Monday, February 1, 2016

A Foolish Inconsistency

The Washington Court of Appeals has held that judicial estoppel precludes a legal malpractice suit premised on contentions inconsistent with those offered in a bankruptcy action.

Courts apply the equitable doctrine of judicial estoppel to protect the integrity of the judicial process by precluding a party from gaining an advantage by asserting one position in a court proceeding and later seeking an advantage by taking a clearly inconsistent position. Here, the appellant-debtor knew all of the facts that gave rise to his potential claim of legal malpractice at the time he filed for bankruptcy, yet he failed to disclose it until almost three years after receiving a discharge from the bankruptcy court. While judicial estoppel generally does not apply to the bankruptcy trustee, here no one asked the trial court to substitute the bankruptcy trustee as the real party in interest. The trial court did not abuse its discretion by applying the doctrine of judicial estoppel to bar this legal malpractice claim. We affirm the trial court.

(Mike Frisch)

February 1, 2016 in Clients | Permalink | Comments (0)

Thursday, January 28, 2016

Allegations Conclusory Or "Utterly Refuted"

The New York Appellate Division for the Second Judicial Department has reversed a trial court order and dismissed a legal malpractice claim by a client against her former divorce attorneys.

The plaintiff's former husband commenced an action for a divorce and ancillary relief against her, and the plaintiff retained the appellants to represent her in that action. Prior to trial, the plaintiff and her former husband entered into a stipulation of settlement on the record in open court, which ended that case. Approximately two years later, the plaintiff commenced this action to recover damages for, among other things, legal malpractice. The plaintiff alleged, inter alia, that the appellants failed to ascertain the full extent of her former husband's assets and failed to adequately explain the stipulation of settlement to her. The appellants moved pursuant to CPLR 3211(a) to dismiss the complaint insofar as asserted against them. The Supreme Court, among other things, denied the appellants' motion. We reverse insofar as appealed from.

The malpractice claims fail because

Here, to the extent that the complaint asserted that the appellants were negligent in failing to ascertain the full extent of the assets of the plaintiff's former husband, it failed to sufficiently allege that the stipulation of settlement entered into was effectively compelled by the mistakes of counsel, since the plaintiff acknowledged that she elected to enter into the settlement agreement even though she was aware that her former husband had not fully disclosed his assets...

The allegation that, but for the appellants' alleged negligence, the plaintiff would have received a more favorable settlement offer from her former husband is conclusory and speculative...In addition, to the extent that the complaint alleged that the plaintiff was not advised about certain aspects of the stipulation of settlement pertaining to the marital residence, the transcript of the court proceedings submitted by the appellants, wherein the attorneys set forth the terms of the stipulation, utterly refuted those factual allegations.

(Mike Frisch)

January 28, 2016 in Clients | Permalink | Comments (0)

Tuesday, January 19, 2016

Getting Mad And Even

sunEthics sunEthics has a report on a decision that will hearten lawyers who are trashed on line by former clients

 Lawyer Giustibelli represented Blake in a divorce from her husband, Birzon.  After a breakdown in the attorney-client relationship, Blake and Birzon posted negative online reviews regarding Giustibelli.  The reviews stated that Giustibelli charged Blake 4 times the amount of fees originally quoted, that she lacked integrity, and that she falsified a contract.  Alleging that the reviews were defamatory, Giustibelli sued Blake and Birzon for libel.  The trial court entered a judgment of $350,000 in punitive damages for Giustibelli.  Blake and Birzon appealed.

The Fourth DCA affirmed.  Blake and Birzon contended that “their internet reviews constituted statements of opinion and thus were protected by the First Amendment and not actionable as defamation.”  The appeals court disagreed.  “all the reviews contained allegations that Giustibelli lied to Blake regarding the attorney’s fee. Two of the reviews contained the allegation that Giustibelli falsified a contract. These are factual allegations, and the evidence showed they were false.”  Appellants’ reliance on Gertz v. Robert Welch, Inc. 418 U.S. 323 (1974), was misplaced.  Giustibelli was not a media defendant, and for non-media defendants libel per se still exists in Florida. Blake v. Giustibelli, __ So.3d __ (Fla. 4th DCA, No. 4D14-3231, 1/6/2016), 2016 WL _______.

(Mike Frisch)

January 19, 2016 in Clients, Current Affairs | Permalink | Comments (2)

Wednesday, January 13, 2016

No Expert, No Case

The web page of the Rhode Island Supreme Court has a summary of a recent decision in a legal  malpractice case

The pro se plaintiff in this appeal, Artecia Behroozi (plaintiff or Behroozi), appealed from the Superior Court’s entry of summary judgment in favor of the defendant, attorney Allen Kirshenbaum (defendant or Kirshenbaum), on her claims for legal malpractice and fraud relating to Kirshenbaum’s representation of Behroozi in Family Court.
The Supreme Court held that both Behroozi’s fraud and legal malpractice claims were barred by the three-year statute of limitations for a legal malpractice action.  The Supreme Court further held that Behroozi’s malpractice claim failed as a matter of law because she did not present an expert witness to testify as to the applicable standard of care and any breach thereof.  The Supreme Court also held that the remainder of Behroozi’s arguments on appeal were without merit.

 The court decision is linked here. (Mike Frisch)

January 13, 2016 in Clients | Permalink | Comments (0)

Wednesday, December 23, 2015

"Subject Matter" Conflicts Explored

The Massachusetts Supreme Judicial Court held that there was no actionable conflict of interest in a circumstance

when attorneys in different offices of the same law firm simultaneously represent business competitors in prosecuting patents on similar inventions, without informing them or obtaining their consent to the simultaneous representation...

