Today’s Outside Counsel Column in the New York Law Journal features our discussion of Barnett v. Schwartz, 47 AD3d 397 (2d Dept, 2007) which we consider to be revolutionary.  The question of "the proximate cause" versus "a proximate cause" is subtle, but of significant importance in the field of legal malpractice. 

Please see today’s column on page 4 of the Law Journal.

Still popular, and still selling records, Sly and the Family Stone were the subject of a film.  Unfortunately, the film and use of many recordings was without out their consent.  Potential litigation followed.  Problem?  While the attorneys were negotiating and battling from their offices, they allowed the statute of limitations to run. 

Thus, EVEN STREET PRODUCTIONS, LTD., Plaintiff, v. SHKAT ARROW HAFER & WEBER, LLP., Defendant.

05 CV 3834 (DAB)   UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK   2008 U.S. Dist. LEXIS 42397 May 29, 2008, Decided .

"Plaintiff Even Street Productions is a corporation incorporated in the State of New York. (Am. Compl. P 1.) Its principal place of business is likewise located in New York County, New York. (Id.) Plaintiff is the assignee of all the rights and interests of the musical career of Sylvester Stewart, professionally known as Sly Stone. (Id.) [*2] These rights and interests include, but are not limited to, his rights and interests as a composer, publisher, recording artist and entertainer. (Id.) Plaintiff is likewise the assignee of the rights and interests of Frederick Stewart, Rose Stewart, Cynthia Robinson, Larry Graham, Greg Errico and Gerald Martini with respect to their past activities as members of the musical group Sly and the Family Stone. (Id.) Plaintiff benefits from royalties and income generated by the exploitation of compositions written by Sylvester Stewart, and from royalties on the sale and exploitation of master recordings made by Sly and the Family Stone. (Am. Compl. PP 2, 3.)

Defendant Shukat Arrow Hafer & Webber, LLP., is a limited liability partnership practicing law; its principal office is in New York County, New York. (Compl. P 5.)

In 2000, Diamond Time Ltd. and New York Times Television produced a documentary titled Jimi and Sly: The Skin I’m In. (Compl. P 11.) This documentary was broadcast on the cable television network Showtime on September 17, 2000 and on at least two other occasions, in September and October of 2000. (Compl. P 13.) The documentary incorporated, without the authorization or permission [*3] of any of the rights holders, 39 musical compositions (the "Compositions") and 10 master recordings (the "Master Recordings") made by Sly and the Family Stone, as well as several film clips containing the image and likeness of Sly and the Family Stone. (Compl. P 12.) All the Master Recordings were and are the exclusive property of Sony Music Entertainment, Inc. ("Sony"). (Compl. P 6.) Copyrights in all the Compositions were and are owned by Mijac Music and administered by Warner/Chappell Music, Inc. ("Warner/Chappell") (Compl. P 4.) "

Here is an article from NY Lawyer about the Wilson Elser legal malpractice case.  They are still in for more than $ 941,000 but have cut about $ 1.7 million from the verdict.

"A 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.

In the malpractice action against Wilson Elser, the jury found the law firm liable for $2.5 million in damages, which included $941,000 in damages related to the adverse settlement and $1.7 million for lost future profits.

But the appeals court found that the construction company’s evidence of lost profits was "speculative and uncertain," and that the lower court should have granted the law firm a partial judgment-notwithstanding-the-verdict motion at trial.

Thomas Hyland, managing partner of Wilson Elser’s New York office, said the firm was evaluating the decision. "

In this case. Gabrielli v Dobson & Pinci ,2008 NY Slip Op 04749 ,Decided on May 27, 2008, Appellate Division, First Department, two attorneys represented the plaintiff contractor in succession, which was unable to prosecute its case for contract damages.  Plaintiffs were able to show many departures [deviations from good and accepted practice], but came up short in the legal malpractice case.  This case is an illustration of how the "but for" principal works.

