Once upon a time there were different statutes of limitation for different ways of suing a lawyer.  The Court of Appeals recognized a 6 year contract statute and a 3 year tort statute.  The legislature changed all that, passing CPLR 324(6)  "an action to recover damages for malpractice, other than medical, dental or podiatric malpractice, regardless of whether the underlying theory is based in contract or tort;."  But (metaphysically speaking) what is malpractice?  Well, as we see inMarte v Graber ;2011 NY Slip Op 21079 ;Decided on March 2, 2011 ;Appellate Term, Second Department
 it is not a simple claim for a return of unused fees.  What is the difference?  We think of it as a return of old money, rather than damages in new and unlimited fresh money.  The Appellate Term writes:

"In this action to recover damages for "money had and received," plaintiff moved, insofar as is relevant to this appeal, for summary judgment. Specifically, plaintiff sought
to recover legal fees he had paid to defendant’s decedent, asserting that he had paid a sum of money to decedent as part of an agreement for legal services and, when the relationship had terminated, the decedent had not performed all of the legal services for which he had been paid. Defendant opposed the motion and cross-moved, insofar as is relevant to this appeal, to dismiss the complaint on the ground that plaintiff’s cause of action was based on a theory of legal malpractice and was thus time-barred (see CPLR 214 [6]). By order entered May 29, 2009, insofar as appealed from, the Civil Court denied the branch of plaintiff’s motion seeking summary judgment and granted the branch of defendant’s cross motion seeking the dismissal of the complaint as time-barred.

While plaintiff’s claim was denominated an action for money had and received, such an action sounds in quasi contract and arises when, in the absence of an agreement, one party possesses money that in equity and good conscience it ought not retain" (Goldman v Simon Property Group, Inc., 58 AD3d 208, 220 [2008] [internal quotation marks and citation omitted]). [*2]Here, since there was an express agreement between the parties, plaintiff has failed to set forth a viable cause of action for money had and received.

As plaintiff seeks to recover a refund of an alleged overpayment of fees paid to the decedent, affording the complaint a liberal construction, and according its factual allegations every possible favorable inference (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]; Minsky v Haber, 74 AD3d 763, 764 [2010]), we find that plaintiff has asserted a breach of contract claim (see Reidy v Martin, 77 AD3d 903 [2010]; Henry v Brenner, 271 AD2d 647, 648 [2000]). Contrary to defendant’s argument, plaintiff has not alleged a legal malpractice cause of action, as he does not seek to recover for harm caused by the negligent performance of services rendered by defendant’s decedent (see generally Cubito v Kreisberg, 69 AD2d 738 [1979], affd 51 NY2d 900 [1980]; 1650 Forest Ave. Corp. v Farrell Fritz, P.C., 17 Misc 3d 132[A], 2007 NY Slip Op 51999[U] [App Term, 2d & 11th Jud Dists 2007]). Therefore, while defendant properly contends that CPLR 214 (6) governs malpractice cases, regardless of whether based on a theory of contract or tort, this provision is inapplicable to the instant action. "
 

We read through this case looking for the legal malpractice connection with Gibson Dunn.  It took a while.  Take a look at this case just to see how many attorneys are listed below the caption. We think this may be a record.

When is an e-mail discoverable in a legal malpractice case?  In this instance it was not.  The case is IN RE REFCO SECURITIES LITIGATION; KENNETH M. KRYS, et al.,  v. CHRISTOPHER SUGRUE, et al.,07 MDL 1902 (JSR)Applies To:08 Civ. 3065, 08 Civ. 3086; UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; 2011 U.S. Dist. LEXIS 14144

"In response to this subpoena, the Gibson Dunn Objectors produced [*14] two privilege logs and over 137,000 pages of documents, including the Gibson Dunn e-mail here at issue (the "E-mail"). The E-mail is a three-page document that consists of a series of internal Gibson Dunn electronic communications among Gibson Dunn partners Scott Kislin, Mitchell Karlan, Natasha Labovitz, Andrew Levy and Bruce Bolander dated October 30-31, 2005. In general terms, the partners share their preliminary thoughts concerning Gibson Dunn’s representation of SPhinX and PlusFunds in various matters, including the Refco bankruptcy proceedings.

