Continuing our discussion of Decker v. Nagel Rice LLC, 09 Civ. 9878 from yesterday, we see the proposed plaintiff’s attorney, Mr. Lowy, being denied admission pro haec vice. One reason for the denial by judge Scheindlin was the Advocate-Witness Rule.  But that was  only one reason.

A second reason was the announcement that Mr. Lowy was to become a third-party defendant.  A strongly held belief in the world of litigation is that when an attorney sees something wrong, he/she looks for someone to blame. Third-party actions in legal malpractice are all about blame., sometimes after trying to fix a problem.

Here, Mr. Lowy will also be disqualified as plaintiff’s attorney should he become a third-party defendant.  This situation perennially arises when the eventual plaintiff’s attorney in a legal malpractice case earlier tries to fix the problem [contra to the attorney rule] tries to fix the underlying problem, but fails.  After this failure, plaintiff turns to legal malpractice with that attorney.  Problems ensue.

"Defendants oppose the foreign plaintiffs’ pro haec vice motion on the grounds that Lowy should be disqualified from representing plaintiffs. According to Defendants, Lowy (1) is a material fact witness; (2) will be named as a third-party defendant for contribution and/or indemnification; and (3) was sued by one of the plaintiffs in this action for legal malpractice in connection with the In re Ski Train Litigation and made sworn statements adverse to that plaintiff. For all three reasons, Lowy is disqualified.

First, Lowy is disqualified under the advocate-witness rule. The malpractice allegedly occurred when Defendants failed to move to certify the foreign plaintiffs as an opt-out class in either 2004, 2005, or 2006 or move this Court for relief from its judgment dismissing Siemens AG. As co-counsel to the foreign plaintiffs in 2005 and responsible for the foreign plaintiffs’ unsuccessful appeal, Lowy had direct, personal, involvement in the alleged acts of malpractice. Even counsel for the foreign plaintiffs recognizes that Lowy had at least some involvement arguing only that "he was not involved in the case at all at the time when most of the acts of malpractice occurred." 

In addition, the advocate-witness rule is intended to address four concerns. All are present here. Lowy declares that he will testify that Defendants engaged in malpractice while he and his co-counsel attempted to rectify those mistakes.  Given Lowy’s involvement with the underlying lawsuit and the prior malpractice action brought against him, this testimony may cause jurors and this Court to fear that he is distorting the truth as a result of bias in favor of plaintiffs or to protect his own interests. Defendants’ counsel will vigorously cross-examine Lowy regarding the actions he took or failed to take as the foreign plaintiffs’ counsel in the In re Ski Train Litigation. Defendants’ counsel will seek to impeach Lowy’s credibility with regard to whether it was Defendants or Lowy that caused the foreign plaintiffs’ alleged harm. Such cross-examination places opposing counsel in a difficult situation and will require Lowy to vouch for his own credibility. Lowy’s simultaneous representation of plaintiffs and his need to defend his own conduct will "’blur the line between argument and evidence [such] that the jury’s ability to find facts [will be] undermined.’"

Furthermore, Lowy’s testimony is both necessary and prejudicial.  Lowy did not merely play a passive role in the In Re Ski Train Litigation. Instead, Lowy was one of only three attorneys — one of which was disqualified in 2007 — that zealously represented the foreign plaintiffs during the precise time when the alleged malpractice was ongoing. Lowy will need to explain why he did not take steps to minimize plaintiffs’ alleged harm, such as by seeking certification of the foreign plaintiffs as an opt-out class in the wake of the Second Circuit opinion or pursuing a judgment on appeal with regard to the dismissal of the claims against Siemens AG. Any such testimony will necessarily be adverse to plaintiffs’ position and undermine their claim that Defendants’ malpractice caused their harm. Because his testimony is both necessary and prejudicial, I find that Lowy must be disqualified under the advocate-witness rule. 

Second, I find that Lowy’s presence as both an attorney and a third-party defendant presents a conflict of interest in violation of Rule 1.7 and Canons 5 and 9. Defendants intend to name Lowy as a third-party defendant for contribution and/or indemnification. 45 Defendants contend that Lowy should be disqualified from representing plaintiffs due to the conflict of interest presented by his position as both plaintiffs’ counsel and a third-party defendant. Plaintiffs attempt to rebut disqualification on this ground by asserting that whether Lowy will be named a third-party defendant is "mere speculation." 46 I disagree. Given Lowy’s prior involvement in this case during the time period in question and Defendants’ stated intention to name him as a third-party defendant, I find that it is a near certainty, and not merely speculative, that he will be named as a third-party defendant."
 

