Monday, April 4, 2016
A falling out among lawyer partners has led the New York Appellate Division for the Second Judicial Department to affirm dismissal on jurisdictional grounds.
In May 2012, the defendant Jeffrey G. Ephraim, an attorney residing in New Jersey, contacted the plaintiff, Ibrahim B. Shatara, an attorney residing in New York, to discuss forming a limited liability company for the purpose of practicing law. During ensuing negotiations, it was agreed that the defendant Luiza DiGiovanni would become a member of the newly formed company upon her admission to the New Jersey State Bar, and that the estate of DiGiovanni's father, who had been an attorney, would refer cases to Ephraim and the plaintiff. In June 2012, a certificate of formation of Ephraim & Shatara, LLC, was filed with the New Jersey Department of the Treasury. The main business address of Ephraim & Shatara, LLC, was located in Elizabeth, New Jersey. Additionally, since the plaintiff and Ephraim were both admitted to the New York State Bar, Ephraim & Shatara, LLC, filed an application for a certificate of authority for a foreign limited liability company to do business in New York State (see Limited Liability Company Law § 802[a]). Although that application was granted, the company failed to comply with the publication requirements (see Limited Liability Company Law § 802[b]) prior to the plaintiff's filing of a certificate of cancellation of Ephraim & Shatara, LLC, with the New Jersey Department of the Treasury in January 2013. The plaintiff alleges that Ephraim & Shatara, LLC, represented five clients in connection with proceedings in New York courts.
In February 2013, the plaintiff commenced the instant action against Ephraim, DiGiovanni, and the newly formed DiGiovanni & Ephraim, LLC (hereinafter DiGiovanni & Ephraim), to recover damages for, inter alia, fraud, conversion, and breach of contract in connection with the formation and dissolution of Ephraim & Shatara, LLC. The defendants were served with process in New Jersey. Thereafter, the defendants moved to dismiss the complaint pursuant to CPLR 3211(a)(8) for lack of personal jurisdiction or, in the alternative, to dismiss the complaint pursuant to CPLR 327(a) on the ground of forum non conveniens or pursuant to CPLR 3211(a)(7) for failure to state a cause of action. The Supreme Court denied those branches of the motion which were to dismiss the complaint insofar as asserted against Ephraim and DiGiovanni & Ephraim pursuant to CPLR 3211(7) and (8) and CPLR 327(a), and directed a hearing on the issue of whether it was proper to exercise personal jurisdiction over DiGiovanni
...the plaintiff failed to establish, prima facie, that DiGiovanni & Ephraim was subject to the personal jurisdiction of the Supreme Court pursuant to CPLR 302.
Thursday, March 10, 2016
The Mississippi Supreme Court reversed the grant of summary judgment to defendants in a legal malpractice claim arising out of a conservatorship and estate matter.
The plaintiff ("Bobby") is the spouse of the decedent ("Debbie") , whose brother ("Michael") served as her conservator. .Michael spent nearly all the funds that she had prior to her death and failed to file an inventory.
When Debbie died, it is alleged
Following Debbie’s passing, [attorney] Montgomery summoned Bobby and others to a meeting at the offices of WWM to discuss Debbie’s estate. At the meeting, Montgomery informed Bobby that he was the only “interested party” who had not signed the combined probate proceeding petition” and that, if he signed the combined petition, he would receive “big money,” but if he did not sign, the estate would sell certain guns which had sentimental value to Bobby. Montgomery also informed Bobby that Debbie’s estate lacked sufficient assets to fund a $50,000 legacy to Bobby’s grandson, and that Bobby should contribute $50,000 of the proceeds he received as beneficiary of Debbie’s $400,000 life-insurance policy. The unpaid bequest to Bobby’s grandson was the only one that had not already been satisfied. Further, Montgomery promised Bobby that, in exchange for contributing the $50,000 from his life insurance proceeds, he would give Bobby the guns, which were valued at only $14,468.48, but had high sentimental value to Bobby.
As a result of Montgomery’s representations, Bobby signed the combined petition, which designated him as a “Petitioner.” Montgomery signed the petition as an “Attorney for Petitioners.” At the time he signed the petition, Bobby was not told that Debbie’s estate had been significantly depleted by Michael’s expenditures as conservator, and Montgomery did not inform him that, by signing the petition, he would be waiving his rights to contest and to renounce Debbie’s will and receive a child’s share of the estate.
Throughout the estate proceedings, Bobby did not challenge any distributions made pursuant to the will, the status of Debbie’s estate, or the actions of the conservator, executor, or Montgomery.
