Justice Ramos of Supreme Court, New York County is handling a strange case.  Plaintiff sued American Home Products in a Phen-Fen case with Napoli Bern being lead counsel.  A conflict exists between their direct clients and the rest of the group. 

"A New York state judge has ordered a trial to determine whether the law firm that negotiated a massive settlement with the maker of banned diet drug fen-phen violated ethical rules by apportioning the settlement in a manner designed to inflate the firm’s share of the funds.

In 2001, the firm now known as Napoli Bern Ripka sued American Home Products (AHP), now known as Wyeth, on behalf of around 5,000 former users of fen-phen (dexfenfluramine), a diet drug recalled by the Food and Drug Administration after studies linked it to heart valve damage. American Home settled the suit under confidential terms, though the settlement has been estimated to be over $1 billion.

But in a decision issued Tuesday, Manhattan Supreme Court Justice Charles E. Ramos said there were serious questions about Napoli Bern’s conduct in dividing and distributing the settlement that needed to be addressed in a trial. He cited in particular an affidavit submitted by a former attorney at Napoli Bern who said the firm had misled clients about the process.

The lawyer, Stephen David Murakami, worked on fen-phen litigation at Napoli Bern before being terminated in 2001 and then unsuccessfully sued the firm for allegedly unpaid bonuses. In his affidavit, Murakami said the firm had told clients their portions of the settlement had been individually negotiated with American Home, when in fact they had been solely determined by Napoli Bern.

"The representation to a client that a specific dollar amount was offered in a negotiation with the defendant to settle the client’s case, when in fact the settlement offer was by the client’s own attorney made upon the attorney’s evaluation, if true, represents a serious breach of duty to the client," Ramos wrote in New York Diet Drug Litigation, 700000/98.

According to Murakami, a major determinant in the size of a client’s share was whether he or she had retained Napoli Bern directly or been referred by another firm. Napoli Bern allegedly inflated the settlement payments of its direct clients because its fees from those clients would not be reduced by referral fees.

A hearing raises the possibility that the prior settlement could be modified or even vacated. The judge said the allocation of settlement

The aphorism is that bad cases make bad law.  In this particular case, an attorney, now disbarred, has been holding on to case files, demanding payment.  So far, not so bad.  However, today, sheriffs were ordered in to look for the files, after contempt findings.

"A half-dozen sheriff’s deputies raided a disbarred attorney’s office last week in search of the 43 boxes of files he has refused to hand over to the law firm that has taken over his biggest case, a wrongful-death action filed by a Bronx woman on behalf of her husband, a ship-rigger who plummeted to his death at the Brooklyn Navy Yards.

For all practical purposes, the deputies came out of Kenneth Heller’s office empty-handed.

"None of the records we’ve been seeking [were] there," said Michael S. Feldman, a partner at Jacoby & Meyers, who, with Terry D. Horner, now represents the plaintiff, "No trial notes, no photographs, no witness statements, no pleadings. The only thing that was there was the record . . . generated as a result of my efforts to obtain the file."

The dispute over the case files began in the summer of 2004. Having first lost her multimillion award and then her attorney in just over a month, Ms. Emanuel, a Bronx mother of two who had recently filed for bankruptcy, turned to Jacoby & Meyers to take over her late husband’s wrongful-death claim.

The firm has spent the last two-and-a-half years trying to recover her files.

In various court papers, Mr. Heller has demanded from $2 million to more than $12 million in fees, as well as $300,000 to $400,000 in unitemized disbursements, before turning over the documents "

Keeping up to date is one way to avoid legal malpractice problems.  Here is a case from the Court of Appeals.  Notice the "immediately"

"We have recognized only two exceptions to prior written notice laws — "where the locality created the defect or hazard through an affirmative act of negligence and where a ‘special use’ confers a special benefit upon the locality" (Amabile v City of Buffalo, 93 NY2d 471, 474 [1999][citations omitted]). Further, "the affirmative negligence exception . . . [is] limited to work by the City that immediately results in the existence of a dangerous condition" (Bielecki v City of New York, 14 AD3d 301 [1st Dept 2005][emphasis added]). Here, plaintiff presented no evidence of who last repaved this section of the roadway before the accident, when any such work may have been carried out, or the condition of the asphalt abutting the manhole cover immediately after any such resurfacing. Next, even assuming that the special use doctrine applies to a manhole situated in a City public street, plaintiffs presented no proof of any special benefit conferred on the City. Finally, we note that the expert’s opinion was not inadmissible merely because nearly four years elapsed between the accident and the expert’s inspection of the site. Because the expert could not supply any reliable evidence as to the elements of the exceptions to the prior written notice law, however, whether the trial court erred in precluding the expert’s testimony is a question that does not affect the outcome of this case. "

Here is a medical malpractice case in which a physician for the Workers Compensation board examines an injured worker, and tells him that a request for surgery will not be granted, and that the worker does not need surgery, only physical therapy.  Even though the examining physician is not plaintiff’s doctor, he is denied summary judgment.

This medical malpractice case is of interest to legal malpractice practitioners, because it is a stong example of liability without privity.  Think for a while, and analogies come to mind.  A second opinion by an attorney?  An attorney for an insurance company turning down a claim?  An opinion letter? 

This case illustrates the problem of being ready for trial.  The case was scheduled months ahead, and presumably the expert was known at the time of trial.  However, the expert could not be coaxed into the courtroom.  Result?  Case dismised on failure to prosecute grounds.  AD affirms, but on failure to demonstrate prima facie case.  In either event, this is the end of the case.  Q:  Whose fault was nonappearance?

This case illustrates withdrawal by a defense attorney in a civil litigation, and how the court wrongfully directed that the case go on to trial without a short adjournment for defendant to get a new attorney.  Result?  Plaintiff tries case, gets verdict, defends appeal, loses appeal, and has to start all over again.  In the long run, perhaps not the best strategy. 

The New York Times reports that a Federal Grand Jury is hearing testimony on attorney fees taken in an American Home Products case settlement problem.  The problem is that when the case was settled for about $ 200 Million in favor of 440 plaintiffs, the attorneys misled state court judges and  did not tell them that retainers allowed the attorneys 30-33% contingencies.  Instead, they ended up with closer to 50%.  This settlement also netted a judge who ruled that a charity had to be set up with part of the settlement proceeds. He told the Kentucky Judicial Conduct Commission that he "didn’t know" of the 30% retainers. The judge then left the bench to head up the charity.  According to the NY Times, Clients ended up with less than 40% of the settlement.

Is the question of legal malpractice at the back of litigator’s minds?  It probably is, if only for the reason that good lawyers are always calculating whether they are doing a good enough job, or, for that matter, doing enough in a case.  Here is an example from overlawyered

"Well — as Ted points out in the comments to her post — I had said "thousands," not "millions." But the bigger problem with what she wrote is that she dramatically underestimates the burden and cost of litigation. We’ll put aside the fact that her proposal — to have paralegals file boilerplate responses — would constitute legal malpractice on the part of the defense attorney."