We conclude that the simultaneous representation by a law firm in the prosecution of patents for two clients competing in the same technology area for similar inventions is not a per se violation of Mass. R. Prof. Conduct 1.7. We further conclude that based on the facts alleged in his complaint, Maling failed to state a claim for relief. Accordingly, we affirm the judgment of dismissal.

The story

The plaintiff, Chris E. Maling, engaged the defendant law firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP (Finnegan), including the three individual attorneys named in this suit, to represent him in connection with the prosecution of patents for Maling's inventions for a new screwless eyeglass.

After obtaining his patents, Maling learned that Finnegan had been simultaneously representing another client that competed with Maling in the screwless eyeglass market. Maling then commenced this action, alleging harm under various legal theories resulting from Finnegan's failure to disclose the alleged conflict of interest.

The court reviewed and applied the "subject matter conflicts" doctrine and found that no conflict had been properly alleged

 This court has not defined a minimum protocol for carrying out a conflict check in the area of patent practice, or any other area of law. However, no matter how complex such a protocol might be, law firms run significant risks, financial and reputational, if they do not avail themselves of a robust conflict system adequate to the nature of their practice. Although Maling's complaint does not plead an actionable violation of rule 1.7 sufficiently, the misuse of client confidences and the preferential treatment of the interests of one client, to the detriment of nearly identical interests of another, are serious matters that cannot be reconciled with the ethical obligations of our profession. 

This is a potentially significant holding for patent attorneys. (Mike Frisch) 

December 23, 2015 in Clients, Hot Topics, Law Firms, Professional Responsibility | Permalink | Comments (0)

Friday, December 4, 2015

When A Client Threatens Suicide

The Virginia State Bar is addressing a difficult issue that attorneys sometimes face

May a lawyer disclose otherwise confidential information to protect a client who threatens to commit suicide?

Rule of Professional Conduct 1.14 ("Client With Impairment") provides guidance to a lawyer whose client's physical and financial well-being is at risk of substantial harm due to the client's diminished capacity. Sadly, there have been many instances when a client facing incarceration, loss of child custody, or loss of income and property has informed his or her lawyer that the client intends to commit suicide. When the lawyer "reasonably believes" that such a threat is credible, the lawyer "may take reasonably necessary protective action" on behalf of the client. Neither the Rule nor the Comments which follow it specifically address a client's threat of suicide, but the Rule should be interpreted to allow the lawyer to contact the client's family, close friends, mental health care providers, or emergency medical services personnel so that an intervention can be made to save the client from harm. Lawyers who take protective action consistent with Rule 1.14 do not violate Rule of Professional Conduct 1.6 ("Confidentiality of Information") because Rule 1.6(a) permits disclosures which are "impliedly authorized in order to carry out the representation". Lawyers must nonetheless adhere to the requirement of Rule 1.14(c) to reveal otherwise confidential information "only to the extent reasonably necessary to protect the client's interests."

The Standing Committee on Legal Ethics has opined that it is not a violation of the ethical duty of confidentiality for a lawyer to disclose to appropriate authorities a client's stated intention to commit suicide. See LEO 560

(Mike Frisch)

December 4, 2015 in Clients, Professional Responsibility | Permalink | Comments (0)

Wednesday, November 18, 2015

Across The Pacific

The New York Appellate Division for the First Judicial Department affirmed the dismissal of claims against Davis Polk & Wardwell

The motion court providently exercised its discretion and properly balanced the factors set forth in Islamic Republic of Iran v Pahlavi (62 NY2d 474, 479 [1984], cert denied 469 US 1108 [1985]; Matter of Alla v American Univ. of Antigua, Coll. Of Medicine, 106 AD3d 570, 571 [1st Dept 2013]). As the motion court observed in evaluating the situs of the events at issue, plaintiff "reached across the Pacific" to recruit the partner he claims to have introduced to the defendant law firm, and all discussions occurred with that partner located in Hong Kong.

Plaintiff claims that Hong Kong is not an adequate forum on the basis that he would be unable to retain counsel on a contingency fee. Here, however, where the negotiations at issue were directed to Hong Kong, and key witnesses were located there, the motion to dismiss was properly granted (see Emslie v Recreative Indus., Inc., 105 AD3d 1335, 1336-1337 [4th Dept 2013]; cf. Waterways Ltd. v Barclays Bank PLC, 174 AD2d 324, 327-328 [1st Dept 1991]).

Plaintiff further ignores the hardship to defendants whose key witnesses are located in Hong Kong, the noted admissibility problems with respect to electronic discovery, and the likely application of the law of Hong Kong. Since this action is almost entirely concerned with events and law in Hong Kong, it cannot be said that the action has a "substantial nexus" with New York (Tetra Fin. (HK) v Patry, 115 AD2d 408, 410 [1st Dept 1985]).

(Mike Frisch)

November 18, 2015 in Clients | Permalink | Comments (0)

Monday, November 9, 2015

No Help For The Indigent

The North Dakota Supreme Court affirmed the dismissal of a legal malpractice claim

Paul Rusgrove appeals from a district court's summary judgment dismissing his lawsuit against Wayne Goter alleging legal malpractice. Rusgrove argues the district court erred in dismissing his claim for failure to identify an expert witness alleging the district court should have permitted him to subpoena an unretained government employee to provide expert testimony because he is indigent. He also argues the district court should have applied a less stringent legal standard to him, because he is an incarcerated self-represented litigant. We conclude the district court appropriately granted summary judgment dismissing Rusgrove's lawsuit with prejudice, because he failed to make a showing sufficient to establish the existence of an element essential to his case on which he would bear the burden of proof at trial because he did not timely retain an expert witness. Rusgrove's remaining arguments are completely without merit, because he provided no relevant legal authority in support of his positions.

