This attorney fee matter involves a huge real estate famiy fortune.  It recalls the Goldman real estate family divorce.  There the husband proudly declared that he owed his wife only $ 386 milion dollars in equitable distribution, not $ 786 million.  

 In Lawrence v. Miller the attorneys worked on this estate matter for an hourly rate which netted them $ 18 million, and at the same time asked for "gifts."  The Gifts were for $5 Million!  Afterwards, they got the widow to sign a new contingent fee arrangement for 40%.  How did the AD react to this?  They said that the fee was all right for now, and that they could not make a decision without further information.

Ex Parte interviews of Non-party doctors is the subject of todays Court of Appeals Ruling.  Read the entire case, and note the many amicus briefs.  This is a big and important case.  Put simply, Surpeme Court is permitted to direct plaintiff to give defendant HIPPA authorizations which allow defendants not only the records, but the right to speak with prior treating physicians and discuss plaintiff’s medical condition.  Plaintiff is not permitted to hear the discussion, nor be supplied with notes.

Remembering the identical genesis of medical malpractice and legal malpractice, as well as the mirror image "physician-patient" and "attorney-client" privileges, a similar legal malpractice case must soon surface.  There are often several attorneys who represented plaintiff prior to the target defendant, and afterwards, too.  Right now, they may not be interviewed.  Will this last?

Law.Com via Newsday reports that Sam Wiley "the colorful Texas billionaire" has sued Milberg Weiss and other class action plaintiff’s law firms for their handling of the Computer Associates class action matter.  Essentially he charges the settled too soon and for too little, in order to grab legal fees prematurely.

"Wyly’s beef? He claims that Milberg and the others left billions on the table by prematurely settling a case so they could bank some $40 million in attorneys fees. The suit was filed in state court in Manhattan and alleges legal malpractice, fraud, unjust enrichment and breach of fiduciary duty. Here’s the story from Newsday.

Newsday reports that Wyly’s lawsuit centers on two shareholder lawsuits filed against CA — one in 1998 following a sharp drop in CA’s share price, and another in 2002 following news of an accounting probe at the company. The plaintiffs law firms effectively dropped the 2002 claims, according to the story. Wyly’s lawyer, William Brewer, told Newsday that the firms’ decision to effectively drop the claims in the 2002 suit “one of the most egregious cases of [legal] malpractice I’ve seen in 23 years.”

In addition to Milberg Weiss, the suit names as defendants Stull, Stull & Brody; Schiffrin Barroway; and Coughlin Stoia. Newsday reached neither the firms nor CA for comment.

Here is a post from NY Lawyer:

In April 2003, Steven Garfinkel, the chief financial officer of DVI Inc., wrote a memo to chief executive officer Michael O’Hanlon about the crushing liquidity crisis facing the health-care finance company and its implications for a pending stock float. The CFO urged his boss to talk as soon as possible to the company’s main outside lawyer, John Healy, a partner in the New York office of Clifford Chance.

As for Clifford Chance, it is now facing two lawsuits in federal court in Philadelphia charging that it participated in the fraud at the company. One is the familiar shareholder class action, which is also targeting Merrill Lynch and Deloitte & Touche. The other suit, however, is by DVI itself, or, rather, the bankruptcy trustee overseeing the fallen company’s estate. Trustee Dennis J. Buckley requested $2 billion in damages from the London-based law firm in a complaint filed in March 2006.

Though they garner fewer headlines, such bankruptcy trustee suits have largely replaced shareholder class actions in the nightmares of law firm managing partners. These suits are often better-funded, better-lawyered and, with the U.S. Supreme Court likely to further limit third-party liability in securities fraud cases, they may soon have a distinct legal edge as well.

"These are the lawsuits firms are most worried about now," said Michael Carlinsky, a partner at Quinn Emanuel Urquhart Oliver & Hedges who is representing Marc S. Kirschner, the bankruptcy trustee of failed commodities brokerage Refco Inc. in a $2 billion suit against the company’s former lawyers at Mayer, Brown, Rowe & Maw, among others.

Indeed, the journey of Enron Corp. law firm Vinson & Elkins illustrates the shifting landscape of law firm liability. The Houston-based firm vigorously fought the high-profile securities fraud suit brought against it by former class action king William S. Lerach, getting off scot-free with a voluntary dismissal in January 2007. But last year Vinson & Elkins quietly paid $30 million to Enron’s bankruptcy trustee, who never formally filed suit against the firm.