The court rejected res judicata grounds for summary judgment
Montgomery and WWM argue that, because Bobby asserted a similar factual account in his Petition to Re-open Debbie’s estate, res judicata precludes him from litigating his legal-malpractice action which is predicated on the same facts. Bobby indeed alleges almost identical facts in both his Petition to Re-open and his Complaint, and this Court reasonably could conclude that the two actions contain the same “identity of the subject matter of the action.”
The “identity of the cause of action,” however, is absent. In his Petition to Re-open, Bobby merely asked that the estate proceedings be reopened to further investigate alleged wrongful conduct and specifically requested relief through the creation of a constructive trust, injunctive relief, and an accounting of the conservatorship and estate. Importantly, within the petition to reopen, Bobby did not assert any legal-malpractice or fiduciary-duty claims. In other words, Bobby sought relief solely within the context of the estate. Conversely, in his legal-malpractice complaint, Bobby specifically alleged claims (including fiduciary-duty claims)—arguing duty, breach, and causation—against Montgomery and WWM, and he requested relief in the form of damages—both actual and punitive.
On the merits
this Court has held that fiduciary relationships can arise in a variety of contexts, and that relationships between attorneys and third parties can give rise to a fiduciary relationship—and the requisite fiduciary duties—despite the absence of an actual “attorney-client” relationship. Accordingly, the general rule in Mississippi is that, under certain facts and circumstances, attorneys can acquire fiduciary obligations to third parties who are not their clients where no attorney-client relationship is present. Fiduciary relationships often turn on questions of fact related to exertion of influence, whether the reliance was justified.
In other words, while it is true that we have never held—and we do not hold today—that attorneys for estates always owe fiduciary duties to every estate beneficiary, we see no reason to carve out a rule of special protection for estate attorneys, exempting them from any beneficiary claim of a fiduciary relationship. An attorney for the estate may, under certain circumstances, owe fiduciary duties to a beneficiary of the estate based on the same considerations relevant to determine fiduciary duties to all third parties. The existence of these fiduciary relationships are questions to be determined in the trial court, and here, we believe sufficient evidence exists in the record for a factfinder to conclude that Montgomery owed Bobby fiduciary duties, even without a finding of an attorney-client relationship...
And, should the trial court find that Montgomery assumed fiduciary duties to Bobby, we also find that—viewing the facts and allegations in the light most favorable to
Bobby—Montgomery allegedly induced Bobby into signing a petition without first informing him of the consequences. This, in effect, caused Bobby to waive his statutory rights to contest and renounce Debbie’s will. Montgomery approached Bobby under circumstances which, if not enough to create an attorney-client relationship, could support an inference of dependence and trust, as Montgomery purported to have Bobby’s interests in mind and to exercise control over Debbie’s estate. There is evidence in the record to support Bobby’s claim that Montgomery coerced or compelled him to deduct $50,000 of life-insurance proceeds to fund a bequest in Debbie’s will. These acts, if true—and assuming a fiduciary relationship is found to have existed—would constitute a breach of that fiduciary duty. So genuine issues of material fact remain regarding Bobby’s fiduciary-duty claims.
To be clear, we do not address today the duties of attorneys who represent executors and administrators of estates. Montgomery claims he was the attorney for the estate and not for the executor of the estate. In thirty filings with the trial court, Montgomery was either listed as or signed as the “attorney for the Estate.”
Friday, March 4, 2016
A guaranty was not enforceable against a departing attorney, according to a recent decision of the New York Appellate Division for the First Judicial Department.
Judgment, Supreme Court, New York County (Ellen M. Coin, J.), entered October 22, 2014, which, to the extent appealed from as limited by the briefs, dismissed the complaint against defendant Guy A. Lawrence, and brings up for review an order, same court and Justice, entered October 24, 2013, and an amended order, same court and Justice, entered September 12, 2014, which determined that Lawrence was released from his obligations under a guaranty, unanimously affirmed, without costs.
The term "withdraws," as employed in the parties' unambiguous guaranty and interpreted according to its plain meaning, refers to a voluntary act. Because defendants, who are seasoned attorneys, chose not to employ terms such as "involuntarily withdraws," "withdraws for cause," "is terminated" or other similar language, it is reasonable to conclude that they did not intend for an attorney departing the firm under such involuntary circumstances to be considered the first guarantor who "retires or withdraws" under the guaranty (Quadrant Structured Prods. Co., Ltd. v Vertin, 23 NY3d 549, 560  ["if parties to a contract omit terms ... the inescapable conclusion is that the parties intended the omission"]). Moreover, the guaranty specifically identifies those limited involuntary circumstances that would apply (i.e., death or disability). The fact that the parties did not expand this category to expressly include termination further underscores that they did not intend it to trigger a release from the guaranty (id.).
