Here is an interesting blog blurb  from the North Carolina Appellate Blog on how an innocent client was seriously hurt by the acts of its attorney.

"Today the Court of Appeals (COA) issued a harsh reminder that a client is, under the law of agency, responsible with the bad conduct of its counsel in almost all instances. The case is Purcell Int’l Textile Group, Inc. v. Algemene AFW N.V., et al.

Here’s what happened. Plaintiff sued a number of businesses alleging contract, tort, and Chapter 75 claims after Defendants terminated certain commercial agreements. Attorney W. Rickert Hinnant were retained by Defendants to represent them in the litigation.

Hinnant began settlement negotiations, reached a settlement, and announced the settlement in open court on the trial date. Hinnant then prepared a settlement agreement, committing Defendants to pay $850,000 in three installments over a 6-month period. Hinnant sent Plaintiff settlement agreement signed by Defendants. Or so it seemed.

The trouble is, Hinnant never sent them the written settlement agreement or even told his clients about the settlement. Instead, he forged their names to the agreement after negotiating it without their consent or knowledge. He never had authority to settle for the amount he did.

Unsurprisingly, Defendants defaulted on the payment under the settlement agreement, since they didn’t know about it. This prompted Plaintiff to file a motion to enforce the agreement, which resulted a judgment for $850,000 plus attorneys fees of 15% (as provided in the settlement agreement) as well as an order attaching assets of Defendants.

The first time Defendants learned of the settlement agreement was when they learned the court had entered that judgment against them. They moved under Rule 60(b) for relief from the judgment, urging that Hinnant committed fraud on the court and exceeded his authority. The trial court rejected the motion, and the COA affirmed

Another report of the question of privity and legal malpractice, here in an executor-estate setting.

"In January 1994 the decedent Miguel Perez (hereinafter the decedent) commenced a medical malpractice action (hereinafter the underlying action) against Lutheran Medical Center (hereinafter Lutheran) alleging a failure to timely diagnose and treat his colorectal cancer condition. The decedent was represented by the defendant, Richard J. Katz. Thereafter, on September 16, 1994, the decedent executed his Last Will and Testament (hereinafter the Will), naming the plaintiff, his brother, as executor. The Will was retained in the defendant’s possession. On February 5, 1995, the decedent passed away from an unrelated cause.

The defendant alleged that soon after the decedent’s passing, he informed the plaintiff of the necessity of probating the Will in order to pursue the underlying action. However, the plaintiff [*2]did not retain the defendant or any other attorney for this purpose at that time. On May 14, 1997, more than two years after the decedent’s passing, the plaintiff went to the defendant’s office, obtained the Will, and signed an affidavit stating that he was taking the Will "for the purposes of having it probated by the Surrogate of Kings County." Nevertheless, another four years passed before the plaintiff took any steps to probate the Will. In fact, the plaintiff did not obtain provisional letters testamentary until December 28, 2001.

In August 2002 the Supreme Court granted a motion by Lutheran made pursuant to CPLR 1021 to dismiss the underlying action for failure to timely substitute a legal representative following the death of the decedent. Shortly before the motion was granted, the plaintiff commenced this legal malpractice action against the defendant alleging that he failed to timely move to substitute a legal representative in the underlying action. The defendant moved for summary judgment dismissing the complaint. In the order appealed from, the Supreme Court, inter alia, denied the motion finding that there were triable issues of fact. We reverse the order insofar as appealed from.

In this ‘il Kim Case the AD reversed and reinstated a judgment against her, based upon her attorney’s negligence. 

 "To vacate her default, the defendant Kimberly Jones, a/k/a "Lil Kim," was required to demonstrate a reasonable excuse for not opposing the plaintiff’s motion and a meritorious defense to the motion (see CPLR 5015[a][1]; Piton v Cribb, 38 AD3d 741, 742; Yurteri v Artukmac, 28 AD3d 545, 546). Jones failed to present a reasonable excuse. Where, as here, there is a pattern of default and neglect, the attorney’s negligence can properly be imputed to the client (see Dave Sandel, Inc. v Specialized Indus. Servs. Corp., 35 AD3d 790, 791; Edwards v Feliz, 28 AD3d 512, 513; MRI Enters. v Amanat, 263 AD2d 530, 531). Accordingly, the Supreme Court should have denied Jones’ [*2]motion to vacate. "

Being Sued – terrible

Losing the suit – worse

Jailed?    This story tells of the worst possibility.  "Three lawyers accused of bilking their clients in a diet drug settlement were jailed Friday after a federal judge agreed to delay their trial date but revoked their bond.

The attorneys, including two co-owners of Preakness winner Curlin, were remanded to custody during a hearing in U.S. District Court in Covington, according to an order filed in the court clerk’s office.

Judge William Bertelsman agreed to the lawyers’ request to push the trial date back to Jan. 7, 2008. It had been set for Oct. 15.

Shirley Cunningham Jr. and William Gallion, who own 20 percent of Curlin, were jailed, along with another lawyer, Melbourne Mills Jr. "

This story out of San Diego has sued Wilkie Farr over its work with Kroll, investigating the finances of the City. 

"City Attorney Michael Aguirre picked a new legal fight for San Diego this week, filing two malpractice suits against a New York law firm that probed the city’s financial failures and prepared a report on them a year ago.
The lawsuits, which target a high-powered law firm that has handled billion-dollar deals for business clients, were filed without City Council approval. As a result, they will test not only Aguirre’s legal strategies, but also new council limits on his ability to file lawsuits without authorization.

