Wednesday, July 1, 2020

Missouri Holds Public Defenders Have Official Immunity

Public Defenders are entitled to official immunity and a judgment for legal malpractice was reversed by the Missouri Supreme Court.

The opinion is linked here. 

The case involved state charges which the defendant (plaintiff here) believed were not subject to jurisdiction, as the alleged burglary was of a post office.

The state brought the charges after federal authorities declined to proceed. 

The sued attorneys did not press the jurisdictional issue and were found liable for malpractice.


As public defenders, Perry and Flottman are entitled to official immunity because they are public employee whose official statutory duties concern the performance of discretionary acts. The legislature created a public defender system to provide legal services to indigent defendants entitled under the federal and state constitutions to the assistance of counsel in criminal prosecutions. State statutes entitle public defenders to all benefits of the state employees’ retirement system, and this Court’s rules of professional conduct characterize public defenders as public employees and governmental attorneys. One need not be a public official engaged in the essence of governing to be entitled to official immunity; such immunity extends to protect public employees from liability for alleged acts of negligence committed during the course of performing discretionary acts requiring exercise of a degree of reason and judgment. There is no dispute Perry and Flottman were acting pursuant to their constitutionally and statutorily mandated duties in representing Laughlin, and he made no allegation they acted with malice toward him during their representation. They also had no clear and unequivocal ministerial duty to assert the jurisdictional challenge; choosing which defenses to raise and which arguments to pursue on appeal on behalf of indigent clients constitutes a discretionary act entitled to official immunity.

(Mike Frisch)

July 1, 2020 in Clients | Permalink | Comments (0)

Friday, May 22, 2020

Loyalty And Fee Forfeiture

The Alaska Supreme Court upheld a contingent fee forfeiture as a result of ethics issues in the representation. 

If the link does not work, the case is Kenneth P. Jacobus, P.C. and Kenneth P. Jacobus v. Uwe Kalenka, Personal Representative of the Estate of Eric Wayne Kalenka, decided today. 

The court sets out the story

After a conflict of interest between an attorney and a long-time client arose during settlement negotiations, the attorney filed a confidential motion with the superior court criticizing his client. The client discharged the attorney and hired new counsel. But the attorney continued to control the settlement funds and disbursed himself his fee, even though the amount was disputed by the client. The court found that the attorney’s actions had violated the rules of professional conduct and ordered forfeiture of most of his attorney’s fees. We affirm the holding of the superior court.

Kenneth Jacobus represented the estate of Eric Kalenka for over a decade after Eric Kalenka was murdered in 2004.  Eric’s divorced parents, Uwe Kalenka and Dorcas Teall, were the estate’s beneficiaries; Uwe Kalenka was the personal representative. Uwe Kalenka retained Jacobus to represent him in the administration of his deceased son’s estate and to bring claims against insurance companies and third parties. Kalenka agreed to pay Jacobus’s fees by a combination of an hourly rate for work relating to the administration of the estate and a share of any recovery from the claims against insurance companies and third parties.

Three cases arose fromEric’s murder: a criminal case in which Jack Morell was convicted of second-degree murder;  a civil suit against an automobile insurer;  and a civil suit for wrongful death against the bar that had served alcohol to Morell (the Jadon litigation). Jacobus prevailed in reversing summary judgment for the bar in the Jadon litigation and entered into settlement negotiations.

In 2015 Jacobus filed an ex parte “Confidential Status Report” with the superior court. In it he stated that although the Jadon litigation appeared to be near settlement, he was concerned that Kalenka was unable “to reasonably evaluate any settlement offer.” Jacobus believed that Kalenka’s emotional state and desire for revenge would lead him to “refus[e] to accept a reasonable settlement offer,” and result in a trial with a “substantial chance of a defense verdict.” Jacobus believed that refusing to settle would be contrary to the best interests of the estate and the estate’s other beneficiary, Teall. Jacobus was also concerned he would not collect his fee given the low likelihood of success at trial. He therefore concluded that he could no longer assist Kalenka.

The trial judge ordered disclosure of the report to the client and held a hearing

The hearing was held in September 2015. Jacobus and Kalenka were present; Kalenka had retained a new attorney, Alfred Clayton. The court ordered the substitution of counsel, replacing Jacobus with Clayton. The next day Jacobus filed an attorney’s lien on funds related to his representation of Kalenka.

Kalenka, represented by Clayton, then settled the Jadon litigation. Following the settlement Clayton wrote Jacobus. This October 2015 letter advised Jacobus that “[t]he settlement check should soon be delivered to [Jacobus’s] office” and authorized him “to deposit [it] into [Jacobus’s] trust account.” The letter also stated that Jacobus was “not authorized to disburse any of the settlement funds from trust until disputes relating to [his] claim for fees and costs are resolved.”

Clayton’s letter then addressed Jacobus’s “claim for a . . . contingent fee from the settlement.” The letter listed events that had occurred since “the confidential probate filing” and stated that as a result “it is . . . Kalenka’s position you are entitled only to a fee in the amount of $83,333.33” rather than the $112,500 Jacobus claimed he was owed.

Clayton sought an accounting but

Jacobus responded a few days later in a lengthy letter with a number of attachments. The letter informed Clayton that Jacobus had already acted regarding the settlement proceeds and had created a new trust account, the “Kalenka Settlement Proceeds Trust,” with himself as trustee. Attached to the letter were an ethics opinion from the Alaska Bar Association and the Declaration of Trust for the newly established trust. The Declaration stated that the trust was created because “it appears necessary to protect the interests of all people who are involved with . . . Kalenka.” The trust’s purposes included protecting Teall’s share of the inheritance and Jacobus’s and Clayton’s fees and costs from interference by Kalenka.

On November 23 Clayton responded to Jacobus’s “astonishing letter.” He again requested the formal accounting of Jacobus’s costs and fees he had sought in his first letter. He then objected to Jacobus’s “extraordinary” actions in creating a new trust, unilaterally determining its purposes, and declaring himself its sole trustee, serving without bond. He accused Jacobus of “usurp[ing] the role of [the judge] who actually presides over the Probate proceeding.” Clayton described as “[e]ven more astonishing” Jacobus’s declaration that the “first thing” he intended to do was “communicate with . . . Teall” after the court had expressly denied his request for permission to do so.


A month after receiving Clayton’s letter, Jacobus filed a “Notice of Intent to Violate Court Order,” asserting that Alaska Rule of Professional Conduct 1.15(d) required him to violate the August order that forbade him from disclosing any confidential information to Teall without Kalenka’s permission. Jacobus claimed that he was ethically required both to promptly notify Teall that he had received funds and to distribute the amount to which Teall was entitled as a beneficiary of the estate.

The superior court ruled against the attorney

Jacobus appeals the superior court’s orders prohibiting him from revealing confidential information to Teall; its findings that he violated his duties to his client; and the order forfeiting the majority of his fees.

Here as to the superior court order

But Jacobus misinterprets both Rule 1.15(d) and the court’s order regarding communication with Teall. Rule 1.15(d) directs an attorney to promptly notify a client or third party upon receipt of funds or property in which the client or third party has an interest. The order prohibiting Jacobus from speaking with Teall only proscribed the “disclos[ure of] any confidential information.” Jacobus could thus have complied with both the order and Rule 1.15(d)’s directive simply by notifying Teall of the existence of settlement funds.

And contrary to Jacobus’s arguments, the December 2015 order made clear he was permitted to communicate with Teall or others. This order reiterated that Jacobus was ordered in August to refrain only from disclosing confidential information unless authorized by Kalenka; it did not prohibit Jacobus from revealing non-confidential information. Noting that the Jadon file was not confidential, the court stated that nothing in its August order prevented Jacobus from sharing information with Teall that a settlement had been reached.

And as to loyalty

The superior court found that Jacobus “continually violated” the duty of loyalty to his client, Kalenka. Jacobus filed pleadings that were directly adverse to Kalenka, ignored Kalenka’s instructions, and urged the court to take actions that were contrary to the instructions he had received from Kalenka.

And disbursement

The superior court did not err by concluding that Jacobus violated his duty to Kalenka when he disbursed funds to himself. Clayton’s October 2015 letter explicitly directed Jacobus to refrain from disbursing funds because of the ongoing dispute over the amount to which he was entitled. Jacobus therefore violated his duty of loyalty by paying himself $83,333.33. By filing pleadings and requesting authorization to take actions that were contrary to Kalenka’s interests and instructions to him, Jacobus also violated his duty of loyalty to his client. Further, by creating a trust for the specific purpose of protecting himself and third parties from his client after his client discharged him, and by paying himself from the trust funds despite an ongoing dispute over fees, Jacobus committed additional violations of his duty of loyalty to Kalenka. The superior court did not err by concluding that Jacobus had committed “egregious” violations of his ethical duties.

