We do not have firm statistics in this area, but from a general overview of litigation it seems to us that a higher percentage of legal malpractice cases are subject to motions to dismiss under CPLR 3211(a)(1) than are other types of cases.  We have thought about why this might be.  A benign explanation is that since there is always a "case within a case", there is a greater source of dispositive documents which might early derail a case.  A less benign explanation is that the defense bar realizes that the bench does not hold legal malpractice cases in high regard [laws written to legislate behavior of attorneys by attorneys, judged by attorneys], or that plaintiff’s bar is a largely disparate group of practitioners.

In any event, this is a recent case from the Fourth Department on the issue: Younis v Martin
2009 NY Slip Op 02118 ;Decided on March 20, 2009 ; Appellate Division, Fourth Department.
 

"In determining such a motion, "[t]he facts pleaded are to be presumed to be true and are to be accorded every favorable inference, although . . . factual claims flatly contradicted by the record are not entitled to any such consideration" (Gershon v Goldberg, 30 AD3d 372, 373; see Parola, Gross & Marino, P.C. v Susskind, 43 AD3d 1020, 1021-1022). Although we agree with defendant that some factual claims by plaintiff in the complaint were contradicted by evidentiary material that he appended to the complaint, the record establishes that the court’s decision to deny the motion was not predicated upon those factual claims. "
 

In the high flown world of patent infringement, large legal fees are the norm.  Here, from law.Com we see the story of $ 10 million in legal fees, all spent in a fruitless effort to enforce a patent infringement case against Palm.  In the end, plaintiff paid its attorney $ 7 million plus in fees, and paid the opposing attorney $ 2.6 million and all for naught.

"E-Pass Technologies is trying to recover millions it paid to Moses & Singer and Squire, Sanders & Dempsey in an ill-fated patent infringement suit by going after the two firms with a negligent misrepresentation lawsuit.

E-Pass originally sued Palm Inc. and others in the Northern District of California in 2000. But U.S. District Judge D. Lowell Jensen dismissed the litigation in 2006, found the German patent holding company had committed litigation misconduct, and awarded attorney fees to the defendants.

"In advising E-Pass to file and maintain their patent infringement claim, they spent $10 million in legal fees and costs without a sound basis to make the elemental case of patent infringement," said James Rosen of Rosen Saba, which filed the suit for E-Pass against its former lawyers at Moses & Singer and Squire Sanders.

The suit against the law firms (.pdf) was filed in San Francisco Superior Court in January, but Rosen Saba didn’t serve it then because it was waiting for a decision on E-Pass’ appeal of the underlying case, Rosen said. On Friday the U.S. Circuit Court of Federal Appeals affirmed Jensen’s decision, and Rosen said the law firms will now be served.

The suit names E-Pass’ primary trial counsel, Moses & Singer, and a partner at the New York firm, Stephen Weiss. It also targets Squire Sanders and San Francisco partner Mark Dosker.  "
 

We reported on this case last week; it’s an example of big law legal malpractice.  The general view of legal malpractice limits its reach to small cases involving personal injury and blown statutes of limitation.  However, cases such as this one are huge.

From Law.Com and the Blog of Legal Times: "A team of lawyers representing Hogan & Hartson has filed a motion to dismiss a suit that alleges the firm committed legal malpractice, breach of contract and breach of fiduciary duty.

Prestige Brands Inc. sued the Washington, D.C., law firm, claiming lawyers at Hogan used attorney-client communication to help a competitor bring a product to the market quicker than it could have without Hogan’s representation. Prestige and the competitor, DenTek Oral Care Inc., are both the makers of an over-the-counter mouth guard designed to prevent people from grinding their teeth while they sleep.

The motion to dismiss, which was filed by Zuckerman Spaeder in D.C., Superior Court Friday afternoon, claims that Prestige did not plead sufficient facts to establish Hogan was guilty of a conflict of interest and a breach of duty. The motion states that Prestige "does not allege facts to establish that the alleged conflict or possession of confidential information proximately caused a reduction in Prestige’s market share."

The motion also says that Prestige did not plead any facts against the two lawyers named in the suit, Hogan partner Howard Holstein and former Hogan partner Jeffrey Shapiro, that would show either lawyer committed malpractice or a breach of fiduciary duty. (Shapiro is now a partner with Hyman, Phelps & McNamara.)