Law Firms as Targets

While securities class actions are brought on behalf of shareholders, bankruptcy trustee suits are brought for the benefit of creditors, the biggest of which are usually banks and investment funds. These creditors have grown more aggressive about recouping losses, lawyers say, with trustees acting accordingly. "

This post is about bad lawyering.  While not legal malpractice [in the sense that it mainly involves criminal defendants who cannot sue their attorney in New York or in most jurisdictions]. it is about the US Supreme Court letting the defendant hang while excusing the poor attorney performance. 

"The U.S. Supreme Court in 1984 established new standards for assessing whether a lawyer’s performance was so bad that his client’s right to a fair trial was compromised.

"An accused is entitled to be assisted by an attorney, whether retained or appointed, who plays the role necessary to ensure that the trial is fair," the Court proclaimed in Strickland v. Washington, 466 U.S. 668 (1984).

Twenty-three years later, however, many experts say that the promise of Strickland has gone unfulfilled, with underpaid and overwhelmed lawyers still allowed to give indigent defendants subpar representation.

And now criminal defense lawyers fear the high court is starting to retreat from Strickland itself. On Nov. 5, it agreed to consider Arave v. Hoffman, an Idaho case that will weigh the obligation of lawyers to explain to their clients the consequences of not accepting a plea agreement. "

The Massey Coal company case in West Virginia with its sister case in Virginia was a $ 50 million verdict, with a legal malpractice case arising from a similar loss in Virginia and the failure appropriately to file an appeal.  From this post both seem doomed.

"Posted on November 22, 2007 by Jeffrey V. Mehalic 
Yesterday was the last day of the Supreme Court of Appeals of West Virginia’s Fall Term, and the Court released several opinions, including its decision in Caperton v. A.T. Massey Coal Company, Inc., No 33350. (The Westlaw opinion is not available yet, so the link is to the PDF version on the Court’s website.)

At stake was the $50 million verdict in the plaintiffs’ favor, based on the jury’s finding that A.T. Massey Coal Company, Inc. and several of its subsidiaries intentionally interfered with and destroyed Hugh Caperton’s business. With accrued interest since the verdict in 2002, the plaintiffs’ judgment had grown to approximately $76 million. Here’s my post from last month when the case was argued.

In a 3-2 decision written by Chief Justice Robin Davis, the Supreme Court reversed the verdict and remanded the case to the Circuit Court of Lincoln County with directions to enter an order dismissing with prejudice the plaintiffs’ claims against the defendants. The Court identified two grounds for the reversal. First, the circuit court should have granted the defendants’ motion to dismiss based on a forum selection clause contained in “a contract directly related to the conflict giving rise to the instant lawsuit.” Second, assuming that the circuit court’s ruling on the forum selection clause was not erroneous, the Supreme Court found that the doctrine of res judicata based on an action that had been litigated in Virginia.

The Virginia litigation to which the Court refers is the plaintiffs’ 1998 suit against a Massey subsidiary in the Circuit Court of Buchanan County, Virginia, which alleged breach of contract and breach of the duty of good faith and fair dealing. Only the breach of contract claim was considered by the jury, which returned a verdict in the plaintiffs’ favor for $6 million. That verdict resulted in Massey suing its Virginia counsel for malpractice, on the grounds that they failed to sign the notice of appeal, which resulted in the dismissal of the appeal and the affirmance of the verdict."

While it is rare, on ocassion, a client may be ordered to pay double fees in a contingent fee case. Here is an example:

Greenberg v. Cross Island Industries Inc., 05CV6026
Decided: October 16, 2007
District Judge Arthur D. Spatt

U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

Alpert & Kaufman, LLP
First Attorneys for the Plaintiff

Gair, Gair, Conason, Steigman & Mackauf
Second Attorneys for the Plaintiff

Judge Spatt

"What began as a routine settlement in a personal injury action has evolved into a contentious battle between plaintiffs’ previous and present counsel over the proper apportionment of legal fees. Here, however, in a somewhat unusual circumstance, the clients, rather than present counsel, are to pay the fee of previous counsel separately and in addition to the fee of present counsel

The Gair Firm asserts that Alpert & Kaufman was dismissed by the Greenbergs for cause and is not entitled to any legal fee. See Garcia v. Teitler, 443 F.3d 202, 212 (2d Cir. 2006); Friedman v. Park Cake, Inc., 34 A.D.3d 286, 287, 825 N.Y.S.2d 11, 12 (1st Dep’t 2006) (stating that where an attorney is discharged for cause, she is entitled to no compensation).

