Legal Pad Blog Reports that the ConnectU people who successfully sued Facebook are in a dispute with Quinn Emanuel over fees.  We wonder if anyone has considered the collateral estoppel effect of fee arbitrations on legal malpractice cases. The teaser from Legal Pad is:

"San Jose Federal Judge James Ware ruled that the settlement should be enforced and appointed special master George Fisher to do the enforcing. In his report, Fisher writes that the “ConnectU shareholders have threatened a malpractice action against Quinn Emanuel” without explaining much more. Fisher also relates that there is currently an arbitration in New York State Supreme Court between the firm and ConnectU over the fee dispute. "

Legal Pad reports the dispute between ConnectU and Facebook is:

"A quick refresher: ConnectU founders Tyler and Cameron Winklevoss sued Facebook founder and Harvard pal Mark Zuckerberg, accusing him of stealing their ideas to start his hotter-than-hot social networking site. After reaching a settlement earlier this year, ConnectU said it had been hoodwinked by Facebook about the value of the company’s stock and so got gypped out of big payout. The company tried to back out of the deal and fired its lawyers at Quinn Emanuel, the high-profile L.A. trial firm that advised on the settlement. Then Quinn filed a lien against any money ConnectU would recover from Facebook. "

Anthony Lin wrote yesterday in the NYLJ about the Shelly v. Bodian case, Index No. 602254/05, currently being litigated in Supreme Court, New York County.,  

The case highlights some interesting principals of legal malpractice which warrant examination.  We’ll take a further look at the motion to dismiss in this case, which was decided last year.

Is it legal malpractice to represent both a small company [closely held] and one of its originators, while suing another?  Need the attorney advise, and perhaps remind the originator that the company and not he may be liable for legal fees?  This is a secondary problem discussed by Justice Goodman.  She writes:  "The fifth cause of action alleges that defendants failed to advise plaintiff Joseph P. Shelly, Jr. that he was not personally liable for the legal fees that the defendants were entitled to receive as a result of their defense of an entity in which Shelly had an interest."

Attorney-Defendants in the case argued that partial payment of their fees and an equivocal letter provided a defense to this cause of action.  The court found that evidence offered in a motion to dismiss must "conclusively establish a defense as a matter of law before a court may dismiss a claim pursuant to CPLR 3211(a)(1).  Equivocal letters are insufficient, and the court denied a motion to dismiss.

Anthony Lin writes today in the NYLJ about the Shelly v. Bodian case, Index No. 602254/05, currently being litigated in Supreme Court, New York County, and discusses a recent decision of Justice Emily Jane Goodman.  Justice Goodman has a fair number of legal malpractice cases on her docket. 

Lin’s article highlights a well known meme in legal professional circles;  lateral movement between biglaw firms.  One publication, NY Lawyer is highly sensitive to movement of attorneys between large law firms.  "NY Lawyers on the Move" or "The Problem of Poached Lawyers" is a staple of this particular magazine.

Is Shelly "A legal malpractice suit against the current New York managing partner of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo claiming he was too preoccupied with his lateral movement among firms to timely file a lawsuit " as Lin writes?  Perhaps.
 

The case highlights some interesting principals of legal malpractice which warrant examination.  We’ll take a look at the motion to dismiss in this case, which was decided last year.

Is it legal malpractice to allow amendment of an answer which then leads to dismissal of a cause of action because the original answer failed to allege statute of limitations and the amended answer successfully alleged statute of limitations?  Justice Goodman held that it was not legal malpractice, because she, and the majority of courts permit amendment of answers absent prejudice, which she describes as "investment of time/expense in engaging in substantial discovery, motion practice or trial preparation."  If there is no investment, there is no prejudice, and a reasonable [if hypothetical] court would have allowed amendment.  Ergo, no malpractice.

Tomorrow:  more on these two decisions.

It’s often surprising, when reading a newly published case, at the wide difference between plaintiff’s take on the case, and the defense presented by his former attorneys.  The attorneys, who just a short period earlier had been plaintiff’s paragons, now have a diametrically opposed viewpoint.  Sometimes it may be justified.  Here is a newly published case in which plaintiff went into bankruptcy, and suspended his mortgage and other payments on a house.  Years went by, and inter alia the house became more valuable.  Then he was forced to pay the old arrears. 

John Vlahakis, appellant, v Mendelson & Associates, et al., respondents. (Index No. 13210/04)2007-06336  SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT2008 NY Slip Op 6703;September 2, 2008, Decided

"The plaintiff alleged that he sustained damages because the defendants, who were his attorneys in a bankruptcy proceeding, advised him that he would not have to pay the arrears which he owed on the mortgage on his residence. The plaintiff further alleged that this advice constituted legal malpractice, and that as a result, he was required to pay interest and late charges on the arrears, as well as attorneys’ fees."

