Here is a blog commenting on a blog commenting on a blog.  It demonstrates the viral nature of this medium.  More to the point, it disucsses the relationship between a plaintiff, a defendant, his auto insruance comapny and the attorneys selected by the insurer.  As all know, there is an inherent conflict between the attorney, the insured and the insurer.  How this all plays out in legal malpractice and bad faith litigation is the subject of these cases.

"While perusing the Indiana Law Blog, I came upon this post entitled Ind. Decisions – Supreme Court decides insurance assignment case.

In this case styled State Farm Mutual Automobile Insurance Co. v. Ruth Estep, in which State Farm had offered its limits which were declined by the plaintiff. State Farm continued to defend, but a verdict was obtained against their insured in excess of those limits. The defendant assigned globally his/her causes of action to include those against State Farm and the lawyer whom they paid to defend the insured.

The Indiana Court held the assignment of the claim against State Farm was valid but not the legal negligence claim’s assignment.

This is an interesting thought since within the context of Kentucky jurisprudence, the fabled "tripartite" relationship in which the lawyer owes a duty to both the insurer AND the insured might be possibly suspect in the event that a conflict of interest arises, an excess verdict, a perceived legal malpractice in the representation, and then the subsequent assignment by the individual defendant of his claims against his insurer and his lawyer. Even if the assignment of the legal negligence claim is "disallowed", how then do you separate the two sides of that tripartite relationship when the relationship goes sour.

Could this happen in Kentucky? Well, let me remind you that insurance defense lawyer’s duties are being tested in the Court of Appeals in a case that has already been argued in which the focus is on which insurance policy will end up paying the plaintiff’s excess judgment? The insurance defense law firm’s malpractice policy or the insurance company that paid/hired them? See, Insurance Defense Lawyers Duties, Responsibilities, and Liabilities to be tested in Court of Appeals decision argued this past week which we posted this spring. "

We guess that this is Web.3   Its a podcast  [that is, a audio web broaddast] on the use of computers, cumputer security and legal malpractice.  "
Jim Arden, a California litigating attorney who focuses on attorney malpractice and legal ethics, discusses the issues of computer security. Technology is a great tool that allows us to be more effective and more efficient. Along the way, however, we can have our tools corrupted"

From the Madison Record::

"Madison County Circuit Judge Barbara Crowder overlooked the obvious when she asked appellate judges if the Lakin Law Firm represented a woman, according to the woman’s attorney.

George Ripplinger of Belleville, representing Suzanne Krause, asked Crowder on Sept. 13 to vacate an order she signed Aug. 23, certifying questions about the Lakins to the Fifth District in Mount Vernon.

Crowder’s order found substantial ground for difference of opinion, but Ripplinger’s motion yielded no ground for difference of opinion.

Ripplinger wrote that Lakin attorney Scott Meyer was actively involved day to day in Krause’s personal injury claim.

As a minor by the name of Suzanne Topps, she suffered injuries when a tree limb fell on one of her legs in Tennessee. "

Anthony Lin, in the NYLJ, reports on this securities based legal malpractice law suit:

"Cadwalader is one of the nation’s top law firms when it comes to securitizations, and its large practice in the area has helped catapult the firm to the top of the profitability charts over the past few years. Such transactions involve the creation and issuance of tradeable securities tied to fixed assets or revenue streams, most commonly residential or commercial mortgages.

Nomura Asset Capital Corp., a U.S. division of Japan’s largest securities firm, filed suit against Cadwalader last October in Manhattan Supreme Court over documents the law firm drafted for a 1997 securitization transaction in which Nomura pooled 156 commercial mortgages worth around $1.8 billion.

At issue in the Nomura suit are two separate warranties Cadwalader included in the documents for the transaction. Both warranties stated that each mortgage included in the pool "qualified" for special tax status under Internal Revenue Service regulations. But one warranty more specifically stated that this meant the mortgages were backed by properties worth at least 80 percent of the mortgage amounts.

That second warranty became a problem for Nomura after a number of the mortgages went into default. LaSalle Bank, which was holding the securitized pool in trust, sued Nomura on the grounds that the defaulting mortgages were not qualified, with one large mortgage secured by property worth only around 60 percent of the loan.

Nomura hoped to escape liability on the basis of a "safe harbor" provision of the IRS regulations, which state that mortgages should be 80-percent secured by property but allow that an issuer’s "reasonable belief" about a property’s value may be sufficient to qualify a mortgage. "

Attorneys are retained by persons, not entities, yet they come to represent entities, not only persons.  Here is a report from Hinshaw which discusses, in part, the problems of representation of the estate versus the executor, the statute of limitations, and related issues.

