Monday, February 4, 2019

An Ordinary Arrangement

A newly-released opinion of the District of Columbia Bar Legal Ethics Committee

Ethics Opinion 376

Mandatory Arbitration Provisions in Fee Agreements

Fee agreements containing mandatory arbitration provisions are "ordinary fee arrangements," and the requirements of Rule 1.8 which addresses business transactions between lawyers and clients do not apply. The standard for obtaining client consent to fee agreements containing mandatory arbitration provisions is set forth in Comment [13] to Rule 1.8, and Legal Ethics Opinions 211 and 218 are superseded by Comment [13] and this opinion.  
If it is explained
For a client to appreciate the "scope and effect" of a mandatory arbitration provision, the lawyer must provide a client with sufficient information about the differences between litigation in the courts and arbitration proceedings. As a general matter, a discussion regarding at least the following differences between the two methods of dispute resolution is prudent: (1) the fees incurred;(2) the available discovery;(3) the right to a jury; and (4) the right to an appeal. As with the application of the informed consent standard, the scope of this discussion depends on the level of sophistication of the client.
(Mike Frisch)

February 4, 2019 in Billable Hours, Clients | Permalink | Comments (0)

Wednesday, November 21, 2018

The Domino's Theory

The New York Appellate Division for the Second Judicial Department reversed the grant of summary judgment to a defendant law firm in a legal malpractice action

On November 4, 2011, the plaintiff, a pedestrian, allegedly was injured when he was struck by a motor vehicle. Thereafter, the plaintiff retained the defendant law firm, Lozner & Mastropietro, P.C. (hereinafter the law firm), to represent him in connection with the accident, and the law firm commenced an action on behalf of the plaintiff against the operator of the vehicle. In January 2017, the plaintiff commenced this action against the law firm and two of its principals, inter alia, to recover damages for legal malpractice. The plaintiff alleged that the driver of the offending vehicle was working for Domino’s Pizza, LLC (hereinafter Domino’s), making a pizza delivery at the time of the subject accident, and that the defendants were negligent in failing to timely commence an action against Dominos. The defendants moved pursuant to CPLR 3211(a) to dismiss the complaint. In the order appealed from, the Supreme Court, inter alia, granted that branch of the defendants’ motion which was pursuant to CPLR 3211(a)(7) to dismiss the first cause of action to recover damages for legal malpractice.

There is a claim properly alleged

The evidentiary submissions did not establish that a material fact alleged in the complaint is not a fact at all and that no significant dispute exists regarding it (see Bodden v Kean, 86 AD3d at 526). Contrary to the defendants’ contention, the plaintiff was entitled to commence this legal malpractice action even though the underlying personal injury action was still pending, as the legal malpractice action accrued, at the latest, in November 2014 (see Johnston v Raskin, 193 AD2d 786, 787).

(Mike Frisch)

November 21, 2018 in Clients | Permalink | Comments (0)

Sunday, November 11, 2018

A Buck And A Bed Leads To A Legal Malpractice Matter Of First Impression In Idaho

A disinherited son lost his legal malpractice case in the Idaho Supreme Court which affirmed the grant of summary judgment by the district court.

The court considered a matter of first impression: the problem of a "hypothetical appeal." 

Thomas Lanham (Thomas) appeals from the district court’s dismissal of his legal malpractice action against his former attorney, Douglas Fleenor (Fleenor). Fleenor represented Thomas in a will contest regarding the will of Gordon Lanham (Gordon), Thomas’s father. After the magistrate court ruled against Thomas at the summary judgment stage, Fleenor filed an untimely appeal, which was rejected on that basis.

Because the appeal brought by Fleenor was untimely, Thomas brought a legal malpractice action against Fleenor in district court. Thomas alleged that the failure to timely appeal the magistrate’s ruling proximately caused him financial loss because he had a meritorious appeal that he never got to pursue due to Fleenor’s negligence.

The will

The facts in this case are largely undisputed. On November 16, 2010, Gordon began dictating his Will via an audio recording device. Gordon recorded his Will intermittently on nine separate days, concluding on January 7, 2011. On January 19, 2011, the ten dictated paragraphs were transcribed into his written Will. On February 19, 2011, the Will was signed, witnessed, and notarized. Thomas has not contested the validity of the Will.

In his Will, Gordon explicitly limited the inheritance of Thomas and Thomas’s brother Keith Lanham to one dollar and one wooden bed each.

After Gordon died

Thomas later retained Fleenor to challenge certain portions of the Will. Fleenor filed a motion for summary judgment arguing that the Will failed to properly dispose of the residue of Gordon’s estate (including the subject properties); the effect of which would mean any property not specifically devised would pass to Thomas and Keith as Gordon’s intestate heirs. In response, Judd, acting on behalf of Gordon’s estate, filed a cross-motion for summary judgment arguing Thomas’s claim should be dismissed because Gordon’s intent to disinherit his sons was clear and the Will fully and properly disposed of all of Gordon’s property.

When Thomas lost

Fleenor filed a notice of appeal to the district court on August 13, 2014, forty-nine days after the magistrate’s written judgment was filed. (The time for filing an appeal is forty-two days. I.R.C.P. 83(b)(1)(A).) The district court dismissed the appeal as untimely and found that the June 20, 2014 motion to reconsider did not toll the period for appeal, because the magistrate’s written decision was filed after the motion for reconsideration was filed.

At issue 

the district court ruled that a determination of whether an underlying, unperfected appeal would have been successful, if pursued in a timely way, was a question of law for the court to decide. (An unperfected appeal giving rise to a legal malpractice suit will be referred to in this decision as a “hypothetical appeal.”)

The court here found that the attorney was properly awarded summary judgment by the district court

Although this Court has decided many legal malpractice cases, it does not appear to have decided one in which the basis for the legal malpractice claim was an unperfected appeal. Consequently, we must decide, as a matter of first impression, if the potential success of a hypothetical appeal is an issue of fact to be decided by a jury, or rather is it a question of law for the court to decide. We conclude, as have twenty-eight other jurisdictions (twenty-seven states and the District of Columbia, 4 RONALD E. MALLEN, LEGAL MALPRACTICE § 33:118 at n.9 (2018 ed.)), that it is a question of law to be decided by the court. 

An appeal would have lost

In reviewing the tripartite test set out in Krokowsky each component has been met. Gordon intended to create an unfettered power allowing Judd to distribute his estate “in any way he sees fit”; he granted the authority to his “friend and cousin” Judd Lanham; and he specified the property over which the power existed: “all my personal and real property” not bequeathed in the Will.

The fact that Gordon also clearly and unequivocally disinherited Thomas in the Will supports the conclusion that Gordon intended to convey a general power of appointment to Judd and that he did not want the residue go to Thomas. As Gordon wrote in his Will:

Thanksgiving is over and I just wanted to add to this program that my son, Thomas Everett Lanham, 48 years old, has already been given all he needs to have and that I am going to leave $1 more dollar [sic] against whatever is legal to him and then he is going to be on his own.