"Here, the defendants met their initial burden on their motion for summary judgment by demonstrating, prima facie, that the plaintiff did not sustain any damages as a result of their actions. Specifically, the defendants established that their efforts on the plaintiff’s behalf resulted in his continuing to reside in his house for approximately seven years, during which [*2] time the value of his house increased significantly. Moreover, the defendants established that during that period the plaintiff was not paying his mortgage, taxes, or insurance. In opposition, the plaintiff failed to raise a triable issue of fact as to whether the sum he eventually paid to the bank exceeded the amount that he saved by not paying his mortgage, taxes, and insurance for approximately seven years. The plaintiff’s mere assertion, which was unsupported by competent evidence, that he had sustained monetary damages, was insufficient to raise a triable issue of fact."

This seems to be a new twist.  It dovetails with our earlier discussions of  new venues in legal malpractice, and cases being brought against lawyers by persons other than their clients.  Here, former opponents sue the attorneys after bargaining with the bankrupt client and obtaining communications between bankrupt client and its attorney.  Now:

"Eager to put an end to a fraud suit brought by a software developer, New Century Mortgage agreed, as part of a settlement in federal bankruptcy court in Delaware, to turn over to opponent Positive Software Solutions Inc. privileged material and internal company documents that also concern a related federal software licensing suit, according to Texas Lawyer.

Now, Positive Software is using those privileged materials to seek sanctions against New Century’s counsel, the Susman Godfrey law firm and two of its partners, Barry Barnett and Ophelia Camina in a federal lawsuit in Texas. It contends that they engaged in fraud and misconduct that eventually caused Positive Software to lose a 2004 arbitration of the software licensing suit, the legal publication explains.

The partners say they did nothing wrong, Texas Lawyer reports. But Positive Software is using material it got from New Century to bolster its argument, in an August filing, that Susman Godfrey should have to turn over internal litigation work product, on the theory that the crime-fraud exception applies, according to attorney Michael Shore of Shore Chan Bragalone in Dallas. He represents the software developer.

"As a practical matter, documents that were thought to be privileged are in the other side’s hands. So, basically, what they did was bought the privilege. And that, in my experience, is unprecedented," says partner David Beck of Beck Redden & Secrest in Houston, who represents the Susman Godfrey defendants."

Legal Pad discusses the ABA ABA’s Standing Committee on Lawyers’ Professional Liability  Report on Legal Malpractice in this report. 

"Legal malpractice claims have gotten more expensive. We think.The claims that result in the highest of indemnity payments appear to be on an upward march, according to an ABA study unveiled this morning at the ABA’s national legal malpractice conference in San Francisco.It’s just not clear how vigorous a march.  The study showed a "“significant increase” in multimillion dollar payouts in the past four years. The study found that claims leading to payments of more than $2 million had more than doubled, from 19 in the 2003 study to 44 in the latest study"

In this short article [no link to the decision] it is reported that in the Cal City v. Wilson Elser case, a legal malpractice jury verdict of $ 17 million + has been dismissed and reduced to below $ 1 million dollars.

" California appeals court has upheld a $941,000 legal malpractice verdict against Wilson Elser Moskowitz Edelman & Dicker, but has thrown out $1.7 million of the original award given to the firm’s former client.

The California Court of Appeal, Second District, on May 28 affirmed the $941,000 award to Cal-City Construction, a company that had hired Wilson Elser after the Los Angeles Unified School District removed the company from one construction project and refused to make payments on another.

According to the decision, Wilson Elser had advised the construction company to walk off the job on the second project. However, prior to the construction company’s breach of contract trial against the school district, the law firm told the client that it should not have walked off the job, and that its only option was to settle under unfavorable terms.
 

Thomas Hyland, managing partner of Wilson Elser’s New York office, said the firm was evaluating the decision.
"We are disappointed that any part of the verdict against our firm was affirmed, but we are pleased that the majority of claim has been knocked out," Hyland said. "
 

Legal Profession Blog reports this dismissed legal malpractice case.  Before reading, please see the last paragraph in which the court holds that there still is a remedy available.

"The North Carolina Court of Appeal today held that a claim of legal malpractice was barred by the statute of repose against a lawyer who had dismissed his client’s accident claim and concealed the dismisal through a series of false representations."

"The court held:

`In the instant case, the facts show that on 21 October 1997, McLaurin voluntarily dismissed without prejudice plaintiff’s claims arising from the 1992 accident. Rule 41(a) of the North Carolina Rules of Civil Procedure requires that any new action after a voluntary dismissal be refiled within one year after the dismissal. N.C. Gen. Stat. § 1A-1, Rule 41(a) (2007). Thus, the last opportunity for McLaurin to act on plaintiff’s claim occurred on 21 October 1998. Plaintiff brought his professional malpractice action against McLaurin on 9 May 2006, nearly seven years after McLaurin’s last act. Thus, plaintiff’s professional negligence claim was barred by the statute of repose, and the trial court did not err in dismissing plaintiff’s claim.
We note that the actions of McLaurin, as alleged in plaintiff’s complaint, are particularly egregious. However, it is for the legislature, and not the courts, to establish statutes of limitations, statutes of repose, and any exceptions to those rules. It is not the role of the courts to create exceptions to the laws established by the legislature where the intent of the legislature is made manifestly clear on the face of the statute.

The court further held that a claim of fraudulent concealment was properly brought against the individual lawyer but not his law firm. ‘"