Estate of Albanese v. Lolio, 393 N.J. Super. 355, 923 A.2d 325 (2007)

"A New Jersey appellate court recently decided a case in which an estate, its executrix and two co-beneficiaries sought to recover for defendants’ allegedly negligent advice regarding the payment of federal estate taxes. That advice allegedly resulted in increased tax liability for the beneficiaries. The subject engagement agreement provided that the executrix retained defendant law firm “as attorneys to represent the Estate.” The agreement further provided that the attorneys would “advise us and cause all necessary and proper steps to be taken for the purpose of fixing and paying any and all Federal and state estate taxes.” It was signed by the executrix in her capacity as executrix and “individually.”

To pay the taxes, the executrix withdrew funds from an IRA and made distributions to each individual plaintiff, resulting in each one being liable for $298,000 in taxes, without being advised by defendants of the tax exposure or the alternatives. The lawyers contended that they were retained by the executrix solely in her capacity as executrix and owed no duty to the beneficiaries. The court rejected that argument because the executrix had also signed as an individual. But it agreed that the co-beneficiaries lacked standing to sue. "

An ironic situation in legal malpractice is the inverse matchup of legal fees in residential real estate legal fees [especially for buyer] and the potential loss when the attorney fails his due dilligence.  Examples?  Bad title searches, poor monitoring of the deed filing, and this article:

"More dangerous is the issue of what if it’s the previous owner’s loan that was wrongly recorded. The previous owner is obviously no longer making payments on the property. The lender may or may not have been paid off properly; if they were there may not be any difficulties. It could just disappear into some metaphorical black hole of things that weren’t done right and were never corrected, but just don’t matter because everybody’s happy and nobody does anything to rock the boat. However, unlike black holes in astronomy, things do come back out of these sorts of black holes.

However, if the previous lender was not paid off correctly, or if they were paid but something causes it to not process correctly, they’ve got a claim on your property, and because the usual title search that is done is county-based, it won’t show up in a regular title search. Let’s face it, property in County A usually stays right where it’s always been, in County A. There is no reason except error for it to be recorded in County B. Therefore, the title company almost certainly would not catch it when they did a search for documents affecting the property in County A; it would be a rare and lucky title examiner who caught it.

In some states, they still don’t use title insurance, merely attorneys examining the state of title. When the previous owner’s lender sues you, you’re going to have to turn around and sue that attorney who did your title examination for negligence, who is then going to have to turn around and sue whoever recorded the documents wrong. If it’s a small attorney’s office and they’ve since gone out of business, best of luck and let me know how it all turns out, but the sharks are going to be circling for years on this one, and the only sure winners are the lawyers.

In most states, however, the concept of title insurance has become de rigeur. Here in California, lenders don’t lend the money without a valid policy of title insurance involved.

Let’s stop here for a moment and clarify a few things. When we’re talking about title insurance, there are, in general, two separate title insurance policies in effect. When you bought the property, you required the previous owner to buy you a policy of title insurance as an assurance that they were the actual owners. By and large, it can only be purchased at the same time you purchase your property. This policy remains in effect as long as you or your heirs own the property. The first Title Company, which became Commonwealth Land Title (now part of LandAmerica), was started in 1876, and there are likely insured properties from the 19th century still covered. If you don’t know who your title insurance company is, you should. Most places, the company and the order of title insurance are on the grant deed. "

 

Continue Reading Real Estate Transactional Legal Malpractice

An attorney may be fired for any reason at any time;  this is the rule in NY as well, apparently in California.  In this case, Mardirossian & Associates, Inc. v. Seth Ersoff, et al., ___Cal.Rptr.3d___, 2007 WL 1732896 (Cal.App. 2 Dist. 2007)  reported by Hinshaw attorneys were retained on a commercial case on a contingency.  They were fired, and the clients settled the case immediately thereafter.  What happens?

"Seth Ersoff and Sugar Ray Leonard retained Mardirossian & Associates, Inc. to represent them in a suit for breach of contract and fraud against Universal Management Services, Inc. (“UMSI”). Because of concerns about obtaining a recovery in the case, Mardirossian agreed to represent both Mr. Leonard and Mr. Ersoff for a 50 percent contingency fee of any settlement or award. The retainer agreement also provided that Mardirossian would have a lien on the cause of action for any recovery based on the reasonable value of legal services provided by Garo Mardirossian at $400 per hour and other firm attorneys at $220 per hour. The retainer further provided that if Mardirossian were discharged by the client, Mardirossian could seek the contingency fee or the reasonable value of services based on the quoted rates. Id. at *2.

After Garo Mardirossian had met personally with Mr. Ersoff and Mr. Leonard to determine he could represent both in the lawsuit, he obtained a signed waiver from each which stated they had “separate counsel with whom I have been given an opportunity to consult regarding this matter. I realize there may be conflicts between my goals and those of (Mr. Leonard or Mr. Ersoff). If there are any such conflicts of interest, I waive them.” Id. at fn. 2. After Mardirossian had filed the complaint, worked the case for seven months and prepared for a mediation scheduled for April 1999, Mr. Ersoff terminated the firm and settled the case nine days later for $3.7 million, while represented by a new firm. Id. at *2.

