Sometimes things go from bad to worse, and then decend even further in legal malpractice litigation.  Here is an example.  Plaintiff was injured, went to attorney 1 who settled the case without asking plaintiff, then went to attorney 2, then sued attorney 1 and 2.

"Sturgill, 46, was fishing with a co-worker from the Maryland School for the Deaf in June 2000 when the surge from a nearby dam release capsized their boat. Sturgill was rescued by a passing sailboat and was rushed by helicopter to the R Adams Cowley Shock Trauma Center in downtown Baltimore.

He claims doctors there released him too soon — after five hours instead of at least 18 — and that his subsequent renal failure and heart problems, which required further hospitalization, were the result of emergency room malpractice.

Sturgill, who had already consulted other lawyers about his claim, called The Suder Law Firm in April 2003, a few months before the filing deadline for his medical malpractice suit.

On Tuesday, Joyce testified that the doctor he had review the case found the emergency room doctors discharged Sturgill in stable condition. The doctor refused to sign on as an expert for the case, but Joyce agreed to negotiate with the hospital on Sturgill’s behalf.

He eventually accepted the offer in a letter to the hospital’s representative without conferring with Sturgill, who was at work, until the next day. Sturgill rejected the offer.

Joyce testified he had explained, before parting ways with Sturgill, that it was still up to the client to decide whether to accept the offer or file a claim.

Joyce said he helped Sturgill draft his claim and file it, all free of charge.

Sturgill, though, testified that he did not learn of Joyce’s action until he was sued by the hospital for having filed an action after settling his claim.

He said he later went to the Lutherville firm of Miller, Murtha & Psoras LLC, which he also sued and eventually settled with over its handling of his medical malpractice claim. "
 

Perez Hilton, DJ Samantha and Legal Malpractice.  If any further evidence on the ubiquitous nature of legal malpractice was needed, this story seals the issue.  In the high stakes celebrity gossip blogworld, the DJ sued the Blogger Perez and lost.  The DJ promptly was sued by her attorney Martin Garbus and sued him for legal malpractice.  Here are the interim results:

"DJ Samantha Ronson has accused her former lawyer of threatening her with bad press in a malpractice lawsuit over outstanding legal fees.

Ronson is suing former attorney Martin Garbus, blaming him for losing her defamation case against celebrity blogger Perez Hilton last November.

The case against Hilton was in relation to the blogger’s posts about Ronson’s gal pal, actress Lindsay Lohan. He alleged on his website that Lohan’s driving under the influence (DUI) arrest in May 2007 was a photo opportunity staged for the paparazzi by Ronson, who he claims was also in possession of cocaine found in the car.

The case was thrown out of court and Ronson was ordered to pay Hilton almost US$85,000.

But Ronson claims it was Garbus’ failure to discredit Hilton’s allegations that lost her the case.

According to court documents obtained by the New York Daily News, Garbus allegedly threatened to sue Ronson for breach of contract and leak details of her outstanding legal fees – amounting to US$100,000 for two months’ work – to the press if she didn’t pay up.

Attorneys deal with issues that have big numbers attached to them.  Here is a story about an Indiana law firm that got into a big problem. The article does not say how the negotiation went bad, but the end result was that the law firm assigned its bad faith claim against its own insurer to the State, and walked away paying $ 50,000. 

"Fillenwarth Dennerline Groth & Towe, an Indianapolis law firm represented the Indiana Construction Industry Trust, which provided health coverage to non-union construction workers before going bust in 2002.

Two years ago, a Marion County jury ordered Fillenwarth Dennerline to pay the insurance department $18 million, concluding it failed to alert the trust’s board to mushrooming financial problems.

The verdict–which far exceeded the small law firm’s ability to pay–equaled the the amount of unpaid claims owed to 8,000 Hoosiers when the trust collapsed."
 

"A legal malpractice insurance carrier has agreed to pay $16.5 million to Indiana ’s insurance department, settling a federal lawsuit stemming from the multi-million-dollar collapse of a health insurance trust."

One of the more interesting aspects of legal malpractice is its utter ubiquity.  Look at any institution and lurking behind it may be a case of legal malpractice.  It’s not surprising, as attorneys are everywhere involved in transactional or litigative work.  A favorite New Yorker cartoon shows a 5 year old whose ice cream cone has fallen to the ground.  A nice adult hovers nearby, asking "Do you need an attorney, little boy?"

