A prime worry for the legal malpractice practitioner, on either side of the aisle, is whether there is legal malpractice insurance. For the defendant, it is paramount; for the plaintiff it is significant. Much thought has gone into how to determine whether the target defendant has adequate [or indeed, any] insurance, and planning has to go into the target’s application for insurance." One prime weapon that the insurer has is the "prior acts" doctrine. It says in essence that you must report all past prior acts that one might reasonably believe could lead to a law suit for legal malpractice, whether it has been started or not. We remember one managing attorney who shouted at least once a week: "Put the Carrier on Notice!" Sometimes he was right. Here, in Executive Risk Indemnity v, Pepper Hamilton, LLP, we see Justice Jone’s decision on this issue: "We are asked to determine, under Pennsylvania law, whether excess insurers Executive Risk Indemnity Inc. and Twin City Fire Insurance Company, based upon their prior knowledge exclusions, and Continental Casualty Company, based upon rescission of its policies, were entitled to summary judgment declaring that they have no obligation to indemnify defendants Pepper Hamilton LLP and one of its members W. Roderick GagnÉ (collectively, the law firm defendants) in actions asserted against them for, among other claims, professional malpractice." "Executive Risk commenced this action against the law firm defendants and Westport, seeking a declaration that it had no obligation to indemnify defendants in the underlying actions. The law firm defendants counterclaimed for a declaration in their favor and brought third-party claims against Twin City and Continental Casualty. Executive Risk and Twin City relied upon Westport’s prior knowledge exclusion, expressly incorporated into their policies, and Continental Casualty cross-claimed for rescission of its excess policies for 2002-[*4]2003 and 2003-2004. " "Here, it is undisputed that the law firm defendants knew of SFC’s securities fraud months prior to the effective dates of the Executive Risk and Twin City policies. The courts below noted that GagnÉ subjectively believed, and informed Mr. Wilcox at least one month prior to the submission of one of the law firm’s insurance applications, that he and the law firm could be subject to a lawsuit from their representation of SFC. Such a belief, although subjective, was also reasonable, but Pepper Hamilton did not provide that information to its insurers. Given the law firm defendants’ role in the securitization of the loans and GagnÉ’s close involvement with SFC, a reasonable attorney with the law firm defendants’ knowledge should have anticipated the [*5]possibility of a lawsuit, particularly when millions of dollars may have been lost from activities of which they were aware. Here, the law firm’s knowledge of its client’s fraudulent payments prior to its application for excess coverage coupled with the fact that a reasonable attorney would have concluded that the law firm defendants would likely be included in the litigation because of their role in their client’s business satisfy the test of Coregis and create an obligation for the law firm to inform its insurers of this potential litigation. Contrary to the Appellate Division’s holding, the prior knowledge exclusion in this case does not require the known of act, error, omission or circumstance to be "wrongful conduct on the part of the insured" (Executive Risk Indem. Inc. v Pepper Hamilton LLP, 56 AD3d 196, 204 [1st Dept]). It excludes coverage of "any act, error, omission, circumstance . . . occurring prior to the effective date of the [policy] if any [insured] at the effective date knew or could have reasonably foreseen that such act, error, omission, circumstance . . . might be the basis of a [claim]." Here, on October 27, 2002, the effective date of the Executive Risk and Twin City policies, the law firm defendants knew of acts that occurred prior to that date, which they could have foreseen to be the basis of a claim. Thus, the prior knowledge exclusions apply to those policies.

The Third Department gives a nice analysis of the law of "account stated" in its decision, Antokol & Coffin v Myers ;2011 NY Slip Op 06051 ;Decided on July 28, 2011 ;Appellate Division, Third Department .
 

""’An account stated is an agreement between parties to an account based upon prior transactions between them with respect to the correctness of the account items and balance due’" (J.B.H., Inc. v Godinez, 34 AD3d 873, 874 [2006], quoting Jim-Mar Corp. v Aquatic Constr., 195 AD2d 868, 869 [1993], lv denied 82 NY2d 660 [1993]). An attorney can recover fees on an account stated "with proof that a bill . . . was issued to a client and held by the client without objection for an unreasonable period of time" (O’Connell & Aronowitz v Gullo, 229 AD2d 637, 638 [1996], lv denied 89 NY2d 803 [1996]).