The court upheld forfeiture of the contingent fee. (MIke Frisch)

May 22, 2020 in Billable Hours, Clients | Permalink | Comments (0)

Wednesday, April 29, 2020

High Probabilities And Client Fraud

Ethical obligations when an attorney is faced with possible fraud by a current or prospective client are discussed in an opinion released today by the American Bar Association

Model Rule 1.2(d) prohibits a lawyer from advising or assisting a client in conduct the lawyer “knows” is criminal or fraudulent. That knowledge may be inferred from the circumstances, including a lawyer’s willful blindness to or conscious avoidance of facts. Accordingly, where facts known to the lawyer establish a high probability that a client seeks to use the lawyer’s services for criminal or fraudulent activity, the lawyer has a duty to inquire further to avoid advising or assisting such activity. Even if information learned in the course of a preliminary interview or during a representation is insufficient to establish “knowledge” under Rule 1.2(d), other rules may require the lawyer to inquire further in order to help the client avoid crime or fraud, to avoid professional misconduct, and to advance the client’s legitimate interests. These include the duties of competence, diligence, communication, and honesty under Rules 1.1, 1.3, 1.4, 1.13, 1.16, and 8.4. If the client or prospective client refuses to provide information necessary to assess the legality of the proposed transaction, the lawyer must ordinarily decline the representation or withdraw under Rule 1.16. A lawyer’s reasonable evaluation after inquiry and based on information reasonably available at the time does not violate the rules. This opinion does not address the application of these rules in the representation of a client or prospective client who requests legal services in connection with litigation.

From the conclusion

A lawyer’s reasonable evaluation after that inquiry based on information reasonably available at the time does not violate the rules.

(Mike Frisch)

April 29, 2020 in Clients | Permalink | Comments (0)

Saturday, April 25, 2020

Too Late To Sue

The Wyoming Supreme Court affirmed the dismissal of legal malpractice and related claims against an attorney

Mr. Foltz failed to plead his fraud claim with the particularity required by Rule 9(b), and his breach of contract claim, if any, arises out of his professional relationship with Mr. Oblasser. Mr. Foltz knew or should have known of his alleged cause of action against Mr. Oblasser no later than January 19, 2017. He filed his complaint on May 9, 2019. The two year professional malpractice statute of limitations therefore bars his complaint.

The representation involved serious criminal charges

In May 2015, Mr. Foltz retained Mr. Oblasser to defend him against a first degree murder charge. Mr. Foltz paid a $30,000 retainer, and Mr. Oblasser entered his appearance. When the State decided to seek the death penalty, Mr. Oblasser moved to withdraw from representation because he was not death penalty certified and thus could not independently represent Mr. Foltz. See Eaton v. State, 2008 WY 97, ¶ 37, 192 P.3d 36, 62 (Wyo. 2008) (adopting the American Bar Association Guidelines for the Appointment and Performance of Defense Counsel in Death Penalty Cases (February 2003)). The court allowed Mr. Oblasser to withdraw and appointed two death penalty certified State Public Defenders to represent Mr. Foltz. The State Public Defender’s Office permitted Mr. Oblasser to assist in Mr. Foltz’s defense under a “pro bono agreement[,]” and Mr. Oblasser re-entered an appearance “acting as [an] Assistant Public Defender[.]” Mr. Oblasser continued in that capacity even after the State withdrew its death penalty election.

A jury convicted Mr. Foltz of first degree murder following a two-week trial in the fall of 2016. The district court sentenced him to life imprisonment without the possibility of parole on January 19, 2017. We affirmed his conviction and sentence in Foltz v. State, 2017 WY 155, 407 P.3d 398 (Wyo. 2017).

In October 2018, Mr. Foltz contacted Mr. Oblasser, requesting that he return the $30,000 retainer. Mr. Oblasser refused to refund the retainer, explaining he represented Mr. Foltz through trial.Mr. Foltz sued Mr. Oblasser and his firm on May 9, 2019. His pro se complaint alleged Mr. Oblasser knew the State could choose to pursue the death penalty and if the State did pursue the death penalty he would no longer be able to represent Mr. Foltz. The complaint further alleged Mr. Oblasser could not provide competent representation under Rule 1.1 of the Wyoming Rules of Professional Conduct; violated Rule 1.5(a) by charging a $30,000 retainer knowing he could not represent Mr. Foltz if the State elected to seek the death penalty; and, violated Rule 1.16(d) by withdrawing from representation without refunding the retainer.


Mr. Foltz filed his complaint and presents this appeal pro se. He concedes he did not file his complaint within the two-year statute of limitations applicable to a professional malpractice suit. Instead, he argues the complaint should be read to assert breach of contract and fraud claims subject to 10- and four-year statutes of limitations, respectively.
We agree with the district court that Mr. Foltz did not plead a fraud claim with the particularity required by Rule 9(b), W.R.C.P. 9(b), and conclude the two-year professional malpractice statute of limitations bars his complaint even if breach of contract was adequately pled.

Gillette News Record reported on the criminal case. (Mike Frisch)

April 25, 2020 in Clients | Permalink | Comments (0)

Wednesday, April 15, 2020

Public Defenders Immune From Legal Malpractice Claims In New Jersey

The New Jersey Supreme Court has held that a public defender is protected from liability by state law.

This case arises out of the representation of plaintiff Antonio Chaparro Nieves by a state public defender, Peter Adolf, Esq., for criminal charges related to sexual assault. After his conviction, Nieves was granted postconviction relief based on the ineffective assistance of counsel at trial. DNA evidence later confirmed that Nieves was not the perpetrator, and the underlying indictment against him was dismissed. Nieves subsequently recovered $608,333.33 in damages from the State under N.J.S.A. 52:4C-2, a section of the Mistaken Imprisonment Act, N.J.S.A. 52:4C-1 to -7, for the time he spent wrongfully imprisoned. He then filed the present legal malpractice action seeking damages against the Office of the Public Defender and Adolf.

Excerpted from the court's headnotes

The Court considers whether the Tort Claims Act (TCA), which governs tort actions filed against public entities and employees, applies to a criminal defendant’s legal malpractice claim filed against his public defender. The Court also considers whether, if the TCA applies, a claim for loss of liberty damages is subject to its “verbal threshold” for pain and suffering awards, as set forth in N.J.S.A. 59:9-2(d).

This case arises out of the representation of plaintiff Antonio Chaparro Nieves by a state public defender, Peter Adolf, Esq. After his conviction, Nieves was granted postconviction relief based on the ineffective assistance of counsel at trial. DNA evidence later confirmed that Nieves was not the perpetrator, and the underlying indictment against him was dismissed. Nieves subsequently recovered damages from the State for the time he spent wrongfully imprisoned. He then filed the present legal malpractice action seeking damages against the Office of the Public Defender (OPD) and Adolf.

Defendants moved for summary judgment, arguing that the TCA barred the damages sought because Nieves failed to vault N.J.S.A. 59:9-2(d)’s verbal threshold. The motion court concluded that the TCA and its verbal threshold were inapplicable. The Appellate Division reversed, concluding that “public defenders are public employees that come within the TCA’s immunities and defenses” and that Nieves’s claim fell squarely within the TCA. The Appellate Division also held that plaintiff’s claim for loss of liberty damages fell within the TCA’s limitation on recovery for pain and suffering in N.J.S.A. 59:9-2(d), which Nieves failed to satisfy.

The Court granted certification “limited to the issues of whether legal malpractice claims are exempt from the [TCA] and whether plaintiff’s ‘loss of liberty’ damages claim is subject to the verbal threshold of the TCA.” 237 N.J. 428 (2019).

HELD: The TCA applied to Nieves’s legal malpractice action, and his claim for loss of liberty damages failed to vault the verbal threshold for a pain and suffering damages claim under the strictures of N.J.S.A. 59:9-2(d). Defendants were entitled to summary judgment...

Although the professional representational duty owed by a public defender is to his or her individual client, N.J.S.A. 2A:158A-11, public defenders are performing a public function -- that of ensuring representation for indigent defendants in criminal matters brought by the State, see N.J.S.A. 2A:158A-3, -5. The fact that such attorneys are adversaries of other state actors prosecuting the criminal charges does not mean they lose their state public employee status under the TCA. The Act contains no express exemption for public defenders, or for public entities and public employees who fall within the definitions of those terms but are excluded because of the nature of their work. The OPD is a public entity under the TCA and Adolf is an employee of that public entity. Therefore, the TCA with its immunities, defenses, and limitation on tort claims filed against public entities and their public employees applies to defendants...

JUSTICE ALBIN, dissenting in part, agrees that the TCA applies here and would also hold that non-pecuniary damages -- such as pain and suffering, loss of liberty, and loss of enjoyment of life -- should not be awarded in legal malpractice cases at least in the absence of egregious or extraordinary circumstances. Justice Albin disagrees, however, that the TCA’s limitation on awards for “pain and suffering” in N.J.S.A. 59:9-2(d) also limits awards for loss of liberty, which is a distinct species of damages not mentioned in the statute. In Justice Albin’s view, neither the text of N.J.S.A. 59:9-2(d) nor the Court’s jurisprudence equates pain and suffering damages with loss of liberty damages, and the majority’s interpretation of N.J.S.A. 59:9-2(d) will have unintended negative consequences in cases unrelated to legal malpractice.