 Evidence of a general dissatisfaction with an attorney’s performance or a difference of opinion between attorney and client does not establish that the attorney was discharged for cause absent some evidence that the attorney failed to properly represent the client’s interest. Garcia, 443 F.3d at 212; Costello v. Kiaer, 278 A.D.2d 50, 50, 717 N.Y.S.2d 560, 561 (1st Dep’t 2000). Indeed, "[a]ttorney-client relationships frequently end because of personality conflicts, misunderstandings, or differences of opinion having nothing to do with any impropriety by either the client or the lawyer." Klein v. Eubank, 87 N.Y.2d 459, 663 N.E.2d 599, 640 N.Y.S.2d 443, (1996); see also D’Jamoos v. Griffith, 2006 WL 2086033, at *5 (E.D.N.Y. July 25, 2006).

Something more than a personality conflict or difference of opinion is required to establish discharge for cause and ‘"[c]ourts typically find a discharge for cause where there has been a significant breach of legal duty.’" D’Jamoos, 2006 WL 2086033, at *5 (quoting Allstate Ins. Co. v. Nandi, 258 F. Supp. 2d 309, 312 (S.D.N.Y. 2003)). For example, in an extreme case, the court held that plaintiff’s counsel was discharged for cause where it kept hidden from its client the fact that it had allowed the statute of limitations to expire. In re Spatola, 196 Misc. 2d 666, 668, 763 N.Y.S.2d 463, 465 (Sur. Ct. Richmond Co. 2003) ("When an attorney deliberately fails to disclose to a client critical information, it weakens [the fundamental] trust and confidence and erodes the relationship to the point that the client . . . has cause to discharge the attorney."). Here, there is no evidence that the conduct of the Alpert Firm breached the trust and confidence so crucial to the attorney-client relationship.

Instead, it is more likely, that the Alpert Firm was discharged as a result of a difference of opinion on how the case ought to be conducted.The Court notes that in Vallejo v. Builders for Family Youth, 2007 WL 10386 (Sup. Ct. Kings Co. Jan. 2, 2007), the court found that because the letters to previous counsel regarding his discharge never mentioned cause and referred to the matter of his compensation, counsel was not discharged for cause. Vallejo, 2007 WL 10386, at *5; see also Realuyo v. Diaz, 2006 WL 695683, at *7 (S.D.N.Y. March 17, 2006) (finding no evidence of discharge for cause because, among other things, the client’s termination letter to attorney failed to specify the reason for termination and requested an accounting of the lawyer’s fee).

There is an unusual twist in the fee arrangement between the Gair Firm and the Greenbergs. In the covering letter from Anthony H. Gair to Barry F. Greenberg dated February 22, 2006 it is stated: "It is understood that you and your wife will be solely responsible for any fees awarded your out-going attorneys. We agree that we will represent you in any fee dispute with the out-going attorneys at no additional cost." In addition, the Gair Firm’s retainer statement, dated March 3, 2006, filed with the Office of Court Administration states that "[a]ny fees awarded to the out-going Attorneys, Alpert & Kaufman, will be the sole responsibility of the plaintiffs." (Retainer Statement of Robert Conason (March 3, 2006)). This agreement is contrary to the usual situation, in which the prior attorney would be paid its portion from the fee received by the incoming firm, rather than by the client.

It’s a trap for the unwary.  We’ve written about this here on the blog, in the New York Law Journal and elsewhere.

Fee determinations in legal fee disputes are determinative of a later legal malpractice case.  Let’s take an example.  Attorney does horrible job, loses case for plaintiff on discovery preclusion grounds.  Let’s assume it is clearly malpractice.  Attorney and client get in a dispute over fees.  Attorney claims $ 100,000 in fees.  At arbitration the award is for $ 100,   Huge negative for attorney?  Yes, but any award of fees, even one so small, necessarily determines that there can be no malpractice case, because no fee may be awarded if there is a determination of legal malpractice.

Here is an example:   Wallenstein v Cohen ,2007 NY Slip Op 09023 ,Decided on November 13, 2007 ,Appellate Division, Second Department .   We agree with the defendants that all of the allegations in the complaint were "reasonably and plainly comprehended to be within the scope of the dispute submitted to arbitration" (Altamore v Friedman, 193 AD2d 240, 247). The determination fixing the value of the defendants’ services necessarily determined that there was no malpractice (see Blair v Bartlett, 75 NY 150, 154; Koppelmann v Finkelstein, 246 AD2d 365, 366; Altamore v Friedman, 193 AD2d at 246; Chisolm Ryder Co. v Sommer & Sommer, 78 AD2d 143, 145-146). Accordingly, the Supreme Court should have granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(5) to dismiss the complaint as barred by arbitration and award and by the doctrine of collateral estoppel