Giving Gordon’s Will the technical interpretation Thomas suggests would only frustrate Gordon’s intent.

Thomas is not obligated to pay attorney's fees

In this case, Thomas is not asking this Court to second-guess evidence or findings of fact. The core issue turns on an unsettled question of law. The issue before this Court is a matter of first impression. The Will did not include the phrase “power of appointment.” It was therefore reasonable for Thomas to appeal in order to have an unsettled question of law answered.

Consequently, Fleenor’s request for attorney’s fees is denied.

Shout out to Mike Oths and Concordia Law students who make up our Idaho readership. (Mike Frisch)

November 11, 2018 in Clients | Permalink | Comments (0)

Monday, November 5, 2018

No Rule 8.5 In Nevada

A lawsuit to collect unpaid legal fees was governed by Nevada rather than California law, according to a recent decision of the Nevada Supreme Court.

 The client relied on a conflict to deny his obligation to pay

Edward Stolz owns several radio stations and other business interests. In 2012, Stolz approached Robert Schumacher, an attorney in Gordon Rees Scully Mansukhani LLP's (Gordon & Rees) Las Vegas office, about potentially representing him and some of his entities in pending litigation in Nevada. One of the matters they discussed was a lawsuit in California alleging Stolz's stations had not paid for the rights to the music it broadcasted. They additionally discussed whether Stolz could be indemnified by his insurance company. Stolz said that his insurer was The Hartford (Hartford), but that he did not have a policy that would indemnify him. Schumacher advised Stolz that Hartford was a Gordon & Rees client, and that the firm could not represent Stolz in any litigation against Hartford; however, Gordon & Rees could write Hartford a letter requesting that it assume Stolz's defense in that lawsuit. Gordon & Rees advised Stolz that if it wrote Hartford a letter, and Hartford denied the request, Stolz would have to seek other counsel if he wished to pursue Hartford further. When Hartford denied the request, Stolz hired an insurance coverage attorney recommended by Gordon & Rees, but never pursued litigation.

The client counterclaimed alleging malpractice but that claim was dismissed on statute of limitations grounds. The law firm prevailed in a jury trial.

On choice of law

We conclude that the district court correctly applied Nevada law. The incident in question—whether Gordon & Rees should have disclosed the Hartford conflict in writing before representing Stolz— occurred in Nevada. The fee agreement, in fact, was signed by the managing partner in Gordon & Rees's Las Vegas office. Additionally, Nevada has an interest in regulating Nevada attorneys and adjudicating disputes for Nevada businesses. Nevada and California have the same public policy interest here because the guidelines for the ethical conduct at issue are virtually the same in both states.

Moreover, Nevada did not adopt the ABA model rules choice of law provision, which would have required that conduct in connection with a matter pending before a tribunal be governed by the rules of the jurisdiction in which the tribunal sits, even though Nevada did adopt the ABA jurisdictional rule. Compare RPC 8.5, with Model Rules of Profl Conduct r. 8.5 (Am. Bar Ass'n 2017). The district court was correct in noting this when determining not to use the California Rules of Professional Conduct as jury instructions. Accordingly, we conclude the district court was correct in applying Nevada law.

The case is ROYCE INT'L BROAD. CORP. VS. GORDON & REES, LLP C/W 72148. (Mike Frisch)

November 5, 2018 in Billable Hours, Clients | Permalink | Comments (0)

Friday, September 7, 2018

Client Autonomy And Concessions Of Guilt

The Louisiana Supreme Court has reversed a murder conviction, finding that defense counsel's concession of guilt over the defendant's objection amounted to ineffective assistance of counsel

During the trial, defense counsel conceded defendant killed [12 year old victim] Justin. However, defense counsel argued that the jury could not find defendant guilty of first-degree murder because the state failed to prove defendant had specific intent to kill and failed to prove defendant was engaged in an aggravated kidnapping or a second degree kidnapping when Justin died. The defense rested in the culpability phase of the trial without calling any witnesses.

A unanimous jury found defendant guilty of first-degree murder and determined defendant should be sentenced to death.

The court cited the recent United States Supreme Court decision  in McCoy v. Louisiana, -- U.S. --, 138 S. Ct. 1500 (2018). 

In this case, Mr. Horn argues his Sixth Amendment right to counsel was violated when his attorney conceded his guilt over his explicit objection. The record demonstrates that defendant’s attorney admitted that defendant killed Justin and also suggested to the jury that the evidence supported a finding that he molested, or attempted to molest Justin. Counsel specifically told the jury he was not asking them to find defendant “not guilty,” and further stated that the facts fit second-degree murder or manslaughter. The record further demonstrates that Mr. Horn disagreed with his counsel’s decision to concede guilt as part of the defense strategy and that defendant made the district court aware of the disagreement both before and during the trial...

In this court, defendant asserts the Supreme Court’s decision in McCoy is dispositive and requires a reversal of his conviction. By contrast, the state suggests McCoy is not controlling in this case because defendant did not claim outright innocence and instructed his attorneys to make an argument for accidental killing under the negligent homicide statute. After review of the record and considering the Court’s decision in McCoy, we reject the state’s argument and decline to restrict application of the holding in McCoy solely to those cases where a defendant maintains his absolute innocence to any crime. McCoy is broadly written and focuses on a defendant’s autonomy to choose the objective of his defense. Although Mr. McCoy’s objective was to pursue a defense of innocence by presenting an alibi defense, Mr. Horn’s objective was to assert a defense of innocence to the crime charged and the lesser-included offenses, i.e. asserting his innocence to any degree of murder. Mr. Horn was charged with first-degree murder. The only verdicts the jury was permitted to enter were “guilty,” “guilty of second degree murder,” “guilty of manslaughter,” or “not guilty.” See La. C.C.P. art. 814. The jury would not have been permitted to enter a plea relative to negligent homicide. The fact that defendant instructed his attorney to admit guilt to this different crime as part of his defense objective did not give defense counsel the authority to admit guilt to the crime charged or the lesser-included crimes, and does not cause us to disregard the holding of McCoy. While defense counsel may use his professional judgment to develop defense theories and trial strategies based on his assessment of the evidence, he cannot usurp the fundamental choices provided directly to a criminal defendant under the Constitution.

Chief Justice Johnson authored the opinion. Justice Weimer concurred and wrote on the sufficiency of evidence for first degree murder. (Mike Frisch)

September 7, 2018 in Clients | Permalink | Comments (0)

Monday, July 30, 2018

A Good Day To Be A Utah Attorney

The Utah Supreme Court took away significant damages awarded to a legal malpractice plaintiff

Erik Highberg, a personal injury attorney for Gregory & Swapp, PLLC, failed to bring a claim against two truck drivers who severely injured Mr. Highberg’s client, Jodi Kranendonk, before the statute of limitations ran on Ms. Kranendonk’s claim. Mr. Highberg then failed to disclose to Ms. Kranendonk for ten months the fact that he missed the statute of limitations. During that time, he sought other legal avenues to correct his mistake. Ms. Kranendonk ultimately sued Mr. Highberg and Gregory & Swapp (collectively, the Swapp Defendants) for legal malpractice, breach of contract, breach of fiduciary duty, and negligent hiring, training, and supervision.

