zimmerman v. Poly Prep Country Day School, 09-cv-4586, the parties reached a confidential settlement in December. Philip Culhane, a partner at Simpson Thacher & Bartlett, was among the plaintiffs (NYLJ, Aug. 30, 2012 & Dec. 28, 2012).

The current suit’s claims include a violation of the state’s Judiciary Law §487, which prohibits attorney misconduct toward a court that includes "deceit or collusion, with intent to deceive the court or any party."

It was brought by 11 of the 12 plaintiffs, except for Culhane, and especially targets the firm’s defense of the school with a focus on Kohn and the firm’s description of an internal probe the school conducted in 2002."
 

We’re pleased to announce an article in the New York Law Journal, entitled When the "Attorney-Client Relationship Ends" appears today in the Outside Counsel column. Here is an excerpt from the article:

"As do all things in life, an attorney-client relationship, once commenced must someday end. It may end at the settlement or verdict of a litigation, it may end at the completion of a transaction, or it may end in the middle. How the attorney-client representation ends has significant effect on fees, compensation and potential legal malpractice liability. Litigations comprise a large portion of attorney-client interactions, and present a sharper beginning and end than do transactions. Transactions might include real estate leases and sales, business negotiations, employment negotiations or contract. Nevertheless, at some time all of these events will be over.

For the most part, it’s not the end of a relationship that results in tension, negotiation or litigation, it’s attorney fees. Depending on the format of those fees, whether hourly, contingent, flat or a hybrid, the end of the attorney-client relationship often indicates or triggers a dispute over fees. Disputes over fees consistently occupy a large amount of attorney time and are governed by some well-understood principles.

We will examine discharge of the attorney by the client first. Later we’ll look at attorneys who wish to end the relationship and must do so with permission of the court. Discharge of an attorney by a client is binary. It is either for cause or not for cause.

Read more: http://www.newyorklawjournal.com/PubArticleNY.jsp?id=1202615356079&When_the_AttorneyClient_Relationship_Ends#ixzz2bw7UY46Z

When does the statute of limitations begin to run?  It might be on the day of the mistake, and it might be later.  The "later cases" are rare, and  few in number.  Anderson v Beranbaum 2013 NY Slip Op 31821(U) August 5, 2013 Sup Ct, New York County Docket Number: 151918/2013
Judge: Anil C. Singh is not one of them, yet it quotes an elusive and interesting case in which the statute did not begin to run from the date of the mistake. 

"Under CPLR 214(6), all claims for legal malpractice, no matter whether they sound in tort or contract, have a three year statute of limitations. Case law further provides that the statute of limitations begins to toll upon the date that all elements of a legal malpractice have been fulfilled such that the injured party could have brought suit, regardless of whether the injured party was aware of the injury at the time (IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 N.Y.3d
132, 140 (2009))."

As for plaintiff’s claims that confidentiality was breached and she was "devastated?"  These are non-economic claims and cannot be compensated in legal malpractice.  "The second incident of legal malpractice is based on Beranbaum’s alleged breach of confidentiality, which the plaintiff claims "devastated" her. Here, the plaintiff has failed to state a claim upon which relief may be granted. The only injuries that Anderson alleges from the legal malpractice are emotional, which are not considered compensable for legal malpractice claims (see Dombrowski v. Bulson, 19 N.Y.3d 347, 351 (2012); Wolkstein v. Morgenstern 275 AD.2d 635, 637 (1st Dept 2000); Dirito v. Stanley, 203 A.I>.2d 903 (4th Dept 1994))."

Its not always easy to say when the last date upon which an attorney renders service to a client, nor when the statute of limitations commences. . is it on the day that a defective security agreement is prepared? is it on the day that the security agreement is given to debtor? In this case, its no earlier than the day when the last signature is executed.

Americana Capital Corp. v Nardella 2012 NY Slip Op 04927, Appellate Division, First Department determines the date upon which a malpractice claim arose.
 

"Plaintiff’s legal malpractice claim was not barred by the statute of limitations (see CPLR 214[6]). Plaintiff alleges that the deceased negligently drafted a security agreement preventing plaintiff, as the creditor, from being able to enforce the agreement as against the debtor once the debtor defaulted.

Plaintiff’s legal malpractice claim accrued no earlier than when the agreement was executed, which occurred on November 29,
2002, the date of the last signature on the agreement (see McCoy v Feinman, 99 NY2d 295 [2002]), and this action was commenced less than three years later. "
 

An interesting article in today’s New York Law Journal discusses the effects of checklists. Brook Boyd writes: "Lawyers can dramatically improve the quality, efficiency, and speed of their work by using "smart" checklists that are digitally integrated with their forms, and that reflect the complexity of their practices. But there are also other very important reasons to use these "smart" checklists and integrated forms."

He discusses the use of checklists in piloting.  Even in the least sophisticated single engine Cessna there are at least 5 checklists, covering normal operation, take off, landing, weight and balance requirements and emergencies.  As he discusses, these checklists save lives.  In lawyering, they save mistakes.

"Checklists Protect Lawyers Against Impaired Judgment Caused by Stress. But there is a practical problem. It takes time to make a good checklist, and clients will not pay for developing an internal law firm form that is intended for general use. So we take five minutes, and just copy a similar form from another deal that closed last week. Why invest any time in developing detailed checklists for any matter when we have extensive experience in similar matters, and every minute billed to preparing a detailed checklist, or reading it, increases the cost to the client?

