Tuesday, March 21, 2017

No Rule 3.7 Exception For Fee Collection Actions

An opinion of the North Carolina Court of Appeals affirms a disqualification order based on the witness-advocate rule. 

This case presents the question of whether a categorical exception to the applicability of Rule 3.7 of the North Carolina Rules of Professional Conduct exists in fee collection cases. Harris & Hilton, P.A. (“Harris & Hilton”) appeals from the trial court’s order disqualifying Nelson G. Harris (“Mr. Harris”) and David N. Hilton (“Mr. Hilton”) from appearing as trial counsel in this action based on their status as necessary witnesses. Because this Court lacks the authority to create a new exception to Rule 3.7, we affirm the trial court’s order.

The story

On 10 June 2015, Harris & Hilton filed the present action in Wake County District Court against James C. Rassette (“Defendant”) to recover attorneys’ fees for legal services the firm had allegedly provided to Defendant prior to that date. The complaint asserted that Harris & Hilton was entitled to recover $16,935.69 in unpaid legal fees. On 13 November 2015, Defendant filed an answer in which he asserted various defenses, including an assertion that no contract had ever existed between the parties.

On 10 June 2016, a pre-trial conference was held before the Honorable Debra S. Sasser. During the conference, Judge Sasser expressed a concern about the fact that Harris & Hilton’s trial attorneys — Mr. Harris and Mr. Hilton — were also listed as witnesses who would testify at trial on behalf of Harris & Hilton. After determining that Mr. Harris and Mr. Hilton were, in fact, necessary witnesses who would be testifying regarding disputed issues such as whether a contract had actually been formed, Judge Sasser entered an order on 20 June 2016 disqualifying the two attorneys from representing Harris & Hilton at trial pursuant to Rule 3.7. On 27 June 2016, Harris & Hilton filed a notice of appeal to this Court.

The issue

Harris & Hilton does not dispute the fact that (1) Mr. Harris and Mr. Hilton will both be necessary witnesses at trial; (2) their testimony will encompass material, disputed issues; and (3) none of the three above-quoted exceptions contained within Rule 3.7 are applicable. Nor does it contest the fact that a literal reading of Rule 3.7 supports the trial court’s ruling. Instead, it asks this Court to adopt a new exception based on its contention that Rule 3.7 should not be applied in fee collection actions to disqualify counsel from both representing their own firm and testifying on its behalf.

 Harris & Hilton argues that permitting a law firm’s attorney to serve both as trial counsel and as a witness in a fee collection case is no different than allowing litigants to represent themselves pro se. It is true that litigants are permitted under North Carolina law to appear pro se — regardless of whether the litigant is an attorney or a layperson. See N.C. Gen. Stat. § 1-11 (2015) (“A party may appear either in person or by attorney in actions or proceedings in which he is interested.”); N.C. Gen. Stat. § 84-4 (2015) (“[I]t shall be unlawful for any person or association of persons, except active members of the Bar . . . to practice as attorneys-at-law, to appear as attorney or counselor at law in any action or proceeding before any judicial body . . . except in his own behalf as a party thereto[.]” (emphasis added)). 

However, the present case does not involve the ability of Mr. Harris or Mr. Hilton to represent themselves on a pro se basis. Instead, they seek to represent their law firm — a professional corporation — in a suit against a third party while simultaneously serving as witnesses on their firm’s behalf as to disputed issues of fact. It is well established that an entity such as Harris & Hilton is treated differently under North Carolina law than a pro se litigant. See LexisNexis, Div. of Reed Elsevier, Inc. v. Travishan Corp., 155 N.C. App. 205, 209, 573 S.E.2d 547, 549 (2002) (holding that under North Carolina law, a corporation is not permitted to represent itself pro se).

Harris & Hilton also makes a policy argument, contending that the current version of Rule 3.7 is archaic and fails to take into account the disproportionate economic burden on small law firms that are forced to hire outside counsel to litigate fee collection cases. However, in making this argument, Harris & Hilton misunderstands the role of this Court given that it is asking us not to interpret Rule 3.7 but rather to rewrite it — a power that we simply do not possess.


we cannot say that the trial court abused its discretion by applying Rule 3.7 as written as opposed to creating a new exception that neither appears within the Rule itself nor has been recognized by North Carolina’s appellate courts. Accordingly, we affirm the trial court’s disqualification order.

(Mike Frisch)

March 21, 2017 in Clients, Current Affairs, Economics, Law & Business, Law Firms | Permalink | Comments (0)

Tuesday, March 14, 2017

Client Gets No Refund When Attorney Withdraws For Cause

The Tennessee Court of Appeals held that a former client was not entitled to a partial fee refund, reversing the holding of the trial court and allowing the law firm to keep the full retainer.

Xingkui Guo signed a contract, structured as an engagement letter, with the Law Offices of Woods & Woods (“the Firm”), on June 15, 2014, for the Firm to represent him in an ongoing lawsuit against two of his former employees. Allen Woods, an attorney with the Firm, had primary responsibility for Mr. Guo’s case.

The client paid a flat fee of $7,000 and agreed to an additional fee of 1/3 of any amounts recovered in the litigation minus the retainer.

The agreement further provided

The contract further states: “[The Firm] may terminate this representation at any time, for good cause . . . .” Upon signing the engagement letter, Mr. Guo paid the Firm $7,000, and the Firm began its representation of Mr. Guo.


A disagreement arose between Mr. Woods and Mr. Guo beginning in early October 2014. After Mr. Woods conducted phone interviews with two third-party witnesses, he strongly advised Mr. Guo against taking their depositions because he thought their testimony would hurt Mr. Guo’s case and because he thought it would be unethical to depose the witnesses under the circumstances. When Mr. Guo insisted that Mr. Woods depose these two witnesses, Mr. Woods withdrew as Mr. Guo’s attorney

Mr. Guo sued for breach of contract.

The trial court

 Defendant admits that it refused to take the depositions of these witnesses, but states that it refused to take the depositions because to do so would violate Rule of Professional Conduct 1.2(d) and would further the Plaintiff’s ulterior motive to take those depositions for a fraudulent purpose not related to the litigation. The Defendant requests that the Court rule it is entitled to the entirety of the $7,000.00 fee the Plaintiff previously paid it. In support of its argument, the Defendant offers evidence that its attorneys performed 20.4 hours of work on the Plaintiff’s lawsuit. Plaintiff requests $22,000.00 in damages for this alleged breach of contract. Based on the evidence presented at trial, the Court makes the following findings of fact: 

The Defendant had justifiable reasons to refuse to take the depositions of the third party witnesses because the Defendant reasonably believed that to do so would violate Rules of Professional Conduct; and 

The 20.4 hours of work the Defendant performed on the Plaintiff’s case is overblown.

Based on these findings of fact, the Court hereby rules that the Plaintiff is entitled to a judgment of $3,500 against the Defendant.

The court here

We next consider the Firm’s argument that the trial court erred in entering judgment in favor of Mr. Guo because it did not find that the Firm breached the contract. We agree. The trial court expressly found that Mr. Woods “had justifiable reasons to refuse to take the depositions of the third party witnesses because [Mr. Woods] reasonably believed that to do so would violate Rules of Professional Conduct.” The trial court’s order does not include a statement that the Firm breached the contract. Instead, the trial court’s finding that Mr. Woods had “justifiable reasons” for refusing to take the depositions suggests that the Firm did not breach the contract. Thus, the trial court erred in entering judgment in favor of Mr. Guo.

Rather, the winner is the law firm

We find that the evidence preponderates against the trial court’s finding that Mr. Woods’s hours spent on the case were “overblown.” Mr. Woods’s written summary and testimony support the hours he claims to have spent on the case. His set fee was reasonable in light of his qualifications and experience, Mr. Guo’s concerns about paying an hourly rate, the time and labor required, the likelihood of collecting on the judgment, and the fees typically charged in the local legal market for similar services.

We conclude that the trial court erred in awarding Mr. Guo $3,500 because he was not entitled to the return of any of the $7,000 he paid to the Firm.