The court's reading of the lease modification is appropriate, since, by its terms, it does not modify the foregoing terms of the guaranty.
Thursday, January 14, 2016
A law firm that sued its client got the usual response - a counterclaim of legal malpractice.
The client then moved to disqualify defendant's counsel on necessary witness grounds.
The trial court disqualified counsel. The disqualification was affirmed by the New York Appellate Division for the Second Judicial Department.
...plaintiff is a law firm that was retained by the defendant, inter alia, to represent it as a third-party defendant in a personal injury action. After the conclusion of the underlying action, the plaintiff commenced this action against the defendant, among other things, to recover damages for breach of contract and on an account stated, seeking to recover unpaid legal fees. The defendant asserted a counterclaim to recover damages for legal malpractice. The plaintiff moved to disqualify the defendant's attorney, James Haddad, on the basis that Haddad would be a witness in this action. The defendant cross-moved, inter alia, for summary judgment dismissing the complaint and on its counterclaim. The Supreme Court granted the plaintiff's motion and denied the defendant's cross motion. The defendant appeals. We affirm.
The disqualification of an attorney is a matter that rests within the sound discretion of the Supreme Court (see Gould v Decolator, 131 AD3d 448; Lauder v Goldhamer, 122 AD3d 908; Nationscredit Fin. Servs. Corp. v Turcios, 41 AD3d 802, 802). Rule 3.7(a) of the Rules of Professional Conduct (22 NYCRR 1200.0) provides that, unless certain exceptions apply, "[a] lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact." Based upon the allegations supporting the defendant's counterclaim and the statements contained in Haddad's affirmation in opposition to the plaintiff's motion and in support of the defendant's cross motion, Haddad is likely to be a witness on the significant facts pertaining to the plaintiff's acts allegedly constituting malpractice and the actions taken by Haddad to mitigate the alleged damage caused by the malpractice. The Supreme Court, therefore, providently exercised its discretion in granting the plaintiff's motion to disqualify Haddad from representing the defendant in this action (see Fuller v Collins, 114 AD3d 827).
Thanks to the commenter for the correction. (Mike Frisch)
Thursday, January 7, 2016
Georgetown Law's Center for the Study of the Legal Profession has an announcement of a significant report
Law firm leaders need to make bold, proactive changes in how legal services are delivered if firms are to thrive in the rapidly changing legal marketplace. That is among the findings of the “2016 Report on the State of the Legal Market” just issued by the Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Peer Monitor.
Two thousand fifteen saw a sixth consecutive year of largely flat demand, weakening pricing power and falling productivity. The report notes that since 2008, the law firm market “has changed in significant and fundamental ways.” Clients have assumed active control of the organization, staffing, scheduling and pricing of legal matters, where previously they had largely left those decisions in the hands of law firms. In addition, competitors such as alternative legal services providers, accounting firms and consultants, continue to grow market share.
The report suggests that law firms need to shift their focus from growth to market differentiation and profitability. But resistance to change can make it difficult for firms to adopt new strategies such as redesigning work processes, adopting new staffing models or setting new pricing strategies. In addition, many firms are locked into a “billable hour mentality” that inhibits creative alternate approaches to the delivery of legal services.
The report is jointly issued on an annual basis by the Center for the Study of the Legal Profession at Georgetown University Law Center and Thomson Reuters Peer Monitor and reviews the performance of U.S. law firms and considers the changed market realities that drive the need for firms to take a longer-range and more strategic view of their market positions going forward.
“Fundamental shifts such as we have seen in the market for law firm services since 2008 require firms to take a hard look at the long-term viability of operating and pricing models that have worked well in the past but may be at risk in the newly developing market environment,” said James W. Jones, a senior fellow at the Center for the Study of the Legal Profession and one of the report's authors. “Firms that are able to redesign their models to better respond to the changing demands and expectations of their clients will have a substantial long-term competitive advantage.”
“A ‘buyer’s market’ for legal services is bringing increasing demands from clients, more nimble and leaner competitors and greater pressures for efficiency,” said Mike Abbott, vice president, Client Management & Global Thought Leadership, Thomson Reuters. “The good news is that some firms are already making strategic changes and performing strongly. The imperative is for firms to identify the best strategy for adapting to the rapidly evolving marketplace, given their unique strengths, talent, geographies and other assets.”