At trial, plaintiff introduced evidence of a retainer agreement between Antokol and defendant as well as unpaid invoices for legal fees dated between September 1995 and December 1996. Antokol testified that these invoices were ordinarily sent to defendant on a monthly basis and that defendant did not object to the bills until plaintiff commenced this action. Defendant testified that she did not remember receiving monthly bills but, in her prior deposition testimony, acknowledged that she thought she had received a bill most months. Although defendant claimed to have had "constant conversations about the bills" with Antokol, and Antokol admitted that he made efforts to get her to pay, including offering a 10% discount in February 1996, he testified that defendant never offered a reason for her refusal to pay the bills. Indeed, with the exception of one specific objection to work completed by one of Antokol’s colleagues, which defendant ultimately agreed to pay, defendant did not claim to have made objections to any specific bill, despite the language at the end of each bill stating, "The above information will be deemed correct unless objection is made within 30 days." Further, defendant admittedly made no written objections to the bills. Under these circumstances, we agree with Supreme Court that defendant’s general claims of verbal refusals to pay did not constitute a specific objection sufficient to defeat plaintiff’s cause of action for an account stated (see Darby & Darby v VSI Intl., 95 NY2d 308, 315 [2000]; J.B.H., Inc. v Godinez, 34 AD3d at 875-876; PPG Indus. v A.G.P. Sys., 235 AD2d 979, 980 [1997]; see also Zanani v Schvimmer, 50 AD3d 445, 446 [2008]). "

"Turning to the adequacy of the services billed for, we agree with Supreme Court that the record demonstrates that plaintiff provided competent representation in a difficult matrimonial matter. Antokol’s failure to establish grounds for divorce in defendant’s favor, albeit clearly a point of frustration for defendant, was irrelevant, as fault did not affect the equitable distribution of marital assets (see Howard S. v Lillian S., 14 NY3d 431, 435-436 [2010]). Defendant’s assertions that Antokol should have presented expert testimony to increase her share of the marital estate and that he was not prepared for trial are counterbalanced by record evidence that Antokol’s decisions were part of his trial strategy and his claims that defendant’s refusal to follow his advice at times interfered with his ability to achieve better results for her. In sum, the record evidence fully supports Supreme Court’s finding that the alleged inadequacies of Antokol’s representation are insufficient to undermine plaintiff’s right to be paid for its services (see Matter of Wapner, Koplovitz & Futerfas v Solomon, 7 AD3d at 916). "

A viable legal malpractice case arising from a criminal prosecution is very rare.  A criminal defendant may not sue the criminal defense attorney absent proof of "actual innocence."  Actual innocence is typically defined as acquittal, reversal or exoneration.  Here, in Dawson v Schoenberg; 2011 NY Slip Op 32033(U);July 8, 2011;Supreme Court, New York County
Docket Number: 16502/09;Judge: Anthony L. Parga we see two of the three. 

"This is an action for legal malpractice arising from the defendant’ s representation of the plaintiff in the action entitled People a/the State a/New York v. Joetta Dean. Defendant was retained to defend the plaintiff following her arrest stemming from allegations that she sexually abused her three minor children. Plaintiff was indicted with thee counts of Course of Sexual Conduct Against a Child (PL 130. , a Class D Felony) and one count of Sexual Abuse in the Second Degree (PL 130.60(2), a Class A Misdemeanor). Defendant represented plaintiff through her first criminal trial, after which, on March 28, 2006, she was convicted of all counts. Plaintiff was sentenced to twenty-one years in prison. After her conviction, plaintiff terminated the services of the defendant and hired
successor counsel, Kevin Keating, Esq., who brought a motion on plaintiffs behalf to vacate the
judgment pursuant to CPL 440. 1 0 (hereinafter referred to as "440 motion ). After a hearing
was held before the first trial judge, the plaintiffs 440 motion was denied. Thereafter, plaintiff appealed her conviction to the Appellate Division, Second Department, which, on April 22, 2008, overturned plaintiff’s conviction based upon a finding that the defendant rendered "ineffective assistance of counsel." In its decision, the Appellate Division, Second Department stated , "we do not find that any single example of deficient representation was sufficient to deprive the defendant of the effective representation of counsel. Rather, we conclude that, given the totality of her counsel’ s deficient representation, the defendant was denied meaningful representation. Based upon the appellate court’s’ s ruling, the plaintiff was granted a new trial before a new judge. Represented by successor counsel, plaintiff was re-tried and acquitted of all charges in October 2008. After plaintiff’s acquittal , the court record was sealed pursuant to N.Y. CPL 160. 50."

