In this case, Silva v. Worby recently decided, the Appellate Division reversed a dismissal under summary judgment over the potential settlement of a case.  The lost opportunity to settle a case is not often discussed, but in this short decision the principal is crystal clear.

"The conflicting deposition testimony and affidavits submitted by the parties present a material issue of fact whether plaintiff instructed defendants to attempt to settle the case underlying this legal malpractice action for $1.25 million (see Langhorn v K. Solo Serv. Corp., 302 AD2d 307 [2003]). As the record indicates that defense counsel in the underlying case was authorized and prepared to settle that case for the requested amount, a finding that plaintiff so instructed defendants would show a settlement opportunity lost through their malpractice (see Masterson v Clark, 243 AD2d 411 [1997]).

Documents filed in matrimonial actions remain confidential.  Anyone may look at court files, but not matrimonial court files.Domestic Relations Law § 235(1) .  But what happens when a divorced plaintiff sues for legal malpractice based upon  the divorce?  Confidentiality gives way to disclosure..

Kodsi v Gee ,2008 NY Slip Op 06938 ,Decided on September 18, 2008 ,Appellate Division, First Department .found:
 

"Domestic Relations Law § 235(1) mandates that all papers filed in a matrimonial matter be designated as confidential. That did not require the court, in this legal malpractice action, to issue an order protecting from outside disclosure all documents requested by defendants that were submitted in connection with the underlying divorce action. The instant malpractice action alleges that defendants failed to secure an uncontested divorce, causing plaintiff to sustain substantial economic damages. The shield afforded by § 235 must, in this instance, give way to the disclosure of relevant evidence needed for the defense against such claims, including records filed in the divorce proceeding that may provide evidence to rebut plaintiff’s contentions of liability and the extent of his financial loss (see Janecka v Casey, 121 AD2d 28 [1986]).

The court did abuse its discretion, however, to the extent it denied an order to protect the confidentiality of plaintiff’s tax returns — specifically, his federal and state returns and W-2 statements for the years 2002-2007. Given the policy disfavoring disclosure of tax returns (see Williams v New York City Hous. Auth., 22 AD3d 315 [2005]), plaintiff’s cross motion should have been granted (see e.g. Foley v Kaplan, 162 AD2d 155 [1990]). "

The New York Law Journal reported a bizare instance of attorney misconduct in which plaintiff’s trial attorney acted so badly that the case was dismissed, the attorney charged with criminal contempt. tried and convicted.  She now faces probation and suspension.  But, what of the plaintiff and his case?  A good guess?  Plaintiff loses all around, and that this attorney will not have insurance available for a loss based upon criminal conduct.

"A Long Island solo practitioner whose conduct throughout an employment discrimination trial resulted in the case’s dismissal has been sentenced to two years’ probation.

Ruth Pollack, a civil rights specialist from Mineola, was also barred from practicing law in the Eastern District of New York for 45 days.

Ms. Pollack’s behavior in the underlying case, Stuart v. Secretary of the Department of the Interior, 07-cv-2239, included refusing to heed Eastern District Judge Joseph F. Bianco’s orders and repeatedly claiming in front of the jury that the orders were "illegal" or "not lawful." Ms. Pollack also arrived late five times during the two week trial, and once failed to appear."
 

"Although the sentencing hearing on Friday began 10 minutes late, Judge Ross twice sent her chief deputy into the hallway to retrieve Ms. Pollack before she appeared.

Ms. Pollack refused the assistance of her court-appointed attorney, Brooklyn solo-practitioner Susan Kellman. "Ms. Kellman is just as much a part of this retaliatory conduct as anybody," Ms. Pollack said.  Following much prodding from the court and brief arguments by Dr. Jubb – who wore jeans, a belly-length shirt and a head wrap tied around his shoulder-length braids – Ms. Pollack set forth an argument for leniency.

