We are proud to report that Andrew Lavoott Bluestone has been admitted as a Diplomate to the American Board of Professional Liability Attorneys.  Andrew Lavoott Bluestone is the author and publisher of the New York Attorney Malpractice Blog

The American Board of Professional Liability Attorneys (ABPLA) is the only organization accredited by the American Bar Association (ABA) to certify attorneys in the areas of medical malpractice and legal malpractice. Legal & medical malpractice lawyers who are Board Certified must meet and exceed rigorous standards set by the ABPLA, and are recognized as leaders in professional negligence law.

LEGAL PROFESSIONAL LIABILITY REQUIREMENTS

To become Board Certified in the area of Legal Professional Liability, the following requirements must also be met:

Demonstrate substantial involvement in Legal Professional Liability by showing you:

• Have served as LEAD counsel during your legal career in at least 10 trials or arbitrations where testimonial evidence was presented and the matters were submitted to the finder of fact; and of the aforesaid 10 trials, 2 must involve claims of Legal Professional Liability and 1 must be a jury trial.
• Participated in 20 additional contested matters (trials, hearings, depositions) involving claims of Legal Professional Liability.
• Within the 3 years prior to application, have done any one of the following:
  • 1. Participated in 10 matters involving claims of Legal Professional Liability that went to trial or alternate dispute resolution;
  • 2. Concluded 24 litigated matters involving claims of Legal Professional Liability as lead counsel or in a supervisory capacity to lead counsel;
  • 3. Had 24 performances (depositions, hearings) involving claims of Legal Professional Liability; or
  • 4. Any combination of trial days, participation in litigated matters or performances which demonstrates substantial involvement in Legal Professional Liabiity

Andrew Lavoott Bluestone can be reached:  233 Broadway, Suite 2702, New York, NY 10279  His telephone number is (212) 791-5600.

It’s a complex question, but in troubled financial times, legal malpractice law suits become more visible and valuable.  Receivers, Trustees in Bankruptcy, and other fiduciary appointees all eye and measure pockets in an ongoing attempt to broaden and increase the fisc.

in COBALT MULTIFAMILY INVESTORS I, LLC, , -against- MARK A. SHAPIRO, UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 111399; November 30, 2009, Decided  we see Justice Wood’s analysis of the relationship:
 

"The court-appointed receiver (the "Receiver") for Plaintiffs Cobalt Multifamily Investors I, LLC, and its related, defunct entities (collectively, "Cobalt"), filed suit against numerous Defendants, including three sets of attorneys and their law firms ("Law Firm Defendants") who provided professional services to Cobalt. Law Firm Defendants moved to dismiss the claims against them on the ground that the Receiver lacks standing. On March 28, 2008, the Court granted the motion to dismiss the Receiver’s claims against Law Firm Defendants.

In light of a subsequent decision issued by the Court of Appeals for the Second Circuit, Bankruptcy Services, Inc. v. Ernst & Young ("CBI Holding Co."), 529 F.3d 432 (2d Cir. 2008), the Receiver moved for reconsideration of the motion to dismiss. On July 15, 2009, the Court granted the motion for reconsideration on the ground that failure to do so would result in clear error. On reconsideration, the Court granted in part and denied in part Defendants’ motion to dismiss. Relevant to the instant motion, the Court denied Law Firm Defendants’ motion to dismiss [*3] Plaintiffs’ legal malpractice and corporate looting claims."
 

"A receiver or trustee representing a bankrupt corporation generally does not have standing to assert claims against third parties for defrauding the corporation where the third parties assisted corporate managers in committing the alleged fraud. See In re Bennett Funding Group, Inc., 336 F.3d 94, 99-100 (2d Cir. 2003). This legal principle is based on the Wagoner rule, which states that a bankruptcy trustee has standing to assert only those claims that the bankrupt corporation itself could have brought. See Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 120 (2d Cir. 1991)."