"The defendant is entitled to disclosure of the second trial transcripts, as the plaintiff has
placed the underlying criminal action at issue in this civil lawsuit, and as a failure to disclose the
second trial transcripts is prejudicial to the defense of this matter by the defendant. A cause of
action for criminal legal malpractice accrues when the criminal proceeding is terminated
, i.e. , on
the date when the indictment against the plaintiff is dismissed. (Britt v. Legal Aid 95 N.Y.2d
443 (2000)). Accordingly, plaintiff’s claim for legal malpractice herein did not even accrue until
the conclusion of the second trial when she was acquitted of the charges brought against her. As
[* 2]
such, the transcripts from the second criminal trial, and the jury s verdict resulting therefrom, are
needed by both the plaintiff to prove legal malpractice, and the defendant to defend against said
claim.’ Further, as the second trial was conducted by a different criminal defense attorney,
presided over by a different judge, possibly prosecuted by a different Assistant District Attorney,
and held before a different jury, factors other than the defendant’s alleged malpractice may have
attributed to the favorable verdict for the plaintiff in the second trial."

Norman Arnoff writes in the NYLJ about professional liability, and concentrates in the SEC,  securities and  FINRA areas.  He writes, in regard to the Madoff proceedings:

"From cases involving the fraud perpetrated by Bernard Madoff upon a series of feeder funds in order to pass investors’ funds into the fictitious accounts of his colossal Ponzi scheme, it is clear that most of our courts have not placed the appropriate responsibility upon the auditors and accountants for the feeder funds. In consequence this has dramatically diminished the ability of investors to pursue a viable recovery source by limiting professional liability insurance coverage as well as diluting an additional dimension of risk avoidance and loss prevention that accompany the underwriting procedures of the professional liability insurers."

"The analysis of the cases shows that the progress in the law will be better achieved by moving away from the formalities of a contractual or quasi-contractual relationship as a way of defining the accountants’ professional liability risk to the more rooted and definitive standards established by the accounting profession itself. Foreseeable risk and the liability that comes with it should be sourced in the authoritative literature where the accounting profession sets its own standard of care…."
 

"Conclusion

The cases and the analysis that they represent are in a dynamic and now uncertain tension. The law legitimately should eliminate the professionals’ liability risk of an indeterminate nature to unidentified groups for an extended series of transactions. Defining the scope of the accountants’ liability by the formality of "privity" and "near privity," however, is not realistic in terms of what we expect and face in our capital markets and from the financial services industry that serves it. Systemic failures such as Madoff’s fraud should now mandate better and more certain protection for ultimate investors.

Nor does creating statutory preemptions that foreclose certain private causes of action and conferring standing only upon the regulators and prosecutors make sense in view of the limitations of resources of government and regulatory authorities. Further review of, and reliance upon, professional standards will provide better answers for both the accounting profession and society to define the parameters of professional liability risk."

Law firm is retained by A and knows that A and B have a contractural relationship.  During the representation A notifies the law firm that if the case is settled some money will be given to B.  By the time that the case is actually settled, A rescinds the advice and tells the law firm to give all the money to A and none to B.  Does B have a cause of action against the law firm for non-payment?