(Mike Frisch)

March 14, 2017 in Clients | Permalink | Comments (0)

Friday, March 3, 2017

Once Extended, "Professional Courtesy" Enforced In Fee Suit

The Massachusetts Supreme Judicial Court has held that a law firm suing for fees cannot collect waived "professional courtesy credits"

This appeal arises from a fee dispute between a law firm and its former clients. The plaintiff law firm, BourgeoisWhite, LLP, brought this action against the defendants, Sterling Lion, LLC, and its owner, David G. Massad, alleging breach of contract and unjust enrichment following the plaintiff's representation of the defendants in an employment dispute. The judge granted the plaintiff's motion for summary judgment, determining that the plaintiff was owed the $83,681.84 amount sought in the complaint, including $29,944.45 in "professional courtesy credits" that the plaintiff extended and then rescinded, plus prejudgment interest.  We conclude that the undisputed facts establish that the $29,944.45 in credits was written off by the plaintiff law firm and thus waived. Summary judgment therefore should have been granted in favor of the defendants with respect to the credits. We further conclude that the defendants have failed to identify any factual disputes as to the reasonableness of the remaining fees, because they rely solely on unsupported and conclusory assertions about the representation. We therefore remand for the entry of summary judgment in favor of the plaintiff in the amount of the fees sought, less the credits.


...reversal of the professional courtesy credits in this case would not comport with the "highly fiduciary" nature of the lawyer-client relationship. Malonis, 442 Mass. at 692. This type of belated attempt by a fiduciary to claw back fees that were previously "written off" would not be fair and equitable to the client -- the party for whom the relationship exists. 15 See Goldman v. Kane, 3 Mass. App. Ct. 336, 342 (1975) (attorney who made advantageous loan to client "breached his fiduciary duty," because "fundamental unfairness" of loan was "self-evident"); Beatty, 31 Mass. App. Ct. at 612-613 ($721,888 "premium" billing inconsistent with agreement to bill on hourly basis and violated fiduciary duty owed to client). We therefore conclude that the defendants, not the plaintiff, should have been granted summary judgment with respect to the $29,944.45 in credits.

As to the other bills

Summary judgment was, however, properly granted for the plaintiff on the issue of the reasonableness of the remaining fees. The defendants have failed to raise a genuine issue of material fact with respect to the reasonableness of those fees. The defendants argue that they were billed for duplicative and "legally unsound" motions, and that the trial was over staffed. Our review of the record indicates that the allegedly duplicative motions predate the contested bills by nearly a year. The defendants do not identify which motions are "legally unsound," and we are provided no explanation for why the trial was over staffed, given the complexity of the case and the amount in controversy. More is required for appellate argument.

Chief Justice Kafker authored the opinion. (Mike Frisch)

March 3, 2017 in Billable Hours, Clients | Permalink | Comments (0)

Wednesday, March 1, 2017

No Suit Where Attorney Uses Confidential Information To Defend Against Former Client's Claims

The Massachusetts Supreme Judicial Court has held an action following the settlement of a legal malpractice claim alleging violation of confidentiality in defending the malpractice action was not sustainable

Attorney H. Ernest Stone represented John Doe in a criminal case and a related tort action. In the course of that representation, Doe relayed certain information to Stone that all parties indisputably agree was subject to attorney-client privilege. After the tort action ended in a default judgment against Doe, Doe brought a legal malpractice action against Stone based on his handling of the tort case. The malpractice action concluded via a settlement agreement. Doe next filed a complaint in the Superior Court alleging that in defending the malpractice action, Stone misused the privileged information he received during his earlier representation of Doe. Doe named as defendants Stone; George Rockas, the attorney who represented Stone in the malpractice action; and American Guaranty and Liability Co. (American), Stone's legal malpractice insurer. The defendants filed motions to dismiss, raising a wide variety of defenses. See Mass.R.Civ.P. 12(b), 365 Mass. 754 (1974). The judge allowed the motions and judgment entered dismissing the complaint. Doe appeals. Because we agree with the motion judge that in bringing the malpractice action, Doe waived the privilege that otherwise applied to the information at issue, we affirm. Resolving the case on that ground, we have no occasion to reach the defendants' other defenses.


 As a matter of law, the Foster 2 issues were relevant to the malpractice action, and they are not rendered irrelevant by Doe's conclusory suggestions that Foster 2's whereabouts would have remained unknown. It follows that by bringing the malpractice action, Doe waived his privilege with respect to information related to Foster 2. Accordingly, none of the defendants could be liable for their use of that information in defending the malpractice action, and their motions to dismiss were properly allowed.

(Mike Frisch) 

March 1, 2017 in Clients, Privilege | Permalink | Comments (0)

Friday, February 17, 2017

No Lien On Property Not Owned By Former Client

The North Dakota Supreme Court rejected the assertion of an attorneys' lien because the former client had no interest in the subject real property.

DeWayne Johnston, individually, and as registered agent of Johnston Law Office, P.C., appeals from a judgment invalidating a notice of attorney lien recorded against Johnston's former client and ordering Johnston Law Office and Johnston, individually, to pay $1,330 in costs and attorney fees. We modify the judgment to relieve Johnston of personal liability and affirm the judgment as modified.

Wayne and Janel Nusviken acquired real property from Johnston's former client Barbara McDermott on October 2, 2013. On October 8, 2013, Johnston recorded a "notice of attorney lien" against McDermott. The notice of attorney lien included the legal description of Nusviken's property and stated McDermott owed Johnston nearly $66,000 in attorney's fees relating to Johnston's representation of McDermott in earlier matters unrelated to the sale of the property.

The Nusvikens petitioned the district court to invalidate the notice of attorney lien, arguing McDermott no longer owned any interest in the property. The court issued an order to show cause directing Johnston to appear and show why the notice of attorney lien should not be declared void. At the hearing, Johnston argued the notice of attorney lien was not a nonconsensual common-law lien but a valid attorney's lien under N.D.C.C. § 35-20-08, and therefore, the court did not have jurisdiction to invalidate the lien. In response Nusviken's attorney stated the notice of attorney lien was invalid because McDermott no longer had an interest in the property and no attorney-client relationship existed between Johnston and the Nusvikens. The court concluded the purported lien was a nonconsensual common-law lien and not a valid attorney's lien because it failed to satisfy the statutory requirements for an attorney's lien under N.D.C.C. § 35-20-08. The court invalidated the lien and ordered the Johnston Law Office and Johnston, individually, to pay the Nusvikens $1,330 in costs and attorney's fees.

No lien on thee

We agree with the district court's analysis. The notice of attorney lien recorded by Johnston against McDermott referenced two cases in which Johnston represented McDermott. Johnston did not submit any evidence indicating a judgment was awarded in favor of McDermott or that she was due any money in those cases. McDermott no longer had an interest in the real property when Johnston recorded the notice of attorney lien, nor did Johnston represent McDermott in the land sale to the Nusvikens. Johnston appears to argue it had a valid attorney's lien simply because the document is titled "notice of attorney's lien." As the district court noted, however, the document on its face failed to meet the requirements of N.D.C.C. § 35-20-08. The district court did not err by invalidating Johnston's "notice of attorney lien."

Johnston argues the district court lacked jurisdiction because under N.D.C.C. § 35-35-05(1) only those who have property subject to nonconsensual common-law lien may petition the court to invalidate the lien. Johnston also argues that before entering the order to show cause the court was required to make a finding that the Nusvikens were subject to a nonconsensual common-law lien...

Here, there was no attorney-client relationship between Johnston and the Nusvikens. We decline to extend Amundson to an attorney's improper or unethical actions toward parties who are not clients. We therefore modify the judgment to relieve DeWayne Johnston of personal liability.

(Mike Frisch)

February 17, 2017 in Billable Hours, Clients | Permalink | Comments (0)

More Than Unhappiness Needed To Establish Legal Malpractice

The Delaware Superior Court affirmed the dismissal of a legal malpractice claim involving the representation of the plaintiff in a personal injury action.

Appellant engaged Appellee to represent her in a personal injury lawsuit. Initially, Appellee, representing Appellant, made a demand on the defendant in that lawsuit for $20,000. The defendant in that action refused to pay the $20,000, and Appellee then filed a personal injury action alleging $20,000 in damages. The Appellant then engaged in mediation with the defendant in that lawsuit, represented by Appellee. The mediation resulted in Appellant accepting a settlement offer for less than the full $20,000 claimed. Appellant received and subsequently cashed the settlement check.

Unhappy with Appellee’s representation of her, Appellant filed a complaint with the Office of Disciplinary Counsel (“ODC”). In her complaint to the ODC, Appellant claimed that Appellee tricked her into signing the settlement agreement. The ODC reviewed the complaint and Appellee’s response to the complaint and determined that Appellee’s representation of Appellant did not fall below the acceptable level of representation.

Appellant then filed a legal malpractice action with the Court of Common Pleas. In that action, Appellant alleged that “[she] was promised to be fully compensated with all medical bills paid, . . . and was encouraged to sign paperwork of legal documentation without any clarity of what [she] was signing.”1 Appellee then filed a Motion to Dismiss pursuant to Court of Common Pleas Civil Rule 12(b)(6) on grounds that Appellant had not sufficiently made a claim for legal malpractice.