"The adverse interest exception is an exception to the Wagoner rule that [*7] is applicable when the corporate managers "totally abandoned [the corporation’s] interests and [acted] entirely for his own or another’s purposes." Center v. Hampton Affiliates, Inc., 66 N.Y. 2d 782, 784-85, 488 N.E.2d 828, 497 N.Y.S.2d 898 (1985). Determination of the exception’s applicability requires a court to engage in a fact-specific inquiry. Such an inquiry may include consideration of (1) the manager’s intent with respect to abandoning the corporation’s interests, (2) the nature and extent of the benefit (if any) obtained by the manager as a result of the fraudulent conduct, (3) the nature and extent of the benefit (if any) received by the corporation itself as a result of the fraudulent conduct, (4) the various financial losses caused by the fraudulent conduct, and (5) other dynamics and details of the fraud relevant to analysis the party’s standing to sue. See In re CBI Holding Co., Inc., 529 F.3d at 451-53."

"If a court finds that the adverse interest exception applies, the receiver or trustee representing the bankrupt corporation has standing to assert claims against a third party that assisted the corporate agent in the fraudulent conduct. In re Bennett Funding Group, 336 F.3d at 100 (citing Wight v. BankAmerica Corp., 219 F.3d 79, 87 (2d Cir. 2000)."

"Even if the Court were to consider [*21] this argument’s merit, there is no clear error warranting reconsideration of the July 2009 Order. The decisions cited by Certilman Defendants stand for the proposition that outside attorneys, like Law Firm Defendants, represent the corporate entity. See, e.g., Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y. 3d 553, 562, 910 N.E.2d 976, 883 N.Y.S.2d 147 (2009) ("a corporation’s attorney represents the corporate entity"). Here, the Receiver stands in the shoes of Cobalt, the corporate entity, and thus has standing to assert claims that would belong to Cobalt, such as claims for legal malpractice. See Wagoner, 944 F.2d at 120. The issue of Law Firm Defendants’ fiduciary duty to shareholders is no barrier to the Receiver’s standing at this stage of the litigation."
 

"

The rules concerning fee-sharing, and the precision of detail which must be given to a client. have changed.    Now, one must be precise in the percentages between attorneys, lest a violation of the rule lead to the Court denying attorney fees at a later stage of the proceedings.

In Lapidus & Associates LLP v. Elizabeth Street Inc., 601955/05;Decided: November 4, 2009;Decided on November 4, 2009 ;Supreme Court, New York County ;Goodman, J.  we see he difference between the old rule and the new:

"Defendants also contend that the account stated has been impeached because Lapidus engaged in an unethical and undisclosed fee-sharing agreement with Fass that violates DR 2-107 (A). DR 2-107(A) provides:

"(A) A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of the lawyer’s law firm, unless:

(1) The client consents to employment of the other lawyer after a full disclosure that a division of fees will be made. [*6]

(2) The division is in proportion to the services performed by each lawyer or, by a writing given the client, each lawyer assumes joint responsibility for the representation.[FN6]

(3) The total fee of the lawyers does not exceed reasonable compensation for all legal services they rendered the client."

Defendants argue that in the Dencorp Matter, the facts suggest that Fass was being paid less than he was being billed to defendants. This conclusion is based on Fass’s deposition testimony that he was paid $273.00 per hour from plaintiff. The submitted invoices demonstrate, and it is undisputed, that plaintiff billed Reiver $390.00 per hour for Fass’s work, including for his communications with Lapidus. "

"With the adoption of the Rules of Professional Conduct (the Rules) in April of this year, New York is now among the states that wisely require that the percentage fee split be disclosed to [*7]a client (see section 1.5 [g] [2] of the Rules). However, representation in this action occurred in 2003-2005, when the Code, and specifically DR 2-107, did not so state, and was not interpreted as requiring such detailed disclosure.[FN8] In instances, such as here, where all of the involved attorneys worked on the case, the court has uncovered no New York authority or expert commentary suggesting that attorneys are required to provide the level of disclosure for which defendants advocate. In fact, according to an expert commentator, DR 2-107 was intended to address referral situations, prevent unreasonable fees to a client and to ensure that the client was made aware of the identities of attorneys working on his or her case and there has never been a controversy as to fee sharing where a lawyer works on a case (Simon, New York Code of Professional Responsibility Annotated, at 402-405 [2007 ed]; see also Lapidus & Associates, LLP v Reiver, 2008 WL 909670, 2008 NY Misc LEXIS 2577 [Sup Ct, NY County 2008] [discussing DR 2-107 extensively]).

