A common law retaining lien entitles the outgoing attorney to retain all papers, securities, or money belonging to the client that came into the attorney’s possession in the course of representation, as security for payment of attorney’s fees. Arising from Judiciary Law 475, it is enforceable only by retention of the items themselves and is lost if the file or documents are no longer in the attorney’s possession.

A charging line similarly arises and attaches to any recovery and thus secures the attorney’s right to compensation. A hearing will be held to determine fees, based upon Quantum meruit

Quantum meruit</em></strong> is the fair and reasonable value of the services rendered, which may be more or less than the amount provided in the contract or retainer agreement and is determined by "taking into consideration the character of the services, the nature and importance of the litigation, the degree of responsibility imposed or incurred, the amount or value involved, the length of time spent, the ability skill and experience required and exercised, the character, qualifications and standing of the attorney and the results achieved. The recovery is not limited to the amount billed, the original terms of the retainer agreement, and may be less or more than the amount which might have been recovered under a contingency fee or other measuring tools of fees.
 

 

One answer to this question is found in Carl v, Cohen,  NY Slip Op 31747(u), a decision by Justice Edmead.  Here defendants Joel Cohen and Greenberg Traurig, LLP reached a "so ordered" stipulation concerning depositions of subsequent attorneys, against whom, presumably, defendants would either like to bring a third-party action, or to say that these subsequent attorneys could have saved the day, and who had a "last clear-chance."  Depending on that stipulation, which concerned depositions of the subsequent attorneys, defendants Cohen and Greenberg Traurig asked Justice Edmead to hold off on other depositions.  Defendants argued that a motion on whether the attorney-client privilege would be invaded be held off in view of the stipulation.

The Court acknowledged that there was indeed a stipulation, but determined that it could decide the motion, and that because plaintiff was willing to authenticate documents, that no deposition of the subsequent attorneys was necessary.  Accordingly, defendant’s attorneys will not get to ask the subsequent successor attorneys any questions.

In Fielding v Kupferman ;2009 NY Slip Op 06151 ;Decided on August 11, 2009 ;Appellate Division, First Department  we see a reversal of a dismissal in Supreme Court.  The facts are uncomplicated.  Wife sues for divorce and husband hires target attorney.  A settlement is reached, and the couples funds are accurately set forth in the settlement agreement.  H’s funds are mostly in a "Profit Sharing Keogh Account" which is characterized as "immediately available,"  The funds were not, and plaintiff suffered a significant tax burden in withdrawing the funds to satisfy the settlement of the divorce.

Defendant moved to dismiss, and Supreme Court granted the motion.  In reversing, the AD wrote:

"Here, not only are the allegations of the giving of incorrect advice sufficient and nonconclusory, as noted above, the documentary evidence provides significant support for plaintiff’s claim. It clearly establishes that the overwhelming majority of plaintiff’s funds, including the amount necessary to satisfy the obligation to his wife, were not, as characterized by the stipulation, "immediately available." Plaintiff alleges that he did not know that under the applicable tax laws the necessary funds were not "immediately available" — we must accept that allegation as true (see Leon v Martinez, 84 NY2d 83, 87 [1994]) —- and that a reasonably competent matrimonial attorney who read the stipulation would not have advised him to sign it. Given these allegations, the stipulation may constitute evidence of defendants’ negligence and does not constitute a defense to the malpractice claim (see Mandel, Resnik & Kaiser, P.C. v E.I. Elecs., Inc., 41 AD3d 386 [2007]; IMO Industries Inc. v Anderson Kill & Olick, 267 AD2d 10 [1999]). "

"Defendants’ documentary evidence not only fails to refute plaintiff’s allegations [*3]conclusively, it supports plaintiff’s claim of malpractice in a key respect. The stipulation identifies four accounts in plaintiff’s name representing his financial assets and states that $894,530 of the total ($1,258,854) is in a "Profit Sharing Keogh Account," a retirement account that has specific rules regarding the withdrawal of funds and requires that significant taxes be paid upon preretirement withdrawal. Thus, the stipulation makes clear that the sum of money that plaintiff needed to comply with its requirements was not "immediately available," yet defendants advised plaintiff to sign it. Given that the ground for plaintiff’s claim of malpractice is apparent from the face of the stipulation, the allegations contained in the complaint are not conclusory and plaintiff properly has pleaded a cause of action for legal malpractice. "

 

From Gina Passarella at  the Legal Intelligencer today:  Blank Rome settles a huge legal malpractice law suit brought by a bankrutpcy trustee.

