In Legal Malpractice the question of a statute of limitations often arises.  Legal malpractice accrues on the date that the mistake is made, not on the day plaintiff discovers it.  Continuous representation allows plaintiff to continue to use the attorney, and does not require an immediate suit,  In Aronov v Law Off. of Roman Popik, P.C.;2011 NY Slip Op 31739(U);June 23, 2011;Sup Ct, NY County;Docket Number: 116100/09;Judge: Debra A. James we see one variant of the problem. 

Attorney represented client in the drafting of a partnership break-up and negligently drafted the non-compete portion so that it failed to restrain the retiring partner from competing.  It mistakenly restrained the remaining partners from competing against the retiring partner.

Law firm then represented the clients in a series of related litigations, but there were big time gaps between.  Was this continuous?

"It is undisputed that the defendants not only drafted the agreement that is the source of the  malpractice obligations, but represented the plaintiffs in subsequent litigation concerning
the agreement. appeals resulted in summary judgment being awarded against the
plaintiffs dismissing their claims in May 2005.  over the agreement apparently recommenced in August 2008 when the former partner sought to restore the action to t h e calendar and sought judgment on counterclaims against the plaintiffs. On June  2, 2009, the Appellate Division, Second Department awarded The initial phase of the litigation including The litigation summary judgment against the plaintiffs on monetary claims under the agreement. The defendants represented the plaintiffs in the entirety of the litigation. This court therefore finds that the plaintiffs are entitled
to the application of the continuous representation toll and that their claim f o r malpractice is timely. The defendants continuously represented plaintiffs w i t h respect to the agreement
provisions that are the subject of the malpractice claims (see Antoniu v Ahearn, 134 AD2 d 151, 152 -153 [1st Dept 1987) and therefore defendants motion pursuant to CPLR 3211 (a) (5) must be granted" (typo?)

It is a rare case in which a legal malpractice cause of action is upheld against the other side’s attorney.  Privity of contract is the first thing one thinks about when gauging whether there can be a legal malpractice case.  Here, in Ginsburg Dev. Cos., LLC v Carbone ; 2011 NY Slip Op 05664
Decided on June 28, 2011 ; Appellate Division, Second Department  we see the rare occasion in which legal malpractice may lay against the other side’s attorney.

"Accepting the facts alleged in the second amended complaint as true, and according the plaintiff the benefit of every favorable inference (see Leon v Martinez, 84 NY2d at 87-88), the second amended complaint states a cause of action to recover damages for legal malpractice (see Aranki v Goldman & Assoc., LLP, 34 AD3d 510). "While privity of contract is generally necessary to state a cause of action for attorney malpractice, liability is extended to third parties, not in privity, for harm caused by professional negligence in the presence of fraud, collusion, malicious acts or other special circumstances" (Good Old Days Tavern v Zwirn, 259 AD2d 300, 300; see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 595; Nelson v Roth, 69 AD3d 912, 913; Aranki v Goldman & Assoc., LLP, 34 AD3d at 511-512; Moran v Hurst, 32 AD3d 909, 910-911). Although the second amended complaint does not allege an attorney-client relationship between the plaintiff and the defendants, the allegations in the second amended complaint "fall within the narrow exception of fraud, collusion, malicious acts or other special circumstances under which a cause of action alleging attorney malpractice may be asserted absent a showing of actual or near-privity" (Aranki v Goldman & Assoc., LLP, 34 AD3d at 512 [internal quotation marks omitted]). Moreover, the documentary evidence does not establish, as a matter of law, a defense to the third cause of action. Thus, we modify the order appealed from accordingly. "
 

Attorney fee disputes often blossom into legal malpractice cases, although Stephan B. Gleich & Assoc. v Gritsipis ; 2011 NY Slip Op 05483 ; Decided on June 21, 2011 ; Appellate Division, Second Department is not one of these.  Nevertheless, it is one of the longest attorney fee disputes in memory. The case itself started in 1993 as the AD tells us:
 

"An affidavit of service reflects service upon the defendant on September 7, 1993, by delivery of a copy of the summons with notice to a person of suitable age and discretion named Evelyn Monterosa at the defendant’s place of business.