CHIEF JUSTICE RABNER and JUSTICES PATTERSON, FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE LaVECCHIA’s opinion. JUSTICE ALBIN filed a separate opinion, dissenting in part.

The Bar's view

The New Jersey State Bar Association fully supports defendants’ position that the TCA applies to claims of legal malpractice filed against public defenders in connection with representation of indigent individuals in criminal proceedings.

From the dissent

There is no basis in the TCA or our jurisprudence for the majority’s conclusion that “loss of liberty damages fall within the subset of emotional distress” in legal malpractice actions, see ante at ___ (slip op. at 19), or, for that matter, in any other legal action. Had the Legislature intended to sweep into the verbal threshold more than just pain and suffering damages, the statute would have limited the recovery of not just pain and suffering but also loss of liberty damages, or would have limited recovery of all non pecuniary damages. See N.J.S.A. 59:9-2(d). We must presume that the Legislature is conversant with our jurisprudence, that it chose the statute’s language with precision, and that it intended what it said. DiProspero, 183 N.J. at 492-94. Limiting the verbal threshold to pain and suffering was a policy choice made by the Legislature. This Court should not extend the metes and bounds of the verbal threshold beyond the Legislature’s clearly expressed intention...

Words and phrases make a difference. They do not have endless elasticity. Defining loss of liberty damages as the same as pain and suffering and emotional distress damages is a breaking point. I therefore respectfully dissent.

Video of oral argument is linked here. 

The court affirmed the decision of the Appellate Division. (Mike Frisch)

April 15, 2020 in Clients | Permalink | Comments (0)

Friday, April 10, 2020

Past Fraud And Undertaking Representation

An advisory opinion of the Ohio Professional Conduct Board is summarized in this staff report 

The Ohio Board of Professional Conduct has issued an advisory opinion outlining a lawyer’s responsibilities when a prospective client admits that he or she has previously engaged in fraudulent conduct.

The opinion replaces Adv. Op. 1990-7, issued under the former Ohio Code of Professional Responsibility.

In Advisory Opinion 2020-03, the board instructs that the lawyer must initially explain to the prospective client that the lawyer cannot assist the client in illegal or fraudulent conduct and that the lawyer’s disclosure of the prior conduct may become ethically required.

If the lawyer agrees to the representation, the board concludes that the lawyer must encourage the client to correct the fraudulent conduct. If the client fails to act, the lawyer may be required to independently disclose the activity and withdraw from the representation.

The opinion also addresses the lawyer’s obligation if he or she declines to undertake the representation.

(Mike Frisch)

April 10, 2020 in Clients | Permalink | Comments (0)

Wednesday, April 8, 2020

Attorney's Lien Survives Deposit Into Personal Account

The Maryland Court of Special Appeals has upheld the enforcement of an attorney's lien

Bibi Khan retained Tracey J. Coates, Esq. and the law firm of Paley, Rothman, Goldstein, Rosenberg, Eig & Cooper, Chartered (the “Law Firm”) to represent her in an action for modification of child custody and child support against her ex-husband Douglas Moore. As a result of the legal services rendered by the Law Firm, the Circuit Court for Montgomery County granted the Law Firm’s Motion to Adjudicate Rights in Connection with Attorney’s Lien. In granting the motion, the court ruled that the $50,000 attorney fee award, granted to Khan against Moore and deposited in Khan’s personal bank account, was subject to the Law Firm’s attorney’s lien and should be paid towards the lien. It is from this ruling that Khan appeals.


The [circuit] court’s ruling effectively validated the Law Firm’s attorney’s lien in the amount of $50,000 against the $50,000 fee award that Khan deposited in her personal Citibank account, and ordered Citibank to pay the $50,000 in her account to the Law Firm.

The court here rejected this contention

Khan argues that an attorney’s lien may only be enforced against the corpus of an existing award, not an account held by a third party. She contends that once the award for attorney’s fees was received from Moore and deposited into her bank account, the corpus no longer existed, and the Law Firm lost any right to assert a lien against the award...

Khan’s contentions are not supported by the plain meaning of § 10–501 or Maryland Rule 2-652(b), and the cases relied on are incompatible with the facts of the present case. For this reason, we hold that the circuit court’s interpretation and application of Maryland statutory and case law was legally correct.

(Mike Frisch)

April 8, 2020 in Billable Hours, Clients | Permalink | Comments (0)

Tuesday, March 31, 2020

New York Rejects Former Client's Claim That Attorneys Pursued Meritless Case To Generate Fees

The New York Court of Appeals affirmed the dismissal of claims by a former client for the alleged pursuit of a meritless claim to earn fees

The singular issue before us in this appeal is whether the Appellate Division erred in dismissing plaintiffs’ claim under Judiciary Law § 487 (1) against their former attorneys who allegedly induced them to bring a meritless lawsuit in order to generate a legal fee. Defendants met their initial burden on summary judgment with respect to whether their alleged deceit occurred during the pendency of litigation, and plaintiffs failed to raise a triable issue of fact on that issue in response. We therefore affirm the Appellate Division order granting summary judgment dismissing the complaint.

Defendants, attorney Mitchell Stein and his law firm, Stein Law P.C., represented plaintiffs Bill Birds, Inc., which manufactures decorative metal automobile parts, and its president in a trademark dispute against General Motors, Service Parts Operation (GM) and Equity Management, Inc. (EMI). After the complaint in that action was dismissed, plaintiffs commenced this action against defendants alleging, as relevant here, a violation of Judiciary Law § 487(1).

Plaintiffs alleged that defendants advised them that GM had possibly abandoned the trademarks GM had licensed to plaintiffs for over a decade, advising plaintiffs that they had meritorious claims against GM. Based on this advice, plaintiffs commenced the underlying federal trademark action against GM and EMI in the United States District Court for the Eastern District of New York, incurring $25,000 in attorney fees. Plaintiffs alleged that the underlying action—which was dismissed as commenced in an improper venue based on a forum selection clause in plaintiffs’ licensing agreements with GM—clearly lacked merit, in part because a provision in the licensing agreement prohibited plaintiffs from challenging GM’s ownership of the relevant intellectual property. Plaintiffs further alleged that defendants concealed the dismissal of the underlying action for approximately nine months and subsequently lied about the reason for the delay, claiming that the federal court did not release its decision promptly.

The underlying case

Plaintiffs alleged that defendants advised them that GM had possibly abandoned the trademarks GM had licensed to plaintiffs for over a decade, advising plaintiffs that they had meritorious claims against GM. Based on this advice, plaintiffs commenced the underlying federal trademark action against GM and EMI in the United States District Court for the Eastern District of New York, incurring $25,000 in attorney fees. Plaintiffs alleged that the underlying action—which was dismissed as commenced in an improper venue based on a forum selection clause in plaintiffs’ licensing agreements with GM—clearly lacked merit, in part because a provision in the licensing agreement prohibited plaintiffs from challenging GM’s ownership of the relevant intellectual property. Plaintiffs further alleged that defendants concealed the dismissal of the underlying action for approximately nine months and subsequently lied about the reason for the delay, claiming that the federal court did not release its decision promptly.

The court

To the extent defendants were alleged to have made deceitful statements, plaintiffs’ allegation that defendants induced them to file a meritless lawsuit based on misleading legal advice preceding commencement of the lawsuit is not meaningfully distinguishable from the conduct we deemed insufficient to state a viable attorney deceit claim in Looff (97 NY at 482). The statute does not encompass the filing of a pleading or brief containing nonmeritorious legal arguments, as such statements cannot support a claim
under the statute.  Similarly, even assuming it constituted deceit or collusion, defendants’ alleged months-long delay in informing plaintiffs that their federal lawsuit had been dismissed occurred after the litigation had ended and therefore falls outside the scope of Judiciary Law § 487 (1). Thus, plaintiffs’ Judiciary Law § 487 cause of action was properly dismissed.

Justice Rivera dissented and would hold that summary judgment was inappropriate here

Plaintiffs allege that their attorney induced them to pursue a frivolous lawsuit for the sole purpose of charging them thousands of dollars in legal fees and with counsel’s full knowledge ab initio that the claims were meritless. As our precedents establish, an attorney may be liable for common-law fraud against a client, but when the conduct includes deceit on the court or a party in a pending lawsuit, the attorney is separately guilty of a misdemeanor and liable for enhanced civil damages under Judiciary Law § 487 (see Melcher v Greenberg Traurig, LLP, 23 NY3d 10, 15 [2014]; see also Judiciary Law § 487). According to plaintiffs, their attorney intentionally, and without regard to the ultimate outcome for plaintiffs, perpetuated a charade on the court and them by filing and pursuing what the attorney knew all along was a meritless action—one doomed to fail—which caused plaintiffs to pay the attorney’s unwarranted legal fees. I dissent because plaintiffs’ cause of action for attorney deceit was improperly dismissed on summary judgment as they asserted a viable legal theory and there exist triable issues of fact as to whether the alleged deceit caused plaintiffs’ any damages.

