In Arkansas Department of Human Services v. Ahlborn, 547 U.S. 268, 126 S. Ct. 1752,  it was "held that from a $550,000 negotiated settlement in a case arising from a car accident, the Arkansas Medicaid authority could recover only $35,581.47 (about one-sixth) of the $215,645.30 it had paid for treatment of Heidi Ahlborn’s injuries, because the $550,000 settlement represented only about one-sixth of the reasonable value of the claim. "
 

Author Howard S. Davis, [disclosure:  HSD was a mentor of NYAMB} writes in today’s New York Law Journal on this issue:  how does Ahorn affect plaintiff’s settlement proceeds, what must an attorney do after settling or winning a case, and how does a retainer agreement’s construction affect the attorney’s fees and obligations?

HSD writes: "The Ahlborn decision answered many questions concerning Medicaid liens in personal injury litigation. In the process, by implication, it overturned well-established New York law allowing local Medicaid authorities to collect Medicaid liens in full from settlements in personal injury lawsuits. (See Cricchio v. Pennisi, 90 N.Y.2d 296 [1997]; Gold v. United Health Services, 95 N.Y.2d 683 [2001]; see also Lugo v. Beth Israel Medical Center, 13 Misc. 3d 681, 819 N.Y.S.2d 892 [July 21, 2006]; Harris v. City of New York, 16 Misc. 3d 674, 837 N.Y.S.2d 486 [March 29, 2007]; Chambers v. Jain, 15 Misc. 3d 1120, 839 N.Y.S.2d 432 [April 13, 2007].)2 But Ahlborn did not answer the question whether plaintiffs in tort cases can compel their attorneys, for no additional fee, to negotiate the allocation of the recovery – and even, if necessary, compel them to initiate court proceedings to fix the allocation.

In other words, in New York, after Ahlborn, the question remained whether attorneys, either plaintiffs’ personal injury attorneys or outside counsel, were entitled to a fee, in addition to the fee permitted by the Appellate Division rules for prosecuting and settling personal injury cases, for negotiating an Ahlborn allocation or getting a court to set one."
 

A recent case Carl v. Cohen, Supreme Court, New York County, Justice Edmead 2009 NY Slip OP 30806(U), April 15, 2009 illustrates two distinct principals. The first is privilege and at issue communications which we discussed on April 15.  The second principal  is relation-back and the statute of limitations.

The statute of limitations in legal malpractice is three years, pursuant to CPLR 214(6)  An action may be commenced against a newly to-be added defendant if that newly related defendant is so closely related to prior defendants that there is no due process violation.

"Plaintiff now seeks to avoid the expiration of the statute of limitations by asserting that his belated adding of Greenberg as a defendant "relates back" to the commencement of this action, before the statute of limitations had run. The test for determining whether a claim asserted against a new party relates back to the date upon which the claim was interposed against the original named defendants is set forth in the case of Buran v. Coupal (87 NY2d 173, 178 [1995]). This test requires that the following three conditions be met:

(1) both claims arise out of same conduct, transaction or occurrence, (2) the party to be joined is united in interest with the original named defendant (s) and, by reason of that relationship, can be charged with notice of the commencement of the action so that the party to be joined will not be prejudiced in maintaining his or her defense due to the delay and (3) the party to be joined knew or should have known that, but for a mistake by the plaintiff as to the identity of the proper parties, the action would have been brought against him or her as well

(Matter of 27th St. Block Assn. v. Dormitory Auth. of State of N.Y., 302 AD2d 155, 163-164 [1st Dept 2002]; Buran v. Coupal, 87 NY2d at 181). "The burden is on the plaintiff to establish the applicability of the doctrine once a defendant has demonstrated that the statute of limitations has expired" (Nani v. Gould, 39 AD3d 508, 509 [2d Dept 2007]).

Here, plaintiff has met its burden to establish the applicability of the relation-back doctrine as to the first two prongs of the three-prong relation-back test. The asserted claims against Greenberg as Cohen’s employer at the time of the alleged malpractice accrued, arise out of the same conduct, transaction or occurrence, and the two parties are united in interest. It should be noted that Greenberg has not challenged plaintiff’s position that the first two prongs of the test have been established.

However, plaintiff has failed to establish the third element of the relation-back test, as he has not demonstrated that, but for an excusable mistake as to Greenberg’s identity, the action would have been brought against Greenberg as well. "When a plaintiff intentionally decides not to assert a claim against a party known to be potentially liable, there has been no mistake . . . the plaintiff should not be given a second opportunity to assert that claim after the limitations period has expired" (Buran v. Coupal, 87 NY2d at 181)."
 

One of the more interesting memes in legal malpractice is the inevitable turnabout that is played out by the target attorney.  Once the advocate for plaintiff, the target attorney immediately turns around to show the holes in, and deficiencies of plaintiff’s position.  The attorney, chameleonlike, turns into plaintiff’s earlier opponent; at least the target attorney takes on their coloration.

