From an unpublished Illinois case, discussed  by  the Illinois Legal Malpractice Blog, we are reminded of the fact that a bankruptcy filing will generally cut off plaintiff’s right to bring any law suit, including the legal malpractice case.  Two things that always bear review:

1.  When one files bankruptcy, everything, including potential unpled causes of action become part of the bankrupt’s estate, and no longer personal to the bankrupt;

2.  Attorney fee disputes serve as collateral estoppel to a later legal malpractice case.

 

On some ocassions, the dissection of a case yields interesting insights.  Here is a Second Department Case: Petersen v Lysaght, Lysaght & Kramer, P.C. ,  2008 NY Slip Op 00472
Decided on January 22, 2008 ,Appellate Division, Second Department  which illustrates several points:

1.  Some cases are a problem from begining to end.  In this case there have been three appeals, and the case ends when plaintiff fails to file a note of issue, and cannot explain why, or show a meritorious case.

2.  Nassau and Suffolk notes of issue dates are sacrosanct.  "The certification order of the Supreme Court dated February 3, 2006, directing the plaintiff to file a note of issue within 90 days and warning that the action would be deemed dismissed without further order of the court if the plaintiff failed to comply with that directive, had the same effect as a valid 90-day notice pursuant to CPLR 3216 (see Louis v MTA Long Is. Bus Co., 44 AD3d 628; Hoffman v Kessler, 28 AD3d 718).

3.  Louis is more often cited for the proposition that the order of court [Kings, for example] did not have the same effect as a CPLR 3216 notice.

4.  It is usually a bad sign when the plaintiff-Appellant’s attorney is not listed on the appellate decision.  Generally, it means that the attorney did not ask for, or attend for oral argument.  Often a bad choice, it tells the court that appellant is not really interested in the outcome.

5.  This court determined that everyone here made mistakes:

"Moreover, the plaintiff’s motion papers failed to establish the existence of a meritorious cause of action. Contrary to the plaintiff’s contention, we have not previously decided this issue in his favor. On a prior appeal, we held that the Supreme Court should have denied those branches of a motion by the defendants Lysaght, Lysaght & Kramer, P.C., Peter Kramer, and Michael Balducci (hereinafter the defendants) which were to dismiss certain of the plaintiff’s causes of action insofar as asserted against them as barred by the doctrine of collateral estoppel (see Petersen v Lysaght, Lysaght & Kramer, 250 AD2d 581). On a second prior appeal, we held that the Supreme Court should have denied a motion by the defendants for summary judgment dismissing the same causes of action, on the ground that they failed to establish their prima facie entitlement to judgment as a matter of law (see Petersen v Lysaght, Lysaght & Kramer, 288 AD2d 281). Finally, on a third prior appeal, we reversed so much of an order of the Supreme Court as granted a motion by the defendants for leave to renew their prior summary judgment motion, on the ground that they failed to meet the requirements of CPLR 2221(e)(3)(see Petersen v Lysaght, Lysaght & Kramer, P.C., 19 AD3d 391). Thus, we have never previously held that the subject causes of action are, in fact, meritorious.

6.  One really should put everything into demonstrating a meritorious cause of action.  "To establish the merit of his claims, the plaintiff tendered a copy of his verified complaint, which, in relevant part, stated that "[t]he defendants made no efforts to secure a default judgment" against a defendant in an underlying personal injury action, thereby committing legal malpractice. Without even a modicum of proof that a default judgment properly could have been obtained against that defendant in the underlying action (see Woodson v Mendon Leasing Corp., 100 NY2d 62, 70-71; CPLR 3215[f]), we cannot conclude that the plaintiff established the existence of a meritorious cause of action to recover damages for legal malpractice.

We’ve reported on the widespread influence of Deleware corporate law.  Many attorneys seemingly practice Delaware law without setting a foot there, without holding themselves out as Delaware attorneys.  This happens when they advise corporate clients on how Delaware would act.

Here, in a Hinshaw report, is the collalary:  Delaware exercising personal jurisdiction over an ever widening group of lawyers.  "The Delaware Court of Chancery held that it had personal jurisdiction over an out of state law firm alleged to have been involved in a client’s tortious schemes because, inter alia, the law firm filed a corporate certificate amendment in Delaware. "  Read the entire report

Its Idaho, and its Winter.  However, this is not a weather blog.  Here is a case illustrating the age old conflict of interest between the insured and its insurer.  Here, the insured says that defendant attorney’s mission was to protect the insurance company, not the insured.

