Thursday, December 13, 2007

Proximate Cause And Legal Malpractice

The New York Appellate Division for the Second Judicial Department affirmed a jury verdict finding legal malpractice in a matter where the lawyers had represented the clients "in the negotiation and closing of a lease and purchase option agreement concerning certain commercial property." The clients wanted to manufacture barbeque sauce on the property, which had earlier been classified as a inactive hazardous waste disposal site. The lawyers had advised the clients to agree to an "as is" clause in the lease agreement. The clients claimed malpractice for failure to properly advise about the impact of the environmental issues and the effect of the "as is" provision.

A key issue at trial was causation. Further, the lawyers contended that the client's decision not to use the property was a business decision unaffected by the environmental issues. As to causation, the court majority held: "the parties have not cited, and research has not revealed, any case from the Court of Appeals or any other other court expressly holding that "but for" causation is synonymous with sole proximate cause, or that requires a degree of causation in legal malpractice cases greater than proximate cause..." The evidence was deemed sufficient to respect and uphold the jury's decision as to proximate cause.

A dissent would hold otherwise: "Both the plaintiffs' and defendants' experts testified that in representing a tenant, an "as is" lease is not uncommon...plaintiffs' expert conceded that there was no statutory or regulatory prohibitions which would have prevented the plaintiffs from using the premises for the purpose intended...To the extent that the alleged malpractice was predicated on [the attorney's] advice to see the deal through, there is no proof that such advice constituted malpractice or resulted in damages to the plaintiffs. As we have consistently held, the mere dissatisfaction with a strategic choice of counsel is not malpractice."

This case should cause some concern about the reach of malpractice liability. (Mike Frisch)

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