Court calendaring…being in court on all assigned conferences, motions, hearings, appearances , is the most frequent source of legal malpractice cases.  Right behind are the late filings, blown statutes, and missed deadlines for documents. 

Here, a big law managing clerk discusses a calendar system for a world wide law firm.  Its hard to believe that in their California office there was no system in place at all. "We began by focusing on our Palo Alto office, which did not have any system in place

"When it comes to errors and potential malpractice claims, court calendars represent one of the most likely areas where law firms can trip themselves up. Many firms, from the smaller boutiques to mega litigation operations, unknowingly expose themselves to date error and malpractice risk because of the way they oversee their court calendars.

In the most recent "Profile of Legal Malpractice Claims," the American Bar Association found that calendar- and deadline-related errors are the leading cause of legal malpractice claims. A total of 16.63 percent of those malpractice claims were due to the firm not knowing or not properly responding to the court calendar. Of those, 7.09 percent were for failure to know/ascertain a deadline; 5.19 percent were for failure to calendar properly; and 4.35 percent were for failure to react to the calendar.

At my firm, it was concern over malpractice risk and exposure that led to a major undertaking — revamping the way that many of our U.S. offices manage their court calendars. Happily, we are also gaining firmwide efficiencies at the same time. White & Case has 37 offices in 25 countries with a total of 2,300 lawyers. In the United States, we have 770 attorneys in five offices, including our headquarters in New York."

In this Court of Appeals Decision Judge Smith goes as far back as Judge Cardozo to discuss the basics in this legal malpractice case.  As a digression, Justice Benjamin Cardozo, who served both on the New York Court of Appeals and the US Supreme Court was fascinating.  "Born in New York City to Albert and Rebecca Nathan Cardozo, Benjamin was a twin, born with his sister Emily. Cardozo’s ancestors were Portuguese Jews who immigrated to the colonies in the 1740s and 1750s from Portugal[1] via the Netherlands and England. The surname Cardozo (Cardoso) is of Portuguese origin. He was a cousin of the Poet Emma Lazarus.

Albert Cardozo was himself a judge on the Supreme Court of New York (the state’s general trial court) until he was implicated in a judicial corruption scandal, sparked by the Erie Railway takeover wars, in 1868. The scandal led to the creation of the Association of the Bar of the City of New York and Albert’s resignation from the bench. After leaving the court, he practiced law until his death in 1885.

Back to this case, Tydings v. Greenfield, Stein & Senior, LLP, the issue was this.  Plaintiff  was  a trustee to an estate, and gave up the position to a successor trustee.  More than 6 years later she was asked for an accounting.  She was then successfully sued for damages arising from the trusteeship.  In the suit, she raised  the defense of statute of limitations,  It was denied on two grounds.  Trustee appealed.

The AD ruled on only one ground.  Plaintiff then sued her law firm, and they successfully moved to dismiss.  Question:  is plaintiff collaterally estopped from raising the second ground in suing her attorney?  Answer, in this case, no.

Judiciary Law 487 is a statute which defines a misdemeanor and creates a private cause of action, with treble damages,
 

§487. Misconduct by attorneys.

An attorney or counselor who:

1. Is guilty of any deceit or collusion, or consents to any
deceit or collusion, with intent to deceive the court or any party; or,

2. Wilfully delays his client’s suit with a view to his own
gain; or, wilfully receives any money or allowance for or on account
of any money which he has not laid out, or becomes answerable for,

Is guilty of a misdemeanor, and in addition to the punishment
prescribed therefor by the penal law, he forfeits to the party injured
treble damages, to be recovered in a civil action.

In Amalfitano v. Rosenberg the Second Circuit has certified several questions to the New York Court of Appeals. The case is well worth reading, not only for the telenovela aspects of brother v. brother, and the unraveling of a family fortune through corruption and self-dealing, but for the discussion of Judiciary Law 487 litigation in New York.

For the most part, liability under this statue is nor covered by insurance, and while pro missing significant awards, has been the stepchild of legal malpractice here.

The two questions are" "Can a successful lawsuit for treble damages brought under N.Y. Jud. Law 487 be based on an attempted but unsuccessful deceit upon a court by the defendant?" and

"In the course of such a lawsuit, may the costs of defending litigation instituted by a complaint containing a material misrepresentation of fact be treated as the proximate result of the misrepresentation if the court upon which the deceit was attempted at no time acted on the belief that the misrepresentation was true?"

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]