The Court of Common Pleas held argument on Appellee’s Motion to Dismiss on April 29, 2016. The Court of Common Pleas issued on oral ruling granting Appellee’s motion to dismiss.

The malpractice claim failed

It appears from the record that the trial court’s factual findings are the result of a logical and deductive reasoning process. The trial court found that Appellee put forth his best efforts in representing Appellant in her personal injury action. Appellant was able to obtain a settlement offer to which Appellant ultimately agreed. Although Appellant may now be unhappy with the settlement agreement into which she entered, that does not create a colorable claim for legal malpractice against the attorney who represented her. Additionally, it is noteworthy that the ODC, upon investigating Appellant’s claim of legal malpractice, found that Appellee committed no malpractice. Accordingly, as Appellant has failed to set forth any reason that Appellee neglected his professional obligation owed to her, her general claim that the trial court committed reversible error is without merit.

(Mike Frisch)

February 17, 2017 in Bar Discipline & Process, Clients | Permalink | Comments (0)

Tuesday, January 31, 2017

Right To Fee Vindicated

A law firm that had secured a judgment in excess of $28 million and sought fees from a guardianship trust  won a significant victory in the Florida Supreme Court.

This case arose after the birth of Aaron Edwards, during which he sustained a catastrophic brain injury as a result of the negligence of employees at Lee Memorial Health System (Lee Memorial) in 1997. The law firm of Searcy Denney Scarola Barnhart & Shipley, P.A. (Searcy Denney) was retained by the family to seek compensation under a standard contingency fee agreement providing for a payment of 40 percent of any recovery if a lawsuit was filed, plus costs. The agreement also stated that “[i]n the event that one of the parties to pay my claim for damages is a governmental agency, I understand that Federal and Florida Law may limit the amount of attorney fees charged by [Searcy Denney], and in that event, I understand that the fees owed to [Searcy Denney] shall be the amount provided by law.”

Collection was limited by sovereign immunity but 

Searcy Denney and various other firms were involved in litigation of the medical malpractice suit, the first appeal, and a subsequent two-year lobbying effort to secure a claims bill from the Legislature on behalf of the injured child and his parents.  Because the waiver of sovereign immunity in section 768.28 limited the family’s recovery to only $200,000 of the $28.3 million judgment, a claims bill for the excess judgment amount was filed in the Florida Legislature in 2011, but was not passed during that legislative session. However, in 2012 the Legislature passed a claims bill, chapter 2012-249, Laws of Florida, directing Lee Memorial to pay $10 million, with an additional $5 million to be paid in annual installments of $1 million each to “the Guardianship of Aaron Edwards, to be placed in a special needs trust created for the exclusive use and benefit of Aaron Edwards, a minor.” Ch. 2012-249, § 2, Laws of Fla. The claims bill further stated that payment of fees and costs from funds awarded in the claims bill shall not exceed $100,000. No funds were awarded in the claims bill for the parents. In November 2012, the child’s mother petitioned to establish a guardianship over the minor son’s property, and Lee Memorial subsequently made its first payment of $10 million.

Searcy Denney, with the full support of the family, then petitioned the guardianship court to approve a closing statement allowing $2.5 million for attorneys’ fees and costs. This requested amount was based on the contract that existed with the Edwards family, as limited by the provisions of section 768.28(8), Florida Statutes. Section 768.28(8), a provision of the limited waiver of sovereign immunity statute, states in pertinent part, “No attorney may charge, demand, receive, or collect, for services rendered, fees in excess of 25 percent of any judgment or settlement.”

The court

The right to contract for legal services in order to petition for redress is a right that is related to the First Amendment, and any impairment of that right not only adversely affects the right of the lawyer to receive his fee but the right of the party to obtain, by contract, competent legal representation to ensure meaningful access to courts to petition for redress...

This same constitutional right extends to a party’s right and practical ability to retain an attorney by contingency fee contract in order to have meaningful access to courts. The “draconian limitation” on the fees in this case, in contravention of the preexisting contract and the provisions of section 768.28, sets an unfortunate precedent that, if allowed to stand, would effectively chill the right of future litigants to obtain effective counsel to make their case for compensation due for injuries caused by the State or its agencies and subdivisions.

...we conclude that the $100,000 fee limitation contained in the claims bill impermissibly impairs the preexisting contract between Searcy Denney and the Edwards family, and that nothing has been presented to justify this violation of the family’s constitutional right to contract with legal counsel to seek full redress of injury, as well as Searcy Denney’s contract right to receive the agreed-upon fees. This is especially true where, as here, the services producing the judgment and claims bill, and the fee amount sought under the contract, are in accord with sections 768.28(5) and (8). The Legislature has expressly provided for both the claims bill mechanism and for fees payable from the judgments obtained under the limited waiver of sovereign immunity statute. We conclude the permissible fees based upon recovery of those funds include funds recovered pursuant to the claims bill process. 

...we conclude there is no impediment to the law firms seeking contractual attorneys’ fees and costs in this case pursuant to the preexisting contract up to and including the amount previously sought—an amount that the Edwards family has urged the courts to award—based on the limitation contained in section 768.28(8), which is 25 percent of the initial $10 million payment made pursuant to the claims bill enactment.

There were dissents

CANADY, J., dissenting. I dissent from the majority’s decision regarding both the certified question and the issue of severability.

POLSTON, J., dissenting. I would answer the certified question in the affirmative. The Florida law limiting the amount of attorneys’ fees does not unconstitutionally impair a preexisting contract that expressly contemplates and accepts that Florida law may limit the amount of attorneys’ fees.

(Mike Frisch)

January 31, 2017 in Clients | Permalink | Comments (0)

Thursday, January 26, 2017

Not Patently Unreasonable

The dismissal of a legal malpractice claim against Alston & Bird was affirmed by the New York Appellate Division for the First Judicial Department

A focal point of this appeal is Brookwood's claim that A & B, in the patent action, negligently litigated defenses that were available to Brookwood pursuant to 28 USC § 1498. 28 USC § 1498 provides that when a patent is infringed for the benefit of the United States government, the patent holder's remedy is against the United States in the United States Court of Federal Claims. Brookwood alleges that had A & B not been negligent, the motions that A & B eventually brought based on 28 USC § 1498 would have been granted and Brookwood would have avoided the approximately $10 million it expended on defending itself at trial and on appeal. Important in this analysis is the fact that Brookwood ultimately prevailed in the underlying patent action, achieving a judgment of noninfringement. The theory of Brookwood's malpractice case is not that but for A & B's negligence it would have prevailed in the patent action; rather Brookwood's claim is that but for the manner in which A & B interposed the defenses available to Brookwood under 28 USC § 1498, Brookwood would have prevailed without incurring the additional legal fees it expended. In other words, but for A & B's negligence, Brookwood could have achieved the same result more expeditiously and economically. The Supreme Court granted A & B's motion and dismissed the complaint in its entirety, holding, among other things, that the allegations did not support a finding of attorney negligence or of proximate cause. We now affirm.

Second-guessing the strategy of counsel was an insufficient basis for a malpractice claim

Decisions regarding the evidentiary support for a motion or the legal theory of a case are commonly strategic decisions and a client's disagreement with its attorney's strategy does not support a malpractice claim, even if the strategy had its flaws. "[A]n attorney is not held to the rule of infallibility and is not liable for an honest mistake of judgment where the proper course is open to reasonable doubt" (Bernstein v Oppenheim & Co., 160 AD2d 428, 430 [1st Dept 1990]). Moreover, an attorney's selection of one among several reasonable courses of action does not constitute malpractice (see Rosner v Paley, 65 NY2d 736, 738 [1985]; Rodriguez v Lipsig, Shapey, Manus & Moverman, P.C., 81 AD3d 551, 552 [1st Dept 2011]). Brookwood has not alleged facts supporting its claim that A & B's evidentiary decision, to rely on Nextec's expert, rather than compromise the merits of Brookwood's position on other arguments, was an unreasonable course of action.