In November 2002, Mardirossian filed a complaint for quantum meruit seeking at least 50 percent of the $3.7 million settlement. The lower court found in favor of Mardirossian and held that it was entitled to reimbursement for the reasonable amount of hours worked on the case six years earlier. Since no hourly time records had been kept on this contingency matter, the attorneys who worked on the case reviewed the file and testified that they had spent approximately 3,700 hours on the case. The jury determined that 2,392 hours were reasonable for reimbursement, which resulted in an award of $645,440, plus interest. This appeal by Mr. Ersoff followed. Id. at *5.

Mr. Ersoff argued on appeal that because detailed time records were not kept by Mardirossian, the testimony from the firm’s attorneys regarding the estimated hours spent on the file was merely guesswork and should have been excluded from evidence. Id. at *6. The court rejected Mr. Ersoff’s argument, noting that there was no legal requirement that an attorney submit billing statements to support an attorney fee claim. “An attorney’s testimony as to the number of hours worked is sufficient evidence to support an award of attorney fees, even in the absence of detailed time records.” Steiny & Co. v. California Electric Supply Co., 79 Cal.App.4th 285, 293, 93 Cal.Rptr.2d 920 (2000). The court rejected the cases cited as supporting precedent by Mr. Ersoff. It also noted that this case was distinguishable because each of the attorneys who testified had personal knowledge of the services performed for Mr. Ersoff and testified about the complexity of the issues and extent of the work that was necessary. 2007 WL 1732896 at *7. These are the types of factors relevant to proving the reasonableness of the fees, factors which also include the attorney’s skill and learning as well as age and experience. See Los Angeles v. Los Angeles-Inyo Farms. Co., 25 P.2d 224 (1933). It was appropriate for the parties to use expert witnesses to also address the issue of reasonableness. See Mattheisen v. Smith, 60 P.2d 873 (1936). The fact that the jury awarded less than the number of hours claimed by Mardirossian indicated that the jury had evaluated the testimony of the Mardirossian attorneys as to the time spent, as well as the expert testimony on the issue and had substantial evidence to support their findings.

Mr. Ersoff also contended that Mardirossian violated California Rule of Professional Conduct 3-310, which provides that an attorney may not represent multiple clients where the interests of the clients may potentially conflict without written consent following written disclosure. 2007 WL 1732896 at *12. The court noted that whether forfeiture of the right to collect the fees is appropriate depends on the egregious nature of the violation. Id. at *14, citing Pringle v. La Chapelle, 87 Cal.Rptr.2d 90 (1999). The court upheld the findings below that the written consent was adequate but that even if it was not, any violation was not egregious and therefore did not justify fee disgorgement. The court also agreed with the lower court that Mr. Ersoff would be unjustly enriched if his fee obligation to Mardirossian were excused. "

This news article in Law.Com reports on the Pan Am v. Sheppard Mullin law suit:

"According to the complaint, Nadolny had forged a $320,000 bond meant to secure a settlement Pan Am had reached with the Air Line Pilots Association. When inspectors from the bond company came calling, Nadolny turned to attorneys at Sheppard Mullin, including John Fornaciari, a partner and white-collar defense attorney at the firm, for advice on how to best handle the insurance company’s investigation. Nadolny had worked with Fornaciari in the past on Pan Am-related litigation in New England and in Florida.

Sheppard Mullin agreed to take Nadolny on as a client, but here’s the interesting part: For several months it allegedly didn’t inform Pan Am that it had done so, nor did it alert Pan Am to the problem with the pending bond. Pan Am alleges that this clandestine relationship resulted in damage to the company’s reputation and a snarled Transportation Department proceeding that has remained stalled for two years.

And the bond, which Nadolny conjured out of thin air complete with a forged signature, wasn’t the only misdeed involved. The former Pan Am senior vice president and general counsel pleaded guilty in late March in the U.S. District Court of New Hampshire to providing false financial information to the Transportation Department and was sentenced last week to six months in a federal prison. "

In this New OrleansCase:

"NEW ORLEANS – A federal appeals panel on Sept. 13 reversed and remanded a district court order dismissing a legal malpractice claim against an errors and omissions insurer and its insured law firm because the claimant had suffered a compensable injury sufficient to assert a legal malpractice claim (H.S. Stanley Jr., in his capacity as trustee of the bankruptcy estate of Gary Eugene Hale v. Clare W. Trinchard, etc., et al., Clare W. Trinchard, Esq., Trinchard & Trinchard Llc, Leigh Ann Schell; Clarendon National Insurance Co.; H. S. Stanley, Jr., in his capacity as trustee of the bankruptcy estate of Gary Eugene Hale, v. Clare W. Trinchard, etc., et al., Northwestern National Ins. Co. Of Milwaukee, Wis., Nos. 06-30120, c/w 06-30299, 5th Cir.; 2007 U.S. App. LEXIS 21937"