The Times-News reports: "St. Luke’s Magic Valley Regional Medical Center has sued a Washington attorney who once represented the hospital in an ongoing dispute, saying the attorney did not adequately defend against claims of Medicare fraud and other alleged improprieties.

The complaint, filed Jan. 17 in U.S. District Court in Boise, claims that Tom Luciani intentionally breached his fiduciary duty and committed professional malpractice while representing the hospital and Farmers Insurance between July 2003 and early 2006. Luciani was brought on by the insurance company to represent the hospital during litigation that started in 2001 with a tort claim against the hospital by two former employees.
According to the hospital’s most recent court filing, Luciani had a longstanding relationship with Farmers, which brought him in to replace another lawyer when the case moved to federal court. Following the desires of the insurance company, the complaint states, Luciani’s strategy focused on protecting Farmers from any damages while leaving the hospital open to a possible $22 million judgment.

After the hospital discovered Luciani had no plan to produce an expert witness to counter testimony from a plaintiff’s witness it hired its own counsel in 2006 – Chicago-based McDermott, Will and Emery LLP, one of the largest law firms in the country. "

 

Here is an Idaho Decision from the Supreme Court of Idaho, which discusses how the statements of an attorney, representing his client in a court proceeding. may be used against him later, as "admissions,"

"The issue is, whether an attorney’s statements in the course of representation fo a client may be used against that attorney in a subsequent legal malpractice case."  Here, the Supreme Court says they may not be used.  Read this thoughful opinion.

 

Here is a New York Law Journal report of a legal malpractice case involving the White House, sitting judges, and other big players.

"Blackwater Security filed a $30 million malpractice suit against Washington, D.C., law firm Wiley Rein on Wednesday, alleging the firm made costly missteps in a wrongful death case brought on behalf of four former Blackwater employees who were killed in Iraq in 2004. The complaint, filed in D.C. Superior Court, claims Wiley Rein lawyers filed sloppy pleadings that ultimately barred Blackwater from shifting the case from a state court in North Carolina to federal district court, where the security firm could have mounted a stronger defense. After losing its bid to have the case transferred in October 2005, Blackwater discarded its Wiley Rein team, which included: Fred Fielding, now White House counsel; Barbara Van Gelder, now an attorney with Morgan, Lewis & Bockius; Scott McCaleb, who is a partner with Wiley Rein; and Margaret Ryan, now a judge for the U.S. Court of Appeals for the Armed Forces.

   

 

Many legal malpractice cases arise from failures to file a notice of claim against a municipality or against the state.  The case law is rife with General Municipal Law mistakes, as well as Court of Claims Act errors.  This case, which involves not New York but Louisiana, shocks the conscience.

Boudreaux v. State of Louisaina Department of Transportation, decided yesterday in the Appellate Division 1st Department reminds us that no matter how difficult it is to litigate against the City or State, Louisiana is a whole ‘nuther place. 

"The Court of Appeals of Louisiana, Second Circuit, recently opined that "[a] judgment creditor of a political subdivision of the state has no way to collect its judgment except by appropriation … Appropriation of funds is discretionary and not ministerial, and mandamus will not lie to compel payment of a judgment by a political subdivision" (The Newman Marchive Partnership, Inc. v City of Shreveport, 962 So2d 1075, 1077 1078 [La 2007], see also Cooper v Orleans Parish School Bd., 742 So2d 55, 64 [La 1999], writ denied 751 So2d 858 [La 1999]).

Plaintiffs herein have registered their judgment in 18 Louisiana parishes but, to date, the Louisiana Legislature has declined to appropriate the funds necessary to pay that judgment. As a result, plaintiffs now seek, in our view, to do an end run around their own legislature, and the laws of their home state, by attempting to enforce the judgment in the New York courts.

So, win your case, and the State of Louisiana need not pay it, ever. 

 

Qualcom v. Boradcom Corp. is an important case.  Duane Morris reports that it will set the standard for all electronic discovery in litigation.  Once the standard is set, attorneys will be expected to heed and obey.

"The district court was particularly concerned with upholding the good faith standard necessitated by the discovery system and emphasized that for the system to work in a time when documents are stored electronically, "attorneys and clients must work together to ensure that both understand how and where electronic documents, records and emails are maintained and to determine how best to locate, review, and produce responsive documents."