(Mike Frisch)

November 9, 2015 in Clients | Permalink | Comments (0)

Friday, November 6, 2015

Bankrupt In Tribeca

The New York Appellate Division for the First Judicial Department has affirmed the dismissal of a legal malpractice claim against Stroock & Stroock & Lavan.

The court applied the correct standard and properly dismissed the complaint. Its unsupported factual allegations, speculation and conclusory statements failed to sufficiently show that but for defendant's alleged failure to advise plaintiffs to pursue Chapter 11 bankruptcy upon their default on a $47 million loan, plaintiffs would not have lost approximately $80 million in equity in the underlying condominium project in Tribecapractice claims against Strook & Strook & Lavan...

Plaintiffs, who defaulted on the loan in May 2009, alleged damages of approximately $80 million in lost equity based on sales figures of units that sold after the lender assumed ownership of the underlying property in 2010. While plaintiffs argue that the amount was also based on an expert appraisal, no basis for the amount is apparent, other than later sales in 2010 and 2011, after the lender took over, and after the market had improved. Plaintiffs' calculation also ignores that the Attorney General would not, as of December 2009, allow the sponsor, plaintiff 415 Greenwich LLC, to sell any units because it had failed to submit a plan that sufficiently stated how it would pay its arrears and other financial obligations in connection with the condominium units. Thus, plaintiffs' speculative and conclusory allegations do not suffice to show actual ascertainable damages.

(Mike Frisch)


November 6, 2015 in Clients | Permalink | Comments (0)

Wednesday, October 28, 2015

Quantum Physics

An opinion from the Minnesota Supreme Court

Appellant Stowman Law Firm, P.A. (Stowman), which represented a client pursuant to a contingent-fee agreement, voluntarily withdrew from the representation of the client when efforts to settle the case failed. The client retained substitute counsel who then successfully settled the case. Stowman brought an action to recover in quantum meruit the value of the services provided prior to the withdrawal. Following a bench trial, the district court found that Stowman failed to establish good cause for withdrawal and, therefore, was not entitled to recover in quantum meruit. The court of appeals affirmed. We conclude that an attorney may withdraw from a contingent-fee agreement with or without cause, provided that the withdrawal satisfies the rules of professional responsibility. But the attorney must establish that the withdrawal is for good cause in order to recover in quantum meruit the reasonable value of the services rendered prior to withdrawal. Because Stowman failed to establish good cause, we affirm.


We conclude that an attorney who withdraws for good cause from representation under a contingent-fee agreement may recover in quantum meruit the reasonable value of services rendered prior to withdrawal, provided that the attorney’s recovery in the event of withdrawal for good cause is not otherwise addressed in the contract and the attorney satisfies the ethical obligations governing withdrawal from representation.

 (Mike Frisch)

October 28, 2015 in Billable Hours, Clients | Permalink | Comments (0)

Saturday, October 24, 2015

Scorned But Compensated

An opinion authored by Judge Janice Rogers Brown of the United States Court of Appeals for the District of Columbia Circuit

“Hell hath no fury like a lawyer scorned.” Tom Gordon, Hell Hath No Fury Like a Lawyer Scorned, WALL ST. J., (Jan. 28, 2015), The problem with scorning a lawyer is that lawyers tend to sue. So it is here. A law firm based in the District of Columbia, Bode & Grenier, LLP, provided legal services to three Michigan-based companies owned and managed by Carroll Knight (“appellants”). More than ten years into the relationship, appellants stopped paying the bill. The predictable result? Litigation. The law firm prevailed in the district court, winning a judgment for $70,000 in overdue legal fees—plus $269,585.19 in legal fees for having to litigate over $70,000 in legal fees. We affirm the district court.

The law firm represented the client from 1994 to 2008

advising on taxation, gasoline contracts, petroleum futures and various regulatory enforcement and litigation matters. Throughout most of the relationship, no written agreement governed the terms of legal representation or manner of payment. Appellants paid the law firm monthly based on oral agreements...

On November 25, 2005, catastrophe struck. Approximately 100,000 gallons of petroleum spilled out of holding tanks owned by appellants in Toledo, Ohio. Appellants stopped the leak, but were powerless to stop the flood of regulatory actions that followed in its wake. A month after the spill, Knight called Bode & Grenier’s  managing partner, William Bode, to request the firm’s services. The firm soon tackled regulatory enforcement proceedings in Ohio, a lawsuit in federal court in Ohio, and counseled the company on other regulatory issues. As before, the firm billed appellants monthly.

The suit came when the fees went unpaid.

The court applied D.C. law

Here, the factors weigh in favor of applying D.C. law, not Michigan law. The first two factors—the place of contracting and place of negotiation—are inconclusive. Mr. Knight negotiated from Michigan, and Bode & Grenier from D.C. Likewise, the fifth factor—domicil—weighs evenly on both ends. In a dispute over a service contract, no factor matters more than the place of performance.

Nearly all of the legal services at issue were performed in D.C. by attorneys licensed to practice in D.C. See Appellee Br. 28–30. While the representation required occasional travel outside D.C. (mainly to Ohio), we find no evidence suggesting the firm’s attorneys routinely practiced in Michigan. The firm managed the representation from its sole office, located in D.C. The fourth factor—the location of the subject matter of the contract— supports applying D.C. law for the same reasons. This contract called for legal services managed and performed in D.C.