And recites the historic antecedents to the present section 487

These three decisions stand for several propositions that inform the analysis here. First, an action for attorney deceit existed under New York’s common law and predates the first state statute from 1787, which itself originated in English law and led to the enactment of Judiciary Law § 487 (Melcher, 23 NY3d at 15; Amalfitano, 12 NY3d at 12). Second, section 487, like its predecessors, codifies attorney deceit as a crime and provides for civil treble damages (Amalfitano, 12 NY3d at 13-14). Third, section 487 does not derive from or supplant common-law fraud, which applies to a broad spectrum of deceitful conduct, including pre-litigation deceit by an attorney, such as inducing a client to retain the attorney in matters the attorney knows are wholly without merit for the sole purpose of securing payment from the client (see Melcher, 23 NY3d at 14-15). Fourth, unlike common-law fraud, section 487 is limited to attorney deceit on the court or a party in the course of litigation (Amalfitano, 12 NY3d at 15; Looff, 97 NY at 482).

Applying these propositions here leads to the logical conclusion that Judiciary Law § 487 encompasses attorney deceit in the form of filing and pursing a knowing frivolous lawsuit...

This interpretation of section 487 and our precedents would not subject attorneys to liability for “poor lawyering, negligent legal research or the giving of questionable legal advice” (majority op at 6 n 2). An attorney is not subject to liability under Judiciary Law § 487 merely because their client fails to prevail in litigation. Otherwise, there would be a flood of meritless actions by dissatisfied clients since in our legal a system there is always a “losing” party. As the Court first stated in Amalfitano, the legislature codified the misdemeanor crime and civil treble damages remedy for attorney deceit because that specific type of conduct is particularly harmful to our judicial system (Amalfitano, 12 NY3d at 14; see also Melcher, 23 NY3d at 15). The legislature’s intent “to enforce an attorney’s special obligation to protect the integrity of the courts and foster their truthseeking function” does not include penalizing an attorney for professionally competent, albeit unsuccessful, advocacy. Indeed, an attorney has a professional duty and ethical obligation, within the bounds of the law, to aggressively advocate colorable claims on behalf of their client (see Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.3 Comment [1] [Note: citation to rule and commentary]). However, the legislature, concerned with “enforc[ing] an attorney’s special obligation to protect the integrity of the courts and foster[ing] their truth seeking function” (id.), could not have intended to exclude from the statute’s coverage an attorney’s intentional filing of a frivolous lawsuit for the sole purpose of obtaining unwarranted legal fees.

(Mike Frisch)

March 31, 2020 in Clients | Permalink | Comments (0)

Sunday, February 2, 2020

When The Client Has A Right To Know The Lawyer Erred

The South Dakota Supreme Court reversed the grant of summary judgment to a defendant in a legal malpractice case.

The alleged malpractice involved the failure to timely serve a defendant in an accident case. 

The court discusses the duty to communicate errors in representation to the client, noting that a recent ABA opinion was not binding

We do not, however, view the ABA’s opinion to be binding on this Court, nor does the opinion necessarily establish a tort duty or express a standard of care for liability purposes.


When an act, error, or omission could reasonably be expected to be the basis of a legal malpractice claim against a lawyer, the lawyer’s professional responsibility to keep a client “reasonably” informed is directly implicated. Imposing a legal duty to disclose such an act, error, or omission serves the purpose of ensuring that a client is able to make an informed decision about how best to proceed under such circumstances...

Here, [attorney] Howey-Fox was informed within days that Ewalt had not been served in Yankton County, and that service was not made within three years from the date of the accident. Howey-Fox also admitted that she “immediately” notified her professional malpractice carrier of the potential malpractice claim against her. The personal injury action against Ewalt was finally dismissed on April 5, 2013, for failure to timely commence the action. It is beyond debate, under the standard we define today, that Howey-Fox had a duty to disclose the potential malpractice claim to Robinson-Podoll when the personal injury action against Ewalt was dismissed on April 5, 2013, and likely much before that time. Yet Howey-Fox testified,

Q: Did you ever advise Miss Robinson that there was a potential legal malpractice claim stemming from the improper service? [Howey-Fox]: Nope. I told her she had a potential claim against the county for their failure to serve or, at the very least, failure to tell me when they knew she wasn’t living in Yankton County to give those papers back, or at the least let me know so I could get her served.

But as to the start of the malpractice limitations

Here, Robinson-Podoll initially sustained damage from a single act of alleged negligence when Howey-Fox failed to timely commence the personal injury action against Ewalt. Any wrongful conduct by Howey-Fox thereafter in failing to disclose the error was not the cause of that initial injury. Thus, the continuing tort doctrine did not delay the occurrence of the three-year repose period on the malpractice claim for failing to timely file the personal injury action.

Nevertheless, questions of fact exist as to whether Howey-Fox’s alleged ongoing tortious conduct in failing to disclose this malpractice supports a separate claim for legal malpractice, that occurred less than three years before Robinson-Podoll commenced this action in January of 2016. Viewing the facts most favorably to Robinson-Podoll shows that Howey-Fox’s duty to disclose and alleged breach of that duty occurred after Howey-Fox allegedly failed to timely commence the personal injury action in 2010. Facts also exist showing that Howey-Fox’s failure to disclose this alleged error during the representation, that continued through 2015, resulted in (1) “a continuous and unbroken course of negligent” representation, and (2) the representation “was so related as to constitute one continuing wrong.”

Finally, as to the ring, we conclude that Robinson-Podoll sufficiently alleged ongoing acts or omissions that support a claim for continuing tortious conduct. Robinson-Podoll claims that Howey-Fox took the ring as collateral in 2012 and held it throughout the representation. Questions of fact exist on this record as to whether Howey-Fox breached professional duties owed to Robinson-Podoll by taking the ring and continuing to hold the ring without returning it to Robinson-Podoll. [citing Rule 1.8] These questions require that we also remand this claim to determine the date of the occurrence under the continuing tort doctrine.

February 2, 2020 in Bar Discipline & Process, Clients | Permalink | Comments (1)

Wednesday, January 29, 2020

New Jersey Upholds Invalidation Of Fee Agreement: Creates Committee To Address Fee Ethics

The facts of a decision by the New Jersey Supreme Court are summarized in the headnote

Plaintiff Lisa Balducci instituted a declaratory-judgment action to invalidate the retainer agreement into which she entered with her former attorney, defendant Brian Cige, on the ground that Cige procured the agreement in violation of the Rules of Professional Conduct. A Superior Court judge voided the agreement, and the Appellate Division affirmed. But the Appellate Division also made a number of pronouncements about ethical obligations on attorneys handling fee-shifting claims. The Court considers Cige’s challenge to the judgment against him, as well as arguments that the professional obligations imposed by the Appellate Division are at odds with current practices and are not mandated by the Rules of Professional Conduct.

Balducci retained Cige to represent her son in a bullying lawsuit, brought under New Jersey’s Law Against Discrimination (LAD), against a school district. Three years later, she terminated Cige’s representation and retained another lawyer to handle the case. Balducci filed a declaratory-judgment action to void the retainer agreement, and a Superior Court judge conducted a hearing at which Balducci, her son, and Cige testified.

Balducci testified that, in September 2012, she approached Cige about bullying that her son had encountered in school. Cige presented her with what he described as a standard retainer agreement for a LAD case, and Balducci raised questions about language that seemingly made her the guarantor of all legal fees and costs, even if the lawsuit failed. Cige told her not to be alarmed by the “standard language” and assured her that the attorney’s fees would be paid by the school board, not by her. (That account was corroborated by Balducci’s son, who testified that he was present during the meeting.) Trusting Cige, Balducci signed the agreement, one key provision of which required her to “pay the Law Firm for legal services the greater of” Cige’s hourly rate, 37 1/2% of both the net recovery and any statutory fee award, or statutory attorney’s fees.

By early 2015, Balducci became dissatisfied with Cige’s handling of the case. The school board rejected her first settlement demand of $3,500,000. After consulting with an expert in bullying cases, Cige approximated the value of the case at somewhere between $500,000 and $700,000. Only when Balducci terminated his services did he inform her she was responsible for the payment of his hourly fees -- almost $271,000.

Cige gave a very different account, but admitted that he did not inform Balducci of the potential value of the case, of the potential litigation expenses, or of the estimated financial obligation she would bear if the litigation did not succeed. Nor did he detail the billing rates for expenses in the retainer agreement. The expenses for the emails -- $1.00 for every email sent or received -- amounted to just over $1700 and were in addition to the hourly rate he charged. Photocopying costs represented almost $12,000 of the nearly $16,000 in expenses owed at the time Cige’s services were terminated.

At the conclusion of the plenary hearing, the trial court invalidated the retainer agreement, crediting Balducci’s testimony over Cige’s. The Appellate Division affirmed, finding substantial and credible evidence in the record to support the trial court’s decision. 456 N.J. Super. 219, 234, 243-44 (App. Div. 2018).