A clerk’s judgment was thereafter executed on February 7, 1994, for the requested sum of $66,875.41, plus statutory costs and disbursements in the sum of $370, for a total judgment in the sum of $67,245.41 (hereinafter the 1994 judgment).

The plaintiff commenced a second action against the defendant on March 17, 2009, by the filing of a summons and complaint in the Supreme Court, Nassau County, under Index No. 09-006753 (hereinafter the 2009 complaint). The plaintiff alleged that no portion of the 1994 judgment had been satisfied, that more than 10 years had passed since the judgment was docketed, and that the judgment should be renewed pursuant to CPLR 5014(1). The defendant answered the 2009 complaint, asserted affirmative defenses, and separately moved under the index number of the 1993 action, inter alia, to vacate the 1994 judgment.
 

Contrary to the defendant’s contention, the plaintiff properly obtained jurisdiction over him under CPLR 308(2). The affidavit of the plaintiff’s process server constitutes prima facie evidence of proper service (see Matter of Perskin v Bassaragh, 73 AD3d 1073; Prospect Park Mgt., LLC v Beatty, 73 AD3d 885; Pezolano v Incorporated City of Glen Cove, 71 AD3d 970, 971; Cavalry Portfolio Servs., LLC v Reisman, 55 AD3d 524, 525; Jefferson v Netusil, 44 AD3d 621). The defendant’s failure to recall the person of suitable age and discretion who was served, without specific facts of the identity of his employees, employment records, payroll records, or affidavits from others, fails to rebut the process server’s affidavit (see Interlink Metals & Chems. v Kazdan, 222 AD2d 55, 56; see also Pezolano v Incorporated City of Glen Cove, 71 AD3d at 971; Sturino v Nino Tripicchio & Son Landscaping, 65 AD3d 1327; Silverman v Deutsch, 283 AD2d 478, 478-479). Thus, there is an insufficient basis to vacate the 1994 judgment for lack of jurisdiction under CPLR 5015(a)(4).

Clerks’ judgments may nevertheless be vacated pursuant to CPLR 5015(a)(1) where the [*3]defendant demonstrates both a reasonable excuse for the default and a potentially meritorious defense to the action (see Verde Elec. Corp. v Federal Ins. Co., 50 AD3d 672, 672-673; see generally Eugene Di Lorenzo, Inc. v A.C. Dutton Lbr. Co., 67 NY2d 138, 141; Gray v B. R. Trucking Co., 59 NY2d 649, 650; Yao Ping Tang v Grand Estate, LLC, 77 AD3d 822; Zanani v Schvimmer, 75 AD3d 546, 547; Li Gang Ma v Hong Guang Hu, 54 AD3d 312, 313). The defendant failed to establish a reasonable excuse for his default since the only excuse he proffered was that he was not served with process. Moreover, we agree with the Supreme Court that the defendant also failed to establish a potentially meritorious defense to the action. Contrary to the defendant’s contention that the legal services were rendered solely to his corporation, the documentary evidence, including the invoices for legal fees incurred and the pleadings in the earlier landlord-tenant litigations, establish that the defendant was an individually named party in those actions who received individualized legal services. Other issues that the defendant raises as to the invoices themselves speak to the specific amount of damages, and not to liability or to his default in the 1993 action.

III. The Clerk’s Judgment Under CPLR 3215(a) The defendant’s argument that the clerk of the court lacked authority to enter a judgment is raised for the first time on appeal. However, where, as here, an argument presents an issue of law appearing on the face of the record which could not have been avoided if raised at the proper juncture, it may be considered by an appellate court (see Parry v Murphy, 79 AD3d 713; Verde Elec. Corp. v Federal Ins. Co., 50 AD3d at 673; Chrostowski v Chow, 37 AD3d 638, 639; Beepat v James, 303 AD2d 345, 346; Hanna v Ford Motor Co., 252 AD2d 478). The nature of this appeal warrants the exercise of our discretion in reaching on its merits the issue of the propriety of the clerk’s judgment. "

BLT reports that the Wilmer law firm may well have to pay $ 214 million in legal malrpactice settlement fees, all depending on a case in which they have no say. From the article:

"Wilmer Cutler Pickering Hale and Dorr is facing the prospect of making $214 million in payments to one of its clients, in what would be an unusually large settlement of a malpractice claim.