An Ski-Train fire killed 155 people in Kaprun, Austria and left twelve survivors. American and foreign survivors and relatives brought multiple lawsuits in federal court called "In re Ski Train Litigation").  That case went through some permutations, was certified as a class action, then partially de-certified and in the end, the foreign plaintiff cases were dismissed.  Why and how they were dismissed is now the subject of a legal malpractice case in Southern District of New York.

In a decision this week,Decker v. Nagel Rice LLC, 09 Civ. 9878 Judge Scheindlin denied the request of one attorney to be admitted pro haec vice as a plaintiff’s attorney on the Advocate-Witness Rule.  Judge Scheindlin writes:

"Attorneys appearing before this Court must abide by the New York State Rules of Professional Conduct (the "Rules"). 32 Rule 3.7(a) addresses the situation where an attorney may be a witness. Commonly referred to as the "advocate-witness" rule, Rule 3.7(a) states:

A lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact unless: (1) the testimony relates solely to an uncontested issue; (2) the testimony relates solely to the nature and value of legal services rendered in the matter; (3) disqualification of the lawyer would work substantial hardship on the client; (4) the testimony will relate solely to a matter of formality, and there is no reason to believe that substantial evidence will be offered in opposition to the testimony; or (5) the testimony is authorized by the tribunal.

The advocate-witness rule is based upon concerns that:

(1) the lawyer might appear to vouch for his own credibility; (2) the lawyer’s testimony might place opposing counsel in a difficult position when she has to cross-examine her lawyer-adversary and attempt to impeach his credibility; (3) some may fear that the testifying attorney is distorting the truth as a result of bias in favor of his client; and (4) when an individual assumes the role of advocate and witness both, the line between argument and evidence may be blurred, and the jury confused. 33

"In order to disqualify an attorney on the basis of the advocate-witness rule, a party must demonstrate that the testimony is both necessary and substantially likely to be prejudicial." 34 "Prejudice in this context means testimony that is ‘sufficiently adverse to the factual assertions or account of events offered on behalf of the client, such that the bar or the client might have an interest in the lawyer’s independence in discrediting that testimony.’"

When a tort is committed outside of New York and a non-resident sues within the State of New York, courts apply the borrowing statute, especially with regard to the statute of limitations.  As an example, Kat House Prods., LLC v Paul, Hastings, Janofsky & Walker, LLP ; 2010 NY Slip Op 02489 ; Decided on March 25, 2010 ; Appellate Division, First Department  reminds us that although the NY statute of limitations is 3 years, the California statute of limitations for legal malpractice is only 1 year.  In this case, the Court applied the California time limits.
 

"When a nonresident sues in New York’s courts on a cause of action accruing outside the state, our "borrowing statute" (CPLR 202) requires that the cause of action be timely under the limitation periods of both New York and the jurisdiction where the claim arose (see Global Fin. Corp. v Triarc Corp., 93 NY2d 525, 528 [1999]). Generally, a tort action accrues "at the time and in the place of the injury," and "[w]hen an alleged injury is purely economic, the place of injury usually is where the plaintiff resides and sustains the economic impact of the loss" (id. at 529).

Applying these principles, it is clear that plaintiffs’ legal malpractice claim accrued in California, where their residences and principal place of business were located and the alleged economic injury was sustained, at the latest, in March 2006. Under that state’s applicable one-year statute of limitations (Cal Civ Proc Code § 340.6), this action, commenced in November 2007, was time-barred. "

We often present cases here from the plaintiff’s point of view.  Here is a case by attorney v. insurance broker over the purchase of "nose" insurance [the opposite of tail insurance.  The attorney wanted to procure "a policy, covering all acts of malpractice prior to the effective date of the policy, irrespective of the date such acts occurred, and irrespective of the date the claim stemming from such acts of malpractice is first interposed."  She did not receive such coverage, although the policy was renewed three times.  Attorney sues broker, and broker moves to dismiss,

Justice Goodman, writing in Steier v. Todd Pallack Insurance runs up against an interesting situation.  Plaintiffs apparently put up an argument which is absolutely not supported by the complaint. "Citing to its complaint, plaintiffs maintain that the action is based on an insurance brokers’ failure to obtain coverage specifically requested by the insured, although as defendants note, the complaint supports no such argument." 