Aguirre alleges that Willkie Farr & Gallagher overbilled the city and essentially failed to follow terms of a contract to assist the risk-management firm Kroll Inc. with a project that became an 18-month, $20 million effort.
The suit alleges that the law firm duplicated much of Kroll’s work, submitted inadequate bills to disguise that, and went beyond the scope of its agreement, in part by billing the city for “lobbying” meetings with The San Diego Union-Tribune editorial board and the San Diego Regional Chamber of Commerce. "

We reported on this case, based on the hews article.  Here is Siagha v. David Katz & Associates LLP, 603927/05 :

"This is a contract action to recover alleged damages concerning legal fees and expenses allegedly not included in the retainer agreement of plaintiff Omar Siagha ("plaintiff").

Defendants Katz, K&A and LePack (collectively "defendants") oppose the motion, and cross move for an order dismissing the action pursuant to CPLR 3211(a)(5) and (7), or in the alternative, awarding summary judgment pursuant to CPLR 3212 in favor of Katz, K&A and LePack., and imposing sanctions and costs against plaintiff pursuant to 22 NYCRR 130-1.1, et seq., for plaintiff’s frivolous action in keeping LePack named as a defendant.

On or about August 1998, after the damages verdict, Saint Jerome’s insurance companies denied coverage and refused to satisfy the judgment. Katz & Rosenblatt commenced a declaratory judgment action. This action was dismissed, Katz & Rosenblatt appealed and the Appellate Division First Department reversed and granted plaintiff summary judgment. The insurance companies sought leave to appeal to the Court of Appeals, and that motion was denied.

Plaintiff’s judgment was for $1,680,093.08 and K&A received a total fee of $870,057.60. This was purportedly equal to one-third of the recovery less purported expenses and minus legal fees for the appeal of the summary judgment, the appeal on the merits and the declaratory judgment action. The legal fees charged to plaintiff for the appellate and collateral matters was $182,100.00. Plaintiff recovered approximately 52 percent of the gross settlement.

A client retaining an attorney on a contingent basis, in the absence of clear and express language to the contrary, contemplates that the percentage fixed is to constitute payment for whatever services may be necessary to obtain collection of any judgment which may be recovered, whether the services be in connection with an appeal taken from the judgment or in connection with efforts to collect the judgment, or both (Ellis v. Mitchell, 193 Misc. 956, 85 N.Y.S.2d 398 [Sup. Ct. New York County 1948] citing Larkin v. Frazier, 224 N.Y. 421, 121 N.E. 105). New York law is generally hostile to midstream efforts to increase contingency fee percentages (see, e.g., 22 NYCRR 603.7[e][4] [limiting opportunities for attorneys to increase contingent fee percentages in certain types of actions]; Belzer v. Bollea, 150 Misc2d 925, 928-29 [NY Sup Ct 1990] [rejecting contingent fee increases that did not comport with 22 NYCRR 603.7(e)(4) regardless of "whether the client in fact agreed or disagreed to additional fees"]). Thus, based on a plain reading of the retainer agreement, there was no agreement for plaintiff to compensate any attorneys, including Katz and K&A separate fees related to services performed on appeal or other collateral matters beyond the 33 1/3 amount as specified in the retainer agreement."

Trautenberg v. Paul, Weiss, Rifkind, Wharton & Garrison LLP, 06 Civ. 14211 reported today:

"Plaintiff David H. Trautenberg sued defendants the law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP, attorney Brad S. Karp, and attorney Daniel J. Toal (collectively "Paul Weiss"), for breach of fiduciary duty and violation of New York Judiciary Law §487. Paul Weiss moved to dismiss, pursuant to Fed. R. Civ. P. 12(b)(6), for failure to state a claim. The motion to dismiss is granted.

"Plaintiff and plaintiff’s attorneys, however, were aware of Paul Weiss’s dual role and its potential for conflict. On many occasions during the negotiations, plaintiff’s attorneys told Paul Weiss that its representation of Citigroup against plaintiff was improper. On one such occasion, Karp responded by telling plaintiff’s attorneys to "stop lecturing" him. Compl. ¶49. In addition, during the legal preparation for the WorldCom bankruptcy litigation, plaintiff "continually objected to Defendants’ representation of Citigroup/SSB in connection with his employment matter and Defendants’ conduct in ‘holding him hostage’ with respect to his employment matter until the completion of his WorldCom civil suit testimony." Id. at ¶61. Despite these objections, Paul Weiss did not withdraw as counsel for Citigroup in the negotiations, nor did plaintiff or his attorneys take any action to force Paul Weiss to withdraw from the negotiations or discontinue their dual representation in the other proceedings. "

The Madison St. Claire Record reports

"The Lakin Law Firm filed suit against Certain Underwriters at Lloyd’s London, Lloyd’s Illinois, Affinity Insurance and Norton & Rain alleging the defendants failed to defend the firm in a federal lawsuit.

Represented by Charles Chapman of the Lakin firm, the suit states the Lakin firm hired Norton & Rain Inc. (NRI), an insurance broker, to procure coverages including professional liability insurance for the firm.

"NRI recommended that Plaintiff purchase professional liability insurance coverage from Lloyd’s," states the complaint filed Aug. 3 in Madison County Circuit Court.

Chapman states that the Lakin firm followed the advice of NRI and purchased the insurance from Lloyd’s in 2006 and paid the premium of $427,025 for the policy’s coverage.

According to Chapman, the Lloyd’s policy required the Lakin firm to notify Affinity of any claim made against the firm, which they did after injured railroad worker Stephen Williams filed suit against the firm in the U.S. District Court for the Northern District of Oklahoma on Oct. 7, 2006.

U.S. District Judge Claire V. Eagan, chief judge of the Northern District of Oklahoma, on April 18 entered a default judgment of $3,752,601.80 against Thomas Lakin and the Lakin firm in Williams’ legal malpractice claim. "