It is often said (and sometimes sanctimoniously) that the legal malpractice claimant is simply trying to gain an advantage, or to avoid paying legal fees.  Here, in Matter of Price ; 2011 NY Slip Op 05814 ; Decided on July 5, 2011 ; Appellate Division, Second Department we see a different use of the claim.  "Respondent" is an attorney-escrow agent.

"In or about September and October 2005, SDLH was engaged in negotiations to sell its business to Great South Bay Automotive, Inc. (hereinafter Great South Bay). At or about that time, the respondent represented SDLH. Great South Bay, whose principals were Robert Gerstacker and Rob Despres, was represented by Richard Bartel.

Prior to the closing, a Notification of Sale, Transfer, or Assignment of Bulk, dated September 20, 2005 (hereinafter the Notification), was sent to the New York State Department of Taxation and Finance (hereinafter the DTF). The respondent was listed in the Notification as escrow agent in connection with the sale of SDLH. [*2]

At the closing, the respondent signed an escrow agreement wherein he acknowledged, inter alia, that he received a check payable to himself, as attorney, in the amount of $82,393.02. From this money, the respondent further acknowledged that he would undertake to satisfy "the State, Suffolk Auto and Exhaust Warehouse." The reference to "the State" in the escrow agreement was to a tax liability owed by SDLH to New York State.

In or about February 2006, New York State issued a Notice of Determination assessing $58,890.03 against Great South Bay for the unpaid taxes of SDLH. By order to show cause, summons, and verified complaint dated April 26, 2006, Great South Bay and its principals commenced an action in the Supreme Court, Suffolk County, against SDLH, its principals, and the respondent entitled Great South Bay Automotive, Inc. v SDLH Automotive Inc., under Index No. 12040/06. The complaint alleged, inter alia, breach of contract due to the failure of SDLH and the respondent to satisfy the tax liability owed to New York State. In addition, there were causes of action to recover damages for fraud and breach of fiduciary obligations on the part of the respondent, as escrow agent, based upon his failure to satisfy the tax liability pursuant to the escrow agreement.

The respondent represented SDLH, its principals, and himself in the action. On behalf of SDLH and himself, the respondent submitted a verified answer sworn to on May 23, 2006. He thereafter submitted an affidavit in opposition to the order to show cause, sworn to on May 24, 2006, on behalf of SDLH and himself. In his affidavit in opposition, the respondent asserted, inter alia, that "at no time did your deponent receive any money from sales tax. There was no known debt to the State." The respondent further asserted that, pursuant to the Agreement for the sale of SDLH, he was required to hold only $1,000 in escrow to guarantee that SDLH received a release from New York State in connection with "unpaid sales tax" due. Great South Bay moved for summary judgment by notice of motion dated September 14, 2006.

By summons and third-party complaint dated September 25, 2006, and October 3, 2006, respectively, the respondent commenced a third-party action on his own behalf against Richard Bartel, attorney for Great South Bay, and its principals, entitled Price v Bartel. The respondent [*3]alleged, inter alia, that Bartel committed legal malpractice in his representation of Great South Bay in its purchase of SDLH.

The order also dismissed the third-party action, reciting that the third-party complaint "fails to state any cognizable cause of action and . . . Price lacks standing to assert certain claims." Specifically, the Supreme Court stated that "Price’s claim for malpractice must fail because he lacks standing to assert such claim against Bartel as he was not in an attorney-client relationship with him. Moreover, on the merits, Price has failed to set forth any of the elements of a prima facie case of legal malpractice [citations omitted]."

The Law sites are consistently filled with stories of partners leaving firm A for firm B, and sometimes taking assoicates with them. Law firms fold and are re-cast as new firms. How does this restelss movement affect legal malpractice clients?

In The New Kayak Pool Corp. v Kavinoky Cook Llp ;2010 NY Slip Op 05176 ;Decided on June 11, 2010 ;Appellate Division, Fourth Department we see the Third Department’s short-form answer.
 

"Plaintiffs commenced this legal malpractice action seeking damages arising from defendants’ alleged malpractice in failing to ascertain the existence of insurance coverage for the parties sued by plaintiffs in the underlying trademark infringement action. The same attorney represented plaintiffs throughout the course of that action. That attorney began representing plaintiffs in 1999 when he was a partner in defendant Kavinoky Cook LLP (Kavinoky). When he subsequently joined defendant Hodgson Russ, LLP (Hodgson), plaintiffs executed a consent to change attorney form in June 2003, thereby substituting Hodgson for Kavinoky as plaintiffs’ attorney of record in the underlying action. That action settled in February 2004 and the instant action was commenced in January 2007.

Supreme Court properly denied the motion of Kavinoky seeking summary judgment dismissing the amended complaint and cross claims against it. Kavinoky contends that the action against it is time-barred because it was commenced more than three years after the attorney in question left Kavinoky and the consent to change attorney form was executed by plaintiffs (see CPLR 214 [6]). We reject that contention inasmuch as the statute of limitations was tolled by the doctrine of continuous representation during the time that the same attorney represented plaintiffs in the underlying action (see [*2]Waggoner v Caruso, 68 AD3d 1, 7, affd ___ NY3d ___ [May 11, 2010]; HNH Intl., Ltd. v Pryor Cashman Sherman & Flynn LLP, 63 AD3d 534, 535)"

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. "