Lawyers also have a much bigger problem, which we are not even consciously aware of. We are instinctively overconfident.26 We think we know more than we do, and we minimize the risk of error.27

Worse, we are especially likely to make errors when we are under time pressure, multitasking,28 anxious about impressing important clients,29 or otherwise stressed—in other words, a typical day for a lawyer. In these stressful situations, we also lose some self-control, react aggressively to provocations,30 are more gullible,31 and make poor judgments, just as we do when we have had a few drinks or too little sleep.32 We are also much more likely to see these deficiencies in others than ourselves.33

Nobel Laureate Daniel Kahneman illustrated the dangers of multitasking when he described a famous experiment based on a "short film of two teams passing basketballs. The viewers of the film are instructed to count the number of passes made by one team…. Halfway through the video, a woman wearing a gorilla suit appears, crosses the court, thumps her chest, and moves on. The gorilla is in view for 9 seconds. Many thousands of people have seen the video, and about half of them do not notice anything unusual. It is the counting task—and especially the instruction to ignore one of the teams—that causes the blindness. No one who watches the video without that task would miss the gorilla…. [W]e can be blind to the obvious, and we are also blind to our blindness."

Barely submerged below the decisions of trial and appellate courts is the fear that if legal malpractice litigation is given full rein, there will be a legal malpractice case which immediately follows every trial of any nature. After all, the one thing that legal malpractice always has are claims of attorney misrepresentation, and every trial has one or more attorneys. So, in Kleinser v Astarita 2012 NY Slip Op 01130 ; Appellate Division, First Department we see such a situation. Plaintiff sues and loses a case, and then sues and loses a legal malpractice.
 

"We need not decide the statute of limitations issue, because even if timely commenced, plaintiff failed to raise an issue of fact as to his claims of legal malpractice and breach of contract. Plaintiff’s contention that defendants did not place before the trial court in the underlying action the evidence of his ownership interest in the "47BH Account" is unsupported in the record. The trial court in the underlying action expressly found that plaintiff had a 1/3 interest in the 47BH Account. Moreover, the court explained, in detail, that that 1/3 interest entitled plaintiff to recover only $37,108, not the much greater sums he sought. Plaintiff does not argue that the court’s calculation of damages was erroneous or a result of defendants’ negligence. Hence, he failed to show that any negligence on defendants’ part proximately caused him to recover less than he was otherwise entitled to (see Brooks v Lewin, 21 AD3d 731, 734 [2005], lv denied 6 NY3d 713 [2006]). To the extent plaintiff argues that defendants did not sufficiently emphasize his ownership in the 47BH account, the argument is unavailing, since an insufficient emphasis would be, "at most, a mere error in professional judgment not rising to the level of legal malpractice" (see Geller v Harris, 258 AD2d 421, 421 [1999]; Rubinberg v Walker, 252 AD2d 466, 467 [1998]).
As to his breach of contract claims, plaintiff failed to present evidence establishing the term of his alleged oral agreement with defendant Martin Kaplan whereby Kaplan agreed that defendant Gusrae Kaplan & Bruno would prosecute all appeals from the underlying judgment for no more than $50,000. "

Attorney retainer agreements often seem to be contracts of adhesion…a term we rarely see post-law school.  Client comes to attorney at many disadvantages.  Client is in trouble, is coming to a "wise man" seeking help, knows that client needs to pay, and is subject to a serious disparity between their bargaining positions.  Nevertheless, the vast majority of attorney-client relationships work out just fine.  This one didn’t.  The New York Law Journal’s Christine Simmons reports  that Justice Jeffrey Spinner in Suffolk County has dismissed a fee claim by Bryan L. Salamone & Associates:  ""Counsel has the insufferable temerity to actually admonish this Court for expressing its distress over the terms and conditions of Plaintiff’s over-reaching retainer agreement (clearly a contract of adhesion on its face), baldly stated that all of the terms thereof ‘…are all within the ambit of the law,’" Spinner said in response. "

The Salamone firm brought a collection suit in July 2012 against Melissa Cohen for $52,701: $10,540 in collection suit fees and $42,161 in fees and interest in an underlying divorce "at the rate of 18 (percent)" from February 2012.

"Spinner cited a 1985 case, Eikenberry v. Adirondack Spring Water, 65 NY2d 125, which found an agreement to pay attorney fees was subject to General Obligations Law §5-501 and its interest rate ceiling of 6 percent per year.

Since the Salamone agreement provided for interest at a rate of more than 6 percent a year, "the said agreement is found by this Court to be usurious," Spinner said in the May ruling.

He found the agreement unenforceable, reversed summary judgment in favor of Cohen and dismissed the law firm’s complaint with prejudice." "But in his ruling Thursday, Spinner said he again reviewed the firm’s billing and found it to be "facially outrageous and certainly bereft of reasonableness" while Cohen’s assertions are "factually at odds" with Salamone’s claims.

The judge also said the firm’s court papers used "an unpleasant, somewhat sarcastic and clearly condescending tone throughout, which, counsel is warned, borders upon conduct that may well be sanctionable."

Spinner said Wan scolded the court for failing to provide statutory and common law bases for certain findings, "even though the character of and deficiencies within the retainer were so painfully obvious on their face." "