"In this legal malpractice action, plaintiffs cannot show that defendant Ferrante’s failure to comply with a condition precedent under plaintiffs’ contract was the cause of any loss (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]), since Ferrante did not prevent them from obtaining the same recovery at a later juncture. Nor can plaintiffs show that Ferrante failed to submit timely a notice of claim to the architect with regard to a separate claim; its timeliness was not before the Second Department when it denied the motion to compel arbitration of said claim (Matter of Anagnostopoulos v Union Turnpike Mgt. Corp., 300 AD2d 393 [2002]).

As to defendant Lefkowitz, the alleged failure to extend a mechanic’s lien filed by his predecessor was not negligent because he was retained after it had expired as a matter of law. The alleged failure to commence or advise of the availability of a plenary action pursuant to General Business Law § 399-c was not negligent since the statute’s bar of mandatory arbitration of certain claims was intended to benefit consumers, not plaintiffs contractors (see Ragucci v Professional Constr. Servs., 25 AD3d 43 [2005]). Even if, arguendo, plaintiffs fall within the protective ambit of the statute, any plenary action would have been barred by the condition precedent, which was also applicable to litigation. Moreover, Lefkowitz’s failure to anticipate the 2005 appellate ruling in Ragucci, upon which plaintiffs rely (id.), would not have constituted [*2]a departure from the professional standard of care (see Darby & Darby v VSI Intl., Inc., 95 NY2d 308, 314 [2000]). "

Law.Com reports that the Wiley Rein legal malpractice case has been dismissed. This was a case with major players: "The Wiley team that defended Blackwater in the underlying case consisted of Fred Fielding, now White House counsel; Barbara Van Gelder, now a partner at Morgan, Lewis & Bockius; Scott McCaleb, still a partner at Wiley; and Margaret Ryan, now a judge for the U.S. Court of Appeals for the Armed Forces. Blackwater’s malpractice suit named Ryan as a separate defendant because, according to the complaint, she led the defense team."

Blackwater is a major player in the Iraq war, and this case involved a wrongful death in Fallujah.  Images of Blackwater contract employees being dragged behind trucks through the streets was a strong and sickening sight..

"Blackwater sued the Washington law firm in January, alleging that Wiley lawyers neglected critical case law and statutes while defending it in a 2005 wrongful death case brought on behalf of four Blackwater guards brutally killed in Fallujah, Iraq, in 2004. "

"In the malpractice complaint, Blackwater argued the wrongful death suit would have been dismissed if it were heard in federal court, where the defense could have relied on similar cases where claims against battlefield contractors were thrown out. But the 2005 case was kept in Wake County Superior Court in North Carolina, despite a motion filed by the Wiley team to get it moved to the U.S. District Court for the Eastern District of North Carolina. The malpractice complaint alleged the motion failed predominantly because the Wiley lawyers didn’t invoke the federal officer removal statute, which gives federal jurisdiction to claims involving federal officers.

Wiley’s motion to dismiss the malpractice suit argued that Blackwater could not have been considered a "federal officer" in the underlying case because the guards who were murdered did not contract directly with the U.S. government, were not providing security for U.S. military personnel, and were not overseen by the U.S. military.

In her five-page order, Retchin said Blackwater’s claim that it was entitled to remove the wrongful death case to federal court under the federal officer removal statute where "dismissal was the only appropriate remedy" were "legal conclusion[s] couched as factual allegation[s]."

A frequent defense in legal malpractice is that while a mistake has been made, plaintiff is not hury anyway.  Here is one example of that defense in a New Jersey Case.  THE MAKE UP BAR, Inc.
Plaintiff-Appellant, vs. COOPER, LEVENSON, APRIL, NIEDELMAN & WAGENHEIM, P.A., and ROBERT E. SALAD, ESQ.,

A hair stylist is hired by plaintiff, and plaintiff asks its attorney to prepare a "no-hire" agreement.  Instead, a "no-solicitation" agreement is prepared.  Is there a difference?

"Severino, a hairdresser, claims that she retained attorney Salad to draft a "no-hire" agreement for execution by Scerati, a hairdresser whom she had agreed to employ for a short period until his own salon, Blink Spa, was opened. Instead, she claims Salad drafted a "non-solicitation" agreement, which proved effectively unenforceable when, in an injunctive action filed by The Make-up Bar against Scerati in the Chancery Division after four of The Make-up Bar’s employees had found employment at Scerati’s salon, each certified that he or she had not been solicited by Scerati. Scerati corroborated the employees’ position in his own certification, and he stated additionally that he would not have signed a no-hire agreement if it had been presented to him. The action filed against Scerati was dismissed without prejudice with Severino’s consent.