She contended that her tardiness was largely the product of medical issues stemming from ovarian cancer; the "contempt," she said, was only the typical back-and-forth between an attorney and a judge. She was guilty only of "disagreeing with a judge."

Arbitration in attorney legal fee disputes are governed by 22 NYCRR 1200 and the following statutes.  There is a complex statutory scheme, including specific forms, fee dispute committees, hearing schedules, and a body of law which accompanies the fee dispute proceedings.

A recent case, illustrates one quirk of the system.  Morelli & Gold v. Altman permitted the law firm to start a fee action de novo after arbitration because [this is the quirk], the law firm had not used an official form to notify the client of his right to arbitrate, and even though the retainer agreement made such arbitration "final and binding" it became neither final nor binding.

Another twist on this issue is the Quinn Emanuel Urquhart Oliver & Hedges arbitration clause.  This firm inserts an arbitration clause into its retainer agreements.  In this particular case,  ConnectU Inc. v. Quinn Emanuel Urquhart Oliver & Hedges, 602082/08, Justice Lowe of Supreme Court, New York County upheld the arbitration agreement , finding that there was no showing that they had been subject to fraud, misrepresentation or duress when they signed the retainer agreement.

"Accordingly, the court rejects petitioners’ assertion that the arbitration clause was obtained without their consent or as a result of some overreaching or other improper action on Quinn Emanuel’s part."

We’ll continue this discussion.

Here is a different kind of Streisand Effect, this time in a post-legal malpractice setting.  Leigh Jones at Law Com reports on a two firm battle.  Plaintiff’s firm Bland and Richter successfully sued Nexsen Pruet Adams & Kleemeier for legal malpractice and settled the case.  As part of that prosecution, defendant law firm had to provide a copy of their manual relating to conflict checking.  A confidentiality agreement was reached and plaintiff’s firm was to return and not again use the manual.  This suit undermines any confidentiality agreement they may have had, a la Streisand.

A new client came to them, and they again sued Nexsen.  Finding that they had not returned the manual, instead of either returning it, or not using it, it was marked at a deposition and used.  Nexsen sued and lost a contempt proceeding at the trial level.  "The Supreme Court of South Carolina determined that attorneys Eric S. Bland and Ronald L. Richter breached an agreement that their law firm had reached in a legal malpractice lawsuit that it filed against Nexsen Pruet in 2000.

Reversing the lower court, the state Supreme Court decision found that Bland and Richter violated a protective order and the settlement agreement, and were in contempt for their conduct following the resolution reached with Nexsen Pruet, a Columbia, S.C.-based firm with about 165 attorneys. "
 

"Arguing that Bland Richter’s conduct was calculated and deliberate, Nexsen Pruet offered a photograph that showed a display hanging in the Bland Richter offices.

The photo was of Richter holding a blow-up check payable to "Bland Law Firm and Richter Law Firm" and Myrick. The amount on the check was written as "$$$$$$$ Big Money $$$$$$." According to the decision, Bland was positioned on one side of the giant check in the photo and was shown shaking the hand of a person on the opposite side of the check whose face was super-imposed with an image of Neil C. Robinson, the Nexsen Pruet attorney whose conduct was at issue in the Myrick case.

Reached by phone Tuesday, Robinson said that he felt "completely vindicated" by the Sept. 22 decision. "
 

A familiar legal malpractice scenario arises when a law firm takes a medical malpractice case, or takes it "subject to investigation", then rejects the case just short of the med mal statute of limitations.  Plaintiff is left in a quandary.  Find a new med mal attorney?  Demand the first attorney do something to preserve the statute of limitations?  Give up?

When the case is not started, it is often found that the client diligently shopped the case around to other med mal firms, only to have it rejected as "too late" or "too close to the statute" or because they see fingerprints on the case from the first firm.  Plaintiff is left with no choices.