At trial, Mr. Highberg testified that he withheld information from Ms. Kranendonk because he wanted to protect her from stress and worry. In response to this testimony, she sought to admit two statements in which he had written that she was becoming “a pain [in] the ass” and was “a moron.” The district court refused, under rule 403 of the Utah Rules of Evidence, to admit these statements and the trial went forward.

The four claims ultimately went to a jury, which found in favor of Ms. Kranendonk on each. The jury first awarded her $750,000, the amount the jurors believed she would have received if Mr. Highberg had timely brought her personal injury claim against the truck drivers. The jury also awarded her $2.75 million for non-economic damages, i.e., emotional distress she sustained as the result of Mr. Highberg’s malpractice in this case. This second award did not relate in any way to the emotional distress she sustained from the original personal injury. The jury did not award punitive damages.

After the jury’s decision, Ms. Kranendonk moved for attorney fees and litigation expenses on the ground that the Swapp Defendants had breached their fiduciary duties. The district court awarded her $1,166,666.67 in attorney fees—the amount she owed under her contingency fee agreement—but did not award her litigation expenses.

The court vacated both the non-economic damages and attorney fees.

Because the nature and language of the contract in this case do not show that emotional distress damages were explicitly contemplated by the parties, the district court erred in upholding the $2.75 million jury award for non-economic damages under a breach of contract theory.

...we hold that the jury had no evidence upon which to base its verdict that Ms. Kranendonk suffered emotional distress damages as a result of Mr. Highberg’s intentional concealment and, therefore, the district court erred in dismissing the Swapp Defendants’ motion for JNOV under a breach of fiduciary duty theory. And because the $2.75 million jury award for non-economic damages is not supported under either a breach of contract or breach of fiduciary claim in this case, we vacate it.

...We also vacate the district court’s award of $1.666,667.67 in attorney fees because Ms. Kranendonk’s breach of fiduciary duty claim—the only claim that could support this award—failed. And we hold that her claim on cross-appeal for litigation expenses also fails for the same reason.

The court rejected her claims based on exclusion of the "pain in the ass/moron" evidence

we decline to reach Ms. Kranendonk’s challenge of the district court’s decision to exclude Mr. Highberg’s two statements. Ms. Kranendonk seeks the admission of these statements in order to support her prayer for punitive damages. But because her breach of fiduciary duty claim fails, punitive damages cannot be awarded in this case regardless of our decision on this issue. So the issue is moot.

(Mike Frisch)

July 30, 2018 in Clients | Permalink | Comments (0)

Friday, June 29, 2018

Choice Of Law Analysis Dooms Legal Malpractice Claim

A legal malpractice claim failed due to the application of a shorter (Pennsylvania) rather than longer (New Jersey) statute of limitations, according to a decision of the New Jersey Appellate Division

 Plaintiff MTK Food Services, Inc. alleges defendants, attorney Richard Grungo, Jr. and his former firm, Archer & Greiner, P.C. (Archer),  committed legal malpractice regarding an insurance claim for fire damage at plaintiff's restaurant. 

The fire occurred in the little town of Bethlehem Pennsylvania

We agree with appellants that the trial court erred in concluding the New Jersey statute of limitations applied to this case. The only pertinent connection to New Jersey – that Grungo, a New Jersey licensed attorney, worked in a New Jersey office – falls short of establishing a substantial interest for New Jersey to apply its statute of limitations here. All other relevant facts point to Pennsylvania: the fire and resulting loss occurred in Pennsylvania; plaintiff is incorporated in Pennsylvania; Robbins enlisted Grungo because he is licensed in Pennsylvania; and Grungo filed the underlying complaint in Pennsylvania...

Furthermore, as the New Jersey State Bar Association contends in its amicus brief, applying New Jersey's six-year statute of limitations here would frustrate the purpose of  adopting the substantial-interest test and defy public policy. In McCarrell, the Court explained that the substantial-interest test: "places both this State's and out-of-state's citizens on an equal playing field, thus promoting principles of comity; advances predictability and uniformity in decision-making; and allows for greater certainty in the expectations of the parties." McCarrell, 227 N.J. at 593. If Robbins had obtained assistance from an attorney in Pennsylvania, the Pennsylvania statute of limitations would apply without question. That Robbins sought assistance from an attorney, who holds a New Jersey license and works in New Jersey, bears no relation to the malpractice allegation and therefore should not change the outcome here. To hold otherwise would subject New Jersey attorneys also practicing in other states to disparate, unfair treatment.

We would not want unfair treatment to New Jersey attorneys. (Mike Frisch)

June 29, 2018 in Clients | Permalink | Comments (0)

Tuesday, June 26, 2018


A legal malpractice claim against two law firm survived summary judgment per the New York Appellate Division for the First Judicial Department

The complaint sufficiently alleges a claim for legal malpractice against both the Budin defendants and the Neimark defendants as plaintiff has sufficiently met the minimum pleading requirements (see Schwartz v Olshan Grundman Frome & Rosenzweig, 302 AD2d 193, 198 [1st Dept 2003]).

The Budin defendants, as successor counsel, had an opportunity to protect plaintiff's rights by seeking discretionary leave, pursuant to General Municipal Law § 50-e(5), to serve a late notice of claim. Whether the Budin defendants would have prevailed on such motion will have to be determined by the trier of fact (see Davis v Isaacson, Robustelli, Fox, Fine, Greco & Fogelgaren, 284 AD2d 104 [1st Dept 2001], lv denied 97 NY2d 613 [2002]; F.P. v Herstic, 263 AD2d 393 [1st Dept 1999]). We do not find this determination to be speculative given that Supreme Court will weigh established factors in exercising its General Municipal Law § 50-e(5) discretion (see e.g. Rodriguez v City of New York, 144 AD3d 574 [1st Dept 2016]; Matter of Strohmeier v Metropolitan Transp. Auth., 121 AD3d 548 [1st Dept 2014]).

We agree with plaintiff's argument that the Neimark defendants' failure to serve a timely notice of claim, as of right, on the New York City Department of Education in the underlying personal injury action remains a potential proximate cause of his alleged damages. Plaintiff has a viable claim against the Neimark defendants despite the fact that the Budin defendants were substituted as counsel before the expiration of time to move to serve a late notice of claim. Thusthe Budin defendants' substitution can only be deemed a superseding and intervening act that severed any potential liability for legal malpractice on the part of the Neimark defendants if a determination is made that a motion for leave to serve a late notice of claim would have been successful in the underlying personal injury action (see Pyne v Block & Assoc., 305 AD2d 213 [1st Dept 2003]).