As an example, Maiolini v McAdams & Fallon, P.C.   2009 NY Slip Op 02755   Decided on April 7,  2009    Appellate Division, Second Department  is instructive.  Plaintiff suffered from TMJ and filed, successfully, for short-term disability insurance payments.  Insurer then denied long term payments, and plaintiff had an opportunity to appeal.  No appeal was undertaken by the retainer [target] attorney.  Was there malpractice in failing to file the appeal?
 

The Appellate Division said no.  "The defendant established its entitlement to judgment as a matter of law by demonstrating that the plaintiff would not have succeeded on a second administrative appeal, even if one had been timely filed (see Alvarez v Prospect Hosp., 68 NY2d 320; Campbell v Tamsen, 37 AD3d 636, 636-637; Flinn v Aab, 167 AD2d 507). In opposition, the plaintiff failed to raise a triable issue of fact (see Teodorescu v Resnick & Binder, P.C., 55 AD3d at 721-722; Campbell v Tamsen, 37 AD3d at 637). Accordingly, the Supreme Court should have awarded summary judgment to the defendant dismissing the legal malpractice cause of action. "  Our bet is that the target attorney simply used the insurance companies medical report, and that plaintiff did not have a better report to show.  It’s just a bet, though,  The decision does not describe the actual papers before it.

A recent case Carl v. Cohen, Supreme Court, New York County, Justice Edmead 2009 NY Slip OP 30806(U), April 15, 2009 illustrates two distinct principals. The first is privilege and at issue communications.  The second principal, to be discussed on Friday, is relation-back and the statute of limitations.

Plaintiff in this case was an employee at a mutual fund operation, and was embroiled in a market timing case in which it was alleged that someone was utilizing the time-zone differences between the east coast and California to make money in the mutual funds market.  He hired law firm 1, then fired it, and went on to law firm 2 and 3.  This case discusses the question of whether target attorney in the legal malpractice case may obtain otherwise privileged materials from the successor attorneys.

"The issue at bar in this case is whether Cohen may depose plaintiff’s successor attorneys about the contents of and subject matter of these documents, as well as other communications "A waiver may also be found where the client places the subject matter of the privileged communication at issue, or where invasion of the privilege is required to determine the validity of the client’s claim or defense and application of the privilege would deprive the adversary of vital information [internal citations omitted] (Jakobleff v. Cerrato, Sweeney & Cohn, 97 AD2d 834, 835 [2d Dept 1983] [plaintiff did not place her privileged communications with her present attorney at issue, nor was discovery of such communications required to enable defendants to assert a defense merely by bringing an action against her former attorney for legal malpractice]; Credit Suisse First Boston v. Ultrecht-American Fin. Co., 27 AD3d 253, 254 [1st Dept 2007]; Raphael v. Clune White & Nelson, 146 AD2d 762, 763 [2d Dept 1989] [attorney-client privilege between client and attorneys who had taken over case from law firm was not waived by client’s initiating lawsuit. In addition, appellants failed to establish why the disclosure of privileged correspondence was vital to their defense in light of the broad range of materials already supplied by plaintiff]).

However, "that a privileged communication contains information relevant to issues the parties are litigating does not, without more, place the contents of the privileged communication at issue in the lawsuit; if that were the case, a privilege would have little effect [internal quotation marks omitted]" (Deutsche Bank Trust Co. Of Americas v. Tri-Links Inv. Trust, 43 AD3d 56, 64 [1st Dept 2007]; Veras Investment Partners, LLC v. Akin Gump Strauss Hauer & Feld LLP, 52 AD3d 370, 374 [1st Dept 2008] [Court found that it was error for the JHO to have found a waiver on the basis of relevance alone]). Thus, there is no "at issue" waiver where the party asserting privilege "does not need the privileged documents to sustain its cause of action" (Manufacturers & Traders Trust Co. v. Servotronics, Inc., 132 AD2d 392, 397 [4th Dept 1987]; (Deutsche Bank Trust Co. Of Americas v. Tri-Links Investment Trust, 43 AD3d at 64 [at issue waiver occurs when a claim or defense has been asserted by a party that he intends to prove by use of the privileged materials]).

Plaintiff asserts that the testimony of his successor attorneys is not discoverable in this case, as it cannot be said that plaintiff placed his privileged communications with his successor attorneys at issue, or that discovery of these communications is required to enable defendants to assert a defense (see Jakobleff v. Cerrato, Sweeney & Cohn, 97 AD2d at 834). Specifically, plaintiff asserts that, as he did not begin consulting with his successor attorneys until after his termination on November 14, 2003, and, as plaintiff’s successor attorneys did not simultaneously counsel him with Cohen in any post-termination matters, there is no possibility that his successor attorneys have any information that Cohen requires in order to defend plaintiff’s claims that Cohen had impermissible and undisclosed conflicts of interest, or that he failed to act in plaintiff’s best interests regarding Alliance’s defamatory U-5 form and subsequent misleading press releases. In addition, plaintiff notes that he concedes and will stipulate that his successor attorneys have not initiated a "whistleblower" cause of action on his behalf.
 