As a result, the law firm was able to recover fees for representing itself in this litigation. (Mike Frisch)

October 24, 2015 in Billable Hours, Clients | Permalink | Comments (0)

Wednesday, October 14, 2015

Attorney Must Return Unreasonable Estate Fee

An attorney must return $95,000 in fees paid by an estate, according to a recent decision of the North Dakota Supreme Court.

In August 2013, the beneficiaries of the Estate petitioned for court determination of reasonableness of fees and for settlement and distribution of estate. The petition objected to the fees charged by Magers and [attorney] Widdel for their services to the Estate and Trust. In September 2014, the district court found Magers had breached her fiduciary duty in several ways, which included paying Widdel large fees without question. The court also found administration of the Estate and Trust was not complicated and Widdel's fees were unreasonable in light of the nature of the work performed. The court ordered Widdel to return attorney's fees in the amount of $95,000.

The district court found that the estate was not complicated and that Widdel did not handle the litigation.

The attorney's "corporate veil" had been properly pierced

When a client engages the services of a lawyer, whether that lawyer is acting through the form of a professional organization or otherwise, the client has the right to expect preservation of a highly confidential relationship rooted in confidence, integrity, and professionalism. Such are the requirements expected of an officer of the court. Under the circumstances of this case, it would be inappropriate for Widdel to be allowed to hide behind the corporate veil and thus escape the professional and ethical requirements demanded by his profession.

And the district court properly found the fees unreasonable

 In this case the district court considered the evidence and testimony before it and determined the fees collected by Widdel in his service to the Estate, as an attorney, were unreasonable. The district court did not abuse its discretion in determining the fees were unreasonable. The district court did not misinterpret or misapply the law in holding Widdel personally responsible for the unreasonable fees he charged.

(Mike Frisch)

October 14, 2015 in Billable Hours, Clients | Permalink | Comments (0)

Friday, September 11, 2015

Not Too Late To Sue For Legal Malpractice

Defendants in a legal malpractice claim were not entitled to judgment on statute of limitations grounds, according to a recent opinion of the South Carolina Supreme Court.

The court overruled prior precedent that started the running of the statute 

In this legal malpractice case, Stokes-Craven Holding Corporation d/b/a Stokes-Craven Ford ("Stokes-Craven") appeals the circuit court's order granting summary judgment in favor of Scott L. Robinson and his law firm, Johnson, McKenzie & Robinson, L.L.C., (collectively "Respondents") based on the expiration of the three-year statute of limitations. Stokes-Craven contends the court erred in applying this Court's decision in Epstein v. Brown, 363 S.C. 372, 610 S.E.2d 816 (2005), and holding that Stokes-Craven knew or should have known that it had a legal malpractice claim against its trial counsel and his law firm on the date of the adverse jury verdict rather than after this Court affirmed the verdict and issued the remittitur in Austin v. Stokes-Craven Holding Corp., 387 S.C. 22, 691 S.E.2d 135 (2010). We overrule Epstein, reverse the circuit court's order, and remand the matter to the circuit court for further proceedings consistent with this opinion...

We overrule Epstein and now hold that the statute of limitations for a legal malpractice action may be tolled until resolution on appeal of the underlying case if the client has not become aware of the injury prior to the decision on appeal. We find this rule comports with the discovery rule and effectuates the purpose of the statute of limitations. Because the circuit court relied upon Epstein to hold that the statute of limitations began to run on the day of the jury's verdict, we reverse the court's grant of summary judgment without prejudice to either party's right to move for this relief under our newly announced statute of limitations standard for legal malpractice suits. Additionally, we find the circuit court abused its discretion in denying Stokes-Craven's motion to compel the production of communications between Respondents and their malpractice carrier because there was no evidence to support the court's ruling.

Chief Justice Toal dissented

In determining when the statute of limitations period commences for legal malpractice actions, the majority adopts a subjective standard that is dependent on whether "the client has [] become aware of the injury prior to the decision on appeal." Because the General Assembly explicitly provided for an objective standard, rather than the majority's new subjective standard, I write separately.

The Chief Justice was joined by Justice Kittredge. (Mike Frisch)

September 11, 2015 in Clients | Permalink | Comments (0)

Saturday, August 22, 2015

May A Lawyer Post A Client's Bail?

Yes in "rare circumstances," according to a recent ethics opinion by the Alaska State Bar

Question Presented:

Under what circumstances, if any, may a lawyer post bail for a client?


Under rare circumstances a lawyer may post bail for a client, though the practice is discouraged.


An attorney asks whether it is ethically permissible to post bail for a client who is in custody.

Posting bail for a client raises several issues under the Alaska Rules of Professional Conduct, which help ensure that a lawyer can zealously represent a client without conflicting interests that could affect the quality of the representation. The Rules provide, for example, that a lawyer may not provide financial assistance to a client in connection with litigation or acquire a proprietary interest in the subject matter of litigation. Neither may a lawyer represent a client if the representation is adverse to a personal interest of the lawyer. 

Each of these prohibitions, however, has exceptions. So, while a lawyer is generally prohibited from providing financial assistance to a client in connection with pending or contemplated litigation, a lawyer may advance court costs and expenses. And if a lawyer believes that he or she will be able to provide competent and diligent representation to a client despite their adverse interests, the lawyer may proceed with that representation after obtaining informed consent from the client.

Posting bail for a client imposes on the lawyer both contractual and financial constraints which could give rise to a situation in which the lawyer’s interests are materially adverse to the client’s, particularly if the client fails to comply with his or her conditions of release. Despite these ethical implications, posting bail does not fit squarely within the “costs of litigation” exception contemplated by Rule 1.8(e) nor the concurrent conflict of interest analysis contemplated by Rule 1.7(a)(2). Some jurisdictions interpret bail as akin to a cost of litigation,  while the American Bar Association applies a concurrent conflict of interest analysis.  While the Rules do not expressly address bail, they do provide analytical guidance.