(Mike Frisch)

June 26, 2018 in Clients | Permalink | Comments (0)

Thursday, June 7, 2018

Law Firm's Suit Against Former Client For Fraud Revived

The District of Columbia Court of Appeals has held that a law firm's fraud claim against a former client for alleged misrepresentations  regarding fee payments survives the resolution of the unpaid fees awarded by the Bar's Attorney Client Arbitration Board ("ACAB").

 Appellant Ludwig & Robinson PLLC ("L&R" or "the law firm") appeals from the Superior Court‘s dismissal of its claims alleging fraud and conspiracy by defendants/appellees BiotechPharma, LLC ("BTP"), BTP‘s wholly-owned subsidiary Converting Biophile Laboratories, Inc ('CBL"), BTP‘s principal Raouf Guirguis (together, the "BTP defendants"), and Martin Kalin (alleged to be a BTP lender "who has held himself out" as BTP‘s "Executive Vice President." For the reasons set out below, we reverse and remand.

 L&R‘s complaint alleges that in 2011, BTP engaged the law firm‘s services to provide the company with "advice and representation regarding cross-border intellectual property claims." The engagement, which entailed extensive motions practice in the Eastern District of Virginia (the "Rocket Docket") and elsewhere as well as depositions and interviews "across the country and overseas," began after Kalin contacted L&R seeking representation for the company. 

There were a series of retainer agreements as unpaid bills mounted.

On January 31, 2013, after attempts to collect payment proved unsuccessful, L&R brought suit in the Superior Court, suing BTP for breach of contract (Count I); CBL and Guirguis for breach of guarantee (Count II); each of the BTP defendants for "Failure to Pay Accounts Stated" (Count III); and all defendants for fraud (Count IV), and conspiracy (Count V). The complaint alleges that as of June 5, 2012, BTP had incurred but failed to pay hourly fees of $1,233,683.08, a "success fee' of $358,659.96, and expenses of $196,605.67, for a total of $1,788,948.71.

The court

Here, the L&R-BTP relationship was an open-ended engagement; i.e., it had no fixed termination date. L&R‘s complaint alleges that the law firm reserved the right to "move to withdraw absent payment" and threatened to invoke that right when confronting Guirguis and Kalin about BTP‘s failure to pay billed amounts. The complaint further alleges that during those conversations, BTP (through Guirguis) and Kalin induced L&R to continue providing legal services to BTP under modified engagement letters, and thus not to withdraw, through false statements about payment sources available to pay the law firm‘s bills (e.g., CBL‘s purported credit line) and through omissions about "the fact and magnitude of liens" against BTP, loans by Kalin to BTP, and BTP‘s level of "indebtedness." In the context of these alleged transactions, the defendants/appellees had a duty independent of the subsequent modified engagement letters to "state truly"what "they told the law firm and also not to suppress or conceal any facts within [their] knowledge which would materially qualify those [representations] stated."

The scope of the ACAB authority 

Under the rules of then ACAB, that body‘s jurisdiction is limited to disputes "about the fee paid, charged, or claimed for legal services." D.C. Bar Att‘y-Client Arb. Bd. R. 3 (b). In addition, the Superior Court did not find, and none of the parties has argued that, Kalin is a privy of any of the BTP defendants such that he could be bound by the ACAB decision to which the BTP defendants were subject. For those reasons, the ACAB arbitration decision did not have res judicata effect as to L&R‘s claims sounding in fraudulent inducement and civil conspiracy against the BTP defendants, and likewise is not a res judicata bar with respect to any claim against Kalin.


In this case, the amount L&R billed BTP for legal services under the second modified engagement letter is some measure of what the law firm could have earned if the lawyers involved had withdrawn from representing BTP and taken on work for another or other clients. As L&R has suggested, its damages (if any) in this regard were likely "up to" rather than equivalent to the billed $1.8 million, because that amount was billed for what L&R has asserted was "round-the-clock work" and also because it included a success fee ($358,659.96) that the law firm would not necessarily have earned through other engagements, as well as expenses ($196,605.67, for, inter alia, "depositions and interviews across the country and overseas") the law firm would not necessarily have incurred in representing other clients. Whatever L&R might be able to prove in the way of "damages . . . up to the claimed 1.8 million dollars," the point we make here is that L&R‘s inclusion of a prayer to recover such an amount as damages for alleged fraudulent inducement does not necessarily require a conclusion that the law firm is attempting to recharacterize a contract claim as a fraud claim, or is merely trying to obtain the benefit of its bargain under its contract with BTP.  Though monetarily equivalent to L&R‘s claimed damages for breach of contract, the law firm‘s prayer in Counts IV and V for approximately $1.8 million in damages may have a different basis and may pertain to damages that are not compensable under contract principles.

Associate Judge Thompson authored the opinion. (Mike Frisch)

June 7, 2018 in Billable Hours, Clients | Permalink | Comments (1)

Saturday, June 2, 2018

An Unusual Arrangement Led To Legal Malpractice

The Nebraska Supreme Court reduced  a legal malpractice damage award but ordered a fee disgorged for a conflict of interest

In November 2013, David LeRette, Jr., individually and as the owner of Master Blaster, Inc., filed a complaint against Steven H. Howard and his law firm, alleging, among other nthings, that Howard committed legal malpractice and breached  his duty as LeRette’s attorney when he failed to advise LeRette of his conflicts of interest and when he acted adversely to LeRette’s interests. A jury trial was held on the matter in early 2017.

 The case involved an unusual situation.

LeRette had secured a judgment against Anderson, who declared bankruptcy. LeRette's counsel suggested that Howard (a law school classmate) be retained through LeRette but on behalf of Anderson to sue Anderson's prior counsel for legal malpractice.

LeRette’s bankruptcy attorney thought Anderson’s bankruptcy attorneys may have been negligent in their representation of Anderson and suggested to LeRette that Anderson could pursue a legal malpractice claim against them in order to generate funds that could be used to satisfy his debt to Master Blaster. Based on this information, LeRette contacted [prior attorney] Maass, who told LeRette that she thought her former classmate, Howard, might be able to help.

With LeRette’s approval, Maass called Howard to discuss the matter. Howard indicated that he was interested in the case. Thereafter, Maass gave Howard’s contact information to LeRette, who then called Howard.

After talking to Howard, LeRette contacted Anderson and asked him if he was interested in pursuing a legal malpractice claim against his bankruptcy attorneys. Anderson indicated that he was, and LeRette and Anderson met at a fast food restaurant to discuss it. According to LeRette, he told Anderson that he would hire the attorney.