In Ulu v Turkotrans Intl. Transp. Co., Ltd. ;2011 NY Slip Op 31803(U) ;July 1, 2011; Sup Ct, NY County; Judge: Barbara R. Kapnick sets the rules:
"Next, the third cause of action for breach of contract alleges that "defendants have breached their agreement to pay the Balance Due to Plaintiff from the Settlement Amount." (Compl. ¶ 34.) Defendant Law Firm argues that if plaintiff is alleging a breach of a contract between himself and the Law Firm, the claim fails because plaintiff never had an agreement directly with the  Law Firm with respect to the monies at issue in this case, or any matter relevant thereto, and that plaintiff has not provided any evidentiary support for the existence of such an agreement. If on the other hand, plaintiff is alleging a breach of a contract that existed between himself and Sensoz/Turkotrans, then the defendant argues that the claim cannot stand as against the Law Firm, because the Law Firm was not party to such an agreement. In his motion papers, plaintiff argues that an agreement
existed between plaintiff and the Law Firm, based on a series of emails, which required the Law Firm to transfer a portion of the settlement funds to plaintiff. Plaintiff cites the following deposition testimony of Mr. Vengrow, to show that there was a contract between plaintiff and the Law Firm:

Plaintiff also argues that he performed all of his obligations under the alleged agreement by paying the legal fees and expenses, but that t h e Law Firm failed to perform when it declined to transfer a  portion of the settlement funds to him and that he sustained damages as a result.  The issue here is whether a contract was actually formed between plaintiff and the Law Firm by virtue of the e-mail
communications between the parties and/or plaintiff’s payment of legal fees.  "The elements of a breach of contract claim are formation of a contract between the parties, performance by the  plaintiff, the defendant’s failure to perform, and resulting damage (citation omitted) .

The requirements for the formation of a contract are at least two parties with legal capacity to contract, mutual assent to the terms of the contract  and consideration. 2 P J I 4:l at 638-39 (2011) ; see also Maas v . Cornell Univ . , 94 NY2d 8 7 , 93-4 (1999)*   Consideration exists if
there is "a benefit to the promisor or a detriment to the promisee" and "it is enough that something is promised, done, forborne or suffered by the party to whom the promise is made as consideration for the promise made to him." Weiner v. McGraw-Hill, I n c . , 57 NY2d 458, 464 (1982) (internal citations omitted). In the instant case, the February 28th E-mail is clearly not
a contract between Ulu and the Law Firm; it is a communication from Sensoz to the Law Firm, which confirms Sensoz’s instructions to the Law Firm. To the extent that plaintiff is alleging that there was an o r a l agreement between himself and the Law Firm, the Court rejects this contention as well, finding that Ulu did not receive consideration from the Law Firm for his payment of the legal fees.

There is no evidence that Ulu paid the legal fees in exchange for either (1) a promise that the Law Firm would do something for him; (2) the Law Firm had done something for him; or (3) the Law Firm’s forbearance of any acts. See Weiner v. McGraw-Hill, Inc., supra at 464. Accordingly, the Court finds that the Law Firm has established its entitlement to summary judgment dismissing the
fourth cause of action, insofar as it is pled against it.

The answer to today’s question is "quite a ways."  Without further comment, here is Breytman v Schechter ; 2011 NY Slip Op 51375(U) ; Decided on July 22, 2011 ; Supreme Court, Kings County
Schack, J.
" In my prior February 8, 2011 decision and order, I granted defendants summary judgment and dismissed the instant action with prejudice. However, despite the dismissal with prejudice, plaintiff BREYTMAN now moves for various relief, including what the Court deems a motion to reargue. The Court, for reasons that will be explained, finds the instant motion "frivolous." It is completely without merit in law and undertaken primarily to harass and maliciously injure defendants SCHECHTER and the Court. After giving plaintiff BREYTMAN a reasonable opportunity to be heard and reviewing all papers submitted and the oral argument transcript, the instant motion is denied. Costs and sanctions are imposed upon plaintiff BREYTMAN for frivolous conduct."
 

