Spanish company is in the business of exporting and selling olive oil.  While in bankruptcy it arranges for ongoing sales to the US.  US Company hires CPAs to do routine monthly billing and reconciliations which go wrong.  How long does the representation go on, and does it comprise "continuous representation"?  Is the commencement date for purposes of the statute of limitations the date of the first mistake or of its discovery?

Since at this juncture the intended scope of defendants’ services cannot be determined, it also cannot be determined whether plaintiffs instituted this action within the requisite statute of limitations. Pursuant to CPLR 214(6), an action for professional malpractice must be commenced within three years of the date of accrual. A claim for professional malpractice accrues when the malpractice is committed, not when it is discovered  (see Williamson v Pricewaterhousecoopers LLP, 9 NY3d 1, 7-8 [2007]), Under the continuous representation doctrine, if the accountant whose professional work is being questioned engages in continuous work for the client with respect to the particular transaction that is the subject of the action, the statutory period is tolled (see Mitschele v Schulfz, 36 AD3d 249, 253 [Ist Dept 20061). “The mere recurrence of professional services does not constitute continuous representation where the later services performed were not related to the original services” ( id ) . In the case at bar, the evidence presented indicates that monthly reports were sent to Spain until March of 2004 and that between March and June of 2004, defendants assisted in  the preparation of a revised reconciliation statement to be sent to Fedeoliva. The scope of defendants’ services is undetermined at this time, thus it cannot be stated with certainty when the statute of limitations began to run. Specifically, it is unclear whether the reports and revised reconciliation were part of continuous work for which defendants were engaged, which would make the continuous representation doctrine applicable and toll the statute of limitations. similarly, in order to establish privity between plaintiffs and defendants, it must be shown that: (1) defendants were aware that their reports were to be used for a particular purpose; (2) in the furtherance of which a known party was intended to rely; and (3) some conduct on the part of defendants evincing their understanding that plaintiffs were going to rely on their accounting work (see Security Pac. Bus, Credit v Peat Marnick Main & Co., 79 NY2d 695, 702 [I 9921; Credit Alliance Corp. v Arthur Andersen & Co., 65 NY2d 536 [ISSS]). Since issues of material fact remain as to what service5 defendants agreed to provide and defendants’ knowledge of the relationship between plaintiffs and Fedeoliva USA, defendants’ privity argument cannot be resolved at the present time.

Moreover, the Court is not persuaded by defendants’ in pari delicto argument because, at this time, there is no e-evidence of Fedeoliva USA’s wrongdoing and, even if that doctrine were to apply, it does not exclude a cause of action for contribution among joint tortfeasors (Rpsenbach v The Diversified Group, Inc., 85 AD3d 569 [Ist Dept 201 11).

There are some attorney specialists in NY.  There is board certification in DWI litigation, in Legal Malpractice, in Medical malpractice and there are Board certified civil trial specialists.  Until a few days ago, if one who was board certified used that title in any letterhead or ad, the following disclaimer was necessary:  ""[1] The [name of the private certifying organization] is not affiliated with any governmental authority [,] [2] Certification is not a requirement for the practice of law in the State of New York and [3] does not necessarily indicate greater competence than other attorneys experience in this field of law.""

Now, the 2d Circuit has ruled the rule unconstitutional  in Hayes v. State of New York Attorney Grievance Committee of the Eighth Judicial District, 10-1587-cv, reversing Western District Judge John T. Elfvin’s grant of summary judgment to the grievance committee and the decision of Magistrate Judge H. Kenneth Schroeder, who rejected Mr. Hayes’ void-for-vagueness claim following a bench trial in 2010. 

In today’s New York Law Journal, Mark Hamblett writes "Parts of a New York rule requiring that attorneys who claim to be certified specialists make prescribed disclosure statements violates the First Amendment, the U.S. Court of Appeals for the Second Circuit ruled yesterday.

Buffalo personal injury lawyer J. Michael Hayes convinced the Second Circuit that there was a lack of clear standards for enforcing Rule 7.4 of the New York Rules of Professional Conduct on attorney specializations.

Mr. Hayes had drawn the attention of the Attorney Grievance Committee in the Eighth Judicial District for inadequate disclosures on his letterhead and on one of two billboards advertising his services in 1999.

Although he was never formally disciplined for running afoul of Rule 7.4, "Identification of Practice and Specialty," Mr. Hayes was facing potential discipline for his letterhead when he filed an action in the Western District seeking a declaration that the rule was unconstitutional both on its face and as applied.