LeRette and Anderson agreed to the arrangement after meeting with Howard

At the meeting, Howard advised LeRette and Anderson that any proceeds from the suit would be used to satisfy the judgment against Anderson. Howard advised LeRette not to execute on the judgment against Anderson, because it would make the case more difficult for Howard. LeRette did not execute on the judgment. According to LeRette, Howard told him that he could not be named in the malpractice action, because malpractice suits cannot be assigned. But Howard represented that the suit would be successful and that LeRette would “get [his] money and get paid.”

But twas not to be

On July 23, 2012, without discussing the matter with LeRette, Howard settled the legal malpractice action for $350,000. Howard deposited the settlement proceeds into his firm’s trust account and dispersed $235,964.78 to Anderson, retaining the remaining $114,035.22 in payment of his fees and expenses. Anderson did not pay LeRette, and LeRette never received any of the settlement proceeds. According to LeRette, he stopped receiving information from Anderson and Howard after the mediation. When LeRette followed up with the malpractice case, he was told that the trial was to occur on October 29, 2012. Sometime later, LeRette learned about the settlement and the payment and filed the suit against Howard and his law firm.

At the trial

the jury was instructed on two theories: legal malpractice and fraudulent misrepresentation. After the case was submitted, the jury returned a general verdict for LeRette and Master Blaster with damages of $775,000.


LeRette and Master Blaster assert that the trial court erred in reducing the damages to $235,968.78, the amount Anderson received in the settlement. He argues that reasonable minds could have concluded that LeRette and Master Blaster were entitled to $775,000. We disagree.

The conflict had consequences

Because Howard violated the rule regarding representations involving conflicts of interest, we conclude that, as a matter of law, Howard is not entitled to compensation for his services in the settlement. Thus, we modify the jury award to include the $114,035.22 that he received for those services.

LeRette v. Howard can be found at this link. (Mike Frisch)

June 2, 2018 in Clients | Permalink | Comments (0)

Tuesday, May 15, 2018

An Inexact Science

The dismissal of a legal malpractice claim has been affirmed by the North Carolina Court of Appeals

Carol D. Moore (“plaintiff”) appeals from the trial court’s order granting defendants’ motion for summary judgment on plaintiff’s claim for legal malpractice. After careful review, we conclude that plaintiff failed to forecast any evidence to prove that, but for defendants’ alleged negligence, plaintiff would have received a more favorable judgment in her prior equitable distribution action. Accordingly, we affirm the trial court’s order.

At issue was the end of a 25-year marriage

Plaintiff hired defendants due to their experience tracing marital assets in complex equitable distribution proceedings. Defendants were aware that plaintiff believed that Dr. Moore had hidden assets in anticipation of the parties’ divorce. In addition to defendants, plaintiff also retained certified public accountant Heather Linton and certified fraud examiner Carl Allen (“Allen”) to help locate the alleged missing assets.

During discovery, defendants conducted depositions; subpoenaed financial institutions; and reviewed tax returns and other documents for evidence of undisclosed earnings or accounts, including potential off-shore transactions. However, neither defendants nor plaintiff’s experts ever located any undisclosed assets. Jordan ultimately concluded that the Moores’ once-substantial marital estate had been depleted as a result of market factors and the parties’ extravagant lifestyle choices. Although Allen had “theories” that Dr. Moore might have mismanaged marital funds, Jordan determined that the evidence was speculative, unsubstantiated, and likely inadmissible. Therefore, when the trial commenced on 3 January 2011, Jordan notified Allen that he would not call him to testify. At trial, defendants did not present any expert witness evidence to support plaintiff’s theory that Dr. Moore hid marital assets prior to the parties’ divorce.

The plaintiff did not appeal the distribution of marital assets by the trial court; rather, she sued her lawyer

“The law is not an exact science but is, rather, a profession which involves the exercise of individual judgment.” Id. Contrary to plaintiff’s arguments, Jordan’s failure to present evidence that he, in his professional judgment, deemed “speculative” and “unsupported” is consistent both with the exercise of due care in representing plaintiff’s action, and with his duty of candor to the court.

Plaintiff failed to forecast sufficient evidence for the trial court to consider regarding any alleged marital asset. Without such evidence, the trial court could not determine whether plaintiff might have obtained a judgment in excess of the one that she actually received at equitable distribution. Furthermore, contrary to plaintiff’s arguments, there is no evidence that defendants failed to exercise due care and diligence in representing plaintiff’s action. Since plaintiff failed to establish that any alleged negligence on the part of defendants proximately caused damage to her, we affirm the trial court’s order granting defendants’ motion for summary judgment.

(Mike Frisch)

May 15, 2018 in Clients | Permalink | Comments (0)

Friday, May 11, 2018

Too Late To Sue

The Iowa Supreme Court reversed a court appeals decision and granted summary judgment to the defendant law firm in a legal malpractice case

A client appealed the district court’s grant of summary judgment in favor of her attorney and the attorney’s law firm in her legal negligence action. The client argued the court erred in finding the statute of limitations barred her action. She also contended the court erred in declining to apply the discovery rule, the continuous-representation rule, or the doctrine of fraudulent concealment.

We transferred the case to the court of appeals, which reversed the judgment of the district court. The attorney and his firm applied for further review, which we granted. On further review, we hold no genuine issue of material fact exists as to when the cause of action accrued and the statute of limitations bars the client’s action because the cause of action accrued more than five years before she filed suit. We also hold the client may not use the discovery rule, the continuous-representation rule, or the doctrine of fraudulent concealment to circumvent the limitations period. Accordingly, we vacate the decision of the court of appeals and affirm the judgment of the district court.

The alleged malpractice was advice to the client to pay estate bills from exempt funds (life insurance and 401k payments). 

we find Skadburg sustained actual, nonspeculative injury when she paid the creditors with the exempt funds on Gately’s alleged advice in 2008. Therefore, her cause of action accrued in 2008 when she made those payments. Because Skadburg made these payments more than five years before she commenced this action on August 19, 2015, section 614.1(4) bars her action unless a legal doctrine tolls the limitations period or estops Gately from raising the statute of limitations as an affirmative defense.

Skadburg argues three exceptions to the strict commencement of the limitations period. These exceptions are the discovery rule, the continuous-representation rule, and the doctrine of fraudulent concealment. Although Gately has the burden of establishing the statute-of-limitations defense, Skadburg, as the party attempting to avoid the limitations period, has the burden of demonstrating any exception.

Communications between lawyer and client showed client knowledge

Viewing the record in the light most favorable to Skadburg, the latest date she had actual or imputed knowledge of the possible connection between Gately’s advice and the damages caused by that advice, i.e., the payment of the estate’s debts from exempt funds was March 26, 2010. Accordingly, we find there is no genuine issue of material fact that by March 26, 2010, Skadburg had the duty to investigate the possible connection between Gately’s bad legal advice and her damages once she knew of such a possibility. At that time, the statute of limitations began to run under the discovery rule. She filed her action more than five years after March 26, 2010.