Here is a newly decided case from Justice Emily Jane Goodman of Supreme Court, New York County who has a fair share of legal malpractice cases in her docket. Gala v. Martz , Justice Emily Jane Goodman,NEW YORK COUNTY, Supreme Court ,Justice Goodman
 

"This is a legal malpractice action arising in connection with a medical malpractice claim where defendant Edward J. Martz (Martz) and co-defendant, being sued herein as Sable & Gold and Sable & Gold, P.C. (S&G), were legal counsel for plaintiff Susan Gala (Gala). In her complaint filed in this action, plaintiff alleges that defendants committed legal malpractice by failing to timely commence a medical malpractice claim on her behalf against Dr. Mark E. Pruzansky (Prusansky), an orthopedic surgeon, prior to the expiration of the statute of limitations, and that due to defendants’ negligence, plaintiff has suffered actual damages."
 

"In this case, defendants argue that, because the surgery performed by Pruzansky occurred on July 14, 1998, the two and one-half year limitations period to bring a medical malpractice action relating to such surgery ended on January 14, 2001. Defendants further argue that, even if the limitations period was tolled by the continuous treatment doctrine, since the last treatment plaintiff received from Pruzansky in connection with the surgery was on June 2, 1999, when she was provided with a new orthotic for her right foot, this would "extend the statute of limitations for a potential claim against Dr. Pruzansky to January 2, 2002, more than a month prior to the date [February 7, 2002] on which the plaintiff retained the defendants." Defendant Brief, p. 17-18. Therefore, defendants argue that the statute of limitations to commence a malpractice action against Pruzansky had already expired when they were retained by plaintiff pursuant to the retainer agreement of February 7, 2002.

This argument is without merit for many reasons. First, based on Pruzansky’s medical records, he continued to treat and provided post-surgery follow-up services to plaintiff, beginning on or about July 20, 1998 through and including October 5, 1999, for a total of not less than ten office visits by plaintiff. Robb Affirmation, Exh. J (various medical records). Secondly, according to Pruzansky’s deposition testimony based on such medical records, a part of the October 5, 1999 office visit was a follow-up examination of plaintiff relating to the July 14, 1998 surgery. Id. Exh. G (Pruzansky Deposition, p. 103). Even more importantly, the office notes maintained by Martz, as well as his own deposition testimony, reflected that when the S&G retainer agreement was signed on February 7, 2002, he was aware of the statute of limitations issue, and that a summons and/or notice should be filed promptly so as to protect plaintiff’s potential claim against Pruzansky. Young Affirmation, ¶7-9 and Exh. 7-10; Martz Deposition, p. 104-111, 115-116.

Based on the foregoing, any argument that the limitations period to commence a malpractice claim against Pruzansky had already expired when defendants were retained by plaintiff lacks merit and must be dismissed.
 

A newly decided appellate case, Executive Risk Indem. Inc. v. Pepper Hamilton,    LLP  2008 NY Slip Op 07044 Decided on September 23, 2008 Appellate Division, First Department
Saxe, J.  turns on the question of when a law firm must notify its insurer [or re-certify upon renewing the insurance] that there are no claims lurking against them, or whether they have a reasonable belief that there may be a claim against them which must be reported to the carrier.

"The law firm Pepper Hamilton and one of its members, W. Roderick GagnÉ, were [*3]deprived of millions of dollars in professional liability insurance coverage purchased by the firm, by the order of the motion court declaring that the three excess insurance carriers have no obligation to indemnify the firm. The court reasoned that because the law firm knew of misconduct on the part of its client, and of the likelihood that claims would be made against the firm itself based upon its representation of that client while the misconduct took place, it had an obligation to inform the insurers of its knowledge of the misconduct and its concern that it might be subject to suit as a result when applying for coverage or for renewal of coverage. As to two of the insurers, the court precluded coverage under the policies’ "prior knowledge" exclusions, and as to the third, it held that the insurer was entitled to rescission of the policy effective the year the claims were made. "

"We disagree with the motion court’s broad view of the nature and extent of the acts, errors or omissions and the type of knowledge to which the prior knowledge exclusion may be applied.