Emphasizing that it is the responsibility of attorneys (both in-house counsel and retained counsel) to make certain that their clients carry out an effective and comprehensive document search, the court noted that "[p]roducing 1.2 million pages of marginally relevant documents while hiding 46,000 critically important ones does not constitute good faith and does not satisfy either the client’s or attorney’s discovery obligations." The court suggested that in-house counsel have a duty to confirm the veracity of any signed papers produced during discovery.

The district court’s solution was to order Qualcomm to implement a "comprehensive Case Review and Enforcement of Discovery Obligations (‘CREDO’) program" which, at a minimum, includes:

(1) identifying the factors that contributed to the discovery violation . . . , (2) creating and evaluating proposals, procedures, and processes that will correct the deficiencies identified in subsection (1), (3) developing and finalizing a comprehensive protocol that will prevent future discovery violations . . . , (4) applying the protocol that was developed in subsection (3) to other factual situations, such as when the client does not have corporate counsel, when the client has a single in-house lawyer, when the client has a large legal staff, and when there are two law firms representing one client, (5) identifying and evaluating data tracking systems, software, or procedures that corporations could implement to better enable inside and outside counsel to identify potential sources of discoverable documents . . . , and (6) any other information or suggestions that will help prevent discovery violations.

The court ordered that the attorneys submit a proposed protocol for the court to evaluate and revise, if necessary. While the district court’s immediate goal was to remedy this specific instance of misconduct, the court hoped that its opinion would be a "road map" for electronic discovery and would "assist counsel and corporate clients in complying with their ethical and discovery obligations and conducting the requisite ‘reasonable inquiry.’"

Electronic Discovery is with us, has been regulated, and there are now standards for its use in litigation.  Attorneys for clients now have to advise on how to store, produce, resist demands, and comply with the appropriate rules.

Whenever there is general agreement upon a standard of practice, the question of deviation from that standard arises.  This is the central tenant of legal malpractice:  if there is a standard, attorneys must adhear. 

Duane Morris reports on the Quallcom case: "The U.S. District Court for the Southern District of California’s latest opinion in Qualcomm Inc. v. Broadcom Corp., Case No. 05cv1958 (BLM) (S.D. Cal.), issued on January 7, 2008, serves as a warning to all corporate litigants regarding electronically stored documents and emails. This warning is especially applicable for in-house counsel, of which several were engulfed in this quagmire. The court ordered Qualcomm to pay all of Broadcom’s litigation costs — around $8.5 million — for "intentionally with[holding] tens of thousands of decisive documents from its opponent in an effort to win this case and gain a strategic business advantage over Broadcom." In addition, the attorneys most heavily involved were referred to the California State Bar for violations of their ethical duties. "

What does a client do when faced with an attorney fee demand?  As is true with most things in life, a reflexive response is precisesly the wrong move.  Many clients [and unfortunately many attorneys] advise or choose to arbitrate the fee dispute.  Bravely, they go to the arbitration and argue piecemeal against the fee.

Let’s look at an example.  In a matrimonial action, attorney for wife bills $ 150,000.  Husband is required to pay $ 100,000 and wife is billed for $ 50,000.  Let’s assume that she is really really  unhappy with the outcome, and believes that there has been malpractice.  What should she do?

The first thought is fee arbitration.  Many think that the fee can be trimmed, or trimmed significantly, and go in to the arbitration arguing that there has been malpractice.  Why is this bad?

A recent case, Pickard v Tarnow ,2007 NY Slip Op 52377(U) [18 Misc 3d 1102(A)] ,Decided on December 3, 2007 ,Supreme Court, New York County ,Madden,  illustrates the problem.

In a nutshell, if the arbitrators allow any fees,  even a dollar, they have implicitly determined that there is no legal malpractice, and there can be no future legal malpractice case brought.

"Although the court has jurisdiction over the defendants, the action against them must be dismissed as barred under the doctrine of collateral estoppel based on the determination in the arbitration that Tarnow was entitled to recover fees for his legal services despite Pickard’s assertion in that proceeding of defects in Tarnow’s representation of her.