Whether Wilmer will be forced to make the payments is still up in the air, depending largely on the outcome of litigation and on legislation moving through Congress. William Perlstein, Wilmer’s co-managing partner, who signed a settlement in February outlining the possible payments to New Jersey-based pharmaceutical company The Medicines Co., said on Tuesday he’s confident it will prove unnecessary.

The amount of money at stake potentially puts the case among the largest public settlements for legal malpractice ever, people who work in the field say.

The malpractice claim has its origins a decade ago, when Wilmer was representing The Medicines Co. in its bid to extend the patent for Angiomax, an anti-blood-clotting drug. The U.S. Patent and Trademark Office ruled that Wilmer lawyers filed the extension application at least a day after a key deadline — a decision that threatened to cost the drug company five years of exclusive drug sales.

In a major win for Wilmer and The Medicines Co., a federal judge last year vacated the patent office’s decision and cleared the way for the patent extension to go forward. If nothing changes, Wilmer is not expected to have to pay the $214 million.

The issue is still alive, though, because one of the drug company’s competitors has appealed to the U.S. Court of Appeals for the Federal Circuit. The case is pending there. (The patent office decided not to appeal.)

The agreement Wilmer signed in February is a contingency in case the Federal Circuit reverses or there’s another unexpected development. So, if a generic version of Angiomax is sold in the United States before June 15, 2015 as a result of the deadline issue, the firm would owe $214 million, $99 million of which would be covered by the firm’s insurance."
 

Client hires attorney for divorce, and the attorney works through the end of the divorce. There are ancillary matters (QDRO) that follow, and more than three years later, client is sued over the late husband’s life insurance policy.  She hires the same attorney, and is later sued for lega fees. She counterclaims for legal malpractice arsing from the divorce, not the insurance case.  Is the case late?

Supreme Court answers yes, in Ursprung v Verkowitz; 2011 NY Slip Op 31723(U); June 14, 2011
Supreme Court, Nassau County; and determines that there must be actual continuous representation, and not a general sense that the attorney is still representing client, albeit not in any actual litigation.  Her representation was litigative, not transactional.

:"Contrary to Ursprug’s contentions, the doctrine of continuous representation is
inapplicable to toll the statute of limitations in the instant action as the matrimonial action during
which attorney Verkowitz allegedly committed the malpractice was concluded on February 27
2004, and Verkowitz’s representation of the plaintiff for the matrimonial action ceased at that
time. The particular transaction which is the subject of this malpractice action had ended in
2004, even if one accepts that a general professional relationship continued. (See, Zaref v. Berk
& Michaels , 192 A.D.2d 346 595 N.Y.S.2d 772 (Ist Dept. 1993)). Furher, as the plaintiff
was no longer "acutely aware of such need for further representation on the specific subject
matter underlying the malpractice claim " the defendant’ s representation on the matter had ceased
at that time. (Shumsky v. Eisenstein 96 N.Y 2d 164, 750 N.E.2d 67 (2001); Carnevali
Herman 293 AD.2d 698, 742 NYS. 2d 85 (2d Dept. 2002)). Attorney Verkowitz
representation of Ursprug in the subsequent insurance matter was pursuant to a separate and
subsequent retainer agreement, which was entered three years after the matrimonial action which was concluded on February 27 2004. As such, the within action for legal malpractice is bared
by the expiration of the statute of limitations. Even accepting plaintiffs arguments that attorney  Verkowitz s inquiries regarding Chrstopher Ursprug’s QDRO filings on behalf of Ursprug are evidence of a continuation of the matrimonial matter, the administrative tasks related to the QDRO were completed on September 12 2006, when Verkowitz forwarded a copy of the August 18 2006 QDRO order to Ursprug. Accordingly, even accepting the later date of September 12, 2006 as the conclusion of Verkowitz s representation ofUrsprug for the matrimonial action, the within legal malpractice action, filed on January 24 2011 , is bared by the statute of limitations."

Manus v Flamm , 2011 NY Slip Op 31691(U); June 14, 2011; Supreme Court, New York County; Docket Number: 110026/2007; Judge: Debra A. James tells an interesting story of divorce, legal malpractice and itinerant jewelery.  Plaintiff is the divorced wife, who is owed $ 1 million in the divorce.  She borrows jewelery from the husband’s safe deposit and ends up in a world of trouble.