Other hindsight arguments concerning the nature and quality of the evidence supporting the second summary judgment motion in the patent action fare no better. There is no factual basis to conclude that the governmental email to Brookwood about the inclusion of a broad patent infringement indemnity clause would have changed the outcome of the motion because the clause never made its way into the government's contract with ADS. Nextec's attorney's letter stating that Brookwood necessarily infringed on Nextec's patents is hearsay. Not only was it apparently sent by the attorney after the underlying lawsuit had been commenced, it was not based upon any personal knowledge. Thus, Brookwood's negligence claim is wholly speculative and "depend[s] on too many uncertainties" to support a conclusion that there would have been a more favorable, that is quicker, outcome in the underlying litigation (Estate of Feder v Winne, Banta, Hetherington, Basralian & Kahn, P.C., 117 AD3d 541, 542 [1st Dept 2014]; Sherwood Group v Dornbush, Mensch, Mandelstam & Silverman, 191 AD2d 292, 294 [1st Dept 1993]). Having prevailed in the underlying patent action and having otherwise failed to plead negligence, Brookwood has also failed to show that its litigation expenditures were damages proximately caused by A & B's alleged negligence (see e.g. Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer., 8 NY3d 438, 443 [2007]).

(Mike Frisch)

January 26, 2017 in Clients | Permalink | Comments (0)

Legal Malpractice Claim Survives In Idaho

The Idaho Supreme Court has issued this recent decision in a legal malpractice case.

Some background

On September 19, 2005, Molen was charged with lewd conduct with a minor child, S.Z. Molen pleaded not guilty at his arraignment. On the morning of trial, Christian arrived at the courthouse under the influence of alcohol. His blood alcohol content was measured at .329 and .344. The trial was vacated. An amended information was filed on May 11, 2007, and the case proceeded to jury trial on June 18, 2007. 

Yes, the attorney showed up for trial with a blood alcohol content way north of legally intoxicated and just south of legally dead.

I might look for another lawyer right there. 

At the rescheduled trial

On June 22, 2007, the jury returned a guilty verdict. Molen moved for a new trial arguing that the disclosure of the photographs of the colposcopic examination was unfair. The district court denied Molen’s motion. On June 4, 2008, Molen was sentenced to twenty years consisting of eight years fixed and twelve years indeterminate. Molen appealed his conviction, but the conviction was affirmed by the Idaho Court of Appeals.

Post-conviction relief was secured in 2014

The district court’s grant of postconviction relief was premised on the conclusion that Molen’s trial counsel’s performance fell below an objective standard of reasonableness in: (1) failing to consult with and/or retain an expert in pediatric sexual abuse; (2) failing to discover the existence of the colposcopic photographs prior to trial; and (3) failing to request either a continuance of the trial or a mistrial so that the new evidence could be reviewed by an expert in pediatric sexual abuse. The district court vacated the judgment of conviction entered on January 7, 2008, granted Molen a new trial, and ordered the Idaho Department of Corrections to release Molen from custody. In a hearing on July 10, 2014, the district court granted the State’s motion to dismiss the case.

The former client filed his legal malpractice claim in February 2015.

The court summary

In a case arising out of Ada County, the Idaho Supreme Court vacated the district court’s summary judgment dismissal of a legal malpractice action brought against Ronald Christian (“Christian”). The malpractice action stemmed from Christian’s defense of criminal charges brought against Michael Scott Molen (“Molen”). The crux of Molen’s appeal was whether the statute of limitations on his malpractice cause of action had accrued at the time of his initial criminal conviction in 2007 or when he was later exonerated in 2014. In granting summary judgment in favor of Christian, a district court made two holdings: (1) Molen’s malpractice cause of action against Christian accrued at the time of Molen’s initial conviction, and (2) whether actual innocence is an element of a legal malpractice claim arising from a criminal conviction would only be an issue if the Idaho Supreme Court adopts the exoneration rule. Generally, the exoneration rule requires a convicted party to obtain direct or collateral relief on that conviction prior to filing suit against a criminal defense attorney for legal malpractice.

The Idaho Supreme Court held that Molen’s malpractice cause of action did not accrue until he was exonerated, which occurred on July 10, 2014. The Court explained that if the exoneration rule was not adopted, a convicted defendant would have to file two lawsuits simultaneously: (1) a malpractice claim, and (2) an appeal and/or post-conviction relief proceeding. The malpractice claim would serve as a protective lawsuit to prevent the claim from being later barred by the statute of limitations, and the appeal and/or post-conviction proceeding, if successful, would be the basis for the malpractice action. The Court held that such a result would be contrary to this Court’s holding in City of McCall v. Buxton, 146 Idaho 656, 663, 201 P.3d 629, 636 (2009). That is, the Idaho Supreme Court does not favor protective lawsuits that must be filed only to be stayed.

Additionally, the Court held that actual innocence is not an element of a criminal malpractice cause of action because: (1) requiring a plaintiff to prove actual innocence is contrary to the fundamental principal that a person is presumed innocent until proven guilty beyond a reasonable doubt; (2) a criminal defendant can be harmed separately from the harm he or she incurs as a result of being guilty of a crime; and (3) requiring actual innocence would essentially eliminate a defense attorney’s duty to provide competent counsel to a client he or she knows to be guilty. Christian’s request for attorney’s fees on appeal was denied because he was not the prevailing party. Costs on appeal were awarded to Molen.

(Mike Frisch)

January 26, 2017 in Clients | Permalink | Comments (0)

Monday, January 23, 2017

Discovery Of Work Done For Other Clients Permitted In Legal Malpractice Case

The Rhode Island Supreme Court decided a case where the court had granted review of the following question

“May a former client in a legal malpractice action against his former attorney properly compel discovery from his former attorney and law firm related to documents the attorney prepared for the attorney’s other clients in order to gain evidence to prove subsequent remedial measures in the legal malpractice action?”

The unhappy client sued and sought discovery

This case came before the Supreme Court on November 2, 2016, on certiorari from the Superior Court, seeking review of a discovery order entered on October 2, 2014, compelling production of any antenuptial or postnuptial agreements drafted, prepared, or negotiated by the defendant, Richard A. Boren (Attorney Boren), from 2005 through 2009 and in 2013, while he was employed at the defendant law firm, Visconti, Boren & Campbell, Ltd. (VBC), (collectively, defendants). Before this Court, the defendants contend that the documents sought exceed the scope of permissible discovery, as provided by Rule 26 of the Superior Court Rules of Civil Procedure, and are protected under the attorney-client privilege, the marital privilege, and the work product doctrine. For the reasons discussed herein, we affirm the discovery order in its entirety.

The story

In 2000, plaintiff, Sergio A. DeCurtis (plaintiff or DeCurtis), retained Attorney Boren to draft an antenuptial agreement. DeCurtis and his then-fiancée, Michelle Tondreault (Tondreault), executed the antenuptial agreement on March 22, 2000, and were married on March 28, 2000. They did not live happily ever after, and Tondreault filed for divorce in 2005.

The divorce petition was dismissed in a negotiated settlement that required DeCurtis and Tondreault to execute a postnuptial agreement. Attorney Boren drafted the postnuptial agreement for the couple, which was executed in November of 2005. The marriage nonetheless failed.

The plaintiff claims that the six antenuptial and postnuptial agreements drafted by Attorney Boren are discoverable under Rule 26(b)(1) because they are relevant to demonstrate if and when Attorney Boren undertook subsequent remedial measures in the drafting of antenuptial and postnuptial agreements. Unlike many other jurisdictions, subsequent remedial measures are admissible in Rhode Island to prove negligence “[w]hen, after an event, measures are taken which, if taken previously, would have made the event less likely to occur...

In the case before us, plaintiff initially retained Attorney Boren in 2000, and the antenuptial agreement between plaintiff and Tondreault was drafted in that same year. In 2005, Attorney Boren drafted a postnuptial agreement, which affirmed the terms stated in the prior agreement. The instant malpractice suit arises out of language that was included in both documents. As a result, we are of the opinion that the triggering “event” for purposes of Rule 407 is the drafting of the later document, the 2005 postnuptial agreement. Accordingly, any measures taken after 2005 would be relevant under Rule 407 and, therefore, discoverable under Rule 26(b)(1)

The attorney-client, work product and marital privileges did not prevent discovery

we are of the opinion that defendants do not have standing to assert the attorney-client privilege on behalf of their clients in this context. In this case, the documents are not confidential communications such that third parties were privy to the discussions surrounding the documents and their execution, thus vitiating the privilege. We conclude that the Superior Court justice amply placed safeguards on the order by requiring redaction and limiting the purpose for which the documents could be used. Adequate redaction will eliminate any sensitive or identifying information and prevent the disclosure of any confidential interests contained in the documents...

The defendants’ argument that the marital privilege applies in this context is unavailing. The parties to the six agreements are not testifying, and the production of executed contracts is not testimonial in any way. Furthermore, the parties were not married at the time the antenuptial agreements were executed. The marital privilege focuses on communications between a husband and wife, such that the communications must occur “during [the] marriage.”