The motion also states that the court should dismiss Prestige’s request for punitive damages because the company does not allege Hogan acted with "malicious intent." "

The principal that attorneys may not be held in legal malpractice over questions of judgment, strategies at trial and the like is given especial prominence in this case.  Client is found liable for $ 7 Million in patent infringement and $20 million in punitives, for "especially reprehensible " behavior.  On appeal, attorneys succeed in reducing liability to $ 520.00, a stunning victory.  They did not appeal the punitive award of $ 20 million.  On remand the district court whittled the punitives way down , but the appellate court determined that they would stay at $20 million.  From Law.Com:

"A federal appeals court ruled Thursday that a major Washington law firm did not commit malpractice when it represented a client found liable for $20 million in punitive damages — and just $520 in actual damages.

The District of Columbia Court of Appeals determined that Finnegan, Henderson, Farabow, Garrett & Dunner’s decision not to initially appeal the punitive damages award was a reasonable, tactical litigation strategy involving an unsettled point of law.

As a result, the appeals court affirmed a lower court’s grant of summary judgment to the 350-attorney intellectual property law firm.

The three-judge panel’s decision stems from an underlying patent infringement and fraud lawsuit against Biomet Inc. involving the company’s manufacture of orthopedic devices. Following a 1996 jury verdict, a trial court found Biomet liable for $7.1 million in compensatory damages and $20 million in punitive damages. After the trial, Biomet hired Finnegan Henderson to handle post-trial motions and the appeal.

On appeal, the law firm did not challenge the punitive damages award as unconstitutional because the ratio of punitive to compensatory damages was only three-to-one, and because rearguing the issue would have required another examination of Biomet’s conduct, which the lower court found was particularly reprehensible, the March 19 decision said.

The appeals court in the underlying case eventually reversed the lower court’s finding of infringement against Biomet and remanded the case for recalculation.

On remand, the lower court held that Biomet was liable only for $520 in compensatory damages. At that point, Finnegan Henderson challenged the punitive damages award as excessive. It asserted that the 38,000:1 ratio of punitive to compensatory damages violated of due process. The lower court agreed, and reduced the punitive amount to $52,000.

But the appeals court determined that because Biomet had not initially appealed the punitive damages, it had waived its right to seek relief from the $20 million award. "

It’s the rare case in which attorney and judge are both defendants, and the rarer case still in which allegations of stalking, habeas corpus, child custody, contempt are joined with legal malpractice.  What makes this case even more unique is that it is set in Federal District Court.  This is a legal malpractice trifecta. Legal malpractice litigation, as we often say, is found everywhere.

The case is LOUIS PISANI, Plaintiff, VERSUS ASHLEY L. DIENER, ESQ., ET AL., Defendants.No 07-CV-5118 (JFB) (ARL) UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK 2009 U.S. Dist. LEXIS 21352  March 17, 2009, Decided  [no link]

Here are some of the facts from the complaint:  "Plaintiff and his ex-wife, America Lopez ("Lopez"), were married in New Jersey in 1993. (Amended Complaint ("Am. Compl.") P 1.) Lopez had a daughter from her first marriage, Tatiana Prats, and wanted two more children in her marriage [*3] with plaintiff. (Id. P 4.) On or about April 2000, Lopez "left on one of her many trips to visit her mother in Miami, FL." (Id. P 10.) "After three months, on or around July 2000 Plaintiff obtained a petition of habeas corpus to have the two children brought back to New York, their home state, in Nassau County venue." (Id. P 11.) The amended complaint does not make clear who the "two children" were, though he is presumably referring to Anthony Pisani and Gabriella Pisani, who are referenced later in the amended complaint. (Id., Exs. A-B.)

Plaintiff alleges that, on advice of counsel, plaintiff began divorce proceedings in New York on October 11, 2000. (Id. P 13.) In January 31, 2001, Lopez filed a petition for dissolution of marriage in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida. (Plaintiff’s Addendum of Exhibits filed July 7, 2008, Ex. G.) Around this time, Lopez began a proceeding in Miami-Dade County before Judge Deborah White-Labora to obtain a temporary injunction for protection against domestic violence against plaintiff. (Id. PP 16-17; Plaintiff’s Memorandum of Law in Opposition, Ex. 6.) The injunction was entered on agreement between [*4] counsel for the parties on October 27, 2001. (Plaintiff’s Memorandum of Law in Opposition, Ex. 6.) Plaintiff alleges that his counsel, Ashley Diener, "intentionally, negligently was in breach of duty to me when he ‘agreed’ to the temporary injunction," and "plaintiff requests that Ashley Diener be disbarred." (Id. P 17.) Plaintiff alleges that the result of the injunction in Florida was "the parental alienation syndrome." (Id. P 18.)

