Veras Investment Partners, LLC, et al., Plaintiffs-Appellants, v Akin Gump Strauss Hauer & Feld LLP, Defendant-Respondent.

3812N, 600340/07

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT

2008 NY Slip Op 5563;
June 19, 2008, Decided

The court granted a motion by defendants requiring plaintiffs to divulge attorney client discussions ‘granting defendant’s motion for a declaration that plaintiffs waived the attorney-client privilege by placing certain subjects "at issue," and to compel the disclosure of otherwise privileged communications and attorney work product, unanimously modified, on the law and the facts, disclosure of otherwise privileged materials relating to defendant’s 2002 advice to plaintiffs and the October 2003”
“In this legal malpractice and fraud action, defendant moved for an order compelling disclosure of communications plaintiffs may have had with their nonparty counsel as well as the work product of such counsel. The judicial hearing officer supervising discovery granted the motion on the ground that plaintiffs waived the attorney-client privilege. Thereafter, the Commercial Division denied plaintiffs’ motion to vacate the JHO’s order. The instant appeal, from the Commercial Division’s order, concerns the scope of plaintiffs’ waiver.”

“In rendering his decision, the JHO determined that any relevant advice plaintiffs received from their nonparty counsel bears on the issue of plaintiffs’ reasonable reliance on defendant’s advice regarding the legality of their trading practices. Based solely on the [**9] relevance of such advice, the JHO concluded that plaintiffs had waived the privilege with respect to any attorney-client communications that bear on plaintiffs’ state of mind regarding the legality of their trading practices. The JHO similarly reasoned that plaintiffs waived the privilege as to communications with nonparty counsel regarding defendant’s disclosure of its potential conflicts and plaintiffs’ understanding and waiver of such conflicts.

HN3 "[T]hat a privileged communication contains information relevant to issues the parties are litigating does not, without more, place the contents of the privileged communication itself at issue’ in the lawsuit" (Deutsche Bank, 43 AD3d at 64). Instead, "at issue" waiver occurs when a party has asserted a claim or defense that he or she intends to prove by use of the privileged material (id.). Accordingly, it was error for the JHO to find waiver on the basis of relevance alone. By itself, relevance also provides no basis for the JHO’s conclusion that plaintiffs’ claims stemming from defendant’s 2002 late trading advice and its preparation of McBride and Larson for their proffers raise "factual assertions which can only be resolved by an examination [**10] of the advice given by the other attorneys." The JHO’s order also directs the disclosure of nonparty [*4] counsels’ "analyses and evaluations of plaintiffs’ jeopardy" with respect to plaintiffs’ rationale for entering into the settlement agreement with the regulators. Such materials would constitute attorneys’ work product, immune from disclosure under CPLR 3101(c), because they involve strategy and legal theory (see Rodriguez v City of New York, 29 AD2d 962, 289 N.Y.S.2d 233 [1968], appeal dismissed 26 NY2d 833, 257 N.E.2d 906, 309 N.Y.S.2d 362 [1970]). HN4 The assertion of a cause of action with a claim for damages arising out of the settlement agreement does not constitute a waiver of the work product immunity (see Deutsche Bank, 43 AD3d at 66).”

MITCHELL PHILLIPS AND DALE PHILLIPS, PLAINTIFFS-RESPONDENTS, v MORAN & KUFTA, P.C., JOSEPH J. MORAN, ESQ., RICHARD J. KUFTA, ESQ., DEFENDANTS-APPELLANTS, ET AL., DEFENDANT.

718 CA 07-02711

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FOURTH DEPARTMENT

2008 NY Slip Op 6025;
July 3, 2008, Decided

JUDGES: PRESENT: SCUDDER , P.J., HURLBUTT , SMITH , GREEN , AND GORSKI , JJ.

Order affirmed without costs ”In support of their motion, defendants had the burden of establishing that plaintiffs are unable to prove at least one of those essential elements (see id.). Here, defendants failed to meet that burden inasmuch as, by their own submissions, they raised triable issues of fact "whether discretionary leave to file a late notice of claim against [the County] would have [**3] been available"

DEALY-DOE-EYES MADDUX, Appellant, v RONALD R. SCHUR JR., Respondent.