The Appellate Division also articulated a set of ethical obligations, purportedly arising from the Rules of Professional Conduct, that must be followed by attorneys in fee-shifting actions when a retainer agreement includes an hourly fee component. Those obligations are discussed in numbered paragraphs 6-9 below.

The Court granted certification limited to Cige’s challenge of the invalidation of the agreement and his claim that the Appellate Division retroactively applied new rules of professional conduct. 236 N.J. 616 (2019).

The court affirmed the invalidation of the agreement but rather than adopt the expansive views of the Appellate Division regarding fee-shifting retainer agreement ethics

The invalidation of the retainer agreement is supported by sufficient credible evidence in the record. Although the Appellate Division’s concerns over the retainer agreement in this case are understandable, the ethical pronouncements issued in its opinion may have far-reaching and negative effects, not only on employment-law attorneys and attorneys handling fee-shifting claims, but also on their clients. Some of those pronouncements appear too broad and some unsound, and others are worthy of the deliberative process by which new ethical rules are promulgated by the Court...

The Court notes that those issues all require careful and thoughtful consideration and deliberation. The Court generally establishes professional standards governing attorneys through the rulemaking process. Several Supreme Court committees have overlapping jurisdiction over the professional-responsibility issues raised in this opinion: the Civil Practice Committee, the Professional Responsibility Rules Committee, and the Advisory Committee on Professional Ethics. The Court has decided that the study of the professional-responsibility issues should be addressed by a newly established ad hoc committee comprised of representatives of those three committees, and of other representative members of the Bar and Bench with experience in these matters. The Court therefore will ask the Administrative Director of the Courts to select members for this committee for the Court’s approval.

This committee of experienced judges and attorneys will make recommendations on the questions raised in this opinion. With the valuable input and insight from the committee, the Court then will be able to carefully survey all viewpoints and deliberate before considering any new rule of general applicability to the Bar. The committee may also consider whether to revisit a cap on contingent fees in statutorily based discrimination and employment claims. See R. 1:21-7(c). The Court expresses no ultimate opinion on the matters referred to the committee.

(Mike Frisch)

January 29, 2020 in Billable Hours, Clients | Permalink | Comments (1)

Friday, January 24, 2020

Hindsight And Transactional Malpractice

The Nevada Supreme Court affirmed a district court's grant of summary judgment to a legal malpractice defendant, holding that the same causation test applies to allegations of transactional malpractice as to litigation matters.

The client was the seller in a failed Reno real estate transaction who had been subject to a mechanic's lien claim. The client had lost on the issue, discharged and sued the law firm but eventually prevailed on the lien.

Iliescu alleges that Hale Lane committed professional malpractice by negligently representing Iliescu during the failed real estate transaction, and during subsequent litigation to expunge the mechanic's lien. Iliescu argues that Nevada treats litigation malpractice and transactional malpractice differently for purposes of establishing proximate causation. Specifically, Iliescu argues that Hale Lane could have taken various preventive measures during the failed real estate transaction to  protect against the risk of a mechanic's lien, and that Hale Lane's alleged transactional negligence should be subject to a substantial factor test for causation, rather than the but-for test. We are not persuaded that different standards for proximate causation control in this case.

The court

This case does not implicate a concurrent independent cause. Hale Lane's purportedly negligent failure to warn or protect against a mechanic's lien was not sufficient, by itself, to bring about the filing of the mechanic's lien. The developer's hiring of the architect who filed the lien, the architect's performance of offsite design services, and the developer's default and subsequent failure to compensate the architect for his work, also had to occur in order for the lien to be filed and for Hale Lane's alleged transactional negligence to be actionable. These multiple forces necessarily depended on one another, and were insufficient of themselves, to bring about the filing of the lien. Accordingly, no concurrent independent cause is implicated here, and Iliescu must instead establish that, but for Hale Lane's alleged transactional negligence, a mechanic's lien would not have been filed.

And failed to do so

Iliescu has not raised any genuine issue of material fact by simply alleging various steps Hale Lane should have taken to protect Iliescu from the filing of a mechanic's lien. Iliescu's transactional malpractice claim cannot survive under the but-for causation test as a matter of law.

As to litigation malpractice

Iliescu also alleges that, after the mechanic's lien was filed, Hale Lane negligently failed to sufficiently challenge the legal deficiencies invalidating the lien. Iliescu specifically alleges that Hale Lane erroneously invited the district court to order discovery in the underlying mechanic's lien litigation, by focusing the court's attention on a fact issue of whether or not Iliescu had sufficient actual knowledge of the off-site work that predicated the filing of the lien. Iliescu argues that Hale Lane should have treated the fact question of actual knowledge as legally insignificant, and instead should have argued as a matter of law that Iliescu's knowledge was irrelevant because the design services were performed off-site. We conclude this argument is unavailing and that Iliescu has failed to raise a genuine fact issue sufficient to overcome summary judgment.

It is difficult to grasp how Hale Lane could have made an onsite/offsite legal distinction in its 2007 litigation to expunge the mechanic's lien, given the state of the law at that time.

...we affirm the district court's rejection of Iliescu's proposed amended complaint. The district court correctly concluded that Iliescu's attempt, with the benefit of more than ten years of hindsight, to allege various steps Hale Lane should have taken during the transaction, would have been futile.

The opinion in Iliescu v. Hale Lane was issued on January 23, 2020. (Mike Frisch)

January 24, 2020 in Clients | Permalink | Comments (0)

Friday, January 10, 2020

No Conversion In Handling Entrusted Funds; New Jersey Rejects Non-Client Claims

The New Jersey Supreme Court rejected claims arising from Fox Rothschild's handing of entrusted funds per the court's head note

This appeal involves claims of conversion and breach of fiduciary responsibility leveled at an attorney, Anthony Argiropoulos, Esq., and his then-law firm, Fox Rothschild LLP (collectively, “the firm”), regarding funds wire-transferred to the firm’s trust account.

As alleged in this matter, an intermediary entity wired funds for plaintiff Moshe Meisels, a London-based real estate investor, to the firm’s trust account in connection with a real estate deal in which Eliyahu Weinstein, the firm’s client, was engaged. Prior to the commencement of this litigation, the firm was admittedly unaware of Meisels’s  existence. It is undisputed that Meisels did not speak to, or otherwise communicate with, Argiropoulos or Fox Rothschild.

In his pleadings, Meisels alleges that he had Rightmatch Ltd., an entity located in London, transfer over $2.4 million to the attorney trust account of Fox Rothschild, Weinstein’s attorneys at the time. Rightmatch wired the money in two transfers, executed by Cambridge Mercantile Group. Confirmations for each transfer were sent, “[f]or and on behalf of Cambridge Mercantile Corp.,” to Rightmatch, with a single line indicating “Attn: Moshe Meisels.” The transfers themselves did not identify plaintiff as the funds’ owner or include any instructions regarding limitations or conditions.

Defendants distributed the funds as their client directed. Meisels alleges that Weinstein instructed the firm to distribute the funds for purposes other than the agreed upon real estate transaction. According to Meisels, the purchase of the Irvington property was never consummated; Weinstein defrauded Meisels and his related co-plaintiffs.

Plaintiff commenced this action in 2012 and, after discovery and the filing of an amended complaint, defendants sought summary judgment on the grounds that (1) plaintiff did not produce evidence to support ownership of the funds that Rightmatch wired to Fox Rothschild and therefore lacked standing to sue; and (2) plaintiff had no contact with anyone from Fox Rothschild and, therefore, could not establish the essential elements of any of the claims.

The motion court granted summary judgment to the firm and dismissed the amended complaint with prejudice. The Appellate Division affirmed as to the fiduciary duty claim but reversed as to the conversion claim, rejecting defendants’ argument “that Meisels was required to show that he demanded the return of his property.”

The Court granted defendants’ petition for certification, seeking review of the Appellate Division’s judgment reinstating the conversion claim. 236 N.J. 67 (2018). The Court also granted plaintiff’s cross-petition, seeking review of the Appellate Division’s judgment dismissing the breach of fiduciary duty claim. 236 N.J. 44 (2018).

HELD: The firm did not breach any fiduciary duty where the firm was not made aware, nor did it have any basis on which it reasonably should have been aware, of plaintiff or of a claim by plaintiff to the funds. As such, there was no relationship between the firm and plaintiff on which a fiduciary duty was owed. On that issue, the Court affirms the judgment of the Appellate Division. However, defendants cannot be found to have engaged in conversion in this matter. Where, as here, a law firm lawfully holds in trust wired funds for its client’s real estate transaction, which funds are received with no limiting direction or instruction and for which the firm receives no demand from the nonclient, the firm’s disposition of the trust funds in accordance with the client’s instructions does not give rise to a claim for conversion. The Court rejects the reasoning that under these circumstances the obligation to make a demand is excused and reverses as to the conversion claim.