The amended complaint alleges that Lopez then took the children to California and then Mexico. (Id. P 19.) Plaintiff alleges that Lopez then retained Kutner to represent her, and that Kutner is a contributor to the election campaign of Judge White-Labora. (Id. P 20.) Plaintiff alleges that Kutner made defamatory statements about plaintiff and the children. (Id. P 22.)

The complaint alleges that plaintiff was concerned about the well-being of his children and, therefore, tried to contact the Lopez family. (Id. P 23.) Though the amended complaint is unclear about this, it appears that this was in violation of his injunction and led to proceedings against plaintiff. (Id. PP 23-24.) Plaintiff retained Gale for the evidentiary hearing held before Judge Harnables. [*5] Plaintiff alleges that, "through [Gale’s] negligence I was arrested in Feb. 2001. He failed then to defend me at the 2nd evidentiary hearing. ‘I should have expected that’ was Gales’ comment!" (Id. at 24.)

Florida State Attorney Katherine Fernandez-Rundle charged the plaintiff with aggravated stalking on or around July 2001 in Florida state court. (Id. P 25.) The plaintiff alleges that he did not commit aggravated stalking, but rather was just trying to find out where his children were. (Id. PP 26-28.) In December 2002, plaintiff alleges that he went to a day care center "presumably with authority to see his children and give them gifts for Christmas." (Id. P 29.) Plaintiff alleges that he was "arrested for violating the injunction even though according to Ken Kaplan Esq plaintiff had permission to see children. He was negligent." (Id. P 30.) Plaintiff further alleges that "Judge Deborah White-Labora has acted maliciously with no finding of fact to cause plaintiff and children pain and suffering." (Id. P 31.) In December of 2007, plaintiff filed a motion to vacate the injunction against him, but his motion was denied by Judge White-Labora. (Id. P 32.)

Plaintiff alleges that he has not [*6] had any unsupervised contact with his children for the past seven years, that he has had his house taken from him, and that he was imprisoned "because of the negligent, malicious intentions of these defendants." (Id. P 33.) Specifically, Plaintiff alleges that Rogers accused plaintiff of disparaging remarks against Cubans, is a campaign contributor to Judge White-Labora, and communicated ex parte with Judge White-Labora. (Id. PP 34-35.) Plaintiff alleges that Judge White-Labora discriminated against him on the basis of his national origin and gender, in that she "did not vacate injunction based on ‘mistreatment’ of day care worker who spoke only Spanish. I don’t speak Spanish." (Id. P 36.) Plaintiff generally alleges that defendants have discriminated against him on the basis of gender and national origin, in violation of 42 U.S.C. § 1983.
 

Legal Malpractice actions often start with the termination of the target attorney, and even more of them have the common aspect of take-overs by successor attorneys.  What happens to the file, how does it get transferred and who pays for the transfer?

This weeks decision in Moore v. Ackerman, Supreme Court, Kings County is a thoughtful discussion of how transition of attorneys interacts with charging liens, retaining liens, termination for cause and without cause.  While it does not really deal with charging liens [the right of an attorney to have his fees paid for with the client’s successful award] it does deal with the question of disbursements made both during and after the representation ends.

There are only a handful of cases which deal with this matter, even though it is a frequent occurrence.  We’ll let Justice Jack M. Battaglia, Kings County Supreme Court  explain:

""[A] client may at anytime, with or without cause, discharge an attorney." (Demov, Morris, Levin & Shein v. Glantz, 53 NY2d 553, 556 [1981].) As the Court of Appeals has noted, an attorney’s discharge does not in itself imply a lack of competence or diligence on the part of the attorney.

"Attorney-client relationships frequently end because of personality conflicts, misunderstandings or differences of opinion having nothing to do with any impropriety by either the client or the lawyer. Others end because of unexpected conflicts of interests or changes in litigation strategy that require different lawyering skills. In some of those situations, the client may ask the attorney to withdraw. In others, it may be the attorney who initiates the termination process by offering to withdraw in order to avoid embarrassment, avert further conflict, preserve the relationship on a long-term basis or simply save the client from the discomfort of having to fire the attorney. Importantly, in many such cases, the decision to terminate the relationship is the product of a mutual choice." (Klein v. Eubank, 87 NY2d 459, 463 [1996].)