Rule 1.7(b) contemplates limited exceptions to a concurrent conflict of interest where a lawyer’s ability to zealously represent the client’s interest is not compromised and the client consents. Rule 1.8(e) anticipates that a lawyer may pay for certain, limited expenses on a client’s behalf within the scope of the representation. Drawing from these exceptions, a lawyer may post bail for a client where the amount of bail is insignificant enough to not create a material limitation on the lawyer’s ability to represent the client. To ensure that a client understands the unique relationship that is created when the lawyer posts bail, a lawyer must obtain written informed consent from the client, specifying the surety provided and the scope of the liability the bail agreement imposes on the lawyer.

These considerations allow lawyers to facilitate the occasional client’s return to the community, which may assist with the representation. By limiting the acceptable circumstances to rare events, lawyers will avoid facing any significant risk that their ability to provide legal representation will be materially limited by the financial obligations posting bail requires. Similarly, by limiting the amount of bail to sums unlikely to materially limit a lawyer’s ability to represent a client, a lawyer diminishes the risk that the client’s noncompliance with the conditions of release would affect his or her ability to provide competent and diligent ongoing representation.

Approved by the Alaska Bar Association Ethics Committee on May 7, 2015. 

Adopted by the Board of Governors on May 12, 2015.

(Mike Frisch)

August 22, 2015 in Clients | Permalink | Comments (0)

Friday, August 21, 2015

Attorney Wins, Former Client Loses

An attorney prevailed in both a suit for legal fees and in dismissal of counterclaims of the former client in an opinion of the New York Appellate Division for the Second Judicial Department.

Here, the plaintiffs established, prima facie, their entitlement to judgment as a matter of law on the cause of action alleging breach of contract by submitting certain email exchanges between the parties, which demonstrated, "[b]y the plain language employed," that the plaintiffs made an offer to represent Landmark in each matter for a certain fee, and that Landmark accepted that offer (Kasowitz, Benson, Torres & Friedman, LLP v Duane Reade, 98 AD3d at 405). In one matter, the parties agreed that the plaintiffs would represent Landmark at a rate of $350 per hour. The invoices documenting the number of hours worked and the amount of disbursements paid out demonstrated, prima facie, the plaintiffs' entitlement to legal fees in the sum of $4,760 in connection with the services rendered for that matter. In the second matter, the agreement was for an initial retainer fee of $5,000, plus a 25% contingency fee with respect to any sums that Landmark ultimately recovered in that matter. Since it is undisputed that, shortly after the commencement of an action in connection with the second matter, Landmark entered into a stipulation of settlement whereby Landmark recovered $40,000, the plaintiffs established, prima facie, entitlement to their full fee of $5,000 plus a contingency fee of 25% of $40,000.

In opposition, Landmark failed to raise a triable issue of fact.

Landmark's counterclaim, which alleged tortious interference with contract and tortious interference with prospective business relations, was premised upon the plaintiffs' alleged contact with the third party with whom Landmark had entered into the stipulation of settlement in connection with the second matter. Specifically, Landmark alleged that, contrary to the terms of the stipulation, the plaintiffs requested that certain of the agreed-upon payments be made directly to them as Landmark's counsel, rather than to Landmark. The ostensible purpose of this communication was to ensure that the plaintiffs would be able to deduct their legal fees from the settlement funds.

The Supreme Court properly granted that branch of the plaintiffs' motion which was pursuant to CPLR 3211(a)(7) to dismiss so much of the counterclaim as alleged tortious interference with contract. A necessary element of such cause of action is the intentional and improper procurement of a breach and damages (see White Plains Coat & Apron Co., Inc. v Cintas Corp., 8 NY3d 422, 426). Here, Landmark failed to adequately plead facts that would establish that the plaintiffs, in communicating with the third party to secure their attorney's fees, intentionally procured that party's breach of the stipulation of settlement (see Dune Deck Owners Corp. v Liggett, 85 AD3d 1093, 1095).

To the extent that the counterclaim sought recovery based on a theory of tortious interference with prospective business relations, the Supreme Court properly granted that branch of the plaintiffs' motion which was pursuant to CPLR 3211(a)(7) to dismiss that portion of the counterclaim. A claim for tortious interference with prospective business relations does not require a breach of an existing contract, but the party asserting the claim must meet a "more culpable conduct" standard (NBT Bancorp. v Fleet/Norstar Fin. Group, 87 NY2d 614, 621). This standard is met where the interference with prospective business relations was accomplished by wrongful means or where the offending party acted for the sole purpose of harming the other party (see Carvel Corp. v Noonan, 3 NY3d 182, 190; Caprer v Nussbaum, 36 AD3d 176, 204). " Wrongful means' include physical violence, fraud or misrepresentation, civil suits and criminal prosecutions, and some degrees of economic pressure" (Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183, 191, quoting Restatement [Second] of Torts §§ 768, Comment e and 767, Comment c). As a general rule, the offending party's conduct must amount to a crime or an independent tort, as conduct that is neither criminal nor tortious will generally be "lawful" and thus insufficiently "culpable" to create liability for interference with prospective business relations (Carvel Corp. v Noonan, 3 NY3d at 190 [internal quotation marks omitted]). The mere violation of an attorney disciplinary rule will only create liability if actual damages are incurred as a result of the violating conduct (see Tabner v Drake, 9 AD3d 606, 610). In addition, where the offending party's actions are motivated by economic self-interest, they cannot be characterized as solely malicious (see Out of Box Promotions, LLC v Koschitzki, 55 AD3d 575, 577). Here, contrary to the conclusion of our dissenting colleague, the allegations in the counterclaim do not establish the elements of tortious interference with prospective business relations. The allegations that the plaintiffs contacted a settling party to protect [*2]their attorney's fees after having been discharged as Landmark's counsel, while arguably alleging a violation of a disciplinary rule, do not, without more, allege that the plaintiffs' acts constituted a crime, or an independent tort, or that the plaintiffs acted solely for the purpose of harming Landmark (see Worldcare Intl., Inc. v Kay, 119 AD3d 554, 556-557; Adler v 20/20 Cos., 82 AD3d 915, 918).