"Blank Rome has entered into a $20 million agreement with the trustee of a former client that is now in bankruptcy to settle a complaint that alleged breach of fiduciary duty, professional malpractice and breach of contract claims against the firm.

The settlement, reached in the Philadelphia Common Pleas Court case Miller v. Blank Rome, was approved by U.S. Bankruptcy Judge Mary F. Walrath for the District of Delaware on July 28.

Walrath is overseeing the bankruptcy of American Business Financial Services, which is involved in a string of litigation in both state and federal court stemming from its bankruptcy and business dealings.

Blank Rome does not admit any liability or wrongdoing in agreeing to the settlement, according to the agreement.

"Blank Rome has expressly denied and continues to deny all allegations of any wrongdoing or liability against it whatsoever arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged by the Trustee," the settlement agreement reads.

"Nonetheless, Blank Rome has concluded that further conduct of the Blank Rome Litigation would be protracted, expensive and distracting and that it is desirable that the Blank Rome Litigation be settled. Blank Rome has also taken into account the uncertainty and risks inherent in any litigation, especially in complex cases such as the Blank Rome Litigation."

Blank Rome represented ABFS in a variety of legal matters prior to the company’s January 2005 Chapter 11 bankruptcy filing and acted as debtors’ counsel in the Chapter 11 proceeding. The bankruptcy was converted to a Chapter 7 in May 2005 and George L. Miller was named trustee of the ABFS estate, according to the agreement.

Miller filed suit — Miller v. Santilli — in Philadelphia Common Pleas Court against former officers and directors of ABFS in July 2006 as well as a number of financial institutions. Those financial institutions joined accounting firm BDO Seidman. [Read more in The Legal this week about BDO Seidman’s defeat of a class action motion in the related federal court case.] "

 

What are the elements of Professional Malpractice?

Malpractice is a professional’s failure to use minimally adequate levels of care, skill or diligence in the performance of the professional’s duties, causing harm to another. In New York, attorney malpractice is defined as a "deviation from good and accepted legal practice, where the client has been proximately damaged by that deviation, but for which, there would have been a different, better or more positive outcome."

The first element of a relationship between the client and the professional was previously discussed. The second element, deviation, is shown by evidence, not necessarily expert, which shows that the acts of the professional fell so below the good and accepted practice of law in New York, that a jury would be permitted to find that the acts below standard.

Expert testimony is necessary when the deviation is subtle; an example could be the failure to supply an affidavit of merits to restore a case marked off calendar, the failure to respond to a CPLR 3216 notice, or failures in response to a motion for summary judgment. Expert testimony is not always necessary however. None is needed to demonstrate the deviation in failing to file within the statute of limitations. Bad outcome do not necessarily equal a deviation. Furthermore, questions of judgment of strategic choice cannot serve as the basis of malpractice. An attorney is permitted the reasonable choice of strategy, if supported by acceptable reasoning. The strategic choice must be reasonable both objectively and subjectively. The difference between strategic choice and mistake are subtle, and create the most difficult cases.

The third element of proximate cause encompasses both the typical analysis that arises in all negligence litigation and the additional element of "but for." The plaintiff must demonstrate not only that the deviation was a substantial cause of the poor outcome, but must additionally show that "but for" the deviation there would have been a different, better or more positive outcome. An example of this potential difficulty arises in an automobile accident. No matter how many deviations are shown, it may be that the maximum insurance for the other driver limits the recovery. If that is true, it will be impossible to show that "but for" the deviation, more than the policy limit was available and could have been recovered from the defendant.
 

This article is about medical malpractice, but it applies to legal malpractice. Examples?  When is a tax legal malpratice case complete?  is it on the day of the mistake, on the day of the filing, on the last date which a return may be filed, or when the IRS determines there was a mistake?

"Duty, breach, causation and injury: These are the traditional elements of a tort claim. Thus, under customary theories, a tort is inchoate unless and until the plaintiff suffers actual injury. For example, a plaintiff who has an increased risk of disease because she has been exposed to a defective product, but no manifest illness, would have no cause of action. Faced with this quandary, plaintiffs have resorted to novel claims and theories. They have argued, for instance, that recovery should be allowed for increased risk of future disease or for emotional distress"

Electronic Discovery is with us, has been regulated, and there are now standards for its use in litigation.  Attorneys for clients now have to advise on how to store, produce, resist demands, and comply with the appropriate rules.

