He was one of the best known, and feared plaintiff’s attorneys in New York.  He had entire floors of offices at the Woolworth building in lower Manhattan, and early every morning a large number of trial attorneys would gather for breakfast and pick up their day’s work.  The Eisen and Napoli firm won gazillions of dollars in verdicts until it all ended.

Eisen has been pursuing a legal malpractice case against his own former attorneys for years, and yesterday the Court of Appeals gave it a green light to continue. 

The NYLJ reports:  "The Court of Appeals yesterday revived a legal malpractice suit against law firm Larossa, Mitchell & Ross over its representation of a personal injury lawyer found to have defrauded New York City by fabricating evidence in tort cases.

The suit, which was previously dismissed because Larossa’s ex-client was in dissolution, cannot now be barred on res judicata grounds against a successor firm, the court ruled.

The case stems from the travails of the law firm Morris J. Eisen PC. Once one of the New York’s top personal injury firms, the firm was accused by the city of falsifying evidence in a 1986 civil suit. Seven lawyers and investigators for the firm, including Morris J. Eisen, were subsequently targeted by federal prosecutors in Brooklyn and convicted on Racketeer Influenced and Corrupt Organizations Act charges in 1991.

Mr. Eisen had been represented in the criminal case by James M. Larossa, and the Larossa firm also represented the Eisen firm in the civil suit by the city. Eisen first tried to bring a legal malpractice suit against Larossa after a court granted partial summary judgment to the city on its fraud claims. The city was awarded $2.1 million.

The suit claimed Larossa did not adequately oppose the city’s summary judgment motion, failing to present evidence that would have shown that, notwithstanding any false testimony, the city was actually responsible for the injuries in the cases at issue.

"

We reported this confluence of Politics, Legal Malpractice and big estate probate work several weeks ago.  Defendants were  R. Christopher Bell, the 2006 Democratic gubernatorial nominee and a former U.S. congressman; Annette M. Henry; and their former firm, Bell & Henry in Houston.

Today, the Texas Lawyer Blog writes:  "former client’s breach-of-fiduciary duty claims can go to trial. In a June 24 decision, the 14th Court of Appeals held in Trousdale v. Henry, et al. that Lenieta Wylene Trousdale’s breach-of-fiduciary duty claims against the two attorneys and the firm were timely filed and are separate from her time-barred legal malpractice claims against all three defendants. The 129th District Court in Houston had granted summary judgment to Henry, Bell and the firm and dismissed Trousdale’s malpractice and breach-of-fiduciary duty claims. In a 2-1 decision, the 14th Court concluded that the trial court erred in applying the two-year statute of limitations to Trousdale’s breach-of-fiduciary duty claims, which include her claim that the defendants allegedly failed to tell her that her probate case and a separate fraud-and-conversion suit had been dismissed even though they continued to demand payment from her. The divided 14th Court panel affirmed the trial court’s order dismissing Trousdale’s malpractice claim but reversed the portion of the order dismissing the breach-of-fiduciary duty claims, which are controlled by a four-year statute of limitations. Justice Leslie Brock Yates joined Justice Wanda McKee Fowler in the majority opinion. Justice Eva Guzman wrote in her concurring and dissenting opinion that she would hold all of Trousdale’s claims are time-barred. "

Here, in an early report from the Competition Law 360 Blog is a report that:

"Kaye Scholer LLP is facing a legal malpractice suit over the way attorneys handled several antitrust suits accusing Celanese Americas Corp. of fixing the price of polyester staple fiber.

The suit, filed late last month in Dallas County, Texas, was removed Thursday to the U.S. District Court for the Northern District of Texas."

In a familiar setting, this time the case is receiver v. former attorney.  Other times it is bankruptcy trustee v. attorney.  Southwest Exchange, a former Nevada financial company involved in litigation and in receivership ended 2007 owing $98 million to 130 real estate investors.

Now, in this familiar setting the receiver is suing the law firm of Snell & Wilmer and accusing them of a fraudulent scheme. From the Wild Wild Law Blog     via a local newspaper reports:

"The Review-Journal reports:
The receiver for Southwest Exchange, the Henderson-based financial company that collapsed in 2007 owing $98 million to 130 real estate investors, is suing regional law firm Snell & Wilmer and accusing the law firm’s managing partner in Las Vegas of participating in a fraudulent scheme.