"The following are some examples of plaintiff BREYTMAN’s outrageous and offensive statements. Plaintiff begins his affidavit in support of the motion by stating, in ¶ 1, "I Alexander Breytman the last of the Mohicans have chutzpah to make this affidavit in support and against dishonorable Arthur M. Schack Universe and Donald Schechter Galaxy and Karl Marxist and Fredrick Engels’ fuzzy Machiavellian order selling snake oil, legally deficient full of holes like Swiss cheese where I can fly space shuttle through [sic]." Further, at ¶ 5, plaintiff informs the Court "Your order is unconstitutional and I do not have to follow, lead or get out of the way, you just overruled by Pro se, how you like them apples [sic]." Then, at ¶ 11, he states, "I am immune from your dishonorable illegal order that is unconstitutional and therefore is null and void and is in effect under lock and key [sic]." Plaintiff, in ¶ 18, calls the Court "Your dishonor," claims that the Court is "both a communistic argument or fascist which for all intent and purposed are the same dam thing [sic]" and informs the Court that "You and your compadres are the problem that plagues this world and not a solution kapish'[sic]." Moreover, plaintiff states: in ¶ 26, "Your dishonorable unconstitutional hypocritical order is meaningless and I do need to comply at all [sic]"; in ¶ 27, "Your dishonor futile attempt to muzzle me only prolongs my pain and suffering [sic]"; and, in ¶ 31, "I am not your sheep for a slaughter. You try but will fail to set my world on fire rather it is your universe that will burn . . . I will rise like Phoenix out of ashes and will reverse your malicious Swiss cheese order . . . You and Schechter only prolong my pain and [*5]suffering and this I cannot and will not live with. I will do my crying in the rain. Donald Schechter Eureka moment is short lived [sic]."

Moreover, plaintiff did an internet search about the Court, reciting personal information about myself and my family that appeared in the New York Times on August 31, 2009, which is totally irrelevant to the instant motion. For example, he wrote, in ¶ 16, "You were a union representative and once walked a picket line with his wife . . . who was a teacher, too . . . Ooh schools in US suuuuuucccccckkkkkkssssss . . . You are not supposed to be picketing with UFT and quiet unethical conduct [sic]." Then, in oral argument, plaintiff attacked me for engaging in picketing, which occurred years before I became a judge, let alone a Member of the Bar. It is not a secret that years before my election as a judge I was a New York City teacher, United Federation of Teachers Chapter Chairman and on strike in 1968 and 1975. Yet, at p. 26, lines 5 – 22, plaintiff engaged in slander, equating events of 1968 and 1975 with the present"

"Clearly, the pattern of plaintiff BREYTMAN’s conduct in the instant action is subject to costs and sanctions. Plaintiff’s arguments in his papers, in support of the instant motion, and in the June 14, 2011 oral argument are replete with threatening, defamatory and malicious statements about defendants SCHECHTER and the Court. They are frivolous and "completely without merit in law or fact." Plaintiff BREYTMAN failed to make any specific allegations that the Court misapprehended or overlooked any matters of fact and law. The instant motion is but another example of plaintiff’s continued harassment of defendants and abuse of the judicial process, with the addition of personal invective and animus directed at the Court. The instant motion prolonged this litigation and attempts "to harass or maliciously injure" defendants SCHECHTER and the Court. In this time of budgetary cuts, combined with increased caseloads, the Court does not need to waste its scarce resources to be the arena for plaintiff BREYTMAN’s personal vendettas against defendants and the Court.

Therefore, based upon the totality of plaintiff BREYTMAN’S frivolous conduct in making the instant motion, the Court finds it is appropriate to award costs of $1,700.00 to defendants SCHECHTER for 10 hours of attorney’s fees at $170.00 per hour. Further, for the waste of judicial resources and "to deter vexatious litigation and dilatory or malicious litigation tactics" by plaintiff BREYTMAN, the Court, in its discretion, imposes financial sanctions of $2,500.00 upon plaintiff BREYTMAN. "
 

Plaintiff sues defendant as ABC, Esqs. and later finds out that the firm really is ABC, LLP.  What are the consequences and how does one remedy the situation?  One answer is given in Koch v Kyong Min  2011 NY Slip Op 31951(U)  June 29, 2011  Sup Ct, NY County  Judge: Emily Jane Goodman

