Justice March Friedman ruled last week that Wilson Elser must disgorge $ 3 Million + fees based upon a  breach of fiduciary duty, and faces $100 in legal malpractice damages as the case progresses.  The story goes on:

"Insurance defense giant Wilson, Elser, Moskowitz, Edelman & Dicker has been ordered to disgorge millions of dollars in legal fees paid by an insurance client who accused the firm of helping another client set up a competing business.

In a March 29 decision, Manhattan Supreme Court Justice Marcy S. Friedman granted summary judgment to trustee liability insurer Ulico Casualty Co. on its claim that former counsel Wilson Elser breached its fiduciary duty by participating in a scheme to transfer Ulico policyholders to another insurer.

The judge ruled that there was "no triable issue of fact" about Wilson Elser’s breach of its duty to Ulico and said the law firm had failed "to perceive its ethical obligation to Ulico."

"While Wilson Elser had the right to represent competitors … it did not have the right to represent competitors in setting up a competing business to which it was contemplated that Ulico’s accounts would be transferred," Friedman wrote in Ulico Casualty Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 602229/99.

"Put another way … Wilson Elser did not have the right to prefer one client over another when the clients’ interests diverged," the judge continued.

She ordered Wilson Elser to forfeit all legal fees it received from Ulico from Jan. 1, 1996, to June 30, 1999. Ulico has claimed it paid the law firm more than $3.4 million in fees during that time. The judge also permitted Ulico to go forward with other claims for legal malpractice and tortious interference with contract. Ulico has requested total damages from Wilson Elser of more than $100 million. "

Plaintiff attorney sued defendant client for legal fees and client counterclaimed for legal malpractice.  At trial plaintiff attorney lost and client won a verdict of $ 31,000 for legal malpractice.  The AD1 found that neither the fee case nor the malpractice case were proven. The malpractice case failed because although a conflict of interest was demonstrated, no deviation was shown.

This article is about medical malpractice, but it applies to legal malpractice. Examples?  When is a tax legal malpratice case complete?  is it on the day of the mistake, on the day of the filing, on the last date which a return may be filed, or when the IRS determines there was a mistake?

"Duty, breach, causation and injury: These are the traditional elements of a tort claim. Thus, under customary theories, a tort is inchoate unless and until the plaintiff suffers actual injury. For example, a plaintiff who has an increased risk of disease because she has been exposed to a defective product, but no manifest illness, would have no cause of action. Faced with this quandary, plaintiffs have resorted to novel claims and theories. They have argued, for instance, that recovery should be allowed for increased risk of future disease or for emotional distress"

The NYLJ reports:

Day Pitney Lawyers Let Off Hook in Malpractice Suit Over Arms-Dealer Loan
Mary Pat Gallagher
New Jersey Law Journal
April 4, 2007

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A company that loaned $3.5 million to a business owned by a man convicted of trying to sell military parts to Iran illegally cannot sue the lawyers it says failed to warn it of the risk.

A federal judge on March 30 dismissed malpractice claims against lawyers from Day Pitney and other firms, finding the lender should have sued the lawyers as part of its state court suit against the borrowers and that, in any event, it was the borrowers’ fraud that caused the loss.

The case, Keltic Financial Partners v. Krovatin, 05-4324, stems from Daniel Malloy’s 1997 arrest and indictment for the attempted sale of 20 Phoenix missile-battery components to Iran. The long-range air-to-air missiles were the type used on F-14A Tomcat jets, which the United States had sold to Iran before 1979, when the shah was overthrown and the country became an Islamic republic.

The NYLJ reports:

"Judge Bars Firm From Suing Ex-Client in Two Courts

By Rosamaria Mancini
New York Law Journal
April 4, 2007

A Mineola law firm cannot sue a former client over unpaid legal fees in both state Supreme Court and District Court if the causes of action are the same, a Nassau judge has ruled.

In Shaw Licitra v. Hahn, 039977/2006, District Court Judge Andrew M. Engel dismissed a suit brought by Shaw, Licitra, Gulotta, Esernio & Schwartz against Chris R. Hahn.