"The three remedies of an attorney discharged without cause – the retaining lien, the charging lien, and the plenary action in quantum meruit – are not exclusive but cumulative." (Levy v. Laing, 43 AD3d 713, 715 [1st Dept 2007]; see also Schneider, Kleinick, Weitz, Damashek & Shoot, v. City of New York, 302 AD2d 183, 186-89 [1st Dept 2002].) "[I]n disputes between attorneys, the discharged attorney may elect to receive compensation based on quantum meruit or on a contingency basis, whereas as against a former client, the discharged attorney is entitled to quantum meruit only, unless the client and attorney agree otherwise." (Levy v. Laing, 43 AD3d at 715.)

The instant dispute concerns only the retaining lien. "A common-law retaining lien, also known as a general possessory lien, entitles the attorney ‘to retain all papers, securities or money belonging to the client’ that come into the attorney’s possession in the course of representation as security for payment of attorneys’ fees." (Hope v. Ortiz, 83 NY2d 323, 311 [1994] [quoting People v. Keefe, 50 NY3d 149, 155 (1980)].) "[A]n attorney’s rendition of services and expenditure of disbursements on behalf of the client entitles him to a common-law retaining lien on the client’s file." (Theroux v. Theroux, 145 AD2d 625, 626 [2d Dept 1988].) "A retaining lien remains in force until the client’s account is paid in full." (Id.)
 

For present purposes, and in the first instance, "disbursements" must be understood as amounts "advanced" on behalf of the client. (See Lansky v. Easow, 304 AD2d at 533; Madison v. Spancrete Machine Corp., 278 AD2d 867, 868 [4th Dept 2000]; Silverstein v. National Auto Renting Corp., 4 AD2d 869, 869 [1st Dept 1957].) But in the only New York decision this Court has found that provides insight on the issue, the Court of Appeals has suggested that the outgoing attorney may seek more.

In Matter of Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn (91 NY2d 30 [1997]), the Court of Appeals was asked to resolve a dispute between the former counsel for corporate clients and the clients’ successor counsel about material in the clients’ files that successor counsel requested and former counsel refused to deliver. Successor counsel asked former counsel "to turn over its files in their entirety on the financing and restructuring matters, and tendered a check for [former counsel’s] bindery expenses for those transactions, that being the only remaining outstanding claim of [former counsel] for payment with respect to services and disbursements arising out of those matters." (See id. at 33.)

The Court of Appeals adopted the majority view: "A majority of courts and State legal ethics advisory bodies considering a client’s access to the attorney’s file in a represented matter, upon termination of the attorney-client relationship, where no claim for unpaid legal fees is outstanding, presumptively accord the client full access to the entire attorney’s file on a represented matter with narrow exceptions." (See id. at 34-37.) "Barring a substantial showing by [former counsel] of good cause to refuse client access, [former clients] should be entitled to inspect and copy work product materials, for the creation of which they paid during the course of the firm’s representation." (Id. at 37 [emphasis added].)
 

In addition, with respect to specified claims or actions, including those for personal injury, property damage, or wrongful death due to negligence, the Second Department requires that "[a]ttorneys for both plaintiff and defendant . . . shall preserve, for a period of seven years" virtually the entire file of the attorney. (See 22 NYCRR §691.20 [f].) Specifically, the retention requirement includes

"the pleadings and other papers pertaining to such claim or cause of action, including but not limited to, letters or other data relating to the claim of loss of time from employment or loss of income; medical reports, medical bills, X-ray reports, X-ray bills; repair bills, estimates of repairs; all correspondence concerning the claim or cause of action; and memoranda of the disposition thereof as well as canceled vouchers, receipts and memoranda evidencing the amounts disbursed by the attorney to the client and others in connection with the aforesaid claim or cause of action." (Id.)

Neither the Disciplinary Rules nor the Second Department’s rules make any exception to the retention requirements where the attorney withdraws from representation or is discharged. As to the "bookkeeping records," however, the applicable Disciplinary Rule provides that, upon dissolution of a law firm, "the former partners or members shall make appropriate arrangements for the maintenance by one of them or by a successor firm of the [bookkeeping] records." (See Disciplinary Rule 9-102 [H]; 22 NYCRR §1200.46 [h].) "A lawyer, upon termination of his practice may properly cause the closed files to be delivered to another lawyer, but the receiving lawyer will hold them only as custodian." (See N.Y. St. Bar. Assn. Comm. Prof. Eth. 460, 1977 WL 15688, * 2.) In any event, the obligations of a lawyer upon termination of a practice and a lawyer continuing in practice would, presumably, be different.