A dissent by Justice Duffy on the tortious interference with business relations count

Although I agree with the majority's position that the plaintiff attorney was motivated by his desire to ensure that he received the fees he contended that Landmark owed him and that, with such motives, the plaintiff attorney's actions cannot be considered "solely malicious," the majority appears to require that, absent facts alleging that the plaintiffs engaged in conduct with the sole purpose of harming Landmark, Landmark failed to state a cause of action for tortious interference with prospective business relations. To the extent that the majority requires that, in order to avoid dismissal of this claim, Landmark had to set forth facts alleging that the plaintiffs engaged in conduct with the sole purpose of harming Landmark and that they did so by means that were unlawful or improper, I disagree. Such an analysis is more rigorous than that applied by the Court of Appeals (citations omitted) in evaluating the sufficiency of a cause of action alleging tortious interference with prospective business relations. To make out a claim for tortious interference with business relations where, as here, the alleged interference was with prospective contractual relationships, rather than existing contracts, the proponent must show that the other party interfered with the proponent's business relationships either with the sole purpose of harming the movant or by means that were unlawful or improper...I submit that Landmark's allegation that the plaintiff attorney interfered with Landmark's business relationships by means that were unlawful or improper—to wit, that he held himself out as counsel for Landmark when he no longer represented it—was sufficient to withstand that branch of the motion which was to dismiss the counterclaim...

The Court of Appeals has enunciated a general rule that, to be sufficiently "culpable" to create liability for tortious interference with prospective business relations, the alleged conduct must amount to a crime or an independent tort (Carvel Corp. v Noonan, 3 NY3d at 190). However, the Court of Appeals did not preclude "other instances of conduct which, though not a crime or tort in itself," are so culpable that they could be the basis of such a claim (id.). Here, the facts alleged by Landmark, that the plaintiff attorney held himself out to be Landmark's counsel when he no longer represented Landmark, in order to obtain money the plaintiffs contend was owed to him by Landmark, if true, would constitute a breach of fiduciary duty as well as a violation of the ethical rules that govern the conduct of attorneys (see Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.8[f] ["A lawyer shall not accept compensation for representing a client, or anything of value related to the lawyer's representation of the client, from one other than the client unless: (1) the client gives informed consent"]; see generally Matter of Cooperman, 83 NY2d 465, 472).

I also disagree with the majority's assertion that, without a concomitant allegation of actual damages, an allegation that, if true, may constitute a violation of an attorney disciplinary rule cannot meet the culpable conduct element required to plead tortious interference with prospective business relations sufficient to defeat the motion to dismiss in this matter. The analysis adopted by the majority is one applied in the context of determining whether a cause of action for legal malpractice has been established (see Tabner v Drake, 9 AD3d at 610), but is not the analysis this Court already has applied in determining the culpable conduct necessary to establish a claim of tortious interference with prospective business relations. In Lyons v Menoudakos & Menoudakos, P.C. (63 AD3d at 802), this Court held that an attorney's violation of a disciplinary rule and his professional obligations was sufficient to demonstrate the culpable conduct required for a claim of tortious interference with prospective business relations so as to withstand a motion for summary judgment. In that case, this Court noted that, to constitute "culpable conduct," the conduct must amount to a crime or an independent tort, and may include " [w]rongful means'" defined as " physical violence, fraud or misrepresentations, civil suits and criminal prosecutions, and some degrees of economic pressure'" (id. at 802, quoting Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d at 191, and citing Carvel Corp. v Noonan, 3 NY3d at 190-193, and Smith v Meridian Tech., Inc., 52 AD3d 685, 687). In Lyons, this Court took note of the various ethical obligations of the defendant in that matter, who had been the attorney for the seller in a real estate transaction and allegedly wished to purchase the property for himself (see Lyons v Menoudakos & Menoudakos, P.C., 63 AD3d at 802). This Court held that "[e]vidence of a violation of a [*4]disciplinary rule is relevant to the question of tort liability," and concluded that the defendant had failed to eliminate all triable issues of fact as to whether his judgment was affected by his personal interest in the transaction and whether he furthered that interest by making misrepresentations to the seller about the creditworthiness of the plaintiff, thereby wrongfully interfering with the prospective transaction (id.). Here, as in Lyons, the allegations of the plaintiff attorney's violations of his ethical obligations, if true, would meet the culpable conduct element necessary to state a cause of action for tortious interference with prospective business relations.