"In the FM action, FM initially sought to recover- possession of certain jewelry that, it alleges, Manus pledged as collateral against a $400,000 loan made by FM to her in 1994. FM alleges t h a t , after retrieving the jewelry from a jeweler to whom Manus had consigned it for sale, Manus failed  to return it: to a safe deposit box maintained by her ex-husband, nonparty Allen Manus (deceased, November 2 0 0 3 ) , a founder of FM, in breach of the terms of the May 4, 1994 loan security agreement, as amended May 5, 1994. On September 28, 1999, Manus entered into a stipulation with FM, prepared by FM’s counsel and signed by Elizabeth Manus, Allen Manus’s wife and FM’s sole officer. Pursuant to the stipulation, Manus was authorized to retain the jewelry f o r nine months in order to sell it, and repay the $400,000 loan. The stipulation also provides that Manus’s cooperative apartment shares would be substituted for the jewelry as collateral under- a September 1999 stock pledge agreement . The ,st.stock:k pledge agreement identifies
Flamm as the escrow agent holding the stock certificates. Manus denies that she ever received $400,000 from FM, and contends that, therefore, the June 15, 1994 promissory note in
that amount bearing her signature is not enforceable.

With respect to the stipulation, Manus alleges that she signed it at Flamm’ s insistence, and that Flamm refused to explain the terms, and their ramifications, to h e r . Flamm ‘ alleges that Manus signed solely at Allen Manus’s urging, and without Flamm’a advice. Manus and Flamm both allege that Allen Manus agreed to arrange for FM to release Manus from the stipulation. Manus alleges that Allen Manus advised her to have her attorney, Flamm, contact FMIs attorneys to obtain.ain the
release. In November 2000, Flamm prepared a release and forwarded it to FM’s attorneys. Flamm alleges that , during the ensuing negotiations regarding the release terms, FM’s attorneys refused to permit FM t.o release Manus from liability because Allen Manus owed t h e m attorneys’ fees. Flamm further alleges that Elizabeth Manus refused to sign any document,t releasing Manus from liability, and that he was advised that she was the only individual with the authority to bind FM to the release.

Flamm’s own admissions regarding the underlying facts alleged in the complaint and the documentary evidence conclusively demonstrate that Flamm continuously represented
Manus with regard t o the FM action from October 1998 through January 2005."

While theft by an attorney may be many things, it is questionable whether it might be called legal malpractice.  In B & R Consol., L.L.C. v Zurich Am. Ins. Co. 2011 NY Slip Op 51142(U) ; Decided on June 22, 2011 ; Supreme Court, Nassau County ; DeStefano, J. we see an upside-down mirror image of the usual legal malpractice case.  Here plaintiff’s attorneys are well known legal malpractice defense counsel, plaintiff in the underlying legal malpractice case is suing the malpractice insurer, and the argument is over whether the insurance policy covers the alleged acts.  Here, for the moment it does.
 

"In an action filed on November 6, 2008, encaptioned B & R Consolidated, L.L.C. v Frederic A. Powell, Esq. and Robin Powell, Index No. 020049/08 (the "underlying action"), B & R asserted, inter alia, causes of action in fraud, unjust enrichment, conversion, breach of contract, and breach of fiduciary duty based upon an admission by attorney Frederick A. Powell ("Powell") that he "stole four hundred and fifty thousand ($450,000.00) dollars of B & R’s money from his escrow account for other personal projects’" and did this "without any authorization from B & R" (Ex. "1" to Plaintiff’s Opposition). Specifically, it was alleged in the complaint that:

Unbeknownst to B & R, [Powell] received the money from the repayment of a mortgage owned by B & R in June of 2007. [Powell] neglected to inform B & R that the money had been received until September 2008, more than an entire year later! Instead, [Powell] made periodic payments to B & R under the guise of interest payments being made by a third party on the mortgage held by B & R