Here is a story about one of East Hampton’s more well known restaurant, The Farmhouse, and its purchase and changeover in 2003.  The Case, MARTIN B. SCHNABEL, Plaintiff, – against – JOHN M. SULLIVAN, ESQ. and BURKE & SULLIVAN, P.C., 04-CV-5076 (RRM) (MLO);UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK;2008 U.S. Dist. LEXIS 79048
 

"In 2003, Schnabel, a New Jersey resident, sought to purchase and operate a restaurant known as The Farmhouse Restaurant, an establishment located in East Hampton, New York (alternatively, the "Restaurant"). In April of 2003, Schnabel formed "M at the Farmhouse, Inc." (the "Corporation"), a New York corporation, for purposes of owning and [*3] operating that Restaurant. At all times, Schnabel was and is the Corporation’s sole shareholder. In April to early May 2003, Schnabel retained Defendant attorney John M. Sullivan and Sullivan’s firm, Burke & Sullivan, P.C., to represent him in purchasing the Restaurant (the "Transaction"), 1 which Transaction was finalized on May 19, 2003. Schnabel claims that Sullivan and his firm failed to properly perform due diligence regarding the financial history of the Restaurant, and failed to apprise him of the existence of substantial liens on the property and the seller’s overall misrepresentation of the Restaurant’s financial condition, information that Schnabel claims would have led him to withdraw from the Transaction if timely brought to his attention. Schnabel alleges that because of his attorneys’ malpractice, he incurred approximately $ 500,000 in losses."
 

"While this Court agrees with the general principle that a sole or majority stockholder has no independent right of action to recover personally for wrongs to the corporation, that principal does not apply in this case. Here, the undisputed existence of an independent duty owed by Defendants personally to Schnabel, as the individual [*10] who retained Defendants, distinguishes this case from the bulk of Defendants’ supporting authority. Compare, e.g., Elenson v. Wax, 215 A.D.2d 429, 626 N.Y.S.2d 531, relying on Abrams v. Donati, 66 N.Y.2d 951, 489 N.E.2d 751, 498 N.Y.S.2d 782 (1985) (dismissing claim as derivative where no breach of independent duty was alleged); PI, Inc. v. Ogle, No. 95 Civ. 1723, 1997 U.S. Dist. LEXIS 886, 1997 WL 37941, at *3 (S.D.N.Y. Jan. 30, 1997) (dismissing action where plaintiff failed to allege defendants’ independent duty to him); Wolf v. Rand, 258 A.D.2d 401, 403 (1st Dep’t 1999) (dismissing claims brought by virtue of shareholder status alone). As explained in Lawrence, supra, "where a defendant owes an independent duty to the shareholder and the shareholder and the defendant are in privity, the shareholder may sue for damages caused by the defendant’s negligence which resulted in injury that is personal to the shareholder and independent of the damage caused to the corporation." Lawrence, 5 A.D.3d at 919, distinguishing Abrams v. Donati, supra, Wolf v. Rand, supra. To the extent that Defendants attempt to challenge Schnabel’s threshold standing to sue his attorneys for malpractice, their arguments are without merit. As such, Defendant’ request to dismiss this matter [*11] due to a lack of standing is DENTED."
 

Plaintiff obtains a $ 1.2 million dollar verdict and pursues defendant to Florida, trying to collect the judgment.  Defendant dies, and plaintiff’s attorneys retain Florida counsel to go after the estate.  Here in Whalen v DeGraff, Foy, Conway, Holt-Harris & Mealey ,2008 NY Slip Op 06342 [53 AD3d 912] ,July 17, 2008 ,Appellate Division, Third Department , things then went wrong.
 

"Plaintiff commenced this action against defendant alleging, among other things, that defendant was vicariously liable for the negligence of Bailey and/or negligently failed to supervise Bailey in filing the notice of claim in Florida. Defendant then moved for summary judgment dismissing the complaint and plaintiff cross-moved for summary judgment. Supreme Court denied the respective motions in a July 2006 order. Plaintiff moved for leave to reargue and/or renew and defendant moved for reargument. Upon reargument, Supreme Court, in November 2007, adhered to its original determination. The parties now cross-appeal from both the 2006 and 2007 orders.[FN2]

Plaintiff contends that defendant is liable for damages resulting from Bailey’s failure to file the notice of claim either on the basis that defendant had a nondelegable duty to file such notice of claim or based upon defendant’s negligent supervision of Bailey. Defendant maintains that its duty to plaintiff was completely met when it retained Bailey to file the notice of claim and that it was entitled to rely on Bailey to perform that act.

The general rule is that "[a] firm is not ordinarily liable . . . for the acts or omissions of a lawyer outside the firm who is working with firm lawyers as co-counsel or in a similar arrangement" (Restatement [Third] of Law Governing Lawyers § 58, Comment e), as such a lawyer is usually an independent agent of the client. Here, however, defendant solicited Cagan and Bailey and obtained their assistance without plaintiff’s knowledge. Although plaintiff was later advised that Bailey had been retained by defendant, she had no contact with Bailey and did not enter into a retainer agreement with that firm. Defendant concedes that plaintiff completely [*3]relied on defendant to take the necessary steps to satisfy her judgment against Gerzof. Under these circumstances, defendant assumed responsibility to plaintiff for the filing of the Florida estate claim and Bailey became defendant’s subagent (see Restatement [Third] of Law Governing Lawyers § 58, Comment e). Therefore, defendant had a duty to supervise Bailey’s actions (see Restatement [Third] Agency § 3.15; Restatement [Second] Agency §§ 5, 406).[FN3]

In New York one must show "actual innocence" in a legal malpractice case arising from criminal defense by the target attorney. This standard is very difficult to demonstrate, and generally requires either an acquittal or reversal.  Here is a slightly different take from Connecticut, via the Legal Profession Blog.