On September 17, 2010 Gibson Dunn discovered that the E-mail had been inadvertently produced and notified the Krys Plaintiffs of the inadvertent production; the Krys Plaintiffs subsequently certified that they had destroyed all copies of the E-mail in accordance with the Court’s December 15, 2009 Protective Order. Id. On November 15, 2010, Gibson Dunn produced to the Krys Plaintiffs a privilege log identifying "Internal Law Firm Communication/Document; work product" as the basis for withholding the E-mail. Id. The Krys Plaintiffs subsequently argued before the Special Master that the Gibson Dunn Objectors were required to produce the E-mail, [*15] and the Special Master agreed. Gibson Dunn then timely appealed to this Court. In accordance with the federal rules and with the orders of this Court appointing the two special masters in this MDL, the Court reviews the discovery orders of Special Master Hedges for abuse of discretion.

The Gibson Dunn Objectors present two grounds for appeal. First, they argue that the E-mail has no relevance to the instant multi-district litigation ("MDL") in which the Special Master is presiding over discovery and, indeed, is relevant only to the arbitration between the Gibson Dunn Objectors and the Krys Plaintiffs. Gibson Dunn Br. at 1. They contend that "discovery relevant only to claims pending in arbitration is a matter to be decided in arbitration, and that the Krys Plaintiffs cannot end run that truism by serving a subpoena in the MDL." Id. at 2. They further argue that, by seeking to compel the production of information that is irrelevant to the instant action, the Krys Plaintiffs are engaged in an abuse of the federal subpoena power. Id. at 2 (citing Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 352 n.17, 98 S. Ct. 2380, 57 L. Ed. 2d 253 (1978) ("[W]hen the purpose of a discovery request is to gather information for use [*16] in proceedings other than the pending suit, discovery is properly denied.")).
 

"As non-exclusive examples of the kinds of documents that might be properly withheld under this exception, the court in Sage Realty mentioned "documents containing a firm attorney’s general or other assessment of the client, or tentative preliminary impressions of the legal or factual issues presented in the representation, recorded primarily for the purpose of giving internal direction to facilitate performance of the legal services entailed in that representation," Id. at 37-38. The conversations in the E-mail are precisely these kinds of discussions. They are internal conversations among law firm partners setting forth their "preliminary impressions of the legal or factual issues presented in the representation." Id. at 38.

The Special Master does not appear to have concluded to the contrary. See 12/21/10 Transcript at 7 ("These are internal musings."); Transcript at 8 ("these are just partners chatting about something"); Transcript at 11 ("[T]hese, frankly, are musings between counsel and partners at the firm as to how litigation might shape or whatever."). He failed, nonetheless, to apply the Sage Realty exception. This was, again, [*20] an abuse of discretion.
 

Today’s NYLJ reports a very large attorney fee arbitration award involving "Schulte Roth & Zabel  which has been awarded $1.7 million in legal fees as a result of a civil suit filed against private investment firm and former client The Belstar Group."

For the commercial details, see the NYLJ article.  Here, it seems that the arbitrators took a good look at the dispute, which ended up as a written retainer agreement v. hearsay and contradictory oral testimony.  Issue:  did the underlying transaction have to close before the law firm was due its fees?

Answer in this case: NO!  "Court papers filed in Manhattan Supreme Court last week show that Schulte entered into an alternative fee arrangement with Belstar’s CEO Daniel Yun, a former vice president at Lehman Brothers who founded the private investment firm in 1998. Belstar, which is based in New York and Seoul, manages more than $1.5 billion on behalf of financial institutions around the world.

The fee was tied to the firm’s work on something identified in court records as the "Lynt project," a structured finance transaction stemming from the Term Asset-Backed Securities Loan Facility. Schulte, known for its hedge funds and investment management work, assigned structured products and derivatives partner Joseph Suh in New York to draft an engagement letter with Belstar.

The company claimed in arbitration that its agreement with Schulte stated Belstar would owe the firm nothing if the transaction, potentially worth $62.5 million, did not close. However, Schulte was entitled to a percentage of the value of the deal if it did close. In the event of a dispute, both parties agreed to resolve their differences in arbitration.

The Lynt transaction never closed and Belstar did not pay Schulte for its work. But as detailed in court records, the three-member arbitration panel rejected Belstar’s argument that Schulte had been hired to handle the Lynt matter on contingency.

According to the panel’s interpretation of Belstar’s contract with Schulte, it found that the engagement letter contained "no language that would suggest that any aspect of the arrangement is contingent on future events." 
 

Experts are often needed in litigation, and always in medical malpractice litigation.   Med Mal cases are lost and it is sometimes thought that they are lost because of experts.  Was the expert good enough?  Did the expert "give" the departures? 