  1. As officers of the courts, attorneys owe a duty of care that finds helpful benchmarks in the Rules of Professional Conduct (RPCs). Standing alone, a violation of the RPCs does not create a cause of action for damages in favor of a person allegedly aggrieved by that violation. In this matter, the RPCs provide relevant information for assessing the claimed violation of a fiduciary duty with which the firm is charged. RPC 1.15 addresses an attorney’s obligation to safeguard property in his or her possession, including property received from a non-client third party. (pp. 12-14)
  2. Here, RPC 1.15 does not provide a pathway for finding a fiduciary duty that was breached by the firm. Meisels maintains that an attorney “owes a fiduciary duty to persons, though not strictly clients, who he knows or should know rely on him in his professional capacity.” However, case law extending an attorney’s duty to a third party not in privity with the attorney has been approached with care so as to be fair to all; generally stated, it is cabined by considerations of reasonableness. Meisels admits that defendants had no knowledge of his existence, had no contact with him, possessed no knowledge about any purported agreement between him and Weinstein, and made no representations to Meisels. It is simply not reasonable to expect a lawyer to have fiduciary obligations to an individual under such circumstances. Meisels produced no evidence to show that he relied upon defendants in their professional capacity. The circumstances of this case, moreover, offer no indicia that defendants endeavored to induce Meisels to rely on the firm. Inducement of reliance cannot be ascribed to the firm simply because the funds for its client’s commercial real estate transaction were permitted to be wired to and held in the firm’s trust account. In these circumstances, the firm’s disposition of the funds held in its trust account in compliance with the client’s instructions, as required by RPC 1.2, was not a breach of fiduciary duty. No fiduciary duty was owed by the firm to Meisels. (pp. 14-18)
    3. The Court traces the history of the tort of conversion. To determine whether a conversion has occurred, there must first be an assessment into whether defendant has independent dominion and control over the subject property. Additionally, where the defendant lawfully acquired plaintiff’s property, the plaintiff must show that he demanded the return of the property and that the defendant refused compliance. The demand is the linchpin that transforms an initial lawful possession into a setting of tortious conduct, if the demand is refused. Accordingly, in such circumstances, a demand is essential; a claimant must make a demand at a time and place and under such circumstances as defendant is able to comply with if he is so disposed, and the refusal must be wrongful. There are circumstances, to be sure, where demand may be futile, but that is and must be viewed as an exception. (pp. 18-22)
    4. Funds held in an attorney’s trust account for its client are the client’s funds, not the firm’s. Here, with no knowledge of a competing claim to the funds -- and, indeed, no knowledge whatsoever about Meisels and his role in the transaction -- the firm acted appropriately in adhering to the client’s directions. Meisels cannot prove that the firm itself exercised independent dominion and control over his funds. That requirement for a conversion claim is lacking in this matter. The lack of independent dominion and control, moreover, renders more serious the lack of demand here. The demand would have been the means to alert the firm that a competing claim existed and would have triggered the firm’s obligation to reasonably inquire further, and perhaps seek judicial assistance, before embarking on fulfillment of a client’s direction. Violation of the demand might then create the tort of conversion. Only when an attorney misdirects or misappropriates funds, or when an attorney has acted contrary to a known, competing claim -- or a competing claim that reasonably should have been known -- can there be an independent dominion or control over the funds by the firm to the repudiation of the rights of the proper owner. (pp. 23-25)

The judgment of the Appellate Division is AFFIRMED IN PART and REVERSED IN PART, and the Court orders the conversion claim DISMISSED. CHIEF JUSTICE RABNER and JUSTICES ALBIN, PATTERSON, FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE LaVECCHIA’s opinion.

Oral argument linked here. (Mike Frisch)

January 10, 2020 in Clients, Current Affairs | Permalink | Comments (0)

Friday, January 3, 2020

The Silver Bullet

The Delaware Superior Court has granted summary judgment to the defendant in a legal malpractice suit.

The attorney had represented the former client in drafting a pre-marital agreement to protect his client's assets. The soon-to-be wife had signed the agreement notwithstanding the advice of her counsel.

When divorce came, the ex-wife sought to set aside the agreement on grounds of unconscionability. She prevailed in family court but lost in the Delaware Supreme Court. 

The unhappy former client sued the drafting attorney for the expenses of defending the attack on the agreement, claiming that the attorney's failure to include a waiver of disclosure clause (a "silver bullet" according to plaintiff's expert) in the agreement had led to his travails.

The court found disputed questions of fact as to standard of care and breach of that standard but granted summary judgment on causation.

The evidence required speculation on whether the "silver bullet" was agreeable to the ex-wife. 

In a question of first impression, the court applied the same causation test for alleged legal malpractice in transactional matters as in litigation matters.

Because the evidence

does not support an inference that Mr. Sherman's ex-wife likely would have likely accepted the term, the trier of fact would be forced to speculate regarding whether Mr. Ellis's alleged negligence proximately caused Mr. Sherman's harm.

(Mike Frisch)

January 3, 2020 in Clients | Permalink | Comments (0)

Friday, September 13, 2019

Hail Concordia! Idaho Endorses Disgorgement For Fiduciary Breach

This post is for Professor (and ex-Bar Counsel) Mike Oths' class at Concordia Law and involves a recent decision of the Idaho Supreme Court.

The court's headnote

Rebecca Parkinson appealed a district court’s dismissal of her claim for breach of fiduciary duty against her attorney, James Bevis. Parkinson filed a complaint alleging Bevis breached his fiduciary duty when he disclosed a confidential email to the opposing attorney after a settlement had been reached in Parkinson’s divorce action. Bevis filed a motion to dismiss under I.R.C.P. 12(b)(6), arguing that Parkinson’s complaint failed to state a claim for relief. The district court dismissed Parkinson’s claim after finding it was, in essence, a legal malpractice claim, which Parkinson could not prevail on because she suffered no damages as a result of the disclosure. Parkinson filed a motion to amend her complaint to clarify that the remedy she sought was the equitable relief of fee disgorgement, which the district court denied.

The Idaho Supreme Court reversed and remanded, recognizing that a lawyer can violate his fiduciary duty, causing no damage, in which case an equitable remedy like Parkinson sought may be recoverable. The Court held that Parkinson could sue her attorney for breach of a fiduciary duty arising out of the attorney-client relationship, just as any other principal may sue an agent who owes a fiduciary duty. The Court explained that its holding was narrow, and offered relief to a client only in those cases in which the client seeks fee disgorgement as a solitary remedy. For these reasons the Court held that the district court also abused its discretion when it denied Parkinson’s motion to amend.

The allegation

In 2015, Bevis, a licensed attorney, represented Parkinson in her divorce proceedings. Parkinson alleged that Bevis breached his fiduciary duties to her by forwarding to opposing counsel a copy of an email she sent to Bevis that accused Bevis of failing to represent her adequately at a mediation conference.

The question on review

The principal question here is whether a client can sue an attorney for breach of fiduciary duty when the cause of action arises from the attorney-client relationship, no matter whether the breach caused the client actual damages. Parkinson argues that Bevis breached his fiduciary duty by disclosing a confidential attorney-client email and that this breach impaired the value of Bevis’ services to Parkinson. On the other hand, Bevis maintains that when an attorney breaches a fiduciary duty to a client, the only cause of action that arises from the attorney-client relationship is legal malpractice.

Damage for fiduciary breach

We agree with, and now adopt, the Restatement’s approach in section 37 as we have stated it. The sanction of fee forfeiture is available when an attorney violates his duty to his client in a serious way. The criteria listed in section 37 are to be used to determine whether the trial court may order forfeiture of all or a portion of an attorney’s fee as an appropriate equitable remedy in these circumstances. To reiterate, those factors are (1) the extent of the misconduct, (2) whether the breach involved knowing violation or conscious disloyalty to a client, (3) whether forfeiture is proportionate to the seriousness of the offense, and (4) the adequacy of other remedies. Id.

The reason for such a remedy makes sense. “[A] lawyer’s clear and serious violation of a duty to a client destroys or severely impairs the client-lawyer relationship and thereby the justification of the lawyer’s claim to compensation.” Id. at cmt. b. The equitable remedy of fee forfeiture discourages an agent from disregarding his or her duty of loyalty to a principal under the theory the principal will suffer no damages. To limit the remedy of forfeiture to situations in which the principal suffers actual damages would defeat the purpose of the rule. It is this breach of loyalty, not actual damages, which violates the fiduciary relationship. The primary purpose of an equitable remedy of forfeiture is to protect the relationship between a principal and her agent by discouraging the agent’s disloyalty...

The result here is narrow, offering relief to a client only in those cases in which the client seeks fee disgorgement as a solitary remedy. To the extent that legal malpractice plaintiffs seek both damages and fee disgorgement, the principles articulated in this decision would apply to the equitable portion of the claim. But, if the breach of fiduciary duty claim includes a claim for damages, that claim is appropriately subsumed by the legal malpractice claim.

We thus conclude that whether an attorney must forfeit any or all fees for a breach of fiduciary duty to a client must be determined by applying the rule as stated in section 37 of the Restatement (Third) of the Law Governing Lawyers and the factors we have identified to the individual circumstances of each case. In light of this conclusion, the district court’s determination that Parkinson could not pursue her claim on an equitable basis as a matter of law was incorrect. We therefore vacate the judgment of dismissal and reverse the district court’s grant of the motion to dismiss.