The Court permits plaintiff to ‘amplify" and then asks for more briefs on whether this departure is tort or contract, and if so, whether subject to a continuing duty analysis.  More soon…

Plagiarism is the act of appropriating the intellectual property of others and passing the material off as one’s own creation [Webster, 2009] is a subject we thought was left behind in school.  Really, all one needs to do is use a pair of quotation marks and a few words which say that we were clever enough to find someone else’s better composition.  Here, in a NYLJ article we see a multi-million dollar plagiarism-legal malpractice law suit against the IP firm Ropes & Grey.  Here, with proper attribution is the story by Nate Raymond:

"Vladimir Drozdoff had just started working at Cold Spring Harbor Laboratory when he was asked to investigate why a patent had been denied for what the lab considered a genetics breakthrough.

Cold Spring, the former home of DNA researcher James Watson, is well known for genetics research. But the U.S. Patent and Trademark Office in 2007 denied one of its top scientists, Gregory Hannon, a patent for technology that would allow researchers to selectively turn off genes.

Mr. Drozdoff’s probe led him to conclude that Matthew Vincent, a partner at Cold Springs’ outside counsel Ropes & Gray, had plagiarized a patent by a rival researcher. Mr. Drozdoff, a former senior IP associate at Kaye Scholer, discovered that 11 pages of text in Mr. Hannon’s patent application had been lifted without citation directly from one by Andrew Fire, a Nobel Prize winner in medicine. Many of Mr. Hannon’s other patent applications contained similar copied passages.

In February, Cold Spring sued Ropes & Gray in the U.S. District Court for the Eastern District, accusing the firm and Mr. Vincent of malpractice. Cold Spring, represented by Chad Ziegler at Scully Scott Murphy & Presser in Garden City, claims it has lost millions of dollars in potential licensing and royalty revenue, and seeks $37.5 million to $82.5 million, plus punitive damages.

Ropes & Gray, in a motion to dismiss filed Tuesday, contends the alleged copying was not the cause of the rejection of the applications. "Cold Spring Harbor Laboratory’s lawsuit lacks merit because the determination of the [Patent and Trademark Office] to reject the patent applications is based on the existence of prior work of other respected scientists and not on our firm’s efforts," the firm said in a statement."

The decision in International Electron Devices (usa) LLC v Menter, Rudin & Trivelpiece, P.C.
2010 NY Slip Op 02343 ; Decided on March 19, 2010 ;Appellate Division, Fourth Department is not groundbreaking, but it is illustrious of what sometimes appears to be unwarranted deference to target attorneys on the question of the statute of limitations.  Defendant attorneys represented plaintiffs in the purchase and closing of business assets and commercial property.  Some two years later, plaintiffs became enmeshed in an Environmental Protection Agency (EPA) investigation about contamination on the property requiring abatement at an estimated cost of $8 million.
 

Plaintiffs sued defendants more than three years after the closing.  Does this fact alone warrant dismissal based upon the statute of limitations?  Supreme Court granted dismissal, but the 4th Department reversed:

"We agree with plaintiffs that Supreme Court erred in granting defendant’s motion for summary judgment dismissing the amended complaint on the ground that it was time-barred. As plaintiffs correctly concede, the three-year statute of limitations applicable to a legal malpractice cause of action accrued on October 26, 2004, the date of the closing and thus when the malpractice was committed, and it expired on October 26, 2007 (see CPLR 214 [6]; Shumsky v Eisenstein, 96 NY2d 164, 166; see also Williamson v PricewaterhouseCoopers LLP, 9 NY3d 1, 7). Defendant thus met its initial burden of establishing that this action, commenced in October 2008, was time-barred (see Gravel v Cicola, 297 AD2d 620, 620-621). The burden then shifted to plaintiffs to raise a triable issue of fact whether the statute of limitations was tolled by the continuous representation doctrine (see id. at 621). "For the continuous representation doctrine to apply to an action sounding in legal malpractice . . ., there must be clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the attorney[,] which often includes an attempt by the attorney to rectify an alleged act of malpractice" (Luk Lamellen U. Kupplungbau [*2]GmbH v Lerner, 166 AD2d 505, 506-507; see Aaron v Roemer, Wallens & Mineaux, 272 AD2d 752, 754, lv dismissed 96 NY2d 730). That doctrine "tolls the [s]tatute of [l]imitations only where the continuing representation pertains specifically to the matter in which the attorney committed the alleged malpractice" (Shumsky, 96 NY2d at 168; see Amendola v Kendzia, 17 AD3d 1105, 1108-1109). Thus "if there is merely a continuing general relationship with [an attorney] . . . involving only routine contact for miscellaneous legal representation . . . unrelated to the matter upon which the allegations of malpractice are predicated’ . . ., the toll will not be found" (Chicago Tit. Ins. Co. v Mazula, 47 AD3d 999, 1000, quoting Shumsky, 96 NY2d at 168).