(Mike Frisch)

August 21, 2015 in Billable Hours, Clients | Permalink | Comments (0)

Thursday, July 30, 2015

Task Delegated But Not Liability

The South Carolina Supreme Court reversed and remanded a case where the Court of Appeals had held that a legal malpractice defendant could not be liable for a task delegated to a title company

In this attorney malpractice case, Amber Johnson alleges her closing attorney, Stanley Alexander, breached his duty of care by failing to discover the house Johnson purchased had been sold at a tax sale the previous year. The trial court granted partial summary judgment in favor of Johnson as to Alexander's liability. On appeal, the court of appeals held Alexander could not be held liable as a matter of law simply because the attorney he hired to perform the title work may have been negligent. Instead, the court determined the relevant inquiry was "whether Alexander acted with reasonable care in relying on [another attorney's] title search"; accordingly, it reversed and remanded. Johnson v. Alexander, 408 S.C. 58, 64, 757 S.E.2d 553, 556 (Ct. App. 2014). We disagree and find the trial court properly granted summary judgment as to liability. We therefore remand to the trial court for a hearing on damages.

The court

In determining the scope of Alexander's duty, we accept his consistent characterization of this responsibility—ensuring Johnson received good title. In her complaint, Johnson alleged "[d]efendants had professional duties to ensure that Plaintiff was receiving good and clear title to the subject property free of any encumbrances, liens, or clouds on title before conducting the closing and if there was a problem after the closing, to correct said deficiencies and/or advise Plaintiff how to correct said deficiencies." In Alexander's answer he admitted those allegations...

However, even absent Alexander's admissions, we find the court of appeals erroneously equated delegation of a task with delegation of liability. Certainly  Feeley's negligence is the issue here, but that does not displace Alexander's ultimate responsibility. While an attorney may delegate certain tasks to other attorneys or staff, it does not follow that the attorney's professional decision to do so can change his liability to his client absent that client's clear, counseled consent. See Rule 1.8(h), RPC, RULE 407, SCACR ("A lawyer shall not. . . make an agreement prospectively limiting the lawyer's liability to a client for malpractice unless the client is independently represented in making the agreement."). Thus, Alexander owed Johnson a duty and absent her agreement otherwise, he was liable for that responsibility regardless of how he chose to have it carried out.

We therefore agree with Johnson that an attorney is liable for negligence in tasks he delegates absent some express limitation of his representation. Stated another way, without an express limitation in representation, attorneys cannot delegate liability for tasks that are undertaken in carrying out the duty owed the client.

(Mike Frisch)

July 30, 2015 in Clients | Permalink | Comments (0)

Friday, July 17, 2015

Too Late The Plaintiff

The statute of limitations ran on a legal malpractice plaintiff, according to a decision of the New York Appellate Division for the Second Judicial Department.

...contrary to the plaintiff's contention, the defendant did not waive its statute of limitations defense, asserted in its answer, by failing to make a pre-answer motion to dismiss. Rather, a statute of limitations defense may be asserted after joinder of issue in a motion for summary judgment pursuant to CPLR 3212. Although the defendant's motion was made pursuant to 3211(a)(5), the parties clearly charted a summary judgment course by submitting extensive documentary evidence and factual affidavits laying bare their proof, Thus, the defendant's motion is properly treated as a motion for summary judgment dismissing the complaint as time-barred.

Further, the Supreme Court properly concluded that the plaintiff's legal malpractice cause of action is time-barred. The defendant met its prima facie burden of demonstrating that the action was commenced more than three years after the alleged malpractice occurred. In opposition, the plaintiff failed to raise a triable issue of fact as to whether the statute of limitations was tolled by continuous representation. In that respect, the evidence demonstrated that after the plaintiff and her husband retained the defendant law firm to represent them in a personal injury action, the defendant law firm retained the law firm of Bauman & Kunkis, P.C. (hereinafter Bauman & Kunkis), to represent the plaintiff and her husband in that action, and thereafter had no contact with the plaintiff. All of the work on the case, from filing the pleadings to selecting a jury, was performed by Bauman & Kunkis. Before the case could be tried, it was dismissed based on willful default, and Bauman & Kunkis was substituted with a different law firm, which sought to restore the action. Even if the arrangement between the defendant and Bauman & Kunkis could be equated with joint representation, under the circumstances of this case, the defendant's representation of the plaintiff would have terminated as of December 1, 2006, the date on which Bauman & Kunkis was substituted. Accordingly, the present legal malpractice cause of action, commenced on or about April 9, 2012, was untimely. (citations omitted)

(Mike Frisch)

July 17, 2015 in Clients | Permalink | Comments (0)

Wednesday, July 15, 2015

No Malpractice In Workers' Compensation Matter

The Maine Supreme Judicial Court affirmed the grant of summary judgment to a lawyer sued for malpractice based on his alleged negligence in a workers' compensation matter

Allen argues that she suffered a measureable loss due to McCann’s failure to advise her to perform a work search. However, Allen settled with her employer, and because of the settlement, her proffered damages calculation is speculative. Attorney MacAdam’s assertion, without further detail or explanation, that he believes that he could have settled for more had Allen been receiving an additional $150 per week in workers’ compensation benefits, does not provide a foundation upon which a jury could assess damages without resort to speculation. The other party to the settlement, the employer, certainly has its own settlement criteria, which may or may not have focused upon the weekly benefit rate. Because the factors producing a settlement cannot be ascertained or weighed in hindsight, attempting to calculate an award of damages is speculative. Summary judgment was correctly granted.

The malpractice issue arose after new counsel got involved

In March 2009, Allen hired attorney James MacAdam to represent her in her workers’ compensation claim, replacing McCann. MacAdam advised Allen to do a work search, which she did unsuccessfully, beginning in April 2009. MacAdam sought to use the work search to obtain an increase in Allen’s workers’ compensation benefits, but Allen’s employer raised a res judicata defense. In December 2010, MacAdam sent a settlement demand for $350,000 on behalf of Allen to her employer, and in July 2012, Allen settled her workers’ compensation claim for $300,000.