However, Cohen does not need further discovery of plaintiff’s successor attorneys to determine whether or not these actions were timely taken, as these facts are plain on their face. Thus, plaintiff is entitled to a protective order denying defendant Cohen’s third-party subpoena ad testificandum on his successor attorneys."

A NYC fact pattern in legal malpractice:  Plaintiff, a MD wishes to buy a co-op for use as a physician’s office.  She finds a prior doctor’s office and hires attorney and engineering company to do the deal. Plaintiff buys the unit only to find out that the certificate of occupancy is for residential use and not for professional space.  Quandary is how to fix. 

Plaintiff spends a considerable sum of money and succeeds.  She sues attorney , who then third-party the owner’s corporation and engineer.  Result?

In Stackpole v. Cohen Ehrlich & Frankel, LLP  we see Justice Madden’s decision, which permits a contribution and indemnity claim against the engineer but not the owner’s corporation.  The complaint against the attorneys failed to advise her of the contents of the certificate of occupancy, failed to include in the contract of sale a provision that seller represented and warranted that the apartment could be used as a doctor’s office, or for a cure provision, failed to advise plaintiff of Local Law 58 [a disability act], and that plaintiff had to spend hundreds of thousands of dollars to fix the situation.

The attorneys started a third party action against many parties, including the lender, the building corporation and the architectural and engineering service company.  In the end, the action against the bank was discontinued, and Justice Madden dismissed the action against the Owner’s corporation.  Attorneys did not have a contribution or indemnity case against the Owner’s corporation.  Pending discovery, the action against the engineer remains viable.

This recent appellate case McCluskey v Gabor & Gabor,  2009 NY Slip Op 02757 Decided on April 7, 2009 Appellate Division, Second Department illustrates the difference between malpractice at the trial level and at the appellate level. 
 

At the trial level one must prove the usual :"a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession’ and that the attorney’s breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages" (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442, quoting McCoy v Feinman, 99 NY2d 295, 301-302; see Noone v Stieglitz, 59 AD3d 505)."

However, at the appellate level [i.e.]  a claim that the attorneys failed to file an appeal, one must prove "that, had the attorney perfected that appeal, the appeal would have been successful, the cause of action would have been reinstated, and the plaintiff would have prevailed on that cause of action in the underlying action (see Suffolk Ave. Car Wash & Lube v Oberman, 256 AD2d 75; Saferstein v Klein, 250 AD2d 831). "

In McClusky the court dismissed legal malpractice claims: "Here, the plaintiff alleged, inter alia, that the defendants committed malpractice by failing to take an appeal in the underlying age discrimination action from so much of an order as dismissed his causes of action alleging fraud. We find, however, that, inasmuch as the causes of action alleging fraud were properly dismissed (see Kaufman v Torkan, 51 AD3d 977, 980; Weitz v Smith, 231 AD2d 518), the plaintiff cannot establish that the defendants committed malpractice by failing to take an appeal from that order (see Suffolk Ave. Car Wash & Lube v Oberman, 256 AD2d 75; Saferstein v Klein, 250 AD2d 831). "

From theLaw Profession Blog we report on this Arizona Disciplinary Case in which the exitence of attorney malpractice insurance was published.  The attorney was disciplined as we see in the order.

"An Arizona hearing officer has recommended the disbarment of an attorney for misconduct in several matters. The lawyer was no stranger to the bar discipline system. He had been the subject of two informal reprimands, censure with probation, and had been suspended in Decemeber 2008. Here, among other things, he responded to a lawsuit against him that alleged legal malpractice by falsely claiming that he had insurance coverage.

The hearing officer found that he had "violated his duty to the legal system by not being honest about his lack of legal malpractice insurance and by delaying the litigation….[t]he most serious misconduct involves the Respondent making false statements to the court." He also had failed to maintain accurate trust account records, refused to provide medical records authorizations to opposing counsel leading to the dismissal of a client’s case, and obstructed court proceedings. (Mike Frisch
 

Cruise Ship Season comes and goes, and even in poor economic times, the ships carry many people to their vacations.  As in all events human, there will be accidents and injury.  The very nature of cruise ships, their location and the mere fact that they travel on water, complicates the legal horizon.  Nautical law is different from terrestrial law, and many times [for legal advantage] the ships themselves are registered in other countries.

All this leads to mistakes when a passenger is physically injured.  Whom does one sue, the travel agent or the cruise ship line?  Where does one sue?  How does one effect service of process?  These are just some of the smaller questions.  How do you line up the witnesses, now back in their many different homes?  How do you get the medical testimony, which was taken far, far away?

Here is a legal malpractice case from such an occurrence.  Engler v Kalmanowitz ;2009 NY Slip Op 02237   Decided on March 24, 2009   Appellate Division, First Department .  Here, the legal malpractice claim is not set forth.  Was it service of process?  Was it failure to bring the action in a timely fashion?  We do not know.  What we do know is that Supreme Court determined that there were questions of fact still existing and that the Appellate Division found, as a matter of law, that the cruise ship, who was not a party to the legal malpractice action, had no notice of the defective carpet.