In complying with this discovery order, the defendants are directed to adequately redact all confidential information and take any additional steps they deem reasonably necessary to ensure confidentiality, including contacting their clients should that be deemed necessary. To the extent that the clients wish to assert the attorney-client privilege, the Superior Court should welcome those motions and use our discussion herein as guidance in rendering a decision.

Finally, we anticipate that the trial justice will act as an additional gatekeeper and conduct an in camera review of the documents after adequate redaction by the defendants, in order to ensure that all confidential and identifying information has been removed.

The court thus affirmed the discovery order. (Mike Frisch)

January 23, 2017 in Clients, Current Affairs, Privilege | Permalink | Comments (0)

Saturday, January 7, 2017

Between Scylla And Charybdis

The United States District Court for the District of Maryland Southern Division (Judge Paul Grimm) disqualified an attorney and his firm for both a former client conflict and a material limitation in the representation of the current client.

Attorney Jonathan Rose represented CytImmune with respect to employee non-compete agreements and other matters while at Katten Muchin. Now at Alston & Bird, he undertook to represent a former employee in litigation adverse CytImmune.

In March 2016, CytImmune filed its complaint against Dr. Paciotti in the Circuit Court for Montgomery County. Dr. Paciotti’s out-of-state attorney retained Rose as local counsel to handle the case. Shortly thereafter, CytImmune notified Rose of its belief that he had a conflict of interest in the case. Rose consulted his firm’s general counsel, who concluded that no conflict existed. 

Dr. Paciotti then removed the case to this Court, Notice of Removal, where CytImmune filed the instant Motion to Disqualify. (record cites deleted)

The court

I am left with the impression that Rose’s inability to recall the precise details of his prior work for CytImmune placed him squarely between the Scylla of MLRPC 1.9 and the Charybdis of MLRPC 1.7. And if Odysseus could not navigate such treacherous waters, then, respectfully, neither can Rose. And the Rules forbid any such attempt. In light of the apparent constraints that I have observed Defense counsel struggle with, I am persuaded that Rose cannot continue to represent Dr. Paciotti without a significant risk of a materially limited defense. Accordingly, I find that Rose has a conflict of interest in representing Dr. Paciotti. Additionally, MLRPC 1.10(a) imputes Rose’s conflict to all of the attorneys at Alston. Waiver of the conflict is possible, but only with the informed consent of “each affected client.” MLRPC 1.7(b); see also MLPRC 1.10(d) (allowing waiver of imputed conflicts according to the requirements enumerated at MLRPC 1.7(b)). CytImmune has made clear that it will not consent to Rose’s representation of Dr. Paciotti. Pl.’s Mem. Supp. Mot. Disqualify 17. Accordingly, both Rose and Alston are disqualified from representing Dr. Paciotti in the remainder of this litigation.

The court did not reach the Rule 3.7 (lawyer as witness) issue

Given the significant divergence between Rose’s recollection of the legal advice he provided concerning CytImmune’s NDA and Marder’s, I cannot discount the possibility that Rose will be called as a fact witness should the case proceed to trial. The Defense does not appear to disagree but argues that Rose need not be disqualified at this juncture because the conflict contemplated by the Rule is only triggered “at trial,” which has not yet been scheduled. Def.’s Opp’n Mot. Disqualify 18–20. The Defense cites no case law in support of its position. In any event, because I find Rose disqualified under MLRPC 1.7, I do not find it necessary to resolve the issue.

Bottom line

MLRPC 1.7 exists for the very purpose of ensuring that a litigant’s claims or defenses are not refracted through the multifaceted prism of an attorney’s conflicts. Dr. Paciotti is entitled to a lawyer whose ability to develop a theory of the case is unencumbered by his own uncertainty concerning his representation of a former client. I am persuaded based on how this case has evolved that Rose and the other lawyers at Alston are unable to provide such unfettered counsel.

CytImmune’s Motion to Disqualify is GRANTED.

(Mike Frisch)

January 7, 2017 in Clients | Permalink | Comments (0)

Tuesday, January 3, 2017

Katten Muchin Prevails In Charging Lien Litigation

The Delaware Supreme Court has ruled in favor of the Katten Muchin law firm in a case involving application of the law of charging liens.

The case was a complex fight over the client's ouster from a family business

Martha reacted to her ouster by, among other things, litigating. She first retained plaintiff Katten Muchin Rosenman LLP to represent her in a § 220 books and records request of the Sutherland Lumber Companies.  Although Martha and Katten disagree over whether they entered into a written fee agreement, the parties agree that Katten was not providing its services on a contingency fee basis and was instead entitled to fees on an hourly rate basis and to reimbursement of its expenses.   Indeed, Katten sent Martha monthly invoices based on hourly billing, which Martha paid for several years.

In 2006, Martha, with Katten as her counsel, filed a derivative and double derivative action against Perry, Todd, and Mark alleging, among other things, that Perry‘s and Todd‘s employment agreements with the Sutherland Lumber Companies were a result of self dealing...

Some benefits were realized with respect to the employment agreements at issue but 

By 2011, [client] Martha accrued $766,166.75 in unpaid attorney‘s fees for services that Katten provided in this litigation between 2009 and 2011. In the spring of 2011, Katten withdrew as counsel. One of Martha‘s attorneys from Katten, Stewart Kusper, left the firm and continued to represent her.

After Martha‘s litigation concluded in 2012—without her securing any additional relief on behalf of the Sutherland Lumber Companies—she sought an award of attorney‘s fees from the Sutherland Lumber Companies for all of her fees arising from the § 220 action and from overcoming the special litigation committee‘s investigation and recommendation to terminate the litigation, plus $25,000 in fees for defending against the summary judgment argument aimed at the employment agreement claim. In total, Martha asked for $1.4 million in attorney‘s fees and, in doing so, she used Katten‘s invoices that detailed the services it provided to her and its expenses incurred on her behalf while it represented her as a reasonable basis for the fees she should be awarded.  Indeed, in Martha‘s petition for an award of attorney‘s fees, she argued that the $1.4 million in attorney‘s fees she incurred from Katten were "fair and reasonable."

...Relying on Katten‘s invoices, the Court of Chancery awarded Martha $275,000 in fees for the minor benefits that she obtained on behalf of the Sutherland Lumber Companies in 2007 when, as a result of Martha‘s and Katten‘s efforts, the Sutherland Lumber Companies amended Perry‘s and Todd‘s employment agreements.

The firm intervened and asserted a lien on the fee award.

The court here reversed the Court of Chancery

Although Delaware does not have a statute governing charging liens, Delaware has a long lineage of cases recognizing charging liens as a matter of common law.  Two recent Delaware cases address charging liens.   In Doroshow,  this Court confirmed that Delaware recognizes the long-standing common law right of charging liens. In Zutrau, the Court of Chancery adopted the definition provided by Corpis Juris Secundum that a charging lien is "an equitable right to have costs advanced and attorney‘s fees secured by the judgment entered in the suit wherein the costs were advanced and the fee earned." Today, we also endorse that definition of a charging lien.

Here, the modifications to Perry‘s and Todd‘s employment agreements— which are the basis for Court of Chancery‘s fee award—were adopted as a result of Martha‘s and Katten‘s efforts in the derivative and double-derivative action. Furthermore, Katten‘s unpaid fees arose from the same litigation that produced the benefits for the Sutherland Lumber Companies and which led to the Court of Chancery‘s award of attorney‘s fees. Therefore, based on our definition of a charging lien, Katten is entitled to a lien on the entire fee award of $275,000. The historical rationale for a charging lien—to promote justice and equity by compensating the attorney for her efforts and thus encouraging attorneys to provide legal services to clients—also supports this conclusion.

In its decision, the Court of Chancery seemed to read Doroshow as standing for a rule that an attorney may only seek a charging lien for fees the attorney incurred that were directly connected to her client‘s recovery. The Court of Chancery cited Doroshow‘s finding that, because the law firm in that case represented its client on a contingent fee basis, it was entitled to a charging lien because "the law firm had not been compensated before its work produced the funds." The Court of Chancery reasoned that because Katten had already been paid for the services that led to the benefits for the Sutherland Lumber Companies, it was not entitled to a charging lien. But, Doroshow dealt with a charging lien based on a contingency fee, and we held that the law firm was entitled to its agreed 40% contingent fee. Our decision in Doroshow did not limit the scope of charging liens in general. Rather, Doroshow demonstrates the application of this equitable right to a particular type of fee arrangement, and one fundamentally different than the one between Martha and Katten.