The decision will be published Monday.

"The court finds that such conduct was frivolous, being completely without merit in law, unable to be supported by any reasonable argument for an extension, modification or reversal of existing law, and undertaken primarily to harass or maliciously injure the defendant," Judge Engel wrote.

He imposed a $1,000 sanction against the firm and ordered it to deposit the funds in the Lawyers’ Fund for Client Protection. A hearing will be held April 27 to determine how much the firm will pay in attorney’s fees to Mr. Hahn. "

Barcelo v. Elliott is a Texas case which holds that privity is necessary for a legal malpractice case.  Here is an article from Baylor Law Review, the TexSupp which discusses the case, its holding, and how the courts have gradually whittled away the privity requirement.

As in other states, ocassionlly an attorney may be held responsible to non-clients.  Opinion letters, fraud, and some other conditions may apply. 

Its a short opinion, the Court of Appeals reversed and remanded this case for further proceedings.  Zorn v. Gilbert is a legal malpractice arising from a matrimonial.  In the opinion, the Court of Appeals determines the date of the judgment of divorce, and determines that the law firm continued to represent Zorn for some months thereafter.  Based upon this, the Court of Appeals found that the case was timely.

Here is access to a podcast interview with Oliver Hill, a civil rights attorney who was part of the NAACP 50’s/60’s legal push for civil rights, equality, and modernity.

"Civil rights attorney Oliver Hill is well known for the role he played in the landmark U.S. Supreme Court decisions that ended the doctrine of “separate but equal” and other forms of racial discrimination in the United States. One of the cases in which Hill was a key figure was NAACP v. Button. On its face, Button was a challenge to Virginia statutes defining and punishing attorney malpractice. The impact of the 1963 decision was, however, far greater. NAACP v. Button established the principle that active encouragement of public interest litigation is “speech” protected by the First Amendment – a principle that was critical to civil rights litigation."

 

Here is a very interesting article on the question of whether law, statute and judicial gloss all favor lawyer defendants in legal malpractice.  It compares treatment of medical malpractice to legal malpractice and concludes that the real question to ask is:  how will a decision in any given situation affect the legal community?

"This Article answers this question with the following jurisprudential hypothesis. Many legal outcomes can be explained, and future cases predicted, by asking a very simple question: is there a plausible result in this case that will significantly affect the interests of the legal profession (positively or negatively)? If so, the case will always be decided in the way that offers the best result for the legal profession.

The article presents theoretical support from the new institutionalism, cognitive psychology and economic theory. The Article then gathers and analyzes supporting cases from areas as diverse as constitutional law, torts, professional responsibility, employment law, evidence, and criminal procedure.

The questions considered include: why are lawyers the only American profession to be truly and completely self-regulated? Why is it that the attorney-client privilege is the oldest and most jealously protected professional privilege? Why is it that the Supreme Court has repeatedly struck down bans on commercial speech, except for bans on in-person lawyer solicitations and some types of lawyer advertising? Why is it that the Miranda right to consult with an attorney is more protected than the right to remain silent? Why is legal malpractice so much harder to prove than medical malpractice? The Article finishes with some of the ramifications of the lawyer-judge hypothesis, including brief consideration of whether our judiciary should be staffed by lawyer-judges at all. "

Union members often use attorneys who are provided by the Union.  After all, they pay union dues and deserve this free attorney.  However, when things go wrong, they cannot sue. 

"Claim of malpractice by the union’s attorney rejected
Mamorella v Derkasch, App. Div., Fourth Dept., 276 AD2d 152

Lucille Mamorella asked the Appellate Division “to reject as against public policy the well-established rule that an attorney who performs services for and on behalf of a union may not be held liable in malpractice to individual union members where the services at issue constitute a part of the collective bargaining process.”

The Appellate Division declined to do so. The court said, "

Sound policy reasons as well as established precedent compel the conclusion that attorneys who perform services for and on behalf of a union may not be held liable in malpractice to individual grievants where the services the attorneys perform constitute a part of the collective bargaining process.

The court cited Peterson v Kennedy, 771 F2