Attorney Steve Morris, who represents Snell & Wilmer, denied the allegations. "The allegations contained in the complaint are false and are not based on the facts," Morris said in a statement. "The complaint is nothing more than a litigation tactic intended to pressure the firm and its partner, Patrick Byrne, into settling claims that simply do not exist."

The article details how Byrne [allegedly] loaned millions of dollars to the owners and operators of Southwest Exchange in exchange for stock and airline flights, failed to disclose to one officer of the company that he was representing another officer of the company, and that Snell & Wilmer "failed to incorporate a provision of Nevada statutes that states that it is a felony for Southwest Exchange to transfer or commingle client money without written consent of the client".

To what extent may a legal malpractice defendant seek disclosure of privileged discussions?  The general answer is if they are "at issue" in the legal malpractice.  Here in the Akin Gump legal malpractice case is a good example.  From Law.Com:

"Manhattan appeals court has narrowed the scope of discovery Akin Gump Strauss Hauer & Feld can seek from the former hedge fund managers who are suing the law firm for fraud and legal malpractice.

James McBride and Kevin Larson, the former principals of Veras Investment Partners, sued Akin Gump for over $4 billion in damages last year, claiming the firm advised it that the "late trading" activities which made the fund a target of former New York Attorney General Eliot Spitzer were legal.

A judicial hearing officer had ruled that the Veras plaintiffs had waived privilege regarding these communications by placing them "at issue" in their complaint. But the Appellate Division, 1st Department ruled Thursday in Veras v. Akin Gump, 600340/07, that mere relevance did not suffice to place the contents of otherwise privileged communications at issue. "

As part of the "but for" rule, a hypothetical judgment which plaintiff would have won, except for the attorney’s mistake, is the measure of damages in legal malpractice.  We have written about this in the New York Law Journal. [4/20/07]  The defense of collectibility is that even if successful in the case below, plaintiff would not have been able to collect the hypothetical judgment.

Here in New York, the Second Department takes the majority position nationwide, and the balance of the other departments take the minority position.  Here is an Ohio case Paterek v. Peterson which nicely discusses each position and gives differing states’ views on the matter.

Decedents, Estates, Administrators, Lawsuits.  This area of legal malpractice is extraordinarily twisted and difficult when asserting privity.  Take for example the question of an executor suing the decedent’s attorney [who prepared the will] or the estate’s attorney [who offered the will for probate.]  They are not necessarily the same person, and different statutes of limitation calculate ions apply.  There will sometimes be privity between the estate and the will-writing attorney, and at other times, none,  see, Jacobs v. Kay, 2008 NYSlipOp 03710.

Here, similarly, is a Texas Case, reported in the Southeastern Texas Record.

"Houston attorney Harold Dutton had appealed Jefferson County 60th District Judge Gary Sanderson’s declaratory judgment that Dugas and his firm owed no duty to a client of Dutton’s. However on June 12 the appeals court upheld Sanderson’s in favor of Dugas in an opinion authored by Justice Hollis Horton.

The case began when Elizabeth Roberts hired Dugas & Associates to handle a survival claim after the death of her brother, Vincent Lazard. Roberts represented to Dugas that she was "the proper party" to bring suit and that she would undertake the steps required to be appointed as the personal representative of her brother’s estate. She also represented to Dugas that no administration of Lazard’s estate was pending.

"Based upon its relationship with (Roberts), Dugas & Associates filed a healthcare liability suit against (Lazard’s) healthcare providers on behalf of his estate," Justice Horton writes.

However Dugas then learned that prior to filing the suit, Patricia Covington had been appointed as executor of Lazard’s estate and that Covington had hired Harold Dutton to prosecute healthcare liability claims.

Dugas then filed suit against Dutton, stating that he was "surprised to learn Patricia Covington had been appointed executor" of Lazard’s estate. "

We reported on this Pennsylvania case last week, having come across several previously unknown words in the decision and article, such as prothonotary.  Here is a follow up article in which the judge recuses himself after the verdict.

"Luzerne County President Judge Mark A. Ciavarella Jr. has recused himself from making post-trial rulings in a $3.4 million legal malpractice case won in February by Robert J. Powell, the prominent attorney with whom Ciavarella has had financial ties.

Ciavarella issued an order Monday directing court administrators to assign another judge to rule on two motions filed by Jeffrey McCarron, the attorney representing the Hazleton law firm that lost to Powell’s clients — a group that includes members of the Slusser family of contractors and construction material suppliers.