The retainer letter submitted by defendants indicates that more than one firm would be working on the case, and identifies the attorneys that would be working on the matter. As payments were to be made only to the plaintiff law firm, and defendants do not contend that it was their understanding that any of the involved attorneys or firms would not receive payment, the only reasonable inference to be drawn is that the attorneys or firms working on the case would be sharing in the fees paid by plaintiff. While defendants may have benefitted from knowing the percentage split, DR 2-107 has not been interpreted to require this level of disclosure.

Concerning the proportionality requirement of DR 2-107, in fee-splitting disputes between attorneys, the Court of Appeals has stated that "courts will not inquire into the precise worth of the services performed by the" attorneys (see Benjamin v Koeppel, 85 NY2d 549, 556 [1995]). Defendants argue that courts should employ greater scrutiny when, as here, the dispute is between an attorney and a client. But defendants also effectively suggest that each attorney should be paid just what was billed to the client for his or her work, but, as discussed extensively in the Dencorp Matter, fee-sharing arrangements where one attorney receives a larger cut than others are not prohibited under the Code.

Finally, "fee forfeitures are disfavored" (Benjamin, 85 NY2d at 553), and "the courts are especially skeptical of efforts by clients or customers to use public policy as a sword for personal gain rather than a shield for the public good” (id. [citation and internal quotation marks omitted]). While a more expansive interpretation of the DR 2-107 would perhaps permit defendants to avoid paying their legal fees, defendants do not make persuasive arguments as to why the interpretation they seek is justified. Consequently, while the court is pleased that the Code has been changed in a way that may benefit some clients, defendants present no basis for a finding [*8]that plaintiff’s fee sharing agreement violates DR 2-107. "

Judiciary Law 487 may be the oldest statute in the English-American Law world.  It dates from 1275, just years after the Magna Carta,  Once in a while we see a reference to Marbury v. Madison, 5 US (1 Cranch) 137 (1803) and think that perhaps this a law student or a new lawyer flexing some muscle.

1275 is a whole other ballgame, however.  There are some misconceptions about the statute which may have been cured by the Court of Appeals decision in Amalfitano v. Rosenberg, 12 NY3d 8 (2009).  One, taken up here, is whether the deceit or attempt to deceive has to be to a judge, or may it be to litigants, or even non-litigants.  In Mokay v Mokay ;2009 NY Slip Op 08528
Decided on November 19, 2009 ;Appellate Division, Third Department  we see that even a non-party may be the subject of an attempt to deceive, and this behavior will be sufficient for a violation of Judiciary Law 487.
 

"Next, we turn to Neroni’s argument that his conduct was "covered by advisor’s immunity" and therefore not actionable. It is the general rule that "attorneys, in the exercise of their proper functions as such, shall not be civilly liable for their acts when performed in good faith and for the honest purpose of protecting the interests of their clients" (Gifford v Harley, 62 AD2d 5, 7 [1978] [internal quotation marks and citation omitted]). However, "[a]n attorney may [*3]be liable to third parties for wrongful acts if guilty of fraud or collusion or of a malicious or tortious act" (Kahn v Crames, 92 AD2d 634, 635 [1983]; see Mills v Dulin, 192 AD2d 1001, 1003 [1993]; Koncelik v Abady, 179 AD2d 942, 944 [1992]). Moreover, Judiciary Law § 487 sets forth a civil cause of action that may be established by, among other things, an attorney’s intent to deceive (see Amalfitano v Rosenberg, 12 NY3d 8, 14 [2009]; Scarborough v Napoli, Kaiser & Bern, LLP, 63 AD3d 1531, 1533 [2009]; Singer v Whitman & Ransom, 83 AD2d 862, 863 [1981]).