In Healy v Finz & Finz, P.C. 2011 NY Slip Op 01616  Decided on March 1, 2011  Appellate Division, Second Department  we see an awful choice foisted on parents.  Mother has triplets, one is dying in utero.  The two others are well but very small, and at risk for low birth weight.  What to do?
 

One child was "born with periventricular leukomalacia, a form of cerebral palsy that renders him dependent on others for his basic needs. There is no dispute that the infant plaintiff’s condition resulted from him sharing a placenta with his deceased brother.

"The plaintiffs retained the defendant law firm, Finz & Finz, P.C. (hereinafter the firm), to represent them in the underlying medical malpractice action, which they commenced in 1997. The firm’s theory of the case was that the doctors should have delivered the surviving babies immediately after learning of Sean’s death, and that the delay caused Kevin’s injury. Most of the defendants in the medical malpractice action obtained summary judgment dismissing the complaint insofar as asserted against them, and the one defendant who went to trial obtained a directed verdict dismissing the case. The plaintiffs’ expert medical witnesses were unable to testify as to when Kevin’s injury occurred, acknowledging that it could have been immediately after Sean’s death. Thus, the Supreme Court held that the plaintiffs could not establish the proximate cause element of medical malpractice. This Court affirmed (see Healy v Spector, 287 AD2d 541). "

"The plaintiffs thereafter commenced the instant action alleging legal malpractice [*2]against the firm. The firm moved for summary judgment dismissing the complaint, submitting in support the affirmations of three physicians, in which they stated that Kevin’s injury was caused by Sean’s death. The plaintiffs submitted the affirmation of their own expert physician in response, who stated that, although Sean’s death caused Kevin’s injuries, the damage would have occurred over time. They also submitted the affirmation of an attorney, who stated that the firm failed to exercise the care and skill commonly exercised by a member of the legal profession, because its attorneys failed to find an appropriate medical expert. The Supreme Court denied the firm’s motion for summary judgment dismissing the complaint. We reverse"

""Attorneys are free to select among reasonable courses of action in prosecuting clients’ cases without thereby exposing themselves to liability for malpractice" (Iocovello v Weingrad & Weingrad, 4 AD3d 208, 208). Here, the firm established, prima facie, that its choice of experts in this case was a reasonable course of action, and the plaintiffs failed to raise a triable issue of fact in opposition. The conclusory assertion of the plaintiffs’ expert attorney—that the firm simply chose the wrong experts—is insufficient to sustain a cause of action alleging legal malpractice (see Dimond v Kazmierczuk & McGrath, 15 AD3d 526, 527). Moreover, the affirmation of the plaintiffs’ expert physician was itself conclusory and was, thus, insufficient to raise a triable issue of fact in opposition to the motion for summary judgment (see Brady v Bisogno & Meyerson, 32 AD3d 410). As the firm demonstrated that it could not have proven proximate cause in the underlying medical malpractice action, and as the plaintiffs failed to raise a triable issue of fact in opposition, the Supreme Court should have granted the firm’s motion for summary judgment dismissing the complaint (see generally Zuckerman v City of New York, 49 NY2d 557, 562). "

We try to read each new published Appellate Division case in legal malpractice, yet some leave us scratching the head.  In Markowitz v Kurzman Eisenberg Corbin Lever & Goodman, LLP ; 2011 NY Slip Op 01626 ; Decided on March 1, 2011 ; Appellate Division, Second Department  one defendant attorney has won and kept summary judgment against plaintiff.  What were the stakes?  It seems from a quick read that the stakes were half of a child’s summer camp costs.  Does the cost of summer camp (which we too remember paying) justify litigation?

""To succeed on a motion for summary judgment, a defendant must establish that the plaintiff is unable to prove at least one of the essential elements of the cause of action" (Dupree v Voorhees, 68 AD3d 810, 811; see Greene v Sager, 78 AD3d 777). The defendant Richard A. Danzig made a prima facie showing that the plaintiff would be unable to prove that, but for the alleged malpractice, he would have prevailed on his claim that he was entitled to the payment of 50% of camp fees for his children in the underlying matrimonial action. In opposition, the plaintiff failed to raise a triable issue of fact. "

The plaintiff’s remaining contentions are without merit.

Accordingly, the Supreme Court properly granted that branch of Danzig’s motion which was for summary judgment dismissing the complaint insofar as asserted against him (see Hamoudeh v [*2]Mandel, 62 AD3d at 949; Orchard Motorcycle Distribs., Inc. v Morrison Cohen Singer & Weinstein, LLP, 49 AD3d 292, 293; Olaiya v Golden, 45 AD3d 823, 823-824; Napolitano v Markotsis & Lieberman, 50 AD3d 657, 657-658; Thaler & Thaler v Gupta, 208 AD2d 1130, 1132).
MASTRO, J.P., BALKIN, LEVENTHAL and MILLER, JJ., concur.