(Mike Frisch)

September 13, 2019 in Clients | Permalink | Comments (0)

Thursday, August 15, 2019

It Ain't Over Till...

The Utah Supreme Court has held that the statute of limitations had not run on a legal malpractice claim against an attorney who had failed to protect a judgment in a bankruptcy 

Kelly and Monty Moshier lost their opportunity to collect $874,805.68 owed to them in a bankruptcy proceeding when their attorney, Darwin C. Fisher, failed to file their nondischargeability claim before the statute of limitations expired. Several years later, the Moshiers sued Mr. Fisher for malpractice. The district court dismissed their malpractice claim as untimely. Because we find that the malpractice claim did not accrue until the bankruptcy court confirmed the final distribution plan, the Moshiers’ claim was timely. Accordingly, we reverse.

At issue in the underlying case was a judgment that the attorney had secured

In September 2010, the Cottams filed for bankruptcy. The Moshiers again hired Mr. Fisher to represent them in the bankruptcy proceedings. He timely filed the Moshiers’ proof of claim. Because the Moshiers’ claim was based on a judgment for money obtained by fraud, their claim was exempt from discharge under section 523 of the Bankruptcy Code.  Creditors claiming this exemption from discharge must commence an independent action by filing a complaint alleging nondischargeability.  But Mr. Fisher failed to file
the Moshiers’ claim for nondischargeability by the deadline, December 29, 2010.  Instead, he filed the claim almost a year after the deadline, which the bankruptcy court dismissed as untimely. On January 31, 2012, the bankruptcy court confirmed the Cottams’ bankruptcy plan for distribution.

Shortly thereafter the attorney advised the clients of the error and notified his malpractice insurer.

The Moshiers assert they did not believe they needed to initiate any legal action against Mr. Fisher, because they believed his claim with his malpractice insurer was the equivalent of them initiating a legal proceeding. They also argue that they believed their claim was fully secured and that they would still receive the full value of their claim. By 2013, the bankruptcy trustee informed the Moshiers they would not receive payment of their full claim.

Not SOL on SOL grounds when the plaintiffs sued in October 2015

The Moshiers argue that their legal malpractice claim did not accrue until they learned that the bankruptcy trustee “would not pay all of their claims,” on or about July 31, 2014.  Mr. Fisher asserts that the claim accrued when he missed the deadline to file their nondischargeability claim—December 29, 2010. We find that the Moshiers’ malpractice claim accrued when the bankruptcy court confirmed the final bankruptcy plan—January 31, 2012. Based on that accrual date, the Moshiers’ malpractice claim was timely filed. Accordingly, we reverse.


In the case now before us, we conclude that the damages and harm were sufficiently final when the bankruptcy court confirmed the final bankruptcy plan, and that the claim therefor accrued on that date.  Until that stage of the bankruptcy concluded, the Moshiers could not be certain whether Mr. Fisher’s alleged malpractice had resulted in damages, or whether they could expect to be made whole despite his error. Mr. Fisher missed a filing deadline, which precluded the Moshiers from litigating their nondischargeability claim. But the harm was not sufficiently final until the bankruptcy plan was finalized.  It was at that point that the Moshiers knew, with certainty, that they would not receive the full value of their claim, and that Mr. Fisher’s actions had, in fact, prejudiced them. And based on that accrual date, the Moshiers’ October 6, 2015 malpractice claim was timely.

The Court of Appeals opinion is linked here. (Mike Frisch)

August 15, 2019 in Clients | Permalink | Comments (0)

Thursday, July 18, 2019

Conviction Bars Malpractice Suit

The Maine Supreme Judicial Court affirmed the dismissal of a legal malpractice claim brought by a criminal defendant against an attorney appointed to represent him after retained counsel withdrew.

After consulting with Haddow, Goguen stated in  open court that he did not dispute that he had committed a sex offense while in  failure to register status. The court sentenced Goguen to a term of months and  a period of supervised release with conditions.

And thereafter violated the terms

In 2013, after Goguen left prison on supervised release, the United  States Probation Office moved to revoke his release on the ground that he had  accessed pornography at the Penobscot Judicial Center law library in violation  of his conditions of release. Haddow was again appointed to represent Goguen.  In open court, Goguen waived his right to an evidentiary hearing and admitted that he had viewed pornography in violation of the conditions of his supervised  release. Goguen was sentenced, and his conviction was affirmed on appeal to  the United States Court of Appeals for the First Circuit.

He sued for malpractice but

Because undisturbed judgments have been entered, here based on  Goguen’s in-court admissions, finding that he committed a sex offense while in  failure to register status and that he accessed pornography in violation of his  conditions of release, Goguen is collaterally estopped from asserting that  inaccurate legal advice—rather than his own conduct—caused the injuries that  he alleges...

Goguen has not, however, alleged that any one of the pertinent  court orders—the judgment of conviction for failing to register, the sentence  imposed upon that conviction, or the order revoking his release—has been set  aside for any reason. Because Goguen has not, through his complaint, presented any facts necessary to overcome the Maine collateral estoppel bar,  we need not, on the record presented here, opine on whether the elements of  actual innocence or exoneration are necessary or sufficient to proceed with a  professional malpractice claim under Maine law when the alleged malpractice  involved the entry of a judgment of conviction or a subsequent revocation of  release. Further, to the extent that Goguen’s complaint may be seen to allege malpractice affecting the sentence imposed by the federal court after Goguen  pleaded guilty to failing to register, the complaint fails to state a claim for relief  because, as is revealed by Goguen’s allegations themselves, the sentence  imposed was at the bottom of the applicable range of the federal sentencing  guidelines given the offense level that pertained to Goguen for his crime of  failure to register.

(Mike Frisch)

July 18, 2019 in Clients | Permalink | Comments (0)

Friday, July 5, 2019

When It's Over It Starts

The Utah Supreme Court reversed the entry of summary judgment for the defendant in a legal malpractice claim, holding that the four-year statute of limitations had not expired. 

Matthew Ross Thomas claims he was convicted of two felonies because of malpractice by his trial counsel, Lyle Hillyard. Following his trial, Mr. Thomas hired new counsel and was able to secure a new trial. He then accepted a plea deal in which he achieved a better result than he had received at trial—replacing two felony convictions with three misdemeanor convictions. We must determine when his malpractice cause of action accrued.

The former client prevailed 

We conclude that Mr. Thomas’s claim accrued at the conclusion of his criminal case—when he pled guilty to three misdemeanors. Because we find that Mr. Thomas’s claim was timely filed, we reverse.

Mr. Thomas was charged and convicted of two counts of aggravated sexual abuse. He hired Mr. Hillyard as his attorney. On October 26, 2012, a jury found him guilty of both felony counts. Mr. Thomas contends that Mr. Hillyard’s representation at trial was deficient in several respects. Specifically, he argues that Mr. Hillyard failed to object to inadmissible testimony from Mr. Thomas’s daughter and her counselor, failed to object to inadmissible other-acts evidence presented in his ex-wife’s testimony, failed to request key jury instructions, and failed to object to prejudicial statements in the prosecutor’s closing argument.

The statute of limitations for criminal defense malpractice begins at the end

We hold that a legal malpractice claim based on alleged malpractice committed in the course of a criminal proceeding does not accrue until the underlying action has concluded and there is no appeal of right available. Additionally, we hold that if a defendant chooses to pursue a claim under the Post-Conviction Remedies Act (PCRA), the statute of limitations will be tolled throughout the pendency of the claim. Under this framework, Mr. Thomas’s claim was timely. So we reverse and remand to the district court.


Today we hold that where there is an ongoing proceeding, the resolution of which informs the fact of malpractice or damages, the claim does not accrue until the conclusion of that proceeding...

We hold that a malpractice claim does not accrue until the underlying direct action has concluded and there is no appeal of right available. Once there is no appeal of right available, the harm is sufficiently final. So the cause of action accrues and the statute of limitations begins to run. Defendants may, of course, decline to bring a direct appeal, in which case they may bring a malpractice action following expiration of the time to file an appeal. But if a defendant chooses to appeal, the statute of limitations will not begin to run until the appeal is final.

(Mike Frisch)

July 5, 2019 in Clients | Permalink | Comments (0)

Thursday, May 23, 2019

No Fee Recovery For Self-Representation In Connecticut

The Connecticut Appellate Court has held that a self-represented lawyer or law firm may not recover attorneys fees in litigation.