The “2016 Report on the State of the Legal Market” can be downloaded here.
Wednesday, December 23, 2015
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 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)
Tuesday, December 15, 2015
The New York Court of Appeals has reversed an Appellate Division decision on spoliation of evidence.
A party that seeks sanctions for spoliation of evidence must show that the party having control over the evidence possessed an obligation to preserve it at the time of its destruction, that the evidence was destroyed with a "culpable state of mind," and "that the destroyed evidence was relevant to the party's claim or defense such that the trier of fact could find that the evidence would support that claim or defense" (Voom HD Holdings LLC v Echostar Satellite L.L.C., 93 AD3d 33, 45 [1st Dept 2012], quoting Zubulake v UBS Warburg LLC, 220 FRD 212, 220 [SD NY 2003]). Where the evidence is determined to have been intentionally or wilfully destroyed, the relevancy of the destroyed documents is presumed (see Zubulake, 220 FRD at 220). On the other hand, if the evidence is determined to have been negligently destroyed, the party seeking spoliation sanctions must establish that the destroyed documents were relevant to the party's claim or defense (see id.).
On this appeal, we are asked to decide whether the Appellate Division erred in reversing an order of Supreme Court that imposed a spoliation sanction on the defendants. We hold that it did, and remand the matter to the trial court for a determination as to whether the evidence, which the Appellate Division found to be negligently destroyed, was relevant to the claims asserted against defendants and for the imposition of an appropriate sanction, should the trial court deem, in its discretion, that a sanction is warranted.
Justice Stein dissented
I part ways with the majority over its determination that the MP defendants' "culpable state of mind" amounted to, at most, simple negligence. I would hold that defendants acted with gross negligence in failing to preserve the ESI.
I further disagree with the majority's view that relevance is not to be presumed because the evidence was not intentionally or wilfully destroyed. The majority endorses the conclusion of the First Department in VOOM and the case upon which it relies -- Zubulake v UBS Warburg LLC (220 FRD 212, 220 [SD NY 2003] -- that, "[w]here the evidence is determined to have been intentionally or wilfully destroyed, the relevancy of the destroyed documents is majority neglects to mention that VOOM further held that "destruction that is the result of gross negligence" also "is sufficient to presume relevance" (VOOM, 93 AD3d at 45). Inasmuch as, under VOOM, the MP defendants' gross negligence gives rise to a presumption of relevancy, I would remit to the Appellate Division for consideration of whether, in its discretion, a sanction is warranted.
Tuesday, May 5, 2015
The New York Appellate Division for the First Judicial Department recently held that the litigation privilege did not protect statements made by an attorney in connection with "sham" litigation
Plaintiff is an attorney who, after dissolving his own practice, became associated with nonparty Jacoby & Meyers, LLP (Jacoby). Defendant Andrew Finkelstein (Finkelstein) is an attorney and is the managing partner of defendant law firm Finkelstein & Partners, LLP (FLLP), and the sole shareholder of defendant Finkelstein, PC (FPC). FPC is a partner of both Jacoby and of FLLP. In April 2009, Jacoby assigned plaintiff to work on a personal injury action that had been commenced on behalf of nonparty Joel Harrison (Harrison) in Supreme Court, Broome County. In December 2009, plaintiff resigned from Jacoby and re-formed his old practice. Harrison decided to have plaintiff continue his representation in the personal injury action and Jacoby caused the necessary consent to be executed and transferred the file. The retainer agreement between plaintiff and Harrison provided that plaintiff would advance all litigation expenses and would be reimbursed out of Harrison's recovery, if any. After the passage of only a few months, Harrison terminated plaintiff and re-retained Jacoby.
In August 2010, Harrison, represented by FLLP, commenced an action against plaintiff in Supreme Court, Broome County. The allegations in the complaint, most of which were made upon information and belief, revolved around the litigation expenses that had been discussed in the retainer agreement between the two parties. Harrison asserted that, notwithstanding plaintiff's promise that he would advance litigation expenses, plaintiff told him that he would not do so and urged Harrison to borrow $40,000 for the expenses from a litigation funding company. The complaint alleged, inter alia, that plaintiff directed the loan company to pay the proceeds to his law firm and that he failed to place them in an attorney escrow account. Harrison asserted causes of action for conversion, breach of fiduciary duty, legal malpractice, and fraud, and sought an accounting from plaintiff.