In the first motion, filed May 13, McCarron requested a new trial, saying Ciavarella showed an “obvious display of favoritism” toward Powell’s clients. McCarron accused the judge of excluding evidence presented on behalf of his clients, Laputka, Bayless, Ecker & Cohn; making statements in front of the jury that prejudiced the firm’s case; and limiting the testimony of the firm’s witnesses, while granting more leeway to Powell and his witnesses. "

Chicago Business Litigation Lawyer Blog reports that a huge class action legal malpractice case against DLA Piper Rudnick has been dismissed.  Plaintiff’s and defendants had entered into a tolling agreement that was amended and went on for several years.  This case was valued at over $ 19 million dollars.  After several amendments of the tolling agreement plaintiffs started the case, but the court determined that it was started a year too late!  Joyce v. DLA Piper Rudnick ended in dismissal.

From the Blog: "The underlying dispute started in 1999, when 21st Century agreed to merge with competitor RCN. DLA Piper attorneys drafted a merger agreement with a mistake that lowered the price of the stock 21st Century shareholders were to receive by $19 million. In response, Edward Joyce, the stockholders’ representative, made a tolling agreement with DLA Piper, in which the statute of limitations was tolled unless a stockholder lawsuit was filed against the firm on or before December 31, 2002. The firm agreed not to avail itself of any statute of limitations defense until after that day. This agreement was amended four times, each time altering only the date. The last agreement set that date at August 21, 2005.

Joyce filed a legal malpractice class action in Cook County against DLA Piper on August 30, 2006. After some procedural disputes, including a finding by the trial court that the filing was timely, the firm won a motion to dismiss based on plaintiff’s lack of standing as a non-client. The plaintiffs appealed and the defendant cross-appealed on the trial court’s decision that the suit was timely.

The appeals court upheld that cross-appeal, finding that the plaintiffs were barred because they filed nearly a year after the last agreement expired. The court rejected the defendants’ contention that it was timely because each amended tolling agreement constituted a new contract that extended the statute of limitations. "

Here, we have Section 130 and Rule 11.  In South Carolina, there are frivolous law suit penalties and sanctions too.  Ex Parte Gregory v. Malloy. is the rather unflattering story of one legal malpractice attorney who went ahead and started a ridiculous suit, all for naught.

Plaintiff is injured in an automobile accident case, and his attorney successfully settles the case.  There is a medicaid lien dispute and the proceeds are not readily distributed.  Plaintiff hires a new attorney, who starts a conversion action against target attorney, and incidentally, makes inflammatory remarks to a newspaper, too.

From the decision:

"In May 1999, Jerry Bittle (Bittle) was seriously injured in an automobile accident in which one person died and four additional people were injured. Bittle sustained a brain injury and is now unable to care for himself. After the accident, Bittle’s elderly mother, Melton, retained respondent to represent Bittle’s interests in seeking recovery for his injuries.

In June 2001, an agreement was reached on how the available insurance coverage would be allocated among the claimants. Bittle was to receive $14,868.97. Within two months, Melton and Bittle went to respondent’s office to consummate the settlement. Respondent was not present. Bittle endorsed the settlement check and respondent’s secretary explained that Bittle would not receive the endorsed check but he would receive another check later.

Melton called and visited respondent’s office several times to determine when the settlement check would be transferred to them; however she was unable to reach him. Melton was aware there was not enough money available from the settlement to pay all of the medical bills; however, she testified she thought respondent had either kept or spent the settlement proceeds.

Melton consulted appellant in January 2004. After the above facts were related to appellant, appellant contacted the insurance agency for the at-fault party and talked with the adjuster who had handled the claim. After obtaining the settlement documents, appellant determined the settlement check was presented for payment on August 24, 2001. Appellant reviewed telephone records that revealed the number of times Melton had called respondent. Appellant also knew that Melton had sought help from a North Carolina attorney; however, seeking that attorney’s help did not produce any response from respondent.

Appellant informed Melton she should file a grievance with the Office of Disciplinary Counsel because he felt that if Melton filed a grievance then it might “shake [the money] loose” from respondent. Appellant prepared the letter to disciplinary counsel for Melton and also prepared a subsequent letter. At this point, appellant indicated he was waiting to see what would happen with the grievance and that he was hoping respondent would deliver the money; however, he became concerned that the statute of limitations on any claim concerning the settlement proceeds would run by the end of August 2004.