However, not having properly named the partnership defendant herein is not entirely fatal to Plaintiff. In Lolly v Brookdale Hosp. Med. Ctr. (37 AD3d 428 [2nd Dept 20071), the appellate
court stated the following, in relevant part:  Despite having been incorrectly named aa ‘The Brookdale University Hospital and Medical Center” in a prior action … involving the same alleged misconduct, and asserting essentially the same causes of action as those pleaded in the instant complaint, the defendant herein represents that it has, in fact, been defending the prior action, that it has never disclaimed responsibility for the individual employees and residents’ identified in the prior action, and that ’a judgment ultimately entered against The Brookdale University Hospital and Medical Center will have the same effect as a judgment entered against The Brookdale
Hospital Medical Center.” Ba sed on these representations, this action was properly dismissed
pursuant to CPLR 3211(a) (4).  Id., at 428-429 (citations omitted). See also Velez v Union
Sanitordum Assn., Inc. , 64 NY2d 1119 (1985) (affirming dismissal of subsequent action where defendant in a prior action answered that complaint and atated that its name as sued in that action
was the proper entity allegedly responsible for the injuries, and Plaintiff also acknowledges that New York Partnership Law permits abbreviations ‘in addition to the registered name,” and
that it would be possible to amend the pleadings in the Related Action “to Incorporate the contents of this Complaint.“where plaintiff accepted the answer without objection).
 

Here, the record reflects that (I) Raguea & Min, Eaqs., the defendant named in the Related Action, had answered the complaint in that action and is defending that action; accepted the answer in the Related Action; issues of law and fact involving both the Related Action and the instant action; (4) the complaint in the Related Action pleaded causes of action that are essentially the same as in this action; and ( 5 ) the defendant herein has requested that "this action be diamissed as there is prior action pending againat Ragues & Min and no valid excuse to sue the firm once more here on the same grounds."

Courts seem to scrutinize the question of damages to a higher degree in legal malpractice litigation.  Break a leg in a slip and fall, and the Court will never review an x-ray on a motion for summary judgment; have a car crash and no court will call in the body-shop guy on the question of whether there was really damage to the bumper.  However in Legal Malpractice, there will be extensive review of actual v. ascertainable damages.  In Fielding v Kupferman 2011 NY Slip Op 31983(U) ;July 12, 2011;Supreme Court, : 113572/07;Judge: Eileen A. Rakower we see one such example. After analysis, and a motion to reargue, summary judgment is granted to defendants.
 

"This action, sounding in attorney malpractice, arises from a stipulation of settlement in a divorce action, wherein defendants represented plaintiff. Specifically, the alleged malpractice involves defendants advising plaintiff to sign the settlement agreement, which required that a 1.2 million dollar payment be made “within 30 days after the execution [of the stipulation of settlement] . . . in
immediately available funds.” Plaintiff claims that funds were not immediately available, as stated, and he failed to make payment as required. Plaintiff brought this action, and defendants moved to dismiss. The Appellate Division, reversing Justice Walter Tolub’s dismissal, found that, accepting plaintiffs allegations as true, the stipulation may constitute evidence of defendants’ negligence. Further, “a pleading need only state allegations from which damages attributable to the
defendant’s conduct may reasonably be inferred.” They went on to say that “at this early stage of the proceedings, plaintiff is not obliged to show that he actually sustained damages, but only that damages attributable to defendants’ conduct might be reasonably inferred.”

"Defendants later moved for summary judgment dismissing this action as against them. Defendants urged that any damages were pure speculation, and that plaintiff could not sustain his burden of showing, by proof in admissible form, that he suffered non speculative and ascertainable damages as a result of entering into  the stipulation of settlement which required that payment be made within 30 days in immediately available funds. This Court, after oral argument and by Decision and Order dated December 14,20 10, denied the motion. That decision is currently on appeal. Defendants now move to reargue. Defendants’ motion to reargue is granted and, upon reargument, defendants’ motion for summary judgment is granted."
 

"Finally, the question turns to whether plaintiff has shown “actual damages.” Assuming a jury were to find that the attorney negligence was the proximate cause of sending plaintiff through the many hoops he claims he had to jump through in order to meet his responsibility of paying approximately 1.2 million dollars within 30 days, the question remains, did plaintiff show that he suffered actual damages. Plaintiff claims that even if he suffered nominal damages, a finding in his favor would require defendants to disgorge back to plaintiff all of the fees they charged in representing plaintiff in his divorce action. "