Here, Neroni’s actions were directed at a judgment of Supreme Court of which he was fully aware and had, in fact, participated in constructing the terms thereof. He was present and representing decedent at the time the terms of the pertinent stipulation were placed on the record and he was involved in the stipulation being incorporated into the judgment of divorce. The stipulation was neither ambiguous nor unenforceable. It clearly provided that decedent would keep the two parcels during his life, but that such parcels would ultimately pass to his five children [FN1]. Plaintiffs presented proof, including a detailed affidavit from Mokay, establishing that, despite his obvious knowledge of the stipulation, Neroni suggested to decedent shortly after the divorce various schemes to attempt to circumvent the transfer and, when decedent elected one of those schemes, Neroni prepared the documents he had advised would successfully accomplish the nefarious goal. The documents were executed and Neroni had them recorded in a fashion aimed at avoiding publication of the transactions. This proof was sufficient to meet plaintiffs’ threshold burden and Neroni failed to contest these basic underlying facts. Accordingly, Supreme Court properly granted plaintiffs’ motion for partial summary judgment. "

Plaintiff sells meat, made loans to a restaurant and its owner.  It was partially repaid, over many years by the restaurant, which added a payment to the meat bills.  All things end, and the owner of the meat company died; then the restaurant went under.  Meat company went to the attorneys and asked them to start a suit.  We see the outcome in Empire Purveyors, Inc. v. Brief Justice Carmen & Kleiman LLP, ; Supreme Court, New York County, NY Slip Op 2009  32752.

This case alleges that one of the attorneys lied to the client for years, and claimed that an action had been commenced, when none had actually been started.  "Plaintiffs contend that Cook misled them about work done on the matter by falsely representing that a lawsuit was commenced against Weinberg, a judgment obtained and that collection efforts were underway.  In a companion law suit [with the same parties] plaintiffs allege that the attorney converted funds returned from their landlord, and violated Judiciary Law 487.

To what extent can plaintiff’s subsequent attorney be disqualified, and to what extent may plaintiff’s communications with subsequent counsel be discovered?  In this case, to no extent. 

Defendants seek discovery on what the attorney tried to do to fix the problems of missing documents, to ameliorate the consequences of defendant’s alleged misconduct, the failure to obtain written acknowledgment of the restaurant’s indebtedness and the litigation strategy.

Justice Solomon of Supreme Court, New York County  determined that the party seeking disqualification "bears the burden of showing the taint or unfairness arising from the lawyer’s testimony in this Case, that the attorney is likely to be called as a witness and that the testimony is necessary."

More to the point, the testimony about communications must be relevant to this lawsuit (it must be "at issue"), under Jakobleff v. Cerrato, Sweeney and Cohn, 97 Ad2d 834 (3d Dept, 1983),  Here, Justice Solomon determined that it was not ‘at issue."

Plaintiff retains attorney to handle promissory note case, and a default judgment is obtained.  Defendant owns real property, yet no lis pendens is filed.  Is this legal malpractice?  In Ali v Fink
2009 NY Slip Op 08766 ;Decided on November 24, 2009 ; Appellate Division, Second Department  we see the following:
"Several months later, the defendant commenced a second action on the plaintiff’s behalf, seeking to set aside a transfer of real property which the debtor had allegedly made to impede the plaintiff’s ability to recover under the promissory notes (hereinafter the fraudulent conveyance action). Although the defendant obtained a default judgment against the debtor and the transferee in the fraudulent conveyance action, while that action was pending, title to the property was transferred twice more. The plaintiff subsequently commenced this legal malpractice action against the defendant, alleging, inter alia, that he had negligently failed to file a notice of pendency upon commencement of the fraudulent conveyance action, and that his failure to do so had allowed title to the subject property to be transferred to bona fide purchasers, thus effectively putting the property out of reach as a means of enforcing her judgment in the collection action."