(Mike Frisch)

July 15, 2015 in Clients | Permalink | Comments (0)

Tuesday, July 14, 2015

Firm That Handled Legal Malpractice Case Sued For Legal Malpractice

Some claims of legal malpractice survived motions to dismiss in a matter in which a law firm was disqualified as a result of a conflict of interest, according to a recent opinion of the New York Appellate Division for the Second Judicial Department.

the plaintiffs retained the defendant law firm Gusrae Kaplan Nusbaum, PLLC (hereinafter GKN), to represent them in an ongoing legal malpractice and fee dispute action, and to represent nonparty Nikolay Minkin, a liaison for the plaintiffs, in a related third-party indemnification action. GKN represented the plaintiffs and Minkin until April 24, 2012, when the Supreme Court disqualified GKN from continuing that representation due to a conflict of interest in representing both the plaintiffs and Minkin.

On a motion to dismiss based on documentary evidence

"To succeed on a motion to dismiss based upon documentary evidence pursuant to CPLR 3211(a)(1), the documentary evidence must utterly refute the plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Gould v Decolator, 121 AD3d 845, 847; see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326;Leon v Martinez, 84 NY2d 83, 88). On a motion pursuant to CPLR 3211(a)(7) to dismiss for failure to state a cause of action, the court must accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d at 326; Leon v Martinez, 84 NY2d at 87-88).

The court

The Supreme Court erred in granting that branch of GKN's motion which was pursuant to CPLR 3211(a)(1) to dismiss the fourth cause of action. The fourth cause of action sought to recover damages for legal malpractice due to GKN's alleged misrepresentation that it had filed a motion to reargue on the plaintiffs' behalf. While the documentary evidence submitted by GKN in support of its motion established that such a motion was prepared, the motion itself indicates that it was not filed until after GKN ceased representing the plaintiffs.

The Supreme Court also erred in granting that branch of GKN's motion which was to dismiss the sixth cause of action, alleging unjust enrichment. "To prevail on a claim of unjust enrichment, a party must show that (1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered" (Citibank, N.A. v Walker, 12 AD3d 480, 481 [internal quotation marks omitted]; see Marini v Lombardo, 79 AD3d 932, 934; Cruz v McAneney, 31 AD3d 54, 59). The complaint alleged that the plaintiffs paid GKN large sums of money, which purportedly represented legal fees associated with the work being performed on the plaintiffs' behalf. The complaint further alleged that, in light of the allegations of, among other things, legal malpractice, GKN had been unjustly enriched by those payments and GKN's retention of that money violated "fundamental principals of justice, equity, and good conscience." GKN did not address those allegations on its motion to dismiss, other than to claim lawful entitlement to the money as fees earned and billed. Accordingly, the Supreme Court erred in determining that the complaint failed to state a cause of action alleging unjust enrichment (see CPLR 3211[a][7]).

The trial court had dismissed the entire lawsuit. (Mike Frisch)

July 14, 2015 in Clients | Permalink | Comments (0)

Thursday, July 9, 2015

Bad Advice, No Relief

The United States Court of Appeals for the Fourth Circuit affirmed the denial of habeas corpus relief to a defendant who had relied on his attorney's advice to plead guilty in West Virginia state court to armed robbery and malicious assault.

Under the circumstances, we have no trouble concluding that the Supreme Court of Appeals of West Virginia could have reasonably found that Christian had little hope of prevailing at trial on the charges and was “lucky to receive the deal that he did.[..]”

Here, abundant evidence exists to support a factual finding that Christian’s guilty plea was driven not by his sentencing exposure at all, which everyone agrees was onerous, but rather by his recognition from the outset that he had little hope of defeating either the federal or state charges against him, or of living long enough to get out of prison at all, and by his desire to spend as much of his remaining life as possible in federal prison. Christian may well have developed “buyer’s remorse."

Circuit Judge Gregory wrote a powerful dissent

The majority goes to great lengths to disguise the simple truths of this case: Counsel gave bad advice to a client, and the client relied on the advice in deciding to plead guilty and forgo his constitutional right to a trial. I respectfully dissent...

Despite the thin veneer of ‘hypotheticals’, [defense counsel] Henderson’s testimony clearly establishes that (1) Christian told him of the two prior felony convictions; (2) Henderson did no further investigation to determine the date or nature of the prior felonies; (3) on the basis of Christian’s disclosure, Henderson advised him that he faced a possible mandatory minimum life sentence if convicted of any of the new charges; and (4) the advice Henderson gave was incorrect because under no circumstances did Christian face such a sentence if convicted...

Here, Henderson failed to investigate his client’s criminal record – either by asking more questions or pulling a file – when accurate information was critical to the client’s ability to make an informed, intelligent choice about whether to accept a plea deal. Indeed, Christian made clear during plea negotiations that his desire to avoid a recidivism enhancement was a significant motivating factor for accepting a deal – as revealed by the letter Henderson wrote to the government expressing Christian’s demand that “THERE WILL BE NO RECIDIVIST FILED”. J.A. 597. Doing a minimally sufficient investigation into Christian’s record would have involved very little effort, requiring a simple examination of the dates of the two prior felony convictions. And the reward would have been significant, fundamentally changing Christian’s calculus in deciding whether to forgo his Sixth Amendment right to a trial...

Of course, as the majority points out, it is possible that Christian would have received a lengthy sentence if he had chosen to go to trial. But the Sixth Amendment right to a public trial does not exist solely when a trial would be in a defendant’s best interests. The record here compels a conclusion that it is reasonably probable Christian would have exercised this constitutional right if he received accurate advice.

(Mike Frisch)

July 9, 2015 in Clients | Permalink | Comments (0)