Here, Katten billed Martha regularly for its services based on the amount of time Katten‘s attorneys spent on the case and the attorneys‘ hourly rates. Katten billed Martha for approximately $3.5 million, of which Martha paid roughly $2.7 million. That Katten‘s services underlying the unpaid fees did not result in any benefit to the Sutherland Lumber Companies does not matter. In the case of hourly billing, unlike with a contingency fee, the total amount that the client is required to pay her lawyer is not based on the client‘s recovery. In Zutrau, the Court of Chancery considered the scope of a charging lien in the context of hourly billing and explained that "[i]t is no secret that litigation is expensive and that the costs of prosecution easily can exceed the recovery." The Court of Chancery found, "that the cost of prosecution conceivably could exceed the recovery does not excuse Zutrau from paying those fees." If, as here, an attorney has unpaid fees that are greater than the client‘s recovery, the attorney is entitled to a charging lien on the entire recovery. Moreover, the client remains obligated to pay her attorney any remaining unpaid fees. Martha was required to pay Katten its reasonable fees in accordance with their agreement whether she won or lost. Because Martha did not pay Katten for all of its services stemming from the litigation in which Katten produced the only benefits, Katten is entitled to the equitable right of a charging lien on the entire $275,000 fee award. Finding otherwise would lead to an inequitable result where attorneys with a claim for unpaid fees from litigation— where work had been billed on an hourly basis—could use the equitable right of a charging lien only to recover fees relating to the services that were directly connected to the litigation‘s beneficial results.

Like other contracts, contracts for the provision of legal services create incentives for parties, including clients. When a party, such as Martha, agrees to pay hourly fees to prosecute a complex case, she is assuring her counsel that it will not suffer the commercial damage of uncompensated services if it presses her claims as aggressively as she demands and as the law permits. To permit a client who is a party to such an agreement to escape a charging lien as if she made a strict contingency fee agreement limiting fees to a percentage of recovery is to judicially rewrite the contract at the expense of the attorney and to undermine the traditional purpose of a charging lien.

(Mike Frisch)

January 3, 2017 in Billable Hours, Clients, Current Affairs, Hot Topics | Permalink | Comments (0)

Wednesday, December 21, 2016

Second Thoughts

A client's instruction to her attorney not to deliver an executed deed for property to her grandson negated his interest in the property, according to a decision of the North Dakota Supreme Court.

Cory Rice is Joyce Neether's grandson. Joyce Neether and her late husband, Alvin Neether, raised Rice at their farm. Alvin Neether was diagnosed with ALS in 2009. Sometime before July 29, 2009, Joyce Neether contacted attorney Wayne Enget to draft a bill of sale for the purchase of personal property and two warranty deeds conveying real property to Rice, reserving a life estate in that property for the Neethers.

In July 29, 2009, Enget met with the Neethers to sign the warranty deeds. At that time, Alvin Neether was terminally ill and, while he was physically unable to sign his own name, the district court found he was mentally competent to transfer property. Joyce Neether had authority through a Power of Attorney to manage Alvin Neether's real and personal property. After consulting with Enget, Joyce Neether signed the deeds on behalf of herself and Alvin Neether. Rice was not present when Joyce Neether signed the deeds. Enget told the Neethers he would record the deeds the following day, July 30, 2009.

Before Enget recorded the deeds, Joyce Neether called Enget and instructed him not to record the deeds. Joyce Neether told Enget that she would call him when he was authorized to record the deeds and the bill of sale. Joyce Neether never contacted Enget to either record the deeds or deliver them to Rice.

Rice contended that Enget had duties as his attorney but

it is undisputed that Rice knew Enget went to the Neethers' residence on July 29, 2009, but was unaware the purpose was to sign these deeds. The district court found "[a]t all times during this action Attorney Enget was acting as an attorney for the Neethers and was not acting as an attorney for Rice." Rice asked Enget some questions regarding a separate matter. Rice never signed a fee agreement or paid Enget, and Enget never prepared any documents for Rice. Because the district court found there was no attorney-client relationship between Rice and Enget, there could be no agency relationship...

The district court found that while the deeds were not in Joyce Neether's physical possession, she still had dominion or control over them through her attorney. This Court will only overturn the district court's finding "if there is no evidence to support it, if the finding is induced by an erroneous view of the law, or if the reviewing court is left with a definite and firm conviction a mistake has been made." Kelly, 2002 ND 37, ¶ 15, 640 N.W.2d 38. Evidence in this record supports the district court's findings that Enget was not acting as Rice's attorney and was acting as Neether's attorney. Therefore, the district court's finding is not clearly erroneous...

The district court's findings that the deeds never left Joyce Neether's control and the Neethers lacked intent to deliver the deeds to Rice is supported by the record and, therefore, not clearly erroneous.

(Mike Frisch)

December 21, 2016 in Clients, Ethics | Permalink | Comments (0)

Tuesday, December 13, 2016

Interesting Decision

A law firm is entitled to prejudgment interest on its judgment against a former client, according to a decision of the New York Appellate Division for the First Judicial Department

The addition of prejudgment interest to plaintiff's award for unpaid legal fees under quantum meruit was mandatory (see CPLR 5001; Ash & Miller v Freedman , 114 AD2d 823 [1st Dept 1985]). Moreover, where plaintiff was required to seek permission to withdraw, it was required to continue to zealously represent defendants until the court granted its motion to withdraw (Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.16[d], [e]). Therefore, it was incorrect for the JHO to refuse to consider any value for plaintiff's work from the time it moved by order to show cause to withdraw. This is particularly true where plaintiff sought, but was denied, an adjournment of the trial date, and the court took six months to grant the application.

(Mike Frisch)

December 13, 2016 in Billable Hours, Clients | Permalink | Comments (0)

Thursday, December 8, 2016

No Malpractice If Attorney Limits Representation

The Ohio Supreme Court reversed a denial of summary judgment for the defendant in a legal malpractice case

The issue on appeal in this case is whether the trial court’s grant of summary judgment in favor of an attorney and his law firm in a legal-malpractice action was appropriate. For the reasons that follow, we conclude that it is clear from the evidence that the attorney refused to undertake representation of the clients on the matter at issue and therefore he did not commit malpractice with respect to the matter. Accordingly, we reverse the judgment of the court of appeals and reinstate the trial court’s judgment. 

Some background

The facts of the underlying case paint a tale of caution for all real estate investors...

Appellees Lorna B. Ratonel and her company Carmalor, Inc., entered into an agreement to purchase an apartment building known as Holden House in August 2007. Attorney Gail Pryse and her law firm, Keating, Muething & Klekamp, P.L.L. (collectively, “KMK”) represented Ratonel and Carmalor during that transaction. Ultimately, Ratonel, Carmalor, and Carmalor Ohio, L.L.C., which is also an appellee herein, engaged appellants, Mark Ropchock and his law firm, Roetzel & Andress, L.P.A, to file a legal-malpractice claim against KMK, based largely on Ratonel’s allegation that KMK failed to ensure that Holden House was inspected prior to the purchase. Ratonel also wanted appellants to pursue a legal malpractice suit against KMK relating to French Village, a building in Nebraska she had purchased.

The original complaint filed by Ropchock against KMK contained a paragraph that mentioned French Village, but a later-filed amended complaint did not mention French Village. Although the record reflects that Ratonel and Ropchock frequently discussed French Village, Ropchock did not file a legal malpractice claim relating to that property. The court directed a verdict in favor of KMK, and Ratonel engaged new counsel to represent her, Carmalor, and Carmalor Ohio in a legal-malpractice claim against appellants based in part on appellants’ failure to assert a legal-malpractice claim against KMK relating to French Village.

The court held that the representation was properly limited as allowed by Rule 1.2

To prove that an attorney owed a duty to a plaintiff with regard to a specific legal matter, the plaintiff must establish that the scope of the attorney-client relationship included the specific legal matter.


Viewing the evidence most strongly in favor of Ratonel, we come to the same conclusion as the trial court. There is significant evidence in the record that Ratonel wanted Ropchock to represent her in asserting a legal-malpractice claim relating to the French Village transaction. There is also significant evidence that Ropchock seriously considered and investigated asserting a French Village claim. But there is clear evidence that he ultimately determined that such a claim was not viable and that he communicated to Ratonel that he was not going to represent her in asserting it.

We note that it is common for a client and counsel to discuss multiple potential claims and then later, after the attorney gathers evidence, agree to have the attorney pursue only those claims he believes are viable...