This Court has recognized...that the privilege is capable of abuse and will not be conferred where the underlying lawsuit was a sham action brought solely to defame the defendant (see Lacher v Engel, 33 AD3d 10, 13-14 [1st Dept 2006]). Lacher derived this principle from Halperin v Salvan (117 AD2d at 544), in which this Court declined to dismiss a defamation claim based on the pertinency privilege where the context in which the allegedly offending statement was made was a litigation that the plaintiffs filed but never prosecuted. The existence of this "sham litigation" exception has been confirmed (but not applied) in other cases in this Department...
Even assuming that plaintiff's fraud claim is not barred solely because he was not the direct recipient of the alleged misrepresentations, we find that he was not entitled to rely on them. That is because, according to the complaint, the misrepresentations were made sometime after June 16, 2010, which was when Harrison re-retained Jacoby to handle his personal injury action. As admitted in the complaint herein, plaintiff learned on December 29, 2009, that he had already been the subject of separate statements by defendants which he alleged were defamatory (see Flomenhaft v Jacoby & Meyers, LLP, 122 AD3d at 423). Accordingly, knowing defendants were, according to him, bent on destroying his reputation, it was not justifiable for plaintiff to view the statements to Harrison as anything other than a further salvo in that campaign.
Friday, April 17, 2015
The Nebraska Supreme Court overturned the grant of a new trial to the plaintiff in a legal malpractice case and reinstated the verdict in favor of the defendant law firm.
Thomas Balames, filed this legal malpractice action against Robert Ginn and Brashear LLP, formerly known as Brashear and Ginn (collectively Ginn), the firm where Ginn practiced when the alleged malpractice occurred. Balames brings this action for himself and three other individuals for whom he serves as attorney in fact (collectively Balames). Balames claimed that Ginn negligently failed to obtain signatures on a guaranty for a loan that Balames made to a third party and failed to inform Balames of the missing signatures. When the third party defaulted, Balames could not obtain a judgment against the individuals who were the intended guarantors for the full amount of the third party’s obligation. The jury returned a general verdict for Ginn, but the court granted Balames a new trial.
The client sought to complete the transaction while the attorney was on vacation. The client had not previously advised the attorney that the situation was urgent and terminated his services shortly thereafter.
[Client] Balames admitted to being pressured by his bank to complete the transaction, and he insisted upon getting the documents to the bank as soon as humanly possible. [Attorney] Ginn’s evidence supported a reasonable inference that because Balames and his business associates had personally guaranteed the loan, they had an immediate need to show the bank that they had renegotiated the debt with Banopu. The crucial point here is that a client has the ultimate authority to determine the objective of a legal representation. Of course, an attorney should make reasonable efforts to explain the legal consequences of a course of conduct that a client insists upon taking. Yet, evidence regarding Ginn’s advisement raised a question of fact whether Ginn had breached a duty of care. That is, if the jury determined that Balames insisted upon closing without Ginn’s review, whether Ginn’s advisements were sufficient to inform Balames of the potential consequences was a question of fact.
The jury verdict sufficiently dealt with the issues
When the jury returns a general verdict for one party, a court presumes that the jury found for the successful party on all issues raised by that party and presented to the jury, particularly when the opposing party did not ask the court to give the jury a special verdict form or require the jury to make special findings. This is true both for Ginn’s failure-of-proof defense and his statute of limitations defense which barred Balames’ recovery even if he proved his malpractice claim. Because the court erred in concluding that plain error permeated the trial, this presumption controlled...
If the jury believed Ginn’s version of the facts, then Ginn did not breach a duty to ensure that the documents were signed before or after the closing. Instead, Balames’ injury was caused by his failure to follow Ginn’s advice, his failure to review the documents for the required signatures, and his misrepresentation to Ginn that the documents were signed.
Thursday, April 9, 2015
From the Indiana Supreme Court
The law firm Cohen & Malad, LLP ("C & M"), filed a quantum meruit claim for part of the contingent fees earned in cases that were handled first by C & M attorneys (including John P. Daly, Jr., when employed there as an associate) and later by Daly and his law firm after he left C & M. The trial court found that C & M attorneys – including Daly while employed there – worked a substantial number of hours on those cases and that most of those cases generated attorney fees. The court nevertheless denied C & M quantum meruit relief because it found Daly was not unjustly enriched where: (1) the client in each case at issue chose to continue with Daly when he left C & M, (2) C & M and Daly had no agreement about what would happen if they parted ways, (3) their employment agreement had no provision for file ownership and lacked a non-competition covenant, and (4) C & M made a "very shrewd deal" for Daly’s services when it employed him on a salary basis, and C & M was "very well compensated" for Daly’s time at C & M, as shown by the amount of fees Daly helped C & M generate on other cases while he worked there. (App. at 32-33.) C & M appealed. Citing the four enumerated findings above, the Court of Appeals affirmed, over Judge Crone’s dissent. Cohen & Malad, LLP v. Daly, 17 N.E.3d 940 (Ind. Ct. App. 2014). We grant transfer.