The court rejects the continuous representation rule where the client knows of the alleged malpractice and as to fraudulent concealment

We conclude as a matter of law Skadburg failed to prove by a clear and convincing preponderance of the evidence elements (2) and (4) of fraudulent concealment because Skadburg knew or was on inquiry notice about the deficiencies in Gately’s advice at the time she sent her communications. Thus, her reliance upon the alleged concealment was unreasonable. Accordingly, no genuine issue of fact exists as to whether Gately fraudulently concealed Skadburg’s cause of action for legal negligence, and Gately is entitled to judgment.

Link to the briefs and oral argument here. (Mike Frisch)

May 11, 2018 in Clients | Permalink | Comments (0)

Tuesday, May 8, 2018

No Attorney-Client Relationship

The New York Appellate Division for the First Judicial Department affirmed the dismissal of a legal malpractice claim

Plaintiff failed to state a claim for legal malpractice against defendant Lori H. Goldstein (Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 10 [1st Dept 2008]). The documentary evidence conclusively establishes that she was not acting as plaintiff's attorney. Rather, the terms of the post-nuptial agreement which plaintiff now challenges, as well as numerous emails between plaintiff, his former wife, and Goldstein, reflect the parties' understanding and agreement that Goldstein would draft the post-nuptial agreement, and the spouses' separate counsel would review it before execution. Accordingly, plaintiff has not sufficiently alleged an attorney-client relationship between him and Goldstein, or that she was negligent and that her negligence was the "but for" cause of his alleged injuries (id.).

Neither has plaintiff stated a legal malpractice claim against the remaining defendants, who reviewed the post-nuptial agreement and/or served as his counsel in the divorce action. He cannot explain how their failure to challenge the terms of the post-nuptial agreement in the divorce action was the "but for" cause of his alleged damages, given that his subsequent counsel also did not challenge the terms of the agreement (id.). In any event, plaintiff concedes that he made a strategic decision not to challenge the terms of the agreement in the divorce action. The claims for fraud and breach of fiduciary duty are duplicative of the legal malpractice claim, since they all arose from identical facts and allege the same damages (Voutsas v Hochberg, 103 AD3d 445, 446 [1st Dept 2013], lv denied 22 NY3d 853 [2013]).

(Mike Frisch)

May 8, 2018 in Clients | Permalink | Comments (0)

Monday, April 30, 2018

ABA Malpractice Disclosure Opinion Challenged On Merits

Dane S, Ciolino at Louisiana Legal Ethics blog has an interesting post on the recent ABA opinion on disclosure of past malpractice

Recognizing that “[e]ven the best lawyers may err,” the ABA Standing Committee on Ethics and Professional Responsibility has issued a formal opinion addressing when a lawyer must inform a client or former client of a material error. See ABA Formal Op. No. 481 (Apr. 17, 2018). While the committee gets it right as to present clients, even the best committees may err when it comes to a lawyer’s obligation to disclose errors to former clients...

The committee got it right in concluding that “[g]ood business and risk management reasons may exist for lawyers to inform former clients of their material errors when they can do so in time to avoid or mitigate any potential harm or prejudice to the former client.” See ABA Formal Op. 481 at 2. But it was wrong in advising that such notification is a “personal decision” left to the lawyer. It’s not. Rule 1.16(d) requires it, at least when notification is practicable and reasonable to prevent, mitigate or rectify substantial injury to the financial interests or property of the former client.

I think Mr. Ciolino gets it right here. (Mike Frisch)

April 30, 2018 in Clients | Permalink | Comments (0)

Thursday, April 19, 2018

Coins Of The Realm

A legal malpractice judgment has been affirmed by the New York Appellate Division for the Second Judicial Department.

23KT Gold Collectibles, Ltd. (hereinafter 23KT), andMerrickMint, Ltd. (hereinafter Merrick), are affiliated designers and manufacturers of memorabilia and collectible coins. In 2008,23KT entered into an agreement with Daily News, L.P. (hereinafter Daily News), in which the parties to the agreement agreed to develop and promote a coin club through which they would sell collectible coins and share profits. 23KT agreed to design and manufacture coins and coin sets, and Daily News agreed to provide 204 pages of advertising space to advertise the coins. The coins sold through the coin club would also be offered for sale on a website called “ecoins,” which would be operated by 23KT. The agreement included an exclusivity clause providing that coin club products could not be advertised, marketed, sold, or offered for sale by 23KT or its affiliates, including Merrick, in any forum or media other than Daily News advertisements or ecoins. Products which were substantially similar, but not identical, to a coin club product could not be sold by 23KT, but were permitted to be sold by its affiliates, such as Merrick. The agreement permitted either party to terminate the agreement via written notice if the other party materially breached the agreement “and the breach is not remedied within thirty (30) days of the breaching party’s receipt of written notice of the breach.” The agreement specified that it was the entire agreement, that it could not be modified except in writing, and that a failure to exercise any right under the agreement did not operate as a waiver of that right.

By letter dated January 29, 2009, Daily News notified 23KT that it had materially breached the exclusivity provision of the agreement by marketing coin club products and similar products in the New York Post and on certain websites. The notice stated that the breaches were not capable of being remedied, and that the agreement would terminate on March 1, 2009. 23KT responded with a letter in which it disputed that a breach had occurred, and asserted that, in any event, Daily News was required to permit it to cure the alleged breaches. No agreement was reached on the issue of a cure, and 23KT retained the defendant Lefkowicz & Gottfried, LLP (hereinafter the defendant law firm), to commence an action, inter alia, to recover damages for breach of contract against Daily News. Daily News obtained summary judgment dismissing the first complaint filed on behalf of 23KT, a finding in its favor on liability on its counterclaims against 23KT due to discovery failures, and dismissal of the second complaint filed on behalf of 23KT based on the doctrine of res judicata. 23KT then retained another attorney, who negotiated a settlement in which the parties discontinued their claims and 23KT paid Daily News the sum of $20,000.

23KT and others then commenced this legal malpractice action against the defendant law firm and its principals. In an order dated August 4, 2014, the Supreme Court granted the defendants’ motion for summary judgment dismissing the complaint. However, in an order dated April 1, 2015, the court granted the plaintiffs’ motion for leave to reargue the defendants’ motion and, upon reargument, denied the defendants’ motion. The matter proceeded to trial, after which the court determined that 23KT established its legal malpractice cause of action against the defendant law firm. Judgment was entered in favor of 23KT and against the defendant law firm in the principal sum of $1,675,000, representing the sum 23KT would have recovered from Daily News in the absence of the law firm’s negligence, the sum spent to settle the matter with Daily News, and a
return of the retainer paid to the defendant law firm. The defendant law firm appeals.