Whenever there is general agreement upon a standard of practice, the question of deviation from that standard arises.  This is the central tenant of legal malpractice:  if there is a standard, attorneys must adhear. 

Duane Morris reports on the Quallcom case: "The U.S. District Court for the Southern District of California’s latest opinion in Qualcomm Inc. v. Broadcom Corp., Case No. 05cv1958 (BLM) (S.D. Cal.), issued on January 7, 2008, serves as a warning to all corporate litigants regarding electronically stored documents and emails. This warning is especially applicable for in-house counsel, of which several were engulfed in this quagmire. The court ordered Qualcomm to pay all of Broadcom’s litigation costs — around $8.5 million — for "intentionally with[holding] tens of thousands of decisive documents from its opponent in an effort to win this case and gain a strategic business advantage over Broadcom." In addition, the attorneys most heavily involved were referred to the California State Bar for violations of their ethical duties. "

 

Plaintiff has a right to sue target attorney, and then, for strategic reasons, agrees to put the case aside for the time being.  Plaintiff and target attorney reach a stand-still agreement, but the question of tolling or abatement of  the statute of limitations remains.  How is the statute of limitations calculated in this situation?

In  CMI Capital Mkt. Inv., LLC v Buchanan Ingersoll & Rooney P.C., 2009 NY Slip Op 31708(u) we see Justice Tolub’s definitions and answer.  In that case, the statute of limitations was tolled, not abated.  Tolling is the suspension of the running of a statute for a period of time.  Abatement is the ending of the statute, allowing for it to start running again, from the beginning.

Both parties wanted to "temporarily suspend the running of the statute to await the outcome of [other] litigation."  Abatement would "nullify the period of the statute of limitations and for it to run anew at the expiration of the parties agreement."

The court then goes on to set forth how one decides whether an agreement is ambiguous:

"Despite CMI’s best arguments, contractual language does not become ambiguous simply because the parties to the litigation argue different interpretations. Riverside S. Planning Corp.,60 AD3d 61."

Defendant hired plaintiff to represent him in a Federal Court law suit over NYC placard holders parking on sidewalks and curbs in front of his commercial establishments, depriving defendant of use of his properties.  He retained plaintiff who started the Federal law suit, and was attorney until a settlement conference.  Defendant’s story is that he was so taken aback by the negligence of plaintiff, that he settled the case for $ 2,125,000 against the City.

We are amazed that the case settled at all, but confess not to have seen anything by Justice Gische’s decision in Bellinson Law LLC. v. Iannucci.  Justice Gische found enough in the motion to deny the attorney’s dismissal request.  While the decision does not discuss the shortcomings in any sort of detail, it does give a good blackletter recitation of the standard for a motion to dismiss.

Defendant was required to place the sum of $ 376,000 in escrow pending the outcome of the case.

 

 

 

In MICHAEL S. JOHNSON, DONNA DYMKOWSKI, PATRICIA LONG-CORREA, , –against- NEXTEL COMMUNICATIONS, INC.,  LEEDS, MORELLI & BROWN, P.C.,  , which ws reviewed on Friday we see more of a clutch of definitions which are quite useful:

Breach of Contract:  To state a claim of breach of contract, the plaintiff must establish 1) the formation of a contract between the plaintiff and defendant, 2) performance by the plaintiff, 3) failure by the defendant to perform, and 4) resulting damages. Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (citing Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996); Furia v. Furia, 116 A.D.2d 694, 498 N.Y.S.2d 12, 13 (2nd Dep’t 1986).

To state a claim of breach of contract, the plaintiff must establish 1) the formation of a contract between the plaintiff and defendant, 2) performance by the plaintiff, 3) failure by the defendant to perform, and 4) resulting damages. Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375 F.3d 168, 177 (2d Cir. 2004) (citing Harsco Corp. v. Segui, 91 F.3d 337, 348 (2d Cir. 1996); Furia v. Furia, 116 A.D.2d 694, 498 N.Y.S.2d 12, 13 (2nd Dep’t 1986).
 

