The Madison Record reports on legal malpractice.  It is perhaps the largest contributor to legal malpractice journalism we’ve encountered.  Here is an interesting point.  Madison County, IL has more class actions than any other single county in the US. 

Here is a story about a big class action firm, which is reported not to have legal malpractice insurance.  The story.

In     Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker, LLP    the question of whether a law firm defending a client has an obligation to determine whether there is excess insurance available. 

This case, determined by the Second Department, has the following issue:

"The principal issue presented on this appeal concerns whether a law firm, retained by a primary carrier to defend its insured in a pending action, has any obligation to investigate whether the insured has excess coverage available and, if so, to file a timely notice of excess claim on the insured’s behalf. " 

"In any event, it seems self-evident that the question whether, in the ordinary case, an attorney could be found negligent for failing to investigate insurance coverage would turn primarily on the scope of the agreed representation – a question of fact – and on whether, in light of all relevant circumstances, the attorney "failed to exercise the reasonable skill and knowledge commonly possessed by a member of the legal profession" (Arnav Indus. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, 96 NY2d 300, 303-304; see Darby & Darby v VSI Intl., supra at 313; Levy v Greenberg, 19 AD3d 462). We cannot say, as a matter of law, that a legal malpractice action may never lie based upon a law firm’s failure to investigate its client’s insurance coverage or to notify its client’s carrier of a potential claim."

"Consequently, just as we are unprepared to say, as a matter of law, that a failure to investigate the existence of excess insurance coverage may never give rise to a legal malpractice action against an attorney retained directly by a defendant in a personal injury action, we take the same view with respect to an attorney who is retained, not by the defendant directly, but by its carrier. Accordingly, the defendant’s pre-discovery motion to dismiss the cause of action sounding in legal malpractice should have been denied. "

Here is the entire Case

 

Privity is a requirement in almost all cases of legal malpractice.  One particular sticking point is the negligently created estate.  Who has the right to sue, if anyone?  Here is a Texas case which differentiates between the damaged estate [think: unnecessary tax, costs, loss of assets] and a disappointed will beneficiary.

In this case, the estate was able to sue its attorney, even thought testator was dead. The Texas case.

 

Insurers, defense counsel, lecturers all tell us that attorney fee suits, and threats, are a major source of discipline and legal malpractice litigation.  Here is yet another example.

"When a client hesitated over paying his bill, Richard Ledingham threatened her with criminal prosecution for "theft of services" and he didn’t stop there: He also warned that she might lose her business, her home and her professional license.

Those actions — all to collect a fee judged to be exorbitant — are cause for suspending the River Vale solo from practice for three months, says New Jersey’s Disciplinary Review Board.

Despite an ethics committee’s call for a reprimand and Ledingham’s lack of prior discipline in 25 years of practice, the board sought suspension "insomuch as he threatened his client’s ruination in all aspects of her life, even including her ability to provide for her children."

In its opinion issued Monday, In re Richard Ledingham, DRB 06-235, the board noted Ledingham’s failure to appear at the District IIA Ethics Committee hearing below, his lack of contrition and his attempt to collect "a grossly excessive fee."

According to the opinion, Ledingham billed his client Karen Ferwerda $52,742 for representing her in the purchase of a Sylvan Learning Center franchise in December 2003. When Ferwerda retained him in June 2003, Ledingham agreed to send monthly invoices but never did do until the purchase closed.

Ledingham’s work for Ferwerda was not extensive, the DRB found. He reviewed documents for a Small Business Administration loan for which she was approved but did not pursue. He reviewed a lease agreement but did not negotiate the terms. And he looked over the Sylvan franchise agreement, which was presented to her as a "take-it-or-leave-it" deal.

Ledingham, also a certified public accountant, charged Ferwerda $175 an hour. But his charges included 47 hours for studying a four-page section of the Internal Revenue Code §197, which deals with amortization of intangibles. "

 

Here is an article from Anthony Lin of the NYLJ which tells of Chicago Ins. Co’s successful move to drop a legal malpractice insurance policy for an attorney who was recently sentenced to jail for fraud.

"A federal judge in Manhattan has permitted a professional liability insurer to rescind coverage for a lawyer recently sentenced to four years in prison for participating in an elaborate corporate fraud scheme.

John Fasciana was convicted in July 2005 on federal charges relating to the diversion to his law firm’s account of hundreds of thousands of dollars sent as payment to Electronic Data Services Corp. (EDS) between 1995 and 1998"

"Southern District Judge Loretta A. Preska ruled last week on a summary judgment motion that the insurer was entitled to rescind the policy and could seek reimbursement of all legal fees it paid on behalf of Mr. Fasciana. She also said Chicago Insurance was entitled to a declaration that it was no longer required to defend Mr. Fasciana in the Texas action. "

 Meat Loaf  argues that "2 out of 3 ain’t bad" but it does not work in Legal Malpractice. Proving that defendant was your attorney, and that defendant breached a duty of care is insufficient..  You must prove proximate cause as well.  There is little so heartbreaking as a trial verdict in which the first and second questions are answered "yes" by the jury, only to have them say no to:  Was this deviation the proximate cause of plaintiff’s injury?"  

Here is a NJ case on the subject. "In short, there was no evidence of any damages, apart from the failure to pay the note. There was no evidence of the value of the assets of the business, the value of the leasehold, or the value of the business at the time of Chang’s breach. Although plaintiffs proved the first two elements of a malpractice action, an attorney-client relationship and a breach of the duty of care, they failed to prove the third element, proximate causation of damages. Conklin v. Weisman, 145 N.J. 395, 416 (1996). "