Collateral estoppel or "issue preclusion" prevents a party from relitigating an identical issue which has previously been decided against it in a prior action in which it had a fair opportunity to fully litigate the issue. See Allied Chemical v Niagara Mohawk Power Corp., 72 NY2d 271 (1988), cert denied, 488 US 1005 (1989). The party seeking to invoke the doctrine of collateral estoppel must show that the issue was necessarily decided in the earlier action, while [*3]the party who opposes the application of collateral estoppel must demonstrate that it did not have a full and fair opportunity to contest the prior determination. Buechel v Bain, 97 NY2d 295, 303-04 (2001).

Here, defendants have met their burden of demonstrating that the issue of malpractice was necessarily decided during the arbitration of the fee dispute in which Pickard contested the fee based on substantially the same alleged acts of malpractice that provide the basis for this action. See Weinstein v. Cohen, 2007 WL 3407107,AD2d(2d Dept 2007)(holding that plaintiff’s action alleging that defendants charged her excessive fees and committed legal malpractice in connection with their representation of her in a matrimonial action was precluded by prior determination that defendants were entitled to a substantial portion of the total fees they sought in a fee arbitration requested by plaintiff pursuant to 22 NYCRR Part 136); Altamore v Friedman, 193 AD2d 240, 244 (2d Dept 1993), lv dismissed, 83 NY2d 906 (1994) (holding that client was barred from bringing a legal malpractice action against his attorney after an arbitration award was issued in attorney’s favor in connection with a fee dispute since both the fee arbitration and the legal malpractice action shared "at the core, claims of attorney malpractice"); Kinberg v. Garr, 28 AD3d 245, 246(1st Dept 2006)("[p]laintiff’s adverse determination in defendants’ prior action to recover fees for the rendering of professional services precludes a finding of malpractice with regard to the same services); Djeddah v. Starr, 306 AD2d 59 (1st Dept), lv denied, 100 NY2d 516 (2003)(client’s arguments based on claims of malpractice were barred by prior unappealed order recognizing attorney’s charging lien and referring the matter for an assessment).

Moreover, although the arbitrators did not directly state whether their determination included the malpractice issues, all of the allegations set forth by Pickard in her Fee Dispute Application and in her supporting documentation focus on Tarnow’s alleged misconduct in his representation of her in her divorce case. In addition, it can inferred from the arbitrators’ statement that their decision was "based on a voluminous record," that they reviewed and considered all of the evidence before them.

Furthermore, Pickard does not argue that she did not have a full and fair opportunity to litigate the issue of Tarnow’s alleged malpractice in the arbitration. In fact, the exhibits submitted by defendants in support of this motion, indicate that Pickard provided the arbitrators with detailed submissions to support her assertion that Tarnow had committed malpractice and therefore should not be awarded a fee.

Pickard maintains, however, that the arbitrators did not have authority to consider the issues of legal malpractice, such that there was no adjudication of those issues in the fee arbitration. Specifically, Pickard contends that the arbitration was conducted pursuant to 22 NYCRR 137 (Part 137), which "establishes the New York State Fee Dispute Resolution Program, which provides for the informal and expeditious resolution of fee disputes between attorneys and clients through arbitration and mediation," and which excludes "claims involving substantial legal questions, including professional malpractice or misconduct." (22 NYCRR 137.1(b)(3)).

This argument is unavailing. Since Part 137 is applicable to cases "where representation has commenced on or after January 1, 2002" (22 NYCRR 137.1(a)), it does not apply to the parties’ fee arbitration, as it is undisputed that defendants commenced their representation of [*4]Pickard prior to that effective date. Rather, the provisions of 22 NYCRR 136 (Part 136) continue to apply to fee disputes in all domestic relations matters subject to that Part in which representation began prior to January 1, 2002.

Unlike the bar to adjudicating legal malpractice claims contained in Part 137, Part 136 contains no such limitation. Pursuant to Part 136.4 (b), "[t]he Administrative Judge may decline to accept or continue to arbitrate a dispute in which substantial legal questions are raised in addition to the basic fee dispute." Here, as the arbitration was held despite the issues of malpractice raised by Pickard, the arbitrators were entitled to consider these issues.

Accordingly, as defendants have met their burden of demonstrating that the identical issue of malpractice was necessarily decided in connection with the arbitration, and as Pickard has not shown that she did not have a full and fair opportunity to be heard on the issue, the doctrine of collateral estoppel bars this action for legal malpractice. "