The attorney had received an award in arbitration

On March 3, 2014, the plaintiff petitioned the legal fee resolution board of the Connecticut Bar Association (board) to resolve a fee dispute that had arisen between the parties. On December 24, 2014, a panel of three arbitrators found that the plaintiff was owed $109,683 in fees for its representation of the defendant. The plaintiff subsequently filed an application to confirm the arbitration award in the Superior Court, which the court, Scholl, J., granted on March 17, 2015. The defendant appealed to this court, which affirmed the trial court’s judgment confirming the arbitration award, and our Supreme Court denied the defendant’s petition for certification to appeal. See Rosenthal Law Firm, LLC v. Cohen, 165 Conn. App. 467, 473, 139 A.3d 774, cert. denied, 322 Conn. 904, 138 A.3d 933 (2016). Attorney Edward Rosenthal, the sole member of the plaintiff, represented the plaintiff throughout the proceedings before the board and in the trial and appellate courts.

The attorney then sued for his fees relying on the retainer agreement

the plaintiff claimed that it had incurred $59,600 in ‘‘legal fees’’ in connection with the arbitration and related court proceedings, which reflected the time spent by Rosenthal on these matters.

The trial court relied on precedent

The plaintiff’s sole claim on appeal is that the trial court erred in determining that the law barring self represented non attorney litigants from recovering statutory attorney’s fees also precludes a self-represented law firm from recovering contractual attorney’s fees.

The court here rejected the suggestion that the precedent was dictum

The court intentionally took up and analyzed the issue and concluded that the general rule announced in Lev would bar the plaintiff attorneys in Jones from recovering attorney’s fees. Although the court discussed the issue only briefly, there is nothing in its opinion or the record to suggest that its conclusion was less carefully reasoned than it might otherwise have been. In sum, the court’s conclusion cannot reasonably be characterized as a merely casual, passing comment made without analysis or due consideration of conflicting authorities. It is clear that the court made a deliberate decision to resolve this issue and that it undeniably decided it. Accordingly, the court’s conclusion that self-represented attorney litigants cannot recover attorney’s fees constitutes an alternative holding, not dictum.

A firmly-held view

we need not determine whether the plaintiff’s status as a law firm litigant renders this case materially distinguishable from Jones, which involved attorney litigants. We note, however, that among the courts that have considered these issues in jurisdictions in which self represented attorney litigants are barred from recovering attorney’s fees, the majority agree that there is no meaningful distinction between solo practitioners who represent themselves and law firms that are represented by their own attorneys.

(Mike Frisch)

May 23, 2019 in Billable Hours, Clients | Permalink | Comments (0)

Wednesday, May 22, 2019

Google Docs And Legal Malpractice

The Massachusetts Supreme Judicial Court vacated a judgment of dismissal of a legal malpractice claim

In the summer of 2008, after the plaintiff and Michelle Barnes decided to marry, they "collaboratively" drafted a "Google [d]oc" to "identify [their] premarital assets and debts and to define [their] mutual rights and obligations regarding property and finances after" marriage. The Google doc contained a section titled "Real Estate Bought for Cash," which provided that "[i]f one partner's savings are used to purchase real estate with no mortgage, the other partner will accrue a 2.5 percent ownership interest in the real estate every year after the purchase, assuming the marriage is intact, up to a maximum ownership interest of 50 percent." The plaintiff and Barnes clarified the intended operation of the provision with an example: "A house is purchased in 2010 . . . and paid for entirely from [the plaintiff's] money market funds. In the event of a divorce in 2020, [Barnes] would receive 25 percent of the value of the house. In the event of a divorce in 2030 or after, the house equity would be split 50/50."

In August 2008, Barnes hired attorney Karen Kearns to draft an antenuptial agreement based on the Google doc. The plaintiff hired the defendant Leon C. Boghossian, III, on September 8, 2008, and noted that Kearns was to "turn this Google document into a standard pre-nup." The plaintiff told "Boghossian that one of the most important terms in the Google doc was a section entitled on [sic] 'Real Estate Bought for Cash.'"

Several drafts of the antenuptial agreement thereafter circulated among Kearns, Barnes, the plaintiff, and Boghossian. The plaintiff reviewed the drafts and sent his feedback to both attorneys, but he relied on Boghossian "to create a document that implemented the terms of the Google [d]oc and protected [his] interests." On October 3, 2008, the plaintiff and Barnes executed the final version of the antenuptial agreement. Article III, paragraph 12 (paragraph 12) of the antenuptial agreement -- the relevant text of which is reproduced in the margin -- detailed the plaintiff's and Barnes's respective ownership interests in a principal residence acquired during the marriage in various factual circumstances.

The couple proceeded to marry, purchase a home, have a child and get divorced.

On October 5, 2008, the plaintiff and Barnes married. Two days later, on October 7, 2008, the plaintiff used his separate property to buy a house in Lincoln for $1.4 million (house), taking title in his name alone. The house became the plaintiff's and Barnes's principal residence during their marriage. The couple had a baby in August 2009. Barnes filed for divorce on September 29, 2011. During the divorce proceedings, Barnes challenged the validity of the antenuptial agreement. A Probate and Family Court judge (probate judge) found the antenuptial agreement valid, and determined that paragraph 12(c)(iv) (rather than paragraph 12[a]) applied to the couple's respective rights in the house, because the couple had a minor child and both the plaintiff and Barnes wished to retain the house. The probate judge ordered that Barnes could buy out the plaintiff's interest in the house for $727,500. Had the provisions of paragraph 12(a) (which incorporated the equity accrual provisions set forth in the Google doc) been applied, Barnes's interest in the house would have been only 7.5 percent, instead of fifty percent. Barnes completed her purchase of the plaintiff's interest in the house by making the $727,500 payment in July 2014.

Plaintiff sued for malpractice. The trial court held he needed a causation expert.

The court disagreed

We conclude that the motion judge erred in ruling that the plaintiff was required to present expert evidence on the issue of causation in the form of an opinion that the antenuptial agreement would have been determined valid if drafted in accordance with the equity accrual provisions set forth in the Google doc.11 We therefore vacate the judgment and remand for additional proceedings consistent with this opinion.

(Mike Frisch)

May 22, 2019 in Clients | Permalink | Comments (0)

Tuesday, March 26, 2019

Wisconsin Declines To Expand Legal Malpractice Liability To Third Parties

The Wisconsin Supreme Court rejected a call to expand malpractice liability in third party beneficiary cases.

We conclude that the narrow Auric exception to the rule of nonliability of an attorney to a non-client applies to the administration of an estate in addition to the drafting and execution of a will. That is, a non-client who is a named beneficiary in a will has standing to sue an attorney for malpractice if the beneficiary can demonstrate that the attorney's negligent administration of the estate thwarted the testator's clear intent.

Applying Auric to the facts of this case, we determine that Charles MacLeish's clear testamentary intent was not thwarted by any alleged negligence on the part of Boardman. As a result, we conclude that the MacLeish children's claim against Boardman for legal malpractice was properly dismissed.

MacLeish died in 1984 leaving a one-page will.

Attorney Forrest Hartmann, a former partner of the will's drafter, and subsequently a member of the Boardman firm, handled the administration of the estate. He advised Thelma MacLeish, Charles's wife, to claim full use of the federal estate tax marital deduction.

Thelma followed Attorney Hartmann's advice and treated all the assets of Charles's estate as though they passed directly to her. She also claimed a federal estate tax marital deduction for those assets.

The effect of this action was that Charles's estate was not subject to estate tax in 1984. Instead, the assets that had been in Charles's estate would be subject to estate tax at the time of Thelma's death.

Thelma followed Charles in 1988. The heirs were concerned about the tax advice.

The circuit court entered summary judgment to the defendants which was affirmed by the Court of Appeals

We are asked to review whether the MacLeish children have standing to bring this legal malpractice action against Boardman. A determination of standing presents a question of law reviewed independently of the determinations rendered by the circuit court and court of appeals.


The MacLeish children contend that the Restatement presents a better approach than the well-established general rule of nonliability and the Auric exception. They argue that broad immunity for attorneys from claims by non-clients is bad public policy. In their view, the Restatement provides a workable standard that narrows such immunity.

Adopting the Restatement as the MacLeish children urge would significantly change the general rule of attorney nonliability to non-clients. In the context of this case, adopting the MacLeish children's position would result in the elimination of the specific requirement that a third party beneficiary demonstrate that the testator's clear intent was thwarted in order to proceed with a legal malpractice claim.

The court squarely rejected this approach but

We therefore conclude that the narrow Auric exception to the rule of nonliability of an attorney to a non-client applies to the administration of an estate in addition to the drafting and execution of a will. That is, a non-client who is a named beneficiary in a will has standing to sue an attorney for malpractice if the beneficiary can demonstrate that the attorney's negligent administration of the estate thwarted the testator's clear intent.

The Auric exception

the Auric exception and cases interpreting it are grounded in the constitutional right to make a will and have it carried out according to the testator's intentions.

...when presented with the opportunity in the past, we have been reluctant to expand attorney liability to non-clients in the estate planning context. For example, in Tensfeldt we concluded that "[e]xtending the Auric exception to attorneys who give negligent advice stretches the exception too far." Tensfeldt, 319 Wis. 2d 329, ¶77. The court was explicit in its instruction that the Auric exception "is a narrow one."

The proof here was insufficient to establish a thwart. (Mike Frisch)

March 26, 2019 in Clients | Permalink | Comments (1)