In short, there is no clear authority as to whether a charge for copying the client’s file is appropriate as a "disbursement" for purposes of a retaining lien, or whether for purposes of general ethical obligations a lawyer may charge for copying a file before releasing it to the client …."

We’ve written in the past on the collateral estoppel trap in legal malpractice.  While fee arbitrations in State Court proceedings probably have the greatest absolute number of applications, bankruptcy court fee awards may well cover a greater dollar figure.  Here, in In re D. A. ELIA CONSTRUCTION CORP., Debtor.  07-CV-754,08-CV-103  UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK  2009 U.S. Dist. LEXIS 20443   March 14, 2009, Decided we see a result.  Law firm handles a 10 year bankruptcy for debtor, and is awarded several interim fees.  Law firm then applies for final fee award, and for the first time, debtor raises issue of legal malpractice.  Court considers the fee application, and awards fees.
 

When debtor later sues in State Court, result is: dismissed on the basis of collateral estoppel/res judicata.

"Upon finding that no merit to Elia’s claims of malpractice, this Court observed:
As is readily apparent from this Decision and Order, the Court finds Elia’s arguments in favor [of] remand and against the motion for summary judgment to be completely without merit. In opposing the motion to dismiss on res judicata grounds, Elia did not even attempt to [*5] distinguish the most obviously relevant case law against it -the First, Fourth and Fifth Circuit rulings holding that a bankruptcy court’s grant of fees under 11 U.S.C. § 330 bars any subsequent malpractice claims premised upon those same services. See Grausz v. Englander, 321 F.3d 467 (4th Cir. 2003); In re Iannochino, 242 F.3d 36 (1st Cir. 2001); In re Intelogic Trace, Inc., 200 F.3d 382 (5th Cir. 2000). Instead, Elia attempts to mischaracterize the record by suggesting that the bankruptcy court never considered its claims of malpractice and attorney misconduct. Both this Court and the Second Circuit have expressly rejected that argument and have found that the bankruptcy court gave adequate consideration to Elia’s claims of postpetition malpractice. See In re D. A. Elia Constr. Corp., 04-CV-975, Dkt. No. 21, at 20 (this Court’s Decision and Order stating that "[t]he bankruptcy court fully considered [Elia’s] allegations of misconduct but found them to be without merit"); and id. at Dkt. No. 33, at 3 and 4 (Second Circuit Summary Order stating that the bankruptcy court gave Elia "more than ample opportunity to present its arguments" regarding its claims of "conflicted and negligent [*6] representation").

In light of those express findings, it is difficult to believe that the state court action was filed by Elia in good faith. Even if Elia did have some good faith basis for initially filing its state court claims, it should have been clear that its position was meritless upon reviewing the cases cited in Damon & Morey’s motion to dismiss. This is particularly true where, as here, Elia’s principal is also an attorney and therefore presumably understood the res judicata arguments being raised. Nevertheless, Elia chose to oppose the motion and filed its own motion to remand.

The foregoing certainly provides sufficient evidence for this Court to conclude that the instant action was brought in bad faith and for the purpose of harassment and delay."

Burt Pugach and Linda Riss are a staple of the blogosphere and the Page Six world.  He was a lawyer who was convicted in 1959 for blinding Linda Riss by use of lye, went to jail ,came out of jail to marry her ,and then was disbarred.  He was determined to have practiced law through the use of a front man-lawyer in 2008.  But that is all part of the Page 6 portion of their lives.

Here, the two sold their life story to HBO for use in a film called "Crazy Love" and this is where the legal malpractice portion of their life comes in.  Was the deal fair, and did HBO owe them more money?

In Pugach v. HBO Pictures Inc., Slip Op. 2009 30489U we see that their legal malpractice action fails. Judge Kitzes of Supreme Court, Queens County writes: 

"This action arises out of an agreement between plaintiffs and defendant Shoot the Moon, dated May 11, 2004, whereby, in consideration of the payment of the sum of $ 2,000, plaintiffs granted Shoot the Moon an option to purchase all rights to their life stories…."  Plaintiff’s argument that Linda Pucach could not read the contract because of her blindnes was disallowed on the basis that "if the party could not read it, "not to procure it to be read was equally negligent."

The legal malpractice action was dismissed as the attorney defendants represented Shoot the Moon and not plaintiffs, thus lacking privity.