In June 2004, Melton wrote respondent a letter terminating his services for failure to account for the settlement proceeds. She then entered into a retainer agreement with appellant so that he would pursue claims for wrongfully holding the settlement funds. Appellant was to take one-third of Melton’s recovery, plus any expenses were to come from Melton’s portion of her recovery. Appellant associated J. Leeds Barroll as co-counsel in late July 2004.

After Barroll and appellant discussed the facts of the case, Barroll researched causes of action and drafted the complaint. Barroll asked appellant if he thought he should contact respondent but appellant did not think it would “do any good.” Because respondent had not responded to Melton’s requests for information regarding the funds, Barroll included the conversion action in the complaint. Barroll testified that because the statute of limitations was going to run, he felt they were in a “shoot first, ask questions later” mode. Barroll stated appellant did not initially tell him that he had been on the case since January.

Appellant testified that the basis of the claim for conversion against respondent was that respondent refused to account for the money. Appellant stated he had no knowledge that respondent had actually converted the money.

Leighton Bell, a staff writer with the Cheraw Chronicle, learned of Melton’s suit against respondent when the process server personally gave the summons and complaint to him. As a result, he wrote two articles regarding the suit. He stated he spoke to appellant first and that appellant was not surprised by his call and was very helpful with the article. In one article, appellant was quoted as saying: “As an attorney [respondent] should have known he couldn’t co-mingle funds,” and “If for some reason he couldn’t disperse the check he should have put it in a separate fund. Whatever [respondent] did, he should’t have kept it in his pocket and collected all the interest on it.”

After the action began, respondent immediately transferred the settlement proceeds from his trust account to appellant. Barroll then deposed the Medicaid agent regarding Medicaid’s lien on the settlement proceeds. After the deposition, Barroll voluntarily dismissed the case with prejudice a mere seven weeks after filing. Barroll stated that if he had been involved in the case since January, as appellant had been, he would have had time to interview the Medicaid agent prior to filing a lawsuit. Barroll also acknowledged that once he requested respondent’s file and reviewed it, he was able to determine that respondent had been in touch with Medicaid about reducing its lien against the settlement proceeds. Although the contact was minimal, Barroll felt it was a waste of time to proceed with the lawsuit. He indicated there was no evidence that appellant ever asked for respondent’s file.

As soon as respondent transferred the money to appellant, Barroll began negotiations with Medicaid and the medical providers to compromise the liens and bills. The Medicaid lien was compromised for $3,469 and the balance of the settlement funds, after subtracting $4,956.32 in attorney fees and $1,045.15 in expenses, was paid to Melton. Melton received $5,398.50.

Respondent filed his motion for sanctions and contended that appellant had no basis for filing a claim, and in particular, the conversion claim. Respondent stated in his affidavit that he was representing Melton and Bittle for free. He stated he discussed with Melton and Bittle how to deal with all of the medical liens and that they agreed that they did not want to jeopardize Bittle’s Medicaid eligibility. He requested a waiver of the Medicaid lien but was only able to obtain an agreement for reduction. He stated, even with the reduction, there would be no funds left over for Bittle.

Due to Rule 1.15 of the Rules of Professional Conduct, respondent stated he was obligated to hold the settlement funds until the disputes between the lienholders and his client were resolved, a fact he explained to Bittle and Melton.[2] He informed them he may be able to recover funds for Bittle if he held the funds until the statute of limitations had expired on the medical provider liens. This method would leave only the Medicaid lien to resolve. He then held the funds per their agreement. The C.P.A. who reviewed respondent’s account stated the funds never left respondent’s trust account until the check was written to appellant.

Appellant testified he did not contact respondent because he thought if respondent would not respond to his clients or the North Carolina attorney, then he would not respond to him. He also felt it was unnecessary to contact respondent because he expected Disciplinary Counsel to take care of it. Appellant stated he did not get respondent’s file because he did not think he would learn anything from it.

The trial court granted respondent’s motion for summary judgment and found there was no dispute the funds remained in respondent’s trust account from the time of the settlement until the funds were disbursed to appellant. The court concluded the cause of action for conversion was frivolous. The court did not issue a judgment against Melton because she had relied on the advice of counsel. The court found appellant had not conducted a reasonable investigation before filing the conversion suit. The court awarded respondent $27,364.31 in attorney fees and costs in defending the action and in pursuing the claim for sanctions.