"Contrary to the defendant’s contention, the Supreme Court properly concluded that he failed to sustain his prima facie burden of demonstrating that the plaintiff would be unable to prove one of the essential elements of her malpractice cause of action. Although the defendant contends that the plaintiff cannot establish the element of causation because she could not have prevailed on the merits in the underlying collection and fraudulent conveyance actions, neither of the default judgments have been set aside. Under these circumstances, the Supreme Court correctly determined that the plaintiff need not prove that she would have prevailed on the merits in those actions in order to establish the element of causation. "

When do divorce, crime and legal malpractice intertwine?  In this case, at the intersection of divorce and fighting ex’s  In short, plaintiff had a child with GF, and they were separating, and at the same time arguing over custody and support.  GF charges plaintiff with child abuse, and a series of investigations start.  Attorney represents plaintiff and helps settle the custody/support issues, and gets a [shaky?] written agreement that GF will not testify against plaintiff.  What happens then?  We see the story in Boykin v. Campbell, NY Slip Op 32721(U). Supreme Court, Nassau, Judge Adams.

For his part, plaintiff gives GF half of a Florida house as tenants in common.  As you might guess, the deal unravels, probably after the criminal and abuse charges were dismissed.  What does one do after the deal works to plaintiff’s benefit, where plaintiff successfully ends the criminal and abuse problems and is prepared to walk away from the litigation?  One sues the attorney.

Eventually this legal malpractice action is dismissed on the grounds that there is no showing [in summary judgment] that the attorney departed from good and accepted practice.  Of interest is the court;s last paragraph in which it opines that the stipulation of settlement of the custody/support case itself is valid…although we do not understand the relevance to the legal malpractice case.

The decision doesn’t tell us in what capacity the attorneys represented the client, but they are now in suit over legal fees, with a legal malpractice counterclaim.  As we read this case, we wondered whether the time and effort was worth it.  Will there ever be a collection of fees?

in Bender, Jenson & Silverstein, LLP v Walter ;  2009 NY Slip Op 08572 ;Decided on November 17, 2009 ;Appellate Division, Second Department  the attorney is seeking fees.  Defendant-counterclaimant asked the court to "assign counsel", a sure sign that the client has few funds. The Court declined, and the Appellate Division determined that "on the Court’s own motion, the appeal from the first order dated June 6, 2008, is dismissed, on the ground that no appeal lies as of right from an order that does not affect a substantial right of the appealing party (see CPLR 5701[a][2][v]), and we decline to grant leave to appeal."  Next, the court looked at plaintiff’s claim that she could not afford photocopies.
 

The balance of the decision covers a frequent situation in pro-se representation; getting tangled up in discovery problems.  "The plaintiff sought to recover its fee for legal services provided to the defendant, who asserted counterclaims sounding in legal malpractice. In response to the plaintiff’s requests for the production of documents, the defendant claimed to be without financial resources to photocopy the requested documents and refused to produce them, in spite of the plaintiff’s offer to bear the cost of photocopying. [*2]

Since the defendant failed to establish that she made any effort to comply with the plaintiff’s repeated discovery requests, the Supreme Court properly considered her lack of cooperation to be willful and contumacious, and properly conditionally granted the plaintiff’s motion to preclude her from introducing the requested documents in evidence (see Kihl v Pfeffer, 94 NY2d 118; D’Aloisi v City of New York, 7 AD3d 750; Brooks v City of New York, 6 AD3d 565; Donovan v City of New York, 239 AD2d 461; cf. Scardino v Town of Babylon, 248 AD2d 371).

In light of the defendant’s noncompliance with discovery, the Supreme Court properly denied her motion to quash certain subpoenas which had been served on nonparty witnesses