In this article from Law.Com a question in Texas mirrors similar issues in California, Nevada and Ohio.  In the recent past there have been surveys, bar association meetings, proposed legislation and other indicia of interest in either mandatory legal malpractice insurance or required insurance disclosure to clients.  As of now, no rippling in New York on the question of whether an attorney has legal malpractice insurance, and no easy-practical way of finding out short of starting a law suit.

"While Texas lawyers aren’t keen on having a rule that would require them to disclose whether they carry legal malpractice insurance, the public favors such a requirement, recent surveys conducted by the State Bar of Texas show.

In an early April telephone survey of 500 Texas residents, 70 percent of the respondents said lawyers should be required to inform potential clients whether the lawyers carry, or do not carry, professional liability insurance that could cover the costs of claims arising out of their law practice.

In contrast, only about 23 percent of the 6,160 attorneys who responded to the State Bar’s online survey in February and 29 percent of the 500 attorneys contacted in a telephone survey in early April favored an insurance-disclosure rule. "

A 13-member task force appointed by State Bar President Gib Walton in the fall of 2007 is reviewing the survey results as well as data collected from other states that require lawyers to disclose their insurance status. David Beck, the task force’s chairman, says he is hopeful the task force will vote on whether to recommend a disclosure rule during a May 21 meeting in Houston.

This report from the West Virginia Record is an eye-opener on politics and judicial elections.  The tip of the iceberg is an aside in which an attorney has been suspended for failing to disclose whether he has legal malpractice insurance.  The story is mulit-facited, however:

"MORGANTOWN – E-mails in state Supreme Court candidate Bob Bastress’ West Virginia University College of Law account show he and others speculating on the race.

"As for the campaign, it has heated up," Bastress, a WVU law professor, wrote to a former colleague in a Feb. 8 e-mail. "The stuff on Spike (Chief Justice Maynard) has made it interesting, and the rumors are heavy (some from apparently knowledgeable sources) that a lot more is coming."

The exchange was with Emily Spieler, dean of the Northeastern University College of Law in Boston. She is a former WVU law professor. The subject line of the e-mail was "Dean search," and part of it was redacted by WVU.

The West Virginia Record had requested phone and fax records for Bastress since Nov. 1, and e-mail records since Nov. 1 of campaign-related correspondence.

The e-mails show that Bastress has talked to other WVU faculty members, students and others about helping on his campaign, had official campaign literature sent to his law school e-mail account, sought donations and communicated with the media about the election and discussed the campaign with current state Supreme Court Justice Larry Starcher. State law prohibits the use of public resources to run a political campaign.

Phone and fax records, according to WVU’s FOIA reply, only are kept for long-distance calls and faxes. Bastress had no long-distance calls or faxes, according to WVU. Bastress also does not have a state-issued cell phone, WVU said.

"The feds have moved in, apparently," Bastress continued in his e-mail to Spieler. "I’ve also been informed another development is coming in the next week. We’ll see. Spike could implode at any time, and he is certainly wounded enough already to have made a race of it. …

"Responses are positive (which means next to nothing), but raising money continues to be a struggle."

Spieler replied asking about the other candidates.

"The other two candidates are Margaret Workman and Menis Ketchum," Bastress replied. "Menis, as you might recall, is a very successful trial lawyer in Huntington and will dump a lot of money into the campaign."

Spieler again replied.

"Bad news about Ketchum," she wrote. "Sorry."

Another exchange that was forwarded to Bastress was between filmmaker Wayne Ewing and Michael C. Farber, a Sutton attorney who currently is suspended for failure to pay dues and to disclose whether he carries malpractice insurance as well as an ethics violation. "

     Good cause for termination is not the same as malpractice. Attorney malpractice, the deviation from good and accepted practice, which proximately damaged the party, in which, but for the negligence of the attorney there would have been a different or better result is not the same as good cause for termination. Termination for cause has arisen in many situations in which malpractice was not even discussed, much less claimed. Substantial delays in prosecuting the case, failure timely to obtain medical records, failure to retain an employment [which] contravenes specific legal requirements is sufficient, abandonment of a case, a conflict of interest, a refusal personally to try a case, a failure to disclose a settlement offer, are all examples of misconduct which does not amount to malpractice.