The two-step analysis set out in Coregis Ins. Co. v Baratta & Fenerty, Ltd. (264 F3d 302, 306 [3d Cir 2001]) should be used to determine whether the exclusion applies. In Coregis, the Third Circuit employed what it referred to as a "mixed subjective/objective standard" to determine whether a professional liability policy’s similarly-worded exclusion applied. That standard asks first the subjective question of whether the insured had knowledge of the relevant facts, and second, the objective question of whether a reasonable lawyer would foresee that those facts might be the basis of a claim.

The primary focus of our analysis here is the objective requirement that there be a basis on which to reasonably expect a claim against the law firm. Notably, it has been held that this prong of the test "does not require that the insured actually form such an expectation [that a suit or claim will result]" (Colliers Lanard & Axilbund v Lloyds of London, 458 F3d 231 [3d Cir 2006]), but that a reasonable person would expect the claim. By the same token, even if the evidence establishes as a matter of law that the insured has formed a subjective belief that a suit may ensue based upon some other party’s misconduct, that does not alone establish the existence of objective facts which would support the conclusion of a reasonable professional that the insured will be subjected to professional liability claims.

Here, while evidence strongly suggests that defendant GagnÉ and other firm members subjectively either believed or feared that the firm might be subjected to professional liability [*7]claims by entities claiming injury as a result of SFC’s conduct, his or the firm’s subjective belief that a suit may ensue based upon SFC’s misconduct is not enough. Pepper Hamilton’s knowledge of SFC’s actions, and of its own legal work related to SFC’s operations, may have provided objective evidence that SFC might be sued and supported a concomitant suspicion that those with claims against SFC might seek relief against SFC’s law firm as well. But we find nothing in the record constituting objective evidence permitting a reasonable professional to conclude that Pepper Hamilton itself did anything that would subject it to suit or other claim. Certainly, no wrongful conduct on Pepper Hamilton’s part is established as a matter of law so as to entitle the insurers to summary judgment declaring that the firm knew or should have known that a claim might be made against the firm.

The underlying claims against counsel arise out of an alleged securities fraud scheme by the firm’s former client, Student Finance Corporation (SFC) and its principal, Andrew Yao. SFC was in the business of financing loans to students in trade schools, primarily truck driving schools; it then pooled the loans into certificates or securities that it sold to investors, using private placement memoranda prepared by Pepper Hamilton. Another client of Pepper Hamilton, Royal Indemnity Company, provided credit risk insurance for the pooled loans."
 

Is discovery in legal malpractice limited by the NY matrimonial rules?  This recent case Kodsi v Gee ,2008 NY Slip Op 06938; Decided on September 18, 2008;  Appellate Division, First Department  holds that there are some limits.
 

"Domestic Relations Law § 235(1) mandates that all papers filed in a matrimonial matter be designated as confidential. That did not require the court, in this legal malpractice action, to issue an order protecting from outside disclosure all documents requested by defendants that were submitted in connection with the underlying divorce action. The instant malpractice action alleges that defendants failed to secure an uncontested divorce, causing plaintiff to sustain substantial economic damages. The shield afforded by § 235 must, in this instance, give way to the disclosure of relevant evidence needed for the defense against such claims, including records filed in the divorce proceeding that may provide evidence to rebut plaintiff’s contentions of liability and the extent of his financial loss (see Janecka v Casey, 121 AD2d 28 [1986]).

The court did abuse its discretion, however, to the extent it denied an order to protect the confidentiality of plaintiff’s tax returns — specifically, his federal and state returns and W-2 statements for the years 2002-2007. Given the policy disfavoring disclosure of tax returns (see Williams v New York City Hous. Auth., 22 AD3d 315 [2005]), plaintiff’s cross motion should have been granted (see e.g. Foley v Kaplan, 162 AD2d 155 [1990]). "