Absent agreement otherwise, "a lawyer retained under a contingent fee contract but discharged prior to the contingency is entitled to recover the value of services rendered if there is a subsequent settlement or award[,]" and in that case, "the fee is to be measured by the proportion of the total fee equal to the contribution of the discharged lawyer’s efforts to the ultimate result[.]" Galanis v. Lyons & Truitt, 715 N.E.2d 858, 860 (Ind. 1999). The trial court’s findings of fact and conclusions of law do not acknowledge Galanis or apply its standards. Accordingly, we reverse and remand with instructions to determine, in accordance with Galanis, what proportional contributions toward the results in the cases at issue were made by attorneys working for C & M, and to enter a corresponding judgment in C & M’s favor. We summarily affirm the part of the Court of Appeals opinion addressing whether C & M should have sued its former clients to recover attorney fees from them. see Ind. Appellate Rule 58(A)(2).
Opinion linked here. (Mike Frisch)
Monday, April 6, 2015
An attorney disciplined in Indiana for a contractual provision that limited an associate's post-employment ability to practice was reprimanded as reciprocal discipline by the Kentucky Supreme Court.
The misconduct at issue in this disciplinary action arises from an employment contract Respondent required his new associate attorney to sign as a condition of his hiring. The contract included a "Separation Agreement" (the "Agreement"), which specified that in the event the employment relationship ended, the associate was prohibited from contacting, notifying, or soliciting the clients he obtained while working at Respondent's law firm. Only Respondent had the luxury of notifying the clients of the associate's departure. The Agreement further included a fee arrangement which highly deterred the associate from continuing to represent those clients.
The associate filed the bar complaint in Indiana.
The court rejected private discipline. (Mike Frisch)
The Kentucky Supreme Court has held that the appearance of impropriety is a legally insufficient basis to disqualify a law firm in a shareholder-derivative action.
The Court concludes that review of the disqualification order in this case is available through the special-cases exception for writs. Further, this Court concludes the trial court applied a disqualification standard that is no longer appropriate under the Rules of Professional Conduct, and that the trial court's factual findings are insufficient to allow disqualification under the proper standard of a showing of actual conflict. For those reasons, a writ of prohibition barring enforcement of the trial court's order is appropriate at this time, even though the issue of disqualification may be revisited in the trial court. The Court of Appeals' decision to deny the writ is therefore reversed, and this matter is remanded to that court to issue the writ.
As noted, disqualification may be appropriate later
This is not to say, however, that Plante cannot show a sufficient conflict to have ]law firm] MGM disqualified once this case returns to the trial court. It is possible that by advising the board, of which Plante was a member, about the Bioniche litigation, MGM was representing Plante. Since the allegedly improper resolution of the Bioniche litigation is part of the underlying derivative suit, among other things, it is possible that MGM may have an actual conflict under Rule of Professional Conduct 1.9, which governs duties to former clients. There has also been some suggestion that MGM now represents the entire board, including Plante, in the derivative action, although only the Appellants appear to have been named as defendants. If MGM is representing the entire board, that could give rise to a conflict with an existing client under Rule 1.7.
Thursday, April 2, 2015
The Nevada Supreme Court has held a law firm not liable for estate planning work that transferred a client's assets to a trust.
The suit was brought by a creditor of the client
In this case, we consider whether, under Nevada's fraudulent transfer law, a nontransferee law firm may be held liable for its client's fraudulent transfers under the accessory liability theories of conspiracy, aiding and abetting, or concert of action. We hold that Nevada, like most other jurisdictions, does not recognize accessory liability for fraudulent transfers. We therefore affirm the district court's judgment in favor of the law firm. We further hold, however, that the district court abused its discretion by awarding costs to the law firm without sufficient evidence showing that each cost was reasonable, necessary, and actually incurred. Thus, we reverse, in part, the district court's post-judgment order awarding costs.