We believe in several tropes about legal malpractice.  One is that we live in a legal centric country, and accordingly, legal malpractice is ubiquitous as well as omnipresent.  The second is that legal malpractice cases are treated differently because they are laws written by lawyers, concerning lawyers, and decided upon by lawyers.

We think that Garnett v Fox, Horan & Camerini, LLP ; 2011 NY Slip Op 01589 ; Decided on March 3, 2011 ; Appellate Division, First Department is just such a case.  It seems to us that only in legal malpractice is such strong scrutiny applied to the underlying premises of the case.  In a car case we do not see the court determining who was in the wrong at an intersection, in a products case we do not see the court determining whether the washing machine was dangerous.  Yet here we see Supreme Court determining (we believe from the decision) that the attorneys gave good advice and that they cannot under any circumstances be responsible for Boylan’s eventual bankruptcy,
 

The Appellate Division thought differently.  "The amended complaint alleges that defendant was negligent in failing to advise Boylan International properly, that defendant’s negligence caused Boylan’s loss, and that Boylan sustained actual damages (see Reibman v Senie, 302 AD2d 290 [2003]). Specifically, it alleges, inter alia, that defendant failed to mount a defense to Boylan’s tax assessment arrears based on Blackstar Publ. Co. v 460 Park Assoc. (137 Misc 2d 414 [1987] [escalation clauses should not be applied where the tax increase is caused by extensive renovation that does not inure to the tenant’s benefit]), negotiated a settlement less beneficial than simply paying the demanded amount, and coerced Boylan into executing the settlement although it knew of the dire consequences thereof. "A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that the settlement of the action was effectively compelled by the mistakes of counsel" (Bernstein v Oppenheim & Co., P.C., 160 AD2d 428, 430 [1990] [citation omitted]). The amended complaint further alleges that, but for defendant’s negligence, Boylan would not have had to declare bankruptcy and incur additional attorney’s fees. These allegations are sufficient to withstand a CPLR 3211(a)(7) motion. At this stage, plaintiff does not have to show a "likelihood of success," as the motion court found, but is required only to plead facts from which it could reasonably be inferred that defendant’s negligence caused [*2]Boylan’s loss (see InKine Pharm. Co. v Coleman, 305 AD2d 151 [2003]). Plaintiff also does not have to show that Boylan actually sustained damages but is required only to allege facts from which actual damages could reasonably be inferred (see id.). "

When we see a business start up and close rapidly, we often wonder how could this happen.  When we see a shuttered restaurant we wonder how one entrepreneur’s dream could go so wrong.  Here, in Wo Yee Hing Realty Corp. v. Stern, Supreme Court, New York County, Justice Debra James we guess at three things:

a.  This real estate transaction was for millions of dollars;

b.  The sellers had absolutely no idea how to go about selling and buying a like-kind building, and lost $ 4 million dollars in unnecessary tax;

c.  Hired a solo practitioner, who (we guess) had no legal malpractice insurance, did so without a retainer agreement, and did so without any written communications between them.

Result? 

"This is an action seeking damages for alleged legal malpractice with respect to the sale of property, in which plaintiffs claim that they were unable to take advantage of the Internal Revenue Code (IRC) § 1031 like-kind exchange tax deferral because of defendant’s actions. The corporate plaintiff is the owner of the subject property, and the individual plaintiffs are principals of the corporate plaintiff . Defendant is an attorney who alleges that, in 2006, plaintiff Chun Wo Yung (Chun Wo) approached him regarding the Check One: sale of a building that Chun Wo and his  family had owned since  1979. In November, 2006, Chun Wo called defendant to let him
know that he was ready to have a contract drafted regarding the sale of the building, and Chun Wo faxed defendant a letter that Chun Wo had received from a real estate broker who was representing the purchaser. "

"Defendant maintains that throughout the entire process, he constantly informed plaintiffs that he had no experience with 1031 like-kind exchanges, and that they always told him that they would take care of it.

In his EBT, Chun Wo stated, in contrast to defendant’s testimony, that he was unfamiliar with how a 1031 like-kind exchange worked, and that he had never heard of a qualified intermediary. In his affidavit, Chun Wo avers that the corporate plaintiff paid approximately $3,400,000 in federal taxes and approximately $1,700,000 in local taxes.