In its complaint, plaintiff simply alleged that it "suffered damages" and "substantial business losses" as a result of defendants’ failure to draft an appropriate agreement that would enjoin Scerati from hiring plaintiff’s employees for a certain period of time. In support of its claim, plaintiff provided a single-page submission of handwritten calculations that purported to identify the revenue generated by the four employees during 2001 and 2002. Plaintiff’s only expert, attorney Barry E. Levine, provided a report completely devoid of any assessment of damages. Levine testified that he was unaware of the attrition rate of beauty salon employees and that he had performed no investigation into the matter, formal or otherwise. Further, neither Severino nor Levine, as lay and expert witnesses, produced evidence of the specific business diverted to the other salon by its hiring of plaintiff’s four former employees. Plaintiff failed to identify which customers, if any, followed the employees to the other salon and which customers continued to patronize it. Moreover, plaintiff did not commission any analysis or comparison of profits generated or clients lost before and after the employees left plaintiff salon. In opposition to defendants’ motion, plaintiff merely set forth that it was damaged in the amount noted in Severino’s handwritten exhibit.

Plaintiff filed its complaint for legal malpractice on February 13, 2004. Following the reversal of the first summary judgment and remand to the trial court, defendants renewed their motion for summary judgment after additional discovery. As in its first motion for summary judgment, defendants conceded for purposes of the motion that they failed to prepare the agreement that Severino requested. In support of their motion, Scerati certified that he would not have signed a more restrictive agreement. "

This article from the Southeast Texas Record amplifies the current debate there over mandatory disclosure of legal malpractice coverage.  "There’s a movement in Austin to change this. Last week, a state Supreme Court task force voted down a measure to require Texas lawyers who don’t carry malpractice insurance to tell potential clients beforehand. Supporters plan to keep trying; next month they’ll take their idea to the Texas Bar’s Board of Directors."

"Predictably, lawyers are crying foul. In a lawyer poll–80,000 are licensed to practice law in Texas–70 percent opposed the idea, using arguments that wreak of irony if not hilarity.

Some lawyers contend letting clients know they are insured will prompt clients to–get this–sue them.

"It’s.. like painting a target on your back," complained Plano attorney Charles Awalt, as quoted in the Austin American-Statesman.

Then there’s the cost. Paying a few hundred to a few thousand dollars per year in premiums, many solo practitioners say they cannot afford to insure themselves and stay in business. "

This case illustrates how difficult it may be to prosecute a Judiciary law 487 case in a legal malpractice setting.  Sara Kinberg, Plaintiff-Appellant, v Heidi Opinsky, Defendant-Respondent.
SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT , 2008 NY Slip Op 4616Decided May 22, 2008.

We have seen unsuccessful 487 cases with allegations of forged wills  which were filed with the surrogate.  Here, the court did not discuss the specific evidence before it,

"The record shows that plaintiff failed to demonstrate that defendant committed negligent acts but for which plaintiff’s 1992 matrimonial action, which plaintiff ultimately settled in 2000 after having discharged defendant, would have ended more favorably to her (see e.g. Tanel v Kreitzer & Vogelman, 293 AD2d 420, 421 [2002]). Moreover, in two causes of action, plaintiff fails to plead any demand for compensatory damages, and her demands for punitive damages are unsupported by evidence that would warrant such relief (see Gamiel v Curtis & Riess-Curtis, P.C., 16 AD3d 140, 141 [2005]). Plaintiff’s cause of action alleging that defendant violated Judiciary Law § 487 is not viable, as the requisite evidence of a "chronic and extreme pattern of legal delinquency" is not found in the record (see Nason v Fisher, 36 AD3d 486, 487 [2007], quoting Solow Mgt. Corp. v Seltzer, 18 AD3d 399, 400 [2005], lv denied 5 NY3d 712 [2005]). [*2] "