In 2004, Robert Krause retained respondent law firm Woods & Erickson, LLP, for estate planning services. The following year, Woods & Erickson created for Krause various legal entities, including an asset protection trust, into which Krause eventually transferred his assets. Meanwhile, appellant The Cadle Company (Cadle) was attempting to collect on a California judgment against Krause. After learning of the transferred assets, Cadle sued Krause and Woods & Erickson in the underlying action, alleging that Krause had fraudulently transferred assets in order to escape execution of the judgment and that Woods & Erickson had unlawfully facilitated the fraudulent transfers.
Plaintiff loses; law firm wins.
The case is Cadle Co. v. Woods & Erickson LLP, decided March 26, 2015. (Mike Frisch)
Wednesday, March 4, 2015
Allegations of conflict of interest were properly alleged in litigation against the Blank Rome law firm, according to this decision of the New York Appellate Division for the First Judicial Department.
the complaint alleges that defendants concealed a conflict of interest that stemmed from defendant law firm's attorney-client relationship with Morgan Stanley while simultaneously representing plaintiff in divorce proceedings against her ex-husband, a senior Morgan Stanley executive, who participated in Morgan Stanley's decisions to hire outside counsel..
plaintiff identifies the nature of the conflict as stemming from defendants' interest in maintaining and encouraging its lucrative relationship with Morgan Stanley and the impact of that interest on defendants' judgement in its representation of plaintiff in the divorce proceedings..
Further, the complaint alleges numerous acts of deceit by defendants, committed in the course of their representation of plaintiff in her matrimonial action. Additionally, the complaint sufficiently alleges that the individual defendants knew of but did not disclose defendant law firm's representation of Morgan Stanley to plaintiff, and it details the calculations of her damages.
The allegations were not subject to strike as scandalous or prejudicial. (Mike Frisch)
Tuesday, February 24, 2015
A recent opinion from the District of Columbia Bar Legal Ethics Committee.
Headnote summary of Opinion No. 368:
A law firm may not provide for or impose liquidated damages on a lawyer who, after departure, competes with the firm. A firm and a departing lawyer may have liability to one another, though, for work done before the lawyer's departure. Also, a firm may not restrict a departed lawyer's subsequent professional association or affiliation with partners or employees of the firm, except insofar as such activity is subject to legal limitations outside the Rules of Professional Conduct. Whether a choice of law provision in a partnership or employment agreement can avoid application of the D.C. Rule governing lawyer departures usually will depend on the location where the departing lawyer principally practiced.
The opinion also deals with choice of law issues. (Mike Frisch)
Thursday, February 12, 2015
The District of Columbia Court of Appeals has affirmed the dismissal of claims brought by a former Wiley Rein employee against the firm.
Alvin Hoff, formerly an at-will employee at the Wiley Rein law firm, seeks reversal of the trial court‟s dismissal of his two-count lawsuit against the firm. He claims: (1) "wrongful termination" of his employment because he refused the firm‟s demand to violate a criminal law, and (2) "retaliatory discharge" because that refusal, contrary to the direction of his supervisor, was protected by the District of Columbia Human Rights Act (DCHRA). More specifically, appellant Hoff, a former records coordinator for appellee Wiley Rein, claims that he was fired unlawfully because he had not been willing to enhance, and thus falsify, the performance evaluation of another employee at the request of Hoff‟s supervisor, who allegedly had tender feelings for that employee. Hoff contends that the trial court erred in granting Wiley Rein‟s motion to dismiss on the ground that he had failed to plead facts sufficient to support either count in his complaint. Perceiving no error, we affirm.
Senior Judge Ferren for a unanimous division of the court
whatever reason Wiley Rein may have had for firing Hoff, his complaint offers no explanation beyond the fanciful proposition that [supervisor] McCleskey fired Hoff because Hoff had filed an "unsatisfactory" evaluation of Ward—an evaluation that, as Hoff‟s own complaint acknowledges, McCleskey himself had requested.
Thursday, December 4, 2014
We don't report on many (indeed any) worker's compensation cases but this one from the West Virginia Supreme Court of Appeals caught our eye.
The employee worked as a legal secretary for a law firm. She was diagnosed with carpel tunnel syndrome and cubital tunnel syndrome.
The court affirmed the findings below that the condition was not the result of her clerical work
This Court agrees with the reasoning of the Office of Judges and the conclusions of the Board of Review. Under West Virginia Code of State Rules § 85-20-41.5, clerical work is not a high risk job for producing or developing carpal tunnel syndrome, and Ms. Whitten does not have any of the contributing factors listed under § 85-20-41.5. Ms. Whitten also has a non-occupational risk factor of obesity. Dr. Mukkamala and Dr. Thaxton found Ms. Whitten’s condition was not related to her work duties. Dr. Bolano opined Ms. Whitten’s condition was occupationally related, but not until January of 2013 after he had already been treating Ms. Whitten for these diagnoses and symptoms since February 27, 2012. In addition, her symptoms began in November of 2010, but she did not mention that her symptoms were caused by her work or related to her job duties until January of 2013.