Legal malpractice is ubiquitous, and yet, prone to many hurdles.  Here, in  HOURANEY,  -against- BURTON & ASSOCIATES, P.C. and BERNARD BURTON,08-CV-2688 (CBA)(LB);   UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK; 2011 U.S. Dist. LEXIS 17046; February 21, 2011, Decided we see the plaintiff pro-se lose on summary judgment for lack of standing, and lack of proofs. 
 

Standing is lacking, because plaintiff retained defendants as a LLC.  Now the LLC is dissolved.  Typically, we guess, it is because the member no longer wants to or has paid state taxes for a LLC which is not doing business.  However, we don’t know why.  From the decision:

"Houraney first objects [*3] to the Magistrate Judge’s determination that he did not have standing to plead a cause of action alleging malpractice against NE Holding. Houraney argues that his right to self-representation is guaranteed; however, Houraney appears to misapprehend the finding of the R&R. Although it is true that Houraney, who is not admitted to practice law, could not represent NE Holdings on his own, see Lattanzio v. COMTA, 481 F.3d 137, 139-40 (2d Cir. 2007) (per curiam), the Magistrate Judge did not hold that Houraney had no right to representation. Instead, the Magistrate Judge held that Houraney had no standing to pursue a claim alleging wrongs to the corporation.

Limited Liability Companies (LLCs) are distinct legal entities. If the defendants committed malpractice against NE Holdings, that is a wrong committed against the LLC, not to Houraney himself. Thus, "[u]nder New York law, ‘an individual shareholder has no right to bring an action in his own name and in his own behalf for a wrong committed against the corporation, even though the particular wrong may have resulted in a deprecation or destruction of the value of his corporate stock.’" Solutia Inc. v. FMC Corp., 385 F. Supp. 2d 324, 331 (S.D.N.Y. 2005) [*4] (citing Fifty States Mgmt. Corp. v. Niagara Permanent Sav. & Loan Assoc., 58 A.D.2d 177, 179, 396 N.Y.S.2d 925, 927 (4th Dep’t 1977)). The rule is applied with equal force to Limited Liability Companies (LLCs), like NE Holdings. Solutia, 385 F. Supp. 2d at 331 n.1.

Houraney argues that he has standing because the company has dissolved, citing New York Limited Liability Company Law § 703(b). That provision reads: "[u]pon dissolution of a limited liability company, the persons winding up the limited liability company’s affairs may, in the name of and for and on behalf of the limited liability company, prosecute and defend suits, whether civil, criminal or administrative . . . ." However, Houraney is not prosecuting this action in the company’s name, but in his individual capacity. The Magistrate Judge was correct, therefore, in determining that Houraney does not have standing in his individual capacity to pursue a cause of action alleging malpractice against NE Holding.

Houraney next objects to the Magistrate Judge’s finding that plaintiff failed to allege facts to demonstrate how defendants’ alleged conduct caused the plaintiff harm. As the Magistrate Judge explained, to succeed on a [*5] legal malpractice claim under New York law, a plaintiff must "plead specific factual allegations establishing that but for counsel’s deficient representation, there would have been a more favorable outcome to the underlying matter." Dweck Law Firm LLP v. Mann, 283 A.D.2d 292, 293, 727 N.Y.S.2d 58 (1st Dep’t 2001).

The Magistrate Judge found that Houraney had failed to adequately plead causation. Houraney does not object to that determination, which is itself dispositive of Houraney’s claim. Instead, Houraney argues that the defendants breached various cannons of legal ethics. Alleging an ethical violation, however, does not relieve plaintiff of the requirement of proving causation. Schwartz v. Olshan Grundman Frome & Rosenzweig, 302 A.D.2d 193, 199, 753 N.Y.S.2d 482 (4th Dep’t 2003) ("The violation of a disciplinary rule does not, without more, generate a cause of action."); see also The William Kaufman Organization Ltd. V. Graham & James LLP, 269 A.D.2d 171, 173, 703 N.Y.S.2d 439 (1st Dep’t 2000); Kyle v. Heiberger & Associates, P.C., 25 Misc. 3d 1218A, 901 N.Y.S.2d 907 (N.Y. Sup. Ct. 2009) (explaining in claim for legal malpractice that "[w]here, as here, plaintiffs do not sufficiently allege the elements [*6] of the claim, dismissal is properly granted-even if there were allegations of ethical violations, and negligence"). Plaintiff cites to Lipton v. Boesky, 110 Mich. App. 589, 313 N.W.2d 163 (Mich. Ct. App. 1981); however, the Court applies New York, not Michigan law in this action."