November 9, 2007
Conflicts Of Law and Malpractice
A New York law firm represented a Florida resident in the sale of a New Hampshire corporation that had its principal place of business in New York (this sounds like a law school conflicts of law exam question). The sale was to another corporation that was represented by seperate counsel. After the sale, the client was employed by the buyer corporation.
Litigation was brought against the buyer corporation by a third party claiming breach of contract. That lawsuit led the buyer to invoke an indemnification agreement and fire the client. The client then brought two arbitration actions against the buyer. The law firm represented represented the buyer in the third party action, after seeking but not obtaining the (now former) client's consent. The arbitration between the client and buyer later settled and the client sued the law firm for malpractice, contending that the firm had improperly represented adverse interests.
The New York Supreme Court granted the law firm's motion to dismiss, determining that Florida law applied and the claim was not viable under Florida law. The Appellate Division for the First Judicial Department ordered the complaint reinstated. First, the claim is well-pleaded under either New York or Florida law. In any event, New York law applies because "the duty forming the basis for plaintiff's claims arose from defendant's representation of plaintiff in New York and New York has an interest in regulating the conduct of its attorneys." (Mike Frisch)
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