On March 5, the Second Circuit agreed in Hayes v. State of New York Attorney Grievance Committee of the Eighth Judicial District, 10-1587-cv, reversing Western District Judge John T. Elfvin’s grant of summary judgment to the grievance committee and the decision of Magistrate Judge H. Kenneth Schroeder, who rejected Mr. Hayes’ void-for-vagueness claim following a bench trial in 2010"
 

"The best defense is a strong offense"…"Tyranny shall not go unopposed!" which of these two opposing story lines will succeed in a legal fee / legal malpractice case. Here is one example where the fee side wins out. Duane Morris LLP v Astor Holdings Inc. , 2009 NY Slip Op 02544
Decided on April 2, 2009 Appellate Division, First Department permits the attorneys to collect their fee, and the malpractice claims to die.
 

"The record shows that in December 2003, each defendant signed an agreement with plaintiff, acknowledging that it owed plaintiff a certain sum of money for their legal representation and agreeing to pay it within a certain amount of time. Although defendants contend that there is a triable issue of fact as to whether these agreements were signed under duress, "[r]epudiation of an agreement on the ground that it was procured by duress requires a showing of both (1) a wrongful threat, and (2) the preclusion of the exercise of free will" (Fred Ehrlich, P.C. v Tullo, 274 AD2d 303, 304 [2000]). The affidavit of defendants’ principal, which claimed that he orally protested plaintiff’s services, does not serve to defeat plaintiff’s motion. A client’s "self-serving, bald allegations of oral protests [a]re insufficient to raise a triable issue of fact as to the existence of an account stated" (Darby & Darby v VSI Intl., 95 NY2d 308, 315 [2000])

The part of defendants’ malpractice counterclaim that dealt with the action against Edward Roski III was properly dismissed. "A legal malpractice action is unlikely to succeed when the attorney erred because an issue of law was unsettled or debatable" (Darby, 95 NY2d at 315 [internal quotation marks and citation omitted]). When the Southern District of New York found that some of Astor’s claims in the Roski Action were barred, it noted that "there appears to be no federal authority directly on point" (Astor Holdings, Inc. v Roski, 325 F Supp 2d 251, 262 [SD NY 2003]), and relied on a California state case that was decided in 2002 (see id.), which was after the Roski action was filed…."
 

Attorneys hold funds for clients, and many attorneys get in trouble because of it.  Just this week two disciplinary cases were published.  In one the brother of an attorney converted a large sum from the escrow account.  The attorney was suspended for failing to supervise his brother.  Here, the attorney resigns in the face of two claims that he took a large sum of money that should have been in escrow. In the second of the two complaints he was sued for, and admitted legal malpractice,

Matter of Weiner ;2012 NY Slip Op 01580 ;Decided on March 1, 2012 ;Appellate Division, First Department ;Per Curiam. 
 

"Respondent acknowledges that in August 2011, a complaint was filed against him by an individual alleging that he wrongfully was in possession of her $10,000 down payment, wired to him as seller’s attorney, for the purpose of purchasing real property. When the mortgage application was denied, the individual was entitled to the return of her down payment which respondent had kept in his business account since he did not have an escrow account related to his practice of law. In June 2011, he gave the individual a check for $10,000, but, it was returned for insufficient funds. It is further alleged that respondent used the down payment funds for a purpose other than what it was intended.

In September 2011, respondent received a copy of a complaint filed against him by two individuals alleging that he converted escrow funds for his personal use without their authority during the course of his representation as their attorney in the sale of their apartment. Earlier, on or about August 2, 2011, the two individuals had commenced a civil suit in New York Supreme Court against respondent alleging, conversion, breach of contract, legal malpractice, breach of fiduciary duty or negligence. On or about August 15, 2011, respondent entered into a stipulation with them wherein he admitted that he had no defense to the claims asserted in the civil lawsuit and a judgment was entered against him for $116,812.19, which included prejudgment interest and attorney’s fees. "

Litigants faced with the 3 year statute of limitations often turn to a fraud cause of action.  Fraud has a 6 year statute of limitations, and in some instances an even longer discovery statute, which would be 2 years after discovery of the fraud.  It’s inviting and promises a cause of action when the legal malpractice time has passed.  It does not always work, and when it is clumsily pled, it is generally a failure.

Coleman v Korn ;2012 NY Slip Op 01374 ;Decided on February 23, 2012 ;Appellate Division, First Department  was dismissed because the fraud was not pled, and raised only late in motion practice.  "Plaintiff was required to commence this legal malpractice action within three years of defendant’s withdrawal as his counsel, but failed to do so (see CPLR 214[6]; cf. Gonzalez v Ellenberg, 300 AD2d 173, 174 [2002]). Plaintiff’s fraud and Judiciary Law § 487 claims were raised for the first time in a surreply, which Supreme Court properly refused to consider (see CPLR 2214[b],[c]; Garced v Clinton Arms Assoc., 58 AD3d 506, 509 [2009]). "
 

What happens to a legal malpractice case when documents suddenly go missing?  Is there a responsibility to maintain documents from the underlying case based upon letters and discovery demands in the underlying case?  How does a $ 20 million legal malpractice  case get dismissed well before the merits are ever tested?