The difference flows logically from the question of damages. In malpractice there is a positive claim for damages, over and above fee considerations from the attorneys; in the question of termination for cause, there can be but a reduction of the fees paid, but no positive claim for damages. As one might expect, the burden of proof for malpractice requires much more than the burden of proof to decide between "good cause" and "no cause."

Suri Katebi, Plaintiff-Appellant, v Paul Fink, et al., Defendants-Respondents.

SUPREME COURT OF NEW YORK,
APPELLATE DIVISION, FIRST DEPARTMENT

2008 NY Slip Op 4141
May 1, 2008, Decided
May 1, 2008, Entered

Clients are often asked at an allocution, settling a matrimonial action whether they are satisfied with their attorney’s work. It is highly questionable whether they, at that time, knew whether the work is satisfactory or not, but the practice goes on.

Here is a legal malpractice case, arising from a matrimonial action which, at least in part, depends on this practice.

“While "[a] claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel" (Bernstein v Oppenheim & Co., 160 AD2d 428, 430, 554 N.Y.S.2d 487 [1990]), here, the complaint is contradicted by the evidentiary material submitted on the motion to dismiss (see Guggenheimer v Ginzburg, 43 NY2d 268, 275, 372 N.E.2d 17, 401 N.Y.S.2d 182 [1977]). Plaintiff testified that she did not wish to proceed with the trial of the matrimonial action, that she decided instead to enter into the stipulation of settlement because she wanted no further connection with her husband, that she understood that by settling the action before the completion of the trial she was foregoing the right to pursue [**2] the funds allegedly dissipated by him, and that she was satisfied with the services provided by her attorney.

We have considered plaintiff’s remaining contentions and find them unavailing.

JOSEPH G. HUGAR AND LKC, LLC, PLAINTIFFS-APPELLANTS, v DAMON & MOREY LLP, CHRISTOPHER T. GREENE, ESQ., ANTHONY L. EUGENI, ESQ., AND ROBERT J. PORTIN, ESQ., DEFENDANTS-RESPONDENTS.

596 CA 07-02311

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FOURTH DEPARTMENT

2008 NY Slip Op 4167; 2008
May 2, 2008, Decided
May 2, 2008, Entered

When are attorneys treated the same as their clients? Here is an example of attorneys getting the benefit of the client’s release.

“Memorandum: Plaintiffs commenced this action seeking damages for breach of fiduciary duty and legal malpractice arising out of defendants’ representation of plaintiffs and two other individuals and their respective limited liability companies in the formation of Aurora Healthcare LLC (Aurora). When Aurora terminated the employment of Joseph G. Hugar (plaintiff), defendants continued to represent Aurora and its remaining principals in negotiations with plaintiff to resolve his claims against Aurora and its two remaining principals and their respective limited [**2] liability companies. Plaintiff and his own limited liability company, plaintiff LKC, LLC, retained new counsel during the negotiations, and their claims were eventually resolved. Plaintiff then, on behalf of both plaintiffs, executed a settlement agreement that included a general release (Settlement Agreement). Defendants moved to dismiss the complaint pursuant to CPLR 3211 (a) (1), (5) and (7), contending that the action is barred by the covenants and general release in the Settlement Agreement. We conclude that Supreme Court properly granted the motion.

We agree with plaintiffs that the terms of the general release do not apply to defendants because they were not "Grantees and their respective successors and assigns," and those were the only parties encompassed by the general release. We conclude, however, that the complaint was properly dismissed because the action is barred by the covenant not to sue in the Settlement Agreement. Pursuant to that covenant, plaintiffs agreed not to institute any action at law or equity or to assert any claim against various entities relating to any "Company Matters." The term "various entities" includes "Company Affiliates," and the Settlement Agreement [**3] defines [*2] Company Affiliates as, inter alia, the parties to the agreement, as well as "all agents and employees thereof."