Common Law Fraud:, the plaintiff must show that the defendant (1) made a material false representation or omission of an existing fact; (2) defendant made such false representation with knowledge of its falsity; (3) with the intent to defraud; (4) which plaintiffs justifiably relied upon to their detriment. Compudyne Corp. v. Shane, 453 F. Supp. 2d 807, 831 (S.D.N.Y. 2006) (citing Kline v. Taukpoint Realty Corp., 302 A.D.2d 433, 754 N.Y.S.2d 899 (2nd Dep’t 2003)); Century Pacific, Inc. v. Hilton Hotels Corp., 528 F. Supp. 2d 206, 217 (S.D.N.Y. 2007) (citing PPI Enters., Inc. v. Del Monte Foods Co., No. 99 Civ. 3794, 2003 U.S. Dist. LEXIS 16006, 2003 WL 22118977, at * 19 (S.D.N.Y. Sept. 11, 2003)). Additionally, in the complaint, the plaintiff must specify the particulars of the alleged [*20] fraud such as the misleading statements along with the speaker, time, place, individuals involved, and specific conduct at issue. Sullivan v. Kodsi, 373 F. Supp. 2d 302, 306 (S.D.N.Y. 2005) (citing United Feature Syndicate, Inc. v. Miller Features Syndicate, Inc., 216 F. Supp. 2d 198, 221 (S.D.N.Y. 2002)); Dover Ltd. V. A.B. Watley, Inc., 423 F. Supp. 2d 303, 317 (S.D.N.Y. 2006) (citing Acito v. IMCERA Group, Inc., 47 F.3d 47, 51 (2d Cir. 1995)).
 

Legal Malpractice:   the plaintiff must show that the attorney acted negligently, such negligence was the proximate cause of the loss sustained, and the loss sustained is actual and ascertainable. Mega Group, Inc. v. Pechenik & Curro, P.C., 32 A.D.3d 584, 819 N.Y.S.2d 796, 798 (3rd Dep’t 2006) (citing Ehlinger v. Ruberti, Girvin & Ferlazzo, 304 A.D.2d 925, 758 N.Y.S.2d 195 (3rd Dep’t 2003)); Flutie Bros. v. Hayes, No. 04 Civ. 4187, 2006 U.S. Dist. LEXIS 31379, 2006 WL 1379594, at *5 (S.D.N.Y. May 18, 2006) (citation omitted). To qualify as negligence, the conduct of the lawyer [*22] must fall below "the ordinary and reasonable skill and knowledge commonly possessed by a member of the profession." Achtman v. Kirby McInerney & Squire, LLP, 464 F.3d 328, 337 (2d Cir. 2006) (citing Grago v. Robertson, 49 A.D.2d 645, 370 N.Y.S.2d 255 (3rd Dep’t 1975). To adequately plead causation, the plaintiff must show that "but for" the attorney’s negligence "what would have been a favorable outcome was an unfavorable outcome." Flutie Bros., 2006 U.S. Dist. LEXIS 31379, 2006 WL 1379594, at *5; Even Street Productions, Ltd. v. Shkat Arrow Hafer & Weber, LLP, No. 05 Civ. 3834, 2008 U.S. Dist. LEXIS 42397, 2008 WL 2224297, at *3 (S.D.N.Y. 2008) (citing D’Jamoos v. Griffith, No. 00 Civ. 1361, 2001 U.S. Dist. LEXIS 17595, 2001 WL 1328592, at *5 (E.D.N.Y. Aug. 1, 2001)).
 

Conversion:  conversion is the unauthorized dominion over property by the defendant that interferes with the plaintiff’s superior right of possession. U.S. v. New York State Div. Of Lottery, No. 92 Civ. 9001, 2007 WL 1703656, at *4 (S.D.N.Y. Mar. 13, 2007); see Zendler Const. Co. v. First Adjustment Group, Inc., 59 A.D.3d 439, 873 N.Y.S.2d 134, 2009 WL 260905, at *1 (2nd Dep’t 2009). To establish a conversion claim, the plaintiff must show: (1) a specific identifiable thing is the subject of the conversion claim; (2) prior to the conversion plaintiff retained ownership or [*26] possession of the property; (3) exercise of unauthorized dominion by the defendant was to the exclusion of the plaintiff’s rights. Moses v. Martin, 360 F. Supp. 2d 533, 541 (S.D.N.Y. 2004).