Accordingly, the Court finds unrebutted plaintiff’s proof that Powell took possession of funds belonging to the plaintiff, hid that fact from it, and then lost or misappropriated those funds for his own use. This constitutes an established breach of fiduciary duty owed to B & R by Powell as its attorney. Further, damages resulting from that breach have been shown as a result of the [*4]misappropriation of the clients’ funds, which is distinct from any claim for negligence or legal malpractice. Summary judgment therefore is granted to the plaintiff on its third and fifth causes of action, breach of "the fiduciary duty of care", and "of loyalty", as they most closely comport with the foregoing authority regarding breach of fiduciary duty generally. The Court notes that such a breach would also allow for a recovery for any attorney’s fees that were improperly charged as being incident the to [sic] breach rendering the continued pursuit of the negligence and malpractice causes of action unnecessary. Summary judgment is therefore denied as to these claims. "

"The Insurer argues that liability in the underlying action was not based upon Powell’s rendition of legal services but, rather, on his misappropriation of B & R’s funds and, thus, the Insurer has no obligation to indemnify. In the underlying action, Justice Palmieri stated in his decision that "the amended complaint is framed in terms of negligence, malpractice, and breach of fiduciary duty to Powell. This in turn is premised on bad advice from Powell as attorney and a failure to keep B & R informed of the true status of its loan to Lyons" (Ex. "7" to Plaintiff’s Opposition at p. 5). 

Under the circumstances, and considering that the causes of action asserting breach of fiduciary duty are based upon the same facts constituting the causes of action alleging negligence and legal malpractice, it cannot be said as a matter of law that Powell’s conduct falls outside the scope of risk covered by the policy (Ex. "7" to Plaintiff’s Opposition at p 8; see Ulico Casualty Co., v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1 [1st Dept 2008]; Burkhart, Wexler & Hirschberg, LLP v Liberty Insurance Underwriters, Inc., 60 AD3d 884 [2d Dept 2009]).[FN3] "

In Crawford v Himmelstein ; 2011 NY Slip Op 31669(U); June 20, 2011; Supreme Court, New York County; Docket Number: 115432/10; Judge: Donna M. Mills we see a straightforward analysis of a typical legal malpractice case.  Client is being pursued by landlord to give up three apartments, on the basis of owner-personal use.  (Put aside why a rent stabilized tenant could have three apartments?).  Case is litigated, and plaintiff eventually settles for $ 300,000 and one year grace period.  At the end of the grace period, tenant does not want to move out, and eventually sues attorney for malpractice. Plaintiff loses.

"To prevail in a legal malpractice action, a plaintiff must show that the attorney “failed to exercise that degree of care, skill, and diligence commonly possessed and exercised by a member of the legal community” (Volpe v Canfield, 237 AD2d 282,283  that such negligence was the proximate cause of their damages, and that, but for the attorney’s negligence, the plaintiff would have prevailed oh the underlying claim (see Rau v , Borenkoff, 262 AD2d 388.

Here, the plaintiff claims that Himmelstein failed to file a motion for summary judgment or proceed to trial on the issue of the owner landlord’s immigration status relating to the underlying holdover proceeding. In addition to the immigration issue, plaintiff claims there were a number of real estate irregularities surrounding the way the house was sold which was never explored sufficiently by Himmelstien. However, Himmelstein submitted documentary evidence establishing that between May 2004 and November 2007, the parties engaged in lengthy motion practice which involved significant discovery battles. It is quite apparent that Himmelstien was litigating vigorously on plaintiffs behalf before the parties decided to settle.  Plaintiff has failed to demonstrate a meritorious cause of action for legal malpractice (Tortorello v Carlin, 286 AD2d 628 [2001]), there being insufficient evidence that “but for” defendants’ alleged negligence in not filing a motion for summary judgment or going to trial in lieu of settling the underlying action, plaintiff would have achieved a more favorable result (Wexler v Shea & Gould, 1 1 AD2d 450 . The record establishes that the parties with the assistance of the court in the underlying action, voluntarily decided to settle the matter instead of proceeding to trial. Moreover, Himmelstein offers a reasonable strategy as to why they did not make a motion for summary judgment. Attorneys are free to select among reasonable courses of action in prosecuting clients’ cases without thereby
exposing themselves to liability for malpractice (Dweck Law Firm v Mann, 283 AD2d 292,
293 [2001])."