"The lawyer had been retained to defend a murder charge. The defendant claimed innocence. The lawyer presented a theory of self-defense to prosecutors without the client’s authority and pressured him to plead to manslaughter, which he eventually did. The client got 20 years and filed the malpractice suit. About six months later, the client sought habeas corpus relief, claiming actual innocence.

A 29 day hearing was held on the petition. The trial judge concluded that the lawyer provided improper assistance, had misled the client on the terms of the plea bargain and sent the client a letter "replete with misstatements." Nonetheless, the trial judge found that the client had failed to demonstrate prejudice and was not entitled to relief.

Here, the court upheld the trial court’s finding that the prejudice component of the malpractice claim was "indistinguishable" from the finding of the habeas court: "

Plaintiff unsuccessfully defended a CPLR 3211 motion brought by attorney group number 1 in a legal malpractice case.  Plaintiff was represented by group 1 and then mid-stream terminated them and moved to attorney group 2, who successfully settled the case.  In KWANGJIN SONG, PLAINTIFF-APPELLANT, v WOODS OVIATT GILMAN LLP AND ROBERT S. ATTARDO, DEFENDANTS-RESPONDENTS.  2008 NY Slip Op 7312; 2008SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FOURTH DEPARTMENT.

On Appeal, the Appellate Division, 4th Department affirmed, but on different reasoning.  "We affirm, although our reasoning differs from that of the court with respect to the underlying basis for the dismissal of the complaint. We conclude that defendants were entitled to summary judgment dismissing the complaint pursuant to CPLR 3212 rather than dismissal of the complaint for failure to state a cause of action pursuant to CPLR 3211 (a) (7). Defendants met their burden by establishing as a matter of law that they, inter alia, were not negligent and that plaintiff sustained no damages, two essential elements of a legal malpractice cause of action (see Oot v Arno, 275 AD2d 1023, 713 N.Y.S.2d 382), and plaintiff failed to raise a triable issue of fact (see Ginther v Heim [appeal No. 1], AD3d , 2008 NY Slip Op 7430, 2008 N.Y. App. Div. LEXIS 7303 [Oct. 3, 2008]; Oot, 275 AD2d at 1024). With respect to the first counterclaim, defendants submitted evidence establishing the reasonable value of their services (see generally Phillips Nizer Benjamin Krim & Ballon v Chu, 240 AD2d 231, 659 N.Y.S.2d 4), and plaintiff failed to raise a triable issue of fact with respect to defendants’ entitlement to the fees sought (see generally DiPlacidi v Walsh, 243 AD2d 335, 664 N.Y.S.2d 537; [**3] Pirro & Monsell v Freddolino, 204 AD2d 613, 614 N.Y.S.2d 232, lv dismissed 85 N.Y.2d 903, 650 N.E.2d 1319, 627 N.Y.S.2d 318). "
 

The short answer is, Yes…  Here is a more fully reasoned opinion from the Third Department in Thompson v. Seligman, 2008 NY Slip Op 06496 [53 AD3d 1019] ;July 31, 2008 ;Appellate Division, Third Department :
"Plaintiff commenced this legal malpractice action against defendants on the ground that they failed to timely advise her that she may have a valid third-party claim. Defendants moved for summary judgment dismissing the complaint, alleging that they had no duty to investigate plaintiff’s representations that she was employed by the Gideon and that they acted reasonably under the circumstances. Supreme Court denied the motion, finding that plaintiff had raised questions of fact with respect to defendants’ duty to investigate her claim and whether they were negligent in performing that duty. Defendants now appeal and we affirm. [*2]

Defendants are correct that "[t]he scope of defendant[s’] duty is, in the first instance, an issue of law for the court" (Moeske v Nalley, 295 AD2d 857, 858 [2002]). Unquestionably, "[a]n attorney has the responsibility to investigate and prepare every phase of his or her client’s case" (Brady v Bisogno & Meyerson, 32 AD3d 410, 410 [2006], lv denied 7 NY3d 715 [2006]). We find as a matter of law that defendants owed such duty to plaintiff here. The question then becomes whether, in the performance of that duty, defendants " ‘exercise[d] that degree of care, skill, and diligence commonly possessed and exercised by a member of the legal community’ " (Perks v Lauto & Garabedian, 306 AD2d 261, 261 [2003], quoting Volpe v Canfield, 237 AD2d 282, 283 [1997], lv denied 90 NY2d 802 [1997]).

Under these circumstances, we agree with Supreme Court that plaintiff has raised a question of fact as to whether defendants exercised the appropriate degree of care in performing their duty to investigate the availability of a third-party claim by plaintiff (see Guiles v Simser, 35 AD3d 1054, 1055 [2006]), which precluded granting defendants’ motion for summary judgment (see Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]; Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; Hook v Village of Ellenville, 46 AD3d 1318, 1319 [2007])."