503708

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, THIRD DEPARTMENT

2008 NY Slip Op 6000
July 3, 2008, Decided

In this legal malpractice action, this Court previously affirmed the denial by Supreme Court (Best, J.) of, among other things, the parties’ motions for summary judgment. Thereafter, a jury trial was convened in December 2005 and, at the close of plaintiff’s proof, the court dismissed the case. In March 2007, plaintiff brought the present motion, purportedly pursuant to, asserting that the court should vacate its prior order of dismissal based upon newly discovered evidence. Opting to treat plaintiff’s motion as one to be relieved from a prior judgment Supreme Court (Aulisi, J.) denied the motion, concluding that plaintiff failed to prove that the evidence would probably have altered the outcome [**2] and that the evidence could not have been discovered earlier. Plaintiff now appeals and we affirm.

In this Lexology report, the lawfirm Lewis Brisbois Bisgaard & Smith LLP argues that a fall decision of the Court of Appeals re-affirms the principal that a legal malpractice claim might proceed even in fhe fact of documents signed by plaintniff or its predecessor.  The facts of Bishop v. Maurer  2007 NY Slip Op 6743; 9 N.Y.3d 910; 875 N.E.2d 883; 844 N.Y.S.2d 165; 2007 N.Y. LEXIS 2666

"involved the plaintiffs’ contention that the attorneys who prepared estate planning documents for plaintiffs’ decedent were negligent in drafting. The defendant law firm argued that the claim should be precluded based on the doctrine that parties should be bound by the documents which they (or, here, their decedent) executed. The Court held that the documents did not necessarily preclude a legal malpractice claim, since a client might be able to establish that his or her attorney negligently furnished an incorrect explanation of the contents of the document. "

The Decision in the Court of Appeals: "The order of the Appellate Division should be affirmed, with [**911] costs, and the certified question not answered on the ground that it is unnecessary. It is true that plaintiffs here, [*2] as is normally the case, are bound by the estate planning documents decedent signed. Nevertheless, the conclusiveness of the underlying agreement does not absolutely preclude an action for professional malpractice against an attorney for negligently giving to a client an incorrect explanation of the contents of a legal document (see Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, 96 NY2d 300, 305, 751 NE2d 936, 727 NYS2d 688 [2001]). Here, however, plaintiffs’ complaint is devoid of any nonconclusory allegation that incorrect advice was given. "

Law.com reports that the Proskauer Rose legal malpractice case continues, but that a discovery dispute over deposition documents has been decided in Proskauer’s favor.

"Proskauer Rose will not be required to turn over internal working papers in a legal malpractice suit filed by Boca Aviation, the 4th District Court of Appeal ruled Wednesday.

Documents used to prepare a Proskauer partner for his deposition are protected by attorney-client and work-product privilege since he did not refer to them during questioning, the appellate panel ruled.

The Boca Raton law firm challenged an order by Palm Beach Circuit Judge Diana Lewis requiring production. Judges Barry Stone, Mark Polen and Larry Klein overturned her order in a unanimous, unsigned opinion. "

NY Lawyer [and Law.com] report that Linklaters is being sued for $55 million in "one of the largest cases against a top U.K. law firm in recent times.

The Magic Circle firm is preparing for a 20-day trial in the High Court next January over claims it gave negligent advice to Baltic telecoms company Levicom. Linklaters was instructed to advise Levicom in 2000 over a dispute with telecoms company Tele2 AB.

Levicom claims Linklaters’ advice on the dispute led to an arbitration in 2004, rather than a settlement on favorable terms. The company claims Linklaters advised it that its case had a 70 percent chance of success if it were to go to arbitration, but at a later date reduced that to 50 percent. It says that, based on Linklaters’ advice, it turned down three settlement offers.

According to the claim form, which was initially filed in October 2006 but was amended in April this year, Levicom is claiming damages for "the lost opportunity to negotiate a more advantageous settlement". It is also seeking an uplift of at least 10 percent, bringing the minimum claim value to $55 million. "

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

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. "

The Times Leader reports on a $ 3.4 Million legal malpractice action taking place there, now, post verdict.  The twist is that the winner of the case, executor of an estate had asked the trial judge to recuse himself because of financial conflict of interest.