On the merits

Here, the Supreme Court determined that the defendant law firm was negligent in the underlying representation and that, but for such negligence, 23KT would have prevailed in the underlying litigation. On appeal, the defendant law firm challenges only the finding of but-for causation, arguing that 23KT was in breach of the exclusivity clause of the underlying agreement and therefore would not have prevailed in the underlying litigation, regardless of its alleged malpractice. The contention is without merit. The evidence at trial established that most of the alleged breaches listed in Daily News’ January 29, 2009, breach notice were actually sales by Merrick of similar, but not identical, coins, which did not violate the exclusivity clause of the agreement. While certain identical coins were simultaneously offered for sale on Merrick’s website and on ecoins, even if such duplication constituted a material breach of the agreement, giving due deference to the court’s credibility determinations (see Gomez v Eleni, LLC, 122 AD3d at 798), 23KT established that Daily News breached the agreement by failing to comply with its obligation to permit 23KT the opportunity to cure prior to termination of the agreement (see Kalus v Prime Care Physicians, P.C., 20 AD3d 452, 454; Rebh v Lake George Ventures, 223 AD2d at 986-987). Accordingly, the determination that 23KT established that it would have prevailed in the underlying litigation but for the defendant law firm’s negligence was warranted by the facts.

(Mike Frisch)

April 19, 2018 in Clients | Permalink | Comments (0)

Friday, April 13, 2018

The Second Prong

The Indiana Supreme Court reversed the grant of summary judgment to a defendant law firm

This case is nominally about lawyer malpractice but really about premises liability. Plaintiff was 85 years old when she fell and severely fractured her leg while visiting her husband in the hospital. Plaintiff retained Defendantsa lawyer and his law firmto represent her against the hospital. Defendants missed the filing deadline by failing to sue the hospital within the applicable statute of limitations. Under the "trial-within-a-trial" doctrine, a client alleging legal malpractice must prove not only that the lawyer’s conduct fell below the governing duty of care but also that the client would have prevailed had the lawyer not been negligent. Neither side disputes that missing a filing deadline breaches the duty of care lawyers owe to clients. So this case is about the second prong: Would Plaintiff have won her claim against the hospital had the lawyer timely sued?

The law firm invokes a defense the hospital would have assertedthat the hospital did not breach its duty under premises-liability law because Plaintiff’s fall was caused by a known or obvious condition: the wires and cords lying on the floor on which she allegedly tripped. We granted transfer to consider whether, as the Court of Appeals held, the landowner bears the burden on summary judgment to disprove that the invitee was distracted from or forgot about a known danger on the premises when the invitee made no such claim and designated no such evidence herself. But after oral argument, it is clear this issue is not squarely before us. Both parties now concede the invitee did not know of the tripping risk that she claims caused her fall. Although we have previously vacated grants of transfer when the factual premise for our grant proves false, we elect to decide this case on its merits.

We hold that Defendants, as movants on summary judgment, failed to negate the causation element of Plaintiff’s malpractice claim. Specifically, Defendants failed to establish, as a matter of law, that Plaintiff would not have succeeded in her premises-liability claim against the hospital. We reverse the trial court’s order granting summary judgment for Defendants and remand.

(Mike Frisch)

April 13, 2018 in Clients | Permalink | Comments (0)

Thursday, April 12, 2018

Excelsior Belongs In This House

A legal malpractice claim came too late and without sufficient basis, according to the New York Appellate Division for the First Judicial Department.

This case arises out of a fraud scheme perpetrated by nonparties Christopher Devine and Bruce Buzil against decedent and nonparty Excelsior Capital LLP, which is wholly owned by Davis. Decedent introduced Davis to Devine and Buzil, resulting in Davis also being defrauded. The scheme resulted in decedent lending more than $70 million to the fraudsters and Davis, through Excelsior, lending them $18 million. Davis, as a judgment creditor of decedent's estate, was permitted to commence and prosecute this action on behalf of the estate.

Defendant was retained by decedent to defend him in an action commenced by Excelsior, and to pursue claims in a federal action under the Racketeer Influenced and Corrupt Organizations Act (RICO) against Devine and Buzil. Defendant commenced that federal action in 2009; decedent died on March 9, 2011.

Following decedent's death, defendant was separately retained to represent decedent's son as a third-party defendant in the Devine action; to defend decedent's estate in two separate actions commenced by Excelsior; and to represent the estate in connection with a potential criminal investigation of Devine. The statute of limitations for a legal malpractice claim is three years (CPLR 214[6]; McCoy v Feinman, 99 NY2d 295, 301 [2002]). Here, the latest date on which the claim could have accrued is March 9, 2011, because that is when decedent died, thereby severing the attorney-client relationship between decedent and defendant (see Pace v Raisman & Assoc., Esqs., LLP, 95 AD3d 1185, 1188 [2d Dept 2012]; see also Velazquez v Katz, 42 AD3d 566, 567 [2d Dept 2007]). March 9, 2011 is more than three years prior to the commencement of this action on August 12, 2014.

In opposing defendant's prima facie showing that the claim is untimely, Davis had the burden of demonstrating the statute of limitations has been tolled or does not apply (see CLP Leasing Co., LP v Nessen, 12 AD3d 226, 227 [1st Dept 2004]). Davis cannot rely on the continuous representation doctrine to toll the statute of limitations as the doctrine "tolls the Statute of Limitations only where the continuing representation pertains specifically to the matter in which the attorney committed the alleged malpractice" (see Shumsky v Eisenstein, 96 NY2d 164, 168 [2001]).

The documentary evidence establishes that following decedent's death, defendant did not represent the estate in the Devine action. The retainer agreements executed with defendant after  the decedent's death were explicitly limited to representing the estate in other litigation and not the Devine litigation. In addition, the evidence demonstrated that following decedent's passing defendant never entered an appearance on the estate's behalf while other law firms were substituted as counsel in the Devine action, made a motion to substitute the estate as plaintiff, and appeared on behalf of the estate, and ultimately settled with the Devine parties in May 2014 (see Matter of Merker, 18 AD3d 332, 332-333 [1st Dept 2005] [no continuous representation where plaintiff had "retained new counsel"]).

Further, the continuous representation doctrine does not apply where there is only a vague "ongoing representation" (Johnson v Proskauer Rose LLP, 129 AD3d 59, 68 [1st Dept 2015]). For the doctrine to apply, the representation must be specifically related to the subject matter underlying the malpractice claim, and there must be a mutual understanding of need for further services in connection with that same subject matter (see Shumsky, 96 NY2d at 168; see also CLP Leasing, 12 AD3d at 227).

Contrary to purported ongoing representation by decedent's family and advisors, the record evidence demonstrates the lack of a mutual understanding that defendant would continue to represent the estate in the Devine action, even if there was a continuation of a general professional relationship (see Pellegrino v Oppenheimer & Co., Inc., 49 AD3d 94, 99 [1st Dept 2008] ["a party cannot create the relationship based on his or her own beliefs or actions"]; Jane St. Co. v Rosenberg & Estis, 192 AD2d 451, 451 [1st Dept 1993], lv denied 82 NY2d 654 [1993] ["plaintiff's unilateral beliefs and actions do not confer upon it the status of client"]).