In 915 Broadway Assoc. LLC v Paul, Hastings, Janofsky & Walker, LLP ; 2012 NY Slip Op 50285(U) ; Decided on February 16, 2012 ; Supreme Court, New York County ; Fried, J. we see the results of "systematic" deleting of electronic data. 
 

"Paul Hastings asserts that 915 Broadway, in particular, 915 Broadway representative Joel Poretsky, intentionally destroyed numerous pertinent documents after the duty to preserve such documents arose on April 1, 2008, the day the Litigation Hold was circulated. After being apprised by Paul Hastings that 915 Broadway had destroyed documents pertaining to this litigation, on March 31, 2011, I ordered 915 Broadway to hire forensic IT experts to analyze the extent of 915 Broadway’s document destruction problem. Those IT professionals confirmed that 915 Broadway had deleted relevant electronic documents well after a duty to preserve those documents arose. As more fully set forth below, the evidence adduced by 915 Broadway’s own IT professionals reveals the 915 Broadway’s destruction of relevant documents was extensive and systematic, and that, responsive documents continued to be destroyed by 915 Broadway, even after Paul Hastings raised its spoliation concerns before me.

Paul Hastings asserts that, any documents related to or touching upon the above claims, are crucial to its ability to present a complete defense in this action, and that 915 Broadway’s failure to safeguard its own documents related to these topics has permanently and irrevocably tainted the documentary record in this matter, and has made it impossible for Paul Hastings to adequately defend itself against 915 Broadway’s claims. Paul Hastings argues that the most severe sanction — the dismissal of 915 Broadway’s amended complaint — is thus appropriate and necessary to redress the prejudice that Paul Hastings has suffered as a result of the spoliation.

Under New York law , a party is required to preserve evidence that may be relevant to pending or reasonably foreseeable litigation. Thus, " [o]nce a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a litigation hold’ to ensure the preservation of relevant documents’" (Voom VD Holdings LLC v EchoStar Satellite L.L.C., ___ AD3d ___, 2010 NY Slip Op. 00658 [1st Dept 2012], quoting (Zubulake v UBS Warburg LLC, 220 FRD 212, 218 [SD NY 2003] ). Over the past decade, this duty to preserve has been extended to electronically stored information, including email and [*7]other electronic documents (see e.g. McCarthy v Phillips Elec. N.A., Index No. 112522/03, at 3 [Sup Ct, NY County June 9, 2005] ["duty to preserve relevant evidence … encompasses electronic data"]). Indeed, "[c]ourts have held that the contents of a computer are analogous to the contents of a filing cabinet" (Etzion v Etzion, 7 Misc 3d 940, 943 [Sup Ct, Nassau County 2005]). Thus, like the contents of a filing cabinet, which must be retained by a party to a pending or reasonably foreseeable litigation, electronic information saved on computers and email servers must also be diligently preserved.

Under the traditional law of spoliation of evidence, "[w]hen a party alters, loses or destroys key evidence before it can be examined by the other party’s expert, the court should dismiss the pleadings of the party responsible for the spoliation" (Squitieri v City of New York, 248 AD2d 201, 202 [1st Dept 1998]). Until recently, New York state courts have grappled with the difficult issue of how to apply the traditional law of spoliation — e.g., the prohibition against destroying easily identifiable physical evidence related to, for example, some kind of accident — to the destruction of email and other electronic documents, as "[e]lectronic discovery raises a series of issues that were never envisioned by the drafters of the CPLR," and "are not faced in traditional paper discovery" (Lipco Elec. Corp. v ASG Consulting Corp., 4 Misc 3d 1019(A), 2004 NY Slip Op 50967[U], * 6, * 8 [Sup Ct, Nassau County 2004]). However, in Ahroner v Israel Discount Bank of New York (79 AD3d 481 [1st Dept 2010]), the First Department has recently clarified the standard for imposing sanctions for the destruction of electronic evidence:

On a motion for spoliation sanctions involving the destruction of electronic evidence, the party seeking sanctions must establish that (1) the party with control over the evidence had an obligation to preserve it at the time it was destroyed; (2) the records were destroyed with a "culpable state of mind"; and (3) the destroyed evidence was "relevant" to the moving party’s claim or defense

Establishing that the electronic data was destroyed with a "culpable state of mind" does not require proof that the destruction was imminent or even reckless. " Spoliation sanctions … are not limited to cases where the evidence was destroyed willfully or in bad faith, since a party’s negligent loss of evidence can be just as fatal to the other party’s ability to present a defense’" (Standard Fire Ins. Co. v Fed. Pac. Elec. Co., 14 AD3d 213, 218 [1st Dept 2004] [citation omitted]). Thus, "[a] culpable state of mind’ … includes ordinary negligence" (Ahroner v Israel Discount Bank of New York , 79 AD3d at 482; see e.g. Mudge, Rose, Guthrie, Alexander & Ferdon v Penguin Air Conditioning Corp., 221 AD2d 243, 243 [1st Dept 1995] [dismissing plaintiff’s claims due to its "negligent loss of a key piece of evidence which defendants never had the opportunity to examine"])."