The work responsibilities did not include "[a]wkward wrist position, vibratory tools, significant grip force, and high force of repetitive manual movements" that can lead to the diagnosed conditions. (Mike Frisch)
Sunday, November 30, 2014
A decision issued last week by the California Court of Appeals, Second District, Division Three holds
The question before us is whether the attorney-client privilege applies to intrafirm communications between attorneys concerning disputes with a current client, when that client later sues the firm for malpractice. We conclude that when an attorney representing a current client seeks legal advice from an in-house attorney concerning a dispute with the client, the attorney-client privilege may apply to their confidential communications. Adoption of the so-called "fiduciary" and "current client" exceptions to the attorney-client privilege is contrary to California law because California courts are not at liberty to create implied exceptions to the attorney-client privilege. In the unpublished portion of the opinion, we hold that the exceptions to the attorney-client privilege embodied in Evidence Code sections 958 and 962 do not apply to the circumstances presented here. Accordingly, we grant in part the petition of Edwards Wildman Palmer LLP and Dominique Shelton for a writ of mandate, and remand to the trial court for further proceedings.
The client had retained the law firm to pursue an invasion of privacy claim against the Daily Mail. As the court noted
The relationship between [client] Mireskandari and the Firm was short lived and, for the most part, contentious.
The court rejected the suggestion that internal counsel and the client were "joint clients" of the firm
Shelton and Mireskandari were not joint clients for purposes of section 962. Shelton and Mireskandari did not retain the Firm "upon a matter of common interest." Mireskandari retained the Firm and Shelton to represent him in the Daily Mail case; Shelton consulted with in-house counsel not as a party to that action, but to obtain advice on how best to address Mireskandari's complaints about billing and his threats to hold the firm responsible for any damages he suffered. Mireskandari and Shelton were not co-parties; they did not employ the same attorney to oppose claims of an adversary or pursue a claim as joint plaintiffs; they were not represented by the same attorney in a business transaction.
The court vacated an order that had permitted discovery into the firm's internal communications.
Thank you to my former student Daniel Woofter for sending me the case. His article from the Georgetown Journal of Legal Ethics is cited in the opinion. (Mike Frisch)
Friday, November 14, 2014
The New Jersey Appellate Division has reversed a lower court order and dismissed a legal malpractice claim.
Under the facts of this case, [attorney] Ward argues that he is shielded from liability as a partner in a limited liability partnership ("LLP") and is therefore not vicariously liable for the alleged legal malpractice of his former partner, defendant John Olivo. Ward also contends that he is otherwise entitled to a dismissal of the complaint because plaintiff Mortgage Grader, Inc. ("MG") failed to serve an affidavit of merit ("AOM") on Ward or substantially comply with the AMS.
The primary issue is whether Ward loses his liability protection as a partner in an LLP if the LLP failed to purchase a tail insurance policy. We disagree with the motion judge that such a sanction is authorized and hold that when attorneys practice law as an LLP, and the LLP fails to obtain and maintain professional liability insurance as required by Rule 1:21-1C(a)(3), the LLP does not revert to a general partnership ("GP") under the Uniform Partnership Act ("UPA"),
if attorneys practice as an LLP, and the LLP fails to maintain malpractice insurance as required by the court rules, then the Supreme Court may terminate or suspend the LLP's right to practice law or otherwise discipline it. As currently written, however, the court rules do not authorize a trial court to sanction a partner of an LLP for practicing law as an LLP without the required professional liability insurance by converting an otherwise properly organized LLP into a GP.
Wednesday, October 22, 2014
My favorite issue of the Georgetown Journal of Legal Ethics -our yearly compilation of student notes on current developments in ethics law - has just hit the street.
This issue holds up well with the past editions and gives the reader excellent exposure to the hottest legal ethics issues that face 21st century members of the legal profession.
As co-faculty advisor (along with my colleague Professor Mitt Regan) to the journal, I am biased in its favor.
With that disclaimer, I highly recommend that all practitioners with an interest in ethics take a look.
Kudos to the journal staff for their hard work and dedication to this notable contribution to the profession. (Mike Frisch)