Defendant never appeared in the Devine action after decedent's death, and when the estate was later substituted as plaintiff, this matter was handled by different counsel. In fact, defendant filed a "Suggestion of Death Upon the Record" advising the court in the Devine action of decedent's death, in which defendant identified itself as "Former Attorneys for C. Robert Allen, III." As such, "there was no concrete task defendant[] [was] likely to perform," and "while there was certainly the possibility that the need for future legal work would be required," decedent's representatives "could not have acutely' anticipated the need for further counsel from defendant[] that would trigger the continuous representation toll" (Johnson, 129 AD3d at 68).

The fact that defendant represented the estate in related matters is not sufficient to establish continuous representation, as these matters were sufficiently distinct as to not be "part of a continuing, interconnected representation" (cf. Town of Amherst v Weiss, 120 AD3d 1550, 1552-1553 [4th Dept 2014]; Deep v Boies, 53 AD3d 948, 948-952 [3d Dept 2008]). The continuous representation doctrine is limited to ongoing representation "pertain[ing] specifically to the matter in which the attorney committed the alleged malpractice" and "is not applicable to a client's ... continuing general relationship with a lawyer" (Shumsky, 96 NY2d at 168; see also Pace, 95 AD3d at 1188). Nor is the fact that defendant represented decedent's son personally in the Devine action sufficient, as he is a separate client.

Even were it not untimely, the malpractice claim should also be dismissed because "the proximate cause of any damages sustained by plaintiff was not the alleged malpractice of defendant[], but rather the intervening and superseding failure of plaintiff's successor attorney" (Boye v Rubin & Bailin, LLP, 152 AD3d 1, 10 [1st Dept 2017]). This is the case where successor counsel had "sufficient time and opportunity to adequately protect plaintiff's rights," but failed to do so (Maksimiak v Schwartzapfel Novick Truhowsky Marcus, P.C., 82 AD3d 652, 652 [1st Dept 2011]; Somma v Dansker & Aspromonte Assoc., 44 AD3d 376, 377 [1st Dept 2007]).

The statute of limitations for a civil RICO claim is four years (Agency Holding Corp. v Malley-Duff & Assoc., Inc., 483 US 143, 156 [1987]). Davis, who now stands in decedent's shoes, is bound by decedent's judicial admissions, including admissions made in the Devine complaint that the fraud was uncovered at the end of 2007 (see New Greenwich Litig. Trustee, LLC v Citco Fund Servs. [Europe] B.V., 145 AD3d 16, 25 [1st Dept 2016], lv denied 29 NY3d 917 [2017][ admissions, including informal judicial admissions, by a "representative or predecessor in interest of a party" are binding on the party]). Since Davis is bound to the allegation that the fraud was uncovered at the end of 2007, and successor counsel appeared in the Devine action by June 2011, successor counsel had approximately six months to adequately [*3]protect decedent's rights when the limitations period for the RICO claim would run at the end of 2011.

(Mike Frisch)

April 12, 2018 in Clients | Permalink | Comments (0)

Wednesday, April 11, 2018

Prospective Client Duties

The District of Columbia Bar Legal Ethics Committee has released a new opinion

 A lawyer's ethical obligations to prospective clients are set forth in Rule 1.18 of the D.C. Rules of Professional Conduct ("the D.C. Rules"). On its face, Rule 1.18 imposes only two obligations on a lawyer. First, regardless of whether a client-lawyer relationship ensues, Rule 1.18(b) prohibits "a lawyer who has had discussions with a prospective client" from "us[ing] or reveal[ing] information learned in the consultation, except as permitted by Rule 1.6." Because "the duty of confidentiality . . . attaches when the lawyer agrees to consider whether a client-lawyer relationship shall be established," a lawyer's obligations under Rule 1.6 also extend to information relating to a prospective client consultation—e.g., notes regarding the lawyer's mental impressions of the prospective client or matter, legal research, or other information obtained through subsequent investigation. Second, Rules 1.18(c) and (d) prohibit a lawyer from "represent[ing] a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received a confidence or secret from the prospective client," unless both the affected client and the prospective client have given informed consent.

 Where a prospective client elects not to retain the lawyer's services, or the lawyer is either unwilling or unable to represent the prospective client, two questions remain. First, what ethical obligation, if any, does a lawyer have to preserve either the information that the lawyer learned in the prospective client consultation or other information relating to the consultation? Second, what ethical obligation, if any, does a lawyer have to turn over such information to the prospective client, either at the time that the lawyer and/or prospective client decide not to form a client-lawyer relationship or thereafter?
Until such time as a final decision is made regarding whether to form a client-lawyer relationship, a lawyer has an obligation under Rules 1.18 and 1.15 to safeguard property, including intangible property, entrusted to the lawyer by the prospective client. For example, in addition to tangible property, a prospective client may entrust a lawyer with certain intellectual property during a prospective client consultation that the lawyer must safeguard while evaluating whether to represent the prospective client. Once a final decision is made not to form a client-lawyer relationship, Rules 1.18 and 1.15 require the lawyer to return such property to the prospective client or otherwise dispose of it in accordance with the prospective client's instructions. In the absence of any substantive legal or contractual obligation to do so, however, the lawyer has no obligation to preserve or turn over to a prospective client information learned in or relating to a prospective client consultation—including the lawyer's notes or other research or information that the lawyer generates or obtains—in which the prospective client has no property interest.
(Mike Frisch)

April 11, 2018 in Clients | Permalink | Comments (0)

Sunday, March 18, 2018

Exoneration Not Required To Sue Defense Counsel

The Iowa Supreme Court has held that proof of exoneration is not necessarily required for a convicted defendant to sue for legal malpractice

This appeal presents the narrow question of whether the relief required rule (also called the exoneration rule) applies to a convicted criminal suing one of his defense attorneys for legal malpractice over an alleged missed opportunity to shorten his period of supervised probation. This rule ordinarily requires proof the client had been exonerated from the underlying conviction. The defendant attorney was retained after the malpractice plaintiff was convicted and sentenced on three counts of welfare fraud and ordered to pay restitution. The attorney successfully obtained postconviction relief vacating two convictions and over $80,000 in restitution and successfully opposed the state’s effort to have his client civilly committed as a sexually violent predator. Meanwhile, the offender, represented by separate counsel, was incarcerated for a probation violation. The district court later determined sua sponte that his term of supervised probation should have ended earlier, which would have avoided nearly a year in prison. The offender then sued one of his lawyers for malpractice.

The defendant attorney moved for summary judgment on four grounds. The district court reached only one ground and granted summary judgment based on the relief-required rule. The court of appeals reversed the summary judgment and held the client may sue over the alleged sentencing error without proving his exoneration from the conviction, so long as he obtained relief from the sentencing error. That is the position taken by the Restatement (Third) of the Law Governing Lawyers. We hold the malpractice plaintiff in