Legal malpractice has lately been examining securities transactions, bankruptcies and other phenomina of the downward trend in the economy.  Here, Law Com reports a new case against outside counsel for Brocade.

"Few plaintiffs have gone after companies’ outside lawyers in backdating lawsuits. But a new derivative case against directors and officers at Brocade Communications Systems Inc. also targets the company’s law firm, Wilson Sonsini Goodrich & Rosati. Filed April 18 in Northern District federal court by a small San Diego firm, Johnson Bottini, the suit accuses Wilson Sonsini of legal malpractice for allegedly blessing backdating at Brocade, a company that saw two of its former executives convicted of criminal charges.

In particular, the plaintiff alleges that the firm signed off on a part-time program for new Brocade hires that was really set up to grant stock options for the new employees at low points. The complaint also claims that Wilson Sonsini gave bad legal advice on a settlement proposal that didn’t give enough to Brocade in another derivative case.

Although firm Chairman Larry Sonsini has been named in backdating suits in his role as a director, as in this case with Brocade, the firm hasn’t (aside from a case brought by a pro se Rambus investor).

"The obvious reason that people don’t sue them is because they’re going to have a lot of cases with Wilson Sonsini in the future," said Francis Bottini Jr., the lead lawyer on the case. "But if there’s a valid claim, it’s our duty as lawyers to bring them for the company."

In the high-stakes Estates and Trust world of Suffolk County [think East Hampton, not Patchogue], this case was reported last week.  Plaintiff  John Randolph Hearst [of the publishing family] sued his attorney on the theory that he and his former wife "fraudulently deprived him of title and use of more than $ 20 million in real property." on a theory of undue influence. The case was decided by the Appellate Division, 2d Departmenbt.

The defendant attorney’s CPLR 3211 motion was converted to a CPLR 3212 motion.  Plaintiff demonstrated that the defendant attorney represented both husband and wife, and was therefore burdened by a conflict of interest.  The AD determined that the case must be tried.

The law firm Clifford Chance was the latest participant in a swelling bankruptcy legal malpractice series of cases.  Anthony Lin of the NYLJ writes:

"Citing ‘Stoneridge,’ Judge Releases Law Firm From Securities Suit

A federal judge in Philadelphia has dropped Clifford Chance from a securities class action, citing the U.S. Supreme Court’s recent decision in Stoneridge Investment Partners v. Scientific-Atlantic Inc. The London-based Clifford Chance firm had been facing suit by shareholders of DVI Inc., a health care finance company the law firm had represented in the months leading up to its 2003 bankruptcy filing. The shareholders had accused the firm of participating in a scheme with DVI’s executives to engage in sham transactions designed to conceal the company’s true financial health. In its January decision in the closely watched Stoneridge case, the Supreme Court rejected such "scheme liability" claims against third parties because the alleged schemes generally did not result in public statements on which investors could claim reliance. Applying this reasoning to the DVI class action, Judge Legrome Davis of the U.S. District Court for the District of Pennsylvania said: "Though Lead Plaintiffs allege that Clifford Chance knew of the scheme, and at times took a more active part in assisting DVI in the scheme, the fact remains that none of this alleged conduct was publicly disclosed such that it affected the market for DVI’s securities." Though he declined to certify a class against Clifford Chance, the judge did allow the case to proceed against other defendants, including Merrill Lynch and Deloitte. The case is one of the first to cite Stoneridge, and Clifford Chance’s lawyer, William J. Schwartz of Cooley Godward Kronish, said Judge Davis’ decision would satisfy law firms that "hoped there would be meaning in the Supreme Court’s decision." Clifford Chance continues to face a suit by DVI’s bankruptcy trustee."