In opposition to the motion, plaintiffs established that defendant represented them in the late summer and fall of 2006 in connection with the EPA investigation. We agree with plaintiffs that there is a triable issue of fact whether that representation was related to defendant’s alleged malpractice in failing to conduct a thorough environmental investigation of the property prior to the closing (see generally Shumsky, 96 NY2d at 168). Plaintiffs also raised a triable issue of fact whether that representation constituted an attempt to rectify the alleged malpractice (see Gravel, 297 AD2d at 621). "

Humans have fingers, and are willing to point with them.  Looking back over events and apportioning blame is not particularly limited to legal malpractice questions, but seems to be very prevalent there.  Here, in Sklover & Donath, LLC v Eber-Schmid ; 2010 NY Slip Op 02002
Decided on March 16, 2010 ; Appellate Division, First Department  the justices borrow from an unidentified law review article to state that hindsight is "an unreliable test for determining the past existence of legal malpractice" (Darby & Darby v VSI Intl., 95 NY2d 308, 315 [2000] [law review source omitted]).
 

Attorneys represented clients in a federal criminal proceeding as well as a related civil proceeding.  Relations broke down over legal fees, and eventually the attorneys moved to be relieved.  A fee action with a legal malpractice counterclaim followed.  The counterclaim fails for several different reasons.

"Defendants failed to allege a viable counterclaim for breach of contract, as they were unable to identify the terms of the agreement allegedly breached (767 Third Ave. LLC v Greble & Finger, LLP, 8 AD3d 75 [2004]). Nothing in the modified agreement prohibited plaintiff from requesting a lien on real property, withdrawing as counsel, or commencing an action based on unpaid legal fees.

Nor did defendants properly allege a counterclaim for legal malpractice. The steps plaintiff took in litigating these cases were among many reasonable options (see Rosner v Paley, 65 NY2d 736, 738 [1985]). The allegations that plaintiff’s decisions were unreasonable are based on hindsight, As to breach of fiduciary duty, defendants’ contention that plaintiff prolonged the litigation for purposes of "churning" the case to increase the legal fees is speculative and conclusory. Defendants failed to otherwise allege any facts showing that their attorney followed any inappropriate course of action. "

Client from outside New York is sued in Federal Court in New York.  Client hires a NY attorney, and then the case shifts focus to a London Arbitration.  When does the billing in NY end, when does the London case take over, and what happens when there is a billing dispute later?  Justice Edmead’s decision in Eaton & Van Winkle LLP v. Midway Oil Holdings Ltd. sets forth a well written explanation of jurisdiction and account stated.

How much must take place in NY for the out of state defendant to be jurisdictionally available in NY?  The short answer is:  enough to satisfy due process.  The longer answer is:  The burden of proving jurisdiction is on the party asserting it.  Long arm jurisdiction is found at CPLR 302(a)(1), and allows for jurisdiction over any non-domiciliary who "transacts any business" within the State, provided that the cause of action arises out of that transaction of business.  A single act will suffice, so long as there is a substantial relationship between that transaction and the injury. The test is the totality of circumstances when determining the existence of purposeful activity. Such acts may include contract negotiations between the parties, meetings, letters or phone calls.  For a fuller description see the decision at pp. 10-13.

The decision also sets forth a full description of the account stated principal.  Where an agreement between the parties holds that when the bill is presented, the recipient is bound to examine it, and if the accounting is admitted as correct, it becomes binding upon both parties.  Receipt and retention of a law firm bill , without objection within a reasonable time, gives rise to an actionable account stated, thereby entitling a firm to summary judgment.

How long is too long? "A lapse of two months is not so long as to constitute such an assent, nor a lapse of three months.  However, four months…"  For a longer explanation, see p. 31-34 of the decision.