"Attorneys for the Slusser family have asked Luzerne County Court to deny a petition filed by attorneys for Laputka, Bayless, Ecker and Cohn that seeks to overturn a $3.4 million legal malpractice judgment against the law firm.

In court papers filed Monday, attorneys Stephen Seach and Jonathan Lang of the Robert Powell law firm said that state law orders the judgment should stand.

Because the petition “lacks merit” court papers said, the judgment should be final and “not be subject to reconsideration,” according to state law.

The case has since been sent to the state Supreme Court, which will assign a judge outside Luzerne County to hear any further matters in the case. Court Administrator William Sharkey filed papers last week asking for the move.

A spokesman for the state Supreme Court said a judge has not yet been assigned.

The Slusser family sued the Laputka firm in 2000, alleging the firm was negligent in its handling of its estate.

In February, a jury awarded Bernadette Slusser, executor of the estate of Thomas Slusser, $3.4 million.

The ongoing civil case has received much attention since Philadelphia attorney Jeffrey B. McCarron of Philadelphia accused Luzerne County Court of Common Pleas Judge Mark Ciavarella of having a conflict of interest in the case.

McCarron said Ciavarella’s financial relationship with a company partly owned by Luzerne County Prothonotary Jill Moran, an attorney with the Powell law firm, calls into question his ability to impartially rule on the case.

Ciavarella has since recused himself from the case. "

This case from New Jersey illustrates the border line between behavior that is so bad that an expert is not needed at trial to testify on whether there was a deviation, and behavior that is bad, but still requires an expert. The NJ court found in TARUTIS, v. ALAN ACKERMAN and GREGORY WISOTSKY, that:

"No expert is needed "where the questioned conduct presents such an obvious breach of an equally obvious professional norm that the fact-finder could resolve the dispute based on its own ordinary knowledge and experience and without resort to technical or esoteric information." Brach Eichler, supra, 345 N.J. Super. at 12. For example, no expert testimony was required when the attorney entirely failed to submit a legal argument in his client’s defense, Sommers v. McKinney, 287 N.J. Super. 1, 8-12 (App. Div. 1996), or where the attorney failed to comply with the controlling statute of limitations, Brizak v. Needle, 239 N.J. Super. 415, 429, 431-33 (App. Div.), certif. denied, 122 N.J. 164 (1990). "

But, where the defendant attorney "did not retain an expert to testify to the coefficient of friction of the floor, nor did he propound interrogatories, depose any witnesses, request documents, or request admissions from Resorts" the legal malpractice client still needs an expert to testify that the attorney was negligent.

Arbitration clauses in attorney-client retainer agreements is a trend.  Law firms, who presumably know the costs and efficiencies of litigation choose arbitration in the belief that most cases they are involved in will be a fee dispute.  Legal malpractice, either as a counterclaim to a fee demand or on its own does sometimes intrude, however.

Here is a case from the Illinois Appellate Lawyer  Blog which shows how to waive the advantage obtained by an arbitration clause:

"Jeffrey Woods and three associated parties had a dispute with the Patterson Law firm. The law firm claimed Woods et al. owed $47,000 for legal fees; Woods claimed the law firm committed legal malpractice. The law firm sued for the fees, but voluntarily dismissed its case. Woods then sued for malpractice.

In the malpractice case, the law firm raised an affirmative defense that its agreement with Woods required arbitration of “[a]ny controversy, dispute or claim arising out of or relating to our fees, charges, performance of legal services …” But the firm also made two motions to dismiss the case, filed a demand for a bill of particulars, served interrogatories on plaintiff, and issued a subpoena for documents to a third-party.

After all that, the firm asked the court to compel arbitration of the dispute. The trial court ruled that the law firm waived its right to compel arbitration because it participated so heavily in Woods’s lawsuit. The law firm appealed the denial of its attempt to compel the arbitration.

The appeal was pursuant to Illinois Supreme Court Rule 307(a), which permits interlocutory appeals as of right from an order granting, modifying, refusing, dissolving, or refusing to dissolve or modify an injunction. The First District Illinois Appellate Court ruled that “a motion to compel arbitration is analogous to a motion for injunctive relief," and that the standard of review is “abuse of discretion.”