We were recently asked whether an Expert, testifying in a legal malpractice case can commit legal malpractice during testimony in the case.  We discussed whether there was an attorney-client relationship, and whether "absolute immunity" for in-court testimony applied.  Now, Levine v Harriton & Furrer, LLP ; 2012 NY Slip Op 01401 ; Decided on February 23, 2012; Appellate Division, Third Department  discusses the same subject, this time for an engineer.
 

"Plaintiff, a licensed professional engineer, was retained to provide services in connection with a personal injury claim in the Court of Claims against the State of New York arising from an alleged highway defect. The claim was subsequently transferred to defendant, a law firm in the Village of Round Lake, Saratoga County, and plaintiff was again retained. The parties initially proceeded upon an oral agreement. In February 2006, plaintiff submitted a written retainer agreement to defendant setting forth a retainer fee and establishing hourly charges and fees, among other things. Defendant paid the retainer fee and, on the claimant’s behalf, returned the agreement to plaintiff, without signature. Plaintiff subsequently provided services and submitted bills periodically to defendant. Defendant made payments through December 2007, when the trial was completed; thereafter, defendant made no further payments but did request continuing services, which plaintiff provided. In May 2008, the Court of Claims rendered a determination dismissing the claim upon the ground that negligence had not been proven. Plaintiff allegedly continued to submit invoices for payment of the outstanding balance due through October 2008, but received no response. After plaintiff’s counsel contacted [*2]defendant, defendant responded in writing in November 2008, refusing to pay and alleging that the unfavorable determination of the claim had resulted from plaintiff’s professional malpractice. "

"Defendant’s objections were not primarily grounded in the particulars of the invoices; instead, the central contention is that the failure to pay for plaintiff’s services was justified by his alleged malfeasance. However, this claim was not supported by an expert affidavit opining that plaintiff’s services "deviated from accepted industry standards" and that this failure proximately caused the loss of the claimant’s case (Columbus v Smith & Mahoney, 259 AD2d 857, 858 [1999]; see Travelers Indem. Co. v Zeff Design, 60 AD3d 453, 455 [2009]). Contrary to defendant’s claim, the decision of the Court of Claims does not replace such an expert opinion. Although that court criticized some of plaintiff’s methods, it made no finding as to his competence beyond the requisite assessment of the credibility of the conflicting expert opinions. The mere fact that the Court of Claims found plaintiff’s opinions less credible than those of the opposing experts is insufficient to present a factual issue as to whether his performance was substandard; such determinations are necessarily made whenever the opinions of experts are in conflict. Further, the court explicitly stated that its determination was not based solely on credibility, but also on its factual conclusion that the subject accident was proximately caused by driver error, and not by a highway defect."

It really does not get any better than this, in the legal malpractice world.  Client asks "Does the Judge dislike me?"  Attorney answers "No, the judge is fair."  In this story, however, it is all reversed.  From Thomson Reuters, "Judge Steps Aside in Case of Alleged Car vandal"

"NEW YORK, Feb 24 (Reuters) – A Brooklyn judge has recused himself from hearing a legal malpractice case after the plaintiff was arrested for tampering with the judge’s car.

Justice Arthur Schack ruled Friday that he would step aside from the case brought by Alex Breytman against Donald Schechter, an attorney who had represented Breytman in an earlier lawsuit.

Schack said he was recusing himself because Breytman was arrested on Jan. 19 for allegedly committing numerous counts of felony criminal mischief against the motor vehicles of Schack and other colleagues from Kings County Supreme Court.

"To avoid the appearance of any impropriety on my part, I must recuse myself from this action, even though I know I would be as fair and impartial as the individual assignment judge in deciding the motion before the court," Schack wrote.

Schack dismissed Breytman’s case against his former lawyer in February 2011 and denied Breytman’s subsequent motion to reargue, deeming it "frivolous." On Dec. 2, Breytman filed a new motion for relief from the court, which Schack described as "barely comprehensible stream-of-consciousness ranting."

Oral argument on the motion was scheduled for Feb. 24. But on Jan. 19, Breytman was arrested for the car incident. Schack signed a supporting deposition that Brooklyn prosecutors presented to the grand jury in the car case."