Paul J. Israelson writes in todays NYLJ about a pitfall, which while well settled and recognized, is often overlooked. If plaintiff files for bankruptcy, in any chapter, between the date of the malpractice and the inception of the legal malpractice case, the cause of action really belongs to the bankruptcy estate, which is controlled by Trustee in Bankruptcy and no longer by the plaintiff. Details

“If it is the case that the plaintiff filed for bankruptcy under Chapter 7 or Chapter 11 of the Bankruptcy Code (but not Chapter 13) during that same period, I then determine whether or not the plaintiff’s cause of action for malpractice was listed as an asset when filing for bankruptcy. In the event the plaintiff did not list his claim for malpractice as an asset when filing for bankruptcy (which is often the case), then the plaintiff will not have standing to pursue his malpractice claim”

One possible remedy is to seek Bankruptcy Court approval to amend the schedules to add the cause of action, and then seek a “sale” of the asset by the trustee.

Lexis reports that:

Sunday, January 22, 2006

Law Firm Wins Judgment In Legal Malpractice Action Over Sauer Verdict

LITTLE ROCK, Ark. — A federal judge has found that a law firm representing a defendant in the record-setting Advocat Inc. v. Sauer verdict is not liable in a legal malpractice action seeking $10 million in damages (Great American Insurance Co., et al. v. Dover & Dixon, P.A., et al., No. 4:04-cv-00582, E.D. Ark., Western Div.; 2005 U.S. Dist. LEXIS 32611).

Although not entirely on the point of legal malpractice, here is a blog entry about Legal advertisin and legal malpractice by Allison C. Shields in her Legal Ease blog.. Here, plaintiff sued attorney for early and insufficient settlement, alleging that attorney advertised its quality and high settlements, along with legal malpractice.

Here is a case of a recently vindicated convict. He was convicted of murder, and served many years in jail. His case was remanded, and dismissed on the basis that there was insufficient evidence that the child who died was murdered; it may have been an accident. It is said in the news article that the vindicated plaintiff has a legal malpractice law suit. Issues are statute of limitations and whether California law requires a demonstration of innocence or simply that the conviction was reversed. Details.

“But for” is probably the hardest part of a legal malpractice case. Plaintiff must prove that except for the mistake of the attorney, it would have won the case. This requirement often comes up against a fact based argument that on the last day of representation by the now defendant attorney, the case was still viable, and was lost, not solely because of mistakes of the defendant attorney, but for other reasons. Here is a blurb from Chicago.

Insurance Week Blog reports this 6th Circuit Legal Malpractice statute of limitations case which points out the difference between a “discovery” statute and a “event” statute. Plaintiff wanted the statute to start running when she found out about the mistake, the court determined that it began to run when the mistake was made. Details. This situation often arises in transactional work, for example, mistakes made at a real estate closing, which do not become known for several years later. In New York there is no “discovery” statute, and the only extending doctrine is that of “continuous representation.”

Sabo v. Alan B. Brill, P.C., 7561-7561A, Index 100055/04 , SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT , 2006 NY Slip Op 221; Decided, January 12, 2006, This is a summary judgment dismissal of what appears to be a real estate transaction gone wrong. Both the attorney and the title company won dismissal.

Frost Line Refrigeration, Inc. v. Gastwirth, Mirsky & Stein, LLP, 2005-03137 , SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT , 2006 NY Slip Op 139; January 10, 2006, Decided. Here, plaintiff signed a consent to change attorney which started the statute of limitations running. Plaintiff’s argument that the statute started running upon later dismissal of the case does not convince the court nor the appellate court.

Izko Sportswear Co., Inc. v. Flaum, 2004-00279, 2004-01167, 2004-05260 , SUPREME COURT OF NEW YORK, APPELLATE DIVISION, SECOND DEPARTMENT , 2006 NY Slip Op 142; This is an interesting and unusual case of Judiciary Law 487, which is usually dismissed. The plaintiffs alleged that their attorney, who represented them in a chapter 11 bankruptcy misled the court, as well as having committed malpractice. The attorneys were eventually awarded legal fees in the Bankruptcy court. Because a court granted legal fees, the malpractice action was dismissed upon res judicata. After dismisal of the legal malpractice portion, the judiciary law portion remains.

Achtman v. Kirby, McInerney & Squire, LLP, 02 Civ. 9913 (JES) , UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK , Decided, January 5, 2006. This is the Broker’s case reported in yesterday’s Blog under “Legal Malpractice and Securities Litigation. This case ends with the plaintiff’s attorneys foreclosed from filing any further matters without express permission.

Here is a strange story from Christopher R. Jones of the PSLRA Nugget Blog about class-action plaintiffs who attempted to sue the class-action attorneys, only to have the entire case fall apart. After a $ 160 million + recovery, several plaintiffs brought the legal malpractice action based upon the claim that Arthur Andersen was not a defendant. The case ended with plaintiff’s attorneys no longer able to file without specific permission of S.D.N.Y judge Sprizzo. Details.