It is clear to us that the engagement letter limited the scope of representation in conformity with Prof.Cond.R. 1.2(c). It is equally clear that nothing in the letter indicates an intention on the part of appellants to represent Ratonel and her companies with respect to the alleged malpractice regarding the purchase of French Village. Nevertheless, the record is replete with references by both Ratonel and Ropchock to French Village. We will now examine the references relied upon by the parties and determine whether the initial scope of representation was expanded to include French Village.

(Mike Frisch)

December 8, 2016 in Clients | Permalink | Comments (0)

Wednesday, December 7, 2016

Immutable Fact Sinks Malpractice Claim In Maritime Litigation

An order dismissing a legal malpractice action was affirmed by the New York Appellate Division for the First Judicial Department.

In this legal malpractice action, plaintiff Optical asserts that its former attorneys, Rubin, Fiorella and Friedman, mishandled the litigation of a maritime action in which it sought to recover damages caused when its submarine fiber optical cable was struck and destroyed by an anchor inadvertently released from a cargo vessel owned by Marbulk Canada, Inc. Rubin Fiorella, on behalf of Optical, brought a maritime action in federal court against the vessel and Marbulk. In the maritime action, Optical alleged that the vessel dropped its anchor in an area designated for laying cable, and that Marbulk was therefore liable. The parties agreed that Marbulk would be liable only if the vessel was located in the designated cable area when its anchor dropped.

Marbulk successfully moved for summary judgment dismissing the complaint in the maritime action. The district court found, inter alia, that sonar data evidence submitted by plaintiff Optical showed that the vessel was outside the boundaries of the designated cable area (Optical Communications Group, Inc. v M/V Ambassador, 938 F Supp 2d 449 [SD NY 2013] [Optical I], affd. 558 Fed Appx 94 [2d Cir 2014] [Optical II]). The conclusion was also supported by evidence submitted by Marbulk, specifically, a screen shot of Simplified Vessel Data Radar (SVDR) data that pinpointed the location of the vessel outside the boundaries of the cable area. As indicated, that decision was affirmed on appeal by the Second Circuit.

In the instant action, plaintiff alleges that, as noted by the Second Circuit in Optical II, Rubin Fiorella failed to preserve an objection to the SVDR data submitted by Marbulk in support of its motion, and also failed to renew a discovery motion that had been denied without prejudice to renewal. Optical alleges that but for these failures, it would have defeated the motion for summary judgment and ultimately prevailed in the maritime action.

The motion court properly found that the Second Circuit's order in Optical II, affirming [*2]Optical I, is documentary evidence within the meaning of CPLR 3211(a)(1), and that its holding flatly contradicts the legal conclusions and factual allegations in the complaint (see Amsterdam Hospitality Group, LLC v Marshall-Alan Assoc., Inc., 120 AD3d 431, 432 [1st Dept 2014]; Morgenthow & Latham v Bank of N.Y. Co., 305 AD2d 74, 78 [1st Dept 2003], lv denied 100 NY2d 512 [2003]).

Even assuming that Rubin Fiorella had successfully challenged the admissibility and authenticity of the SVDR data proffered by Marbulk, the district court found that plaintiff Optical's own sonar data evidence, submitted through its expert, indicated that the vessel was outside the cable field when it released its anchor. Thus, plaintiff's evidence submitted in the maritime action refutes its allegations in this action that, but for Rubin Fiorella's negligence, it would have prevailed in the maritime action (see e.g. Brooks v Lewin, 21 AD3d 731, 734 [1st Dept 2005], lv denied 6 NY3d 713 [2006]).

The district court's decision also refutes Optical's allegation that, but for Rubin Fiorella's failure to conduct further discovery, it would have prevailed in the maritime action, since that court found that the record with respect to the location of the vessel was "immutable and complete" so that "further discovery will not recreate the events underlying the anchor drop or enhance the existent evidence in any meaningful way" (Optical I, 938 F Supp 2d at 464; see Biondi v Beekman Hill House Apt. Corp., 257 AD2d 76, 81 [1st Dept 1999], affd 94 NY2d 659 [2000]).

December 7, 2016 in Clients | Permalink | Comments (0)

Tuesday, December 6, 2016

A "Special Circumstance" Exception To Privity Requirement In Legal Malpractice Case

The dismissal of portions of a legal malpractice claim has been reversed by the New York Appellate Division for the First Judicial Department

Defendant Pryor Cashman LLP represented nonparty David Lichtenstein in a transaction in which Lichtenstein was to purchase $10 million worth of stock in nonparty Park Avenue Bank. Before the transaction could close, nonparty Savings Deposit Insurance Fund of the Republic of Turkey (SDIF) sued the holder of 99% of the bank's shares and obtained a restraining order preventing any transfer of the shares (Deep Woods Holdings, L.L.C. v Savings Deposit Ins. Fund of the Republic of Turkey, 745 F3d 619, 621 [2d Cir 2014], cert denied __ US __, 135 S Ct 964 [2015]).

On June 22, 2004, Lichtenstein and SDIF entered into a stipulation, pursuant to which Lichtenstein had the right to exercise a call option to buy shares of stock in the bank for a specified sum, provided Lichtenstein exercised his right within 45 days after SDIF was able to deliver the shares. SDIF was able to deliver the shares on July 12, 2005, but Pryor Cashman did not exercise Lichtenstein's call option until November 2, 2005 (Deep Woods, 745 F3d at 623), and SDIF then refused to honor it.

Thereafter, Pryor Cashman recommended to Lichtenstein that he, together with nonparties Donald Glascoff, chairman of the bank, and Charles Antonucci, form plaintiff Deep Woods Holdings LLC, and that Lichtenstein assign the call option to Deep Woods, which would then sue SDIF to exercise the call option. In or about 2007, Pryor Cashman organized Deep Woods, drafted the assignment, and insisted on acting as counsel for Deep Woods in the litigation against SDIF. The assignment read in its entirety: "In consideration of the issuance to David Lichtenstein ("Assignor") of a 75% interest in Deep Woods Holdings LLC, a Delaware limited liability company ("Deep Woods"), as described in the Deep Woods Operating Agreement dated February 6, 2007, the Assignor hereby assigns, transfers and delivers to Deep Woods his entire right, title and interest in and to the option contained in Paragraph 8 of that certain Stipulation dated June 22, 2004 between the Assignor and [SDIF]." Pryor Cashman did [*2]not draft the assignment so as to specifically assign any tort claims Lichtenstein might have in connection with the exercise of the call option to Deep Woods.

According to Mr. Glascoff, when Pryor Cashman formed Deep Woods and prepared the assignment, it acted on behalf of Lichtenstein, the other members of Deep Woods, and Deep Woods itself. Mr. Glascoff further alleges that, during this process, Pryor Cashman was silent on the issue of whether the assignment transferred tort claims, but that it was Mr. Glasscoff's understanding that it did, and, if he had understood that it did not, he would have insisted on adding any necessary language so that it did.

At the trial level, Deep Woods won $25.3 million in damages. However, the Second Circuit reversed, finding that the call option had not been not exercised in a timely manner (Deep Woods, 745 F3d at 620).

After the U.S. Supreme Court denied certiorari, Deep Woods brought the instant action against Pryor Cashman, alleging, inter alia, malpractice based on Pryor Cashman's failure to exercise the call option in a timely manner. On February 11, 2016, the motion court issued the order appealed from, granting Pryor Cashman's motion to dismiss so much of the malpractice claim as was based on the failure to timely exercise the call option. The motion court found that, because the assignment Pryor Cashman had drafted did not specifically assign Lichtenstein's tort claims, and because the malpractice alleged occurred while Lichtenstein owned the call option, Deep Woods did not have standing to sue Pryor Cashman. Deep Woods now appeals.


 The motion court correctly found that the subject assignment, which merely transferred the assignor's "entire right, title and interest in and to the [call] option contained in Paragraph 8 of" another contract, did not explicitly assign tort claims (see e.g. Commonwealth of Pennsylvania Pub. Sch. Employees' Retirement Sys. v Morgan Stanley & Co., Inc., 25 NY3d 543, 550-551 [2015]; Dexia SA/NV v Morgan Stanley, 135 AD3d 497 [1st Dept 2016]). Unlike the assignment in Banque Arabe et Internationale D'Investissement v Maryland Natl. Bank (57 F3d 146 [2d Cir 1995]), this assignment did not, by its terms, transfer rights to a transaction. The assignment is not ambiguous; even if it were (and if we therefore considered parol evidence), an unexpressed understanding does not suffice (see Commonwealth of Pennsylvania, 25 NY3d at 551).

However, accepting plaintiff's affidavit in opposition to defendants' motion as true, we find that plaintiff sufficiently pleaded that defendants should be equitably estopped from arguing that the assignment did not assign tort claims. Contrary to defendants' contention, estoppel can be based on silence as well as conduct (see e.g. Rothschild v Title Guar. & Trust Co., 204 NY 458, 462 [1912]). Under these circumstances, where defendants drafted the assignment at a time when it represented both Lichtenstein and plaintiff, and that interpreting the assignment to exclude tort claims would mean that neither the assignor nor plaintiff, the assignee, would be able to sue defendants for malpractice for failing to exercise the call option in a timely manner, we find that the "special circumstances" exception to the privity requirement applies (see [*3]generally Estate of Schneider v Finmann, 15 NY3d 306, 308-309 [2010]; Good Old Days Tavern v Zwirn, 259 AD2d 300 [1st Dept 1999]). To do otherwise might insulate defendants from liability for their alleged wrongdoing.

(Mike Frisch)

December 6, 2016 in Clients | Permalink | Comments (0)

Saturday, October 22, 2016

Lawyer Witness Disqualified In Escrow Dispute

Disqualification was proper due to the witness-advocate rule, according to a recent decision of the New York Appellate Division for the Second Judicial Department

Consolata A. Bajohr commenced an action against attorney Stuart R. Berg and his law firm, Stuart R. Berg, P.C. (Action No. 1), in which she alleged that Berg breached his fiduciary duty in connection with certain money that he was holding in escrow. Josephine Longo and Phyllis Longo commenced a separate action against Bajohr (Action No. 2), seeking, among other things, a judgment declaring that they were entitled to the money that Berg was holding in escrow. The two actions were joined for trial. In an order entered August 26, 2014, the Supreme Court, inter alia, granted that branch of Bajohr's oral application which was to disqualify Berg and his law firm from representing Josephine Longo in Action No. 2. Josephine Longo appeals, by permission, from that portion of the order.

The disqualification of an attorney is a matter that rests within the sound discretion of the trial court (see Ike & Sam's Group, LLC v Brach, 138 AD3d 690, 692;Goldberg & Connolly v Upgrade Contr. Co., Inc., 135 AD3d 703, 704; Spielberg v Twin Oaks Constr. Co., LLC, 134 AD3d 1015). " The advocate-witness rules contained in the Rules of Professional Conduct (22 [*2]NYCRR 1200.0) rule 3.7 provide guidance, but not binding authority, for courts in determining whether to disqualify an attorney'" (Spielberg v Twin Oaks Constr. Co., LLC, 134 AD3d at 1015, quoting Gould v Decolator, 131 AD3d 448, 449). " [P]ursuant to rule 3.7 of the Rules of Professional Conduct (22 NYCRR 1200.0), unless certain exceptions apply, [a] lawyer shall not act as an advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact'" (Spielberg v Twin Oaks Constr. Co., LLC, 134 AD3d at 1016, quoting Friia v Palumbo, 89 AD3d 896, 896).

Here, Berg, who is a defendant in Action No. 1, is likely to be called as a witness on significant issues of fact regarding his conduct with respect to the money that he is holding in escrow (see Goldberg & Connolly v Upgrade Contr. Co., Inc., 135 AD3d at 704; Spielberg v Twin Oaks Constr. Co., LLC, 134 AD3d at 1016; Gould v Decolator,131 AD3d at 449). Accordingly, the Supreme Court providently exercised its discretion in granting that branch of Bajohr's oral application which was to disqualify Berg and his law firm from representing Josephine Longo in Action No. 2.

(Mike Frisch)

October 22, 2016 in Clients | Permalink | Comments (0)

Monday, October 10, 2016

"Th[e] Type Of Shenanigan That Judicial Estoppel Cuts Off At The Knees" But With A Dissent

The West Virginia Supreme Court of Appeals denied a writ of prohibition brought by a criminal defendant to prevent disclosure of a report prepared at the behest of the defendant and her counsel.

The limited record in this proceeding indicates that the Petitioner was charged...with two counts of child neglect creating a risk of injury, and two counts of child neglect causing injury.  In September of 2015, the Petitioner pled guilty to all the charges. Prior to the scheduled sentencing hearing, a psychological evaluation and risk assessment was arranged for the Petitioner by defense counsel. To facilitate the psychological assessment, the Petitioner wanted the psychologist to review the medical records of her two children, which had been generated during a prior child abuse and neglect proceeding. The Petitioner also wanted to have her attorney discuss with the psychologist the specifics of her case and other confidential information that involved the victims...

The Petitioner underwent the psychological assessment. After the Petitioner had the psychological assessment done, she refused to disclose the report to the trial court and State. A hearing was held over the Petitioner’s refusal to disclose the psychological report. At the end of the hearing, the trial court ordered the Petitioner to disclose the report to the State and court. The Petitioner thereafter filed this proceeding to prevent enforcement of the disclosure order.

The court majority was sharply critical of defense counsel

In this proceeding the Petitioner contends that disclosure of her psychological report would violate the attorney-client privilege and work product doctrine. Assuming, without deciding, that the attorney-client privilege and work product doctrine would prevent disclosure of the psychological report, we find that the doctrine of judicial estoppel prevents the application of those doctrines...

After obtaining a favorable ruling from the trial court allowing disclosure of confidential information to the psychologist, in exchange for a specific promise to turn over the psychological report for sentencing purposes, the Petitioner now asserts for the first time that the psychological report is protected from disclosure by the attorney-client privilege and the work product doctrine. We are gravely concerned by the Petitioner’s blatant attempt to insult the integrity of the judicial process by pretending that her promise to the court did not exist. It is precisely this type of shenanigan that judicial estoppel cuts off at the knees. “The doctrine estops a party from playing ‘fast-and-loose’ with the courts or to trifle with the proceedings.”

...The Petitioner came to the trial court with a promise to disclose the psychological report to the court, if the court allowed the Petitioner to reveal certain information to the psychologist. In making this promise to the court, the Petitioner implicitly waived any attorney-client privilege and work product protections the psychological report may have had. However, now that the report has been generated, the Petitioner has changed her mind about disclosure and is seeking the protection of those privilege doctrines. We will not allow this.

Justice Benjamin dissented

The criminal defense bar ought to be able to confidently develop expert services and opinions on behalf of their clients for sentencing purposes without fear that the information thereby derived, if proved harmful instead of useful, will fall into the hands of the prosecution. The adversary process and its attendant safeguards, including time-honored privileges and the work-product doctrine, does not cease to exist once a criminal defendant has pleaded guilty or is found to be so. Unfortunately, the majority’s well-intentioned efforts in this instance to improve the flow of relevant information to the circuit court will, in the longer term, perversely and inevitably impede the truth-seeking function of sentencing proceedings and render them less accurate by chilling the efforts of criminal defense lawyers to effectively advocate for their clients.

(Mike Frisch)

October 10, 2016 in Clients, Privilege | Permalink | Comments (0)

Friday, October 7, 2016

Client Perjury Rules Clarified In Virginia

A recent notice on the web page of the Virginia State Bar

September 30, 2016

Supreme Court of Virginia Approves Rule Changes and Legal Ethics Opinion 1884

The Supreme Court of Virginia has approved amendments to Rules 1.6: Confidentiality of Information and 3.3: Candor Toward the Tribunal, as well as Legal Ethics Opinion 1884.

Effective December 1, 2016, the Supreme Court of Virginia has approved amendments to Rules 1.6: Confidentiality of Information and 3.3: Candor Toward the Tribunal.

The amendments clarify a lawyer’s obligations when a client discloses an intent to commit perjury well in advance of trial, and when the lawyer can withdraw from the representation before the client’s intended perjury occurs. The order may be found here.

Effective immediately, the Supreme Court of Virginia has approved Legal Ethics Opinion 1884: Conflicts arising from a lawyer-legislator’s employment with a consulting firm owned by a law firm.

The opinion addresses a situation where a lawyer who is a member of the Virginia General Assembly joins a consulting firm. The lawyer asks whether the lawyers and non-lawyers in the consulting firm would be barred from lobbying the General Assembly and whether that bar would extend to members of the law firm as well. In this opinion, the Committee concluded that both lawyers and non-lawyers in the consulting firm, as well as the lawyers in the law firm that own the consulting firm, would be barred from representing clients or otherwise lobbying before the General Assembly. The order may be found here.

(Mike Frisch)

October 7, 2016 in Bar Discipline & Process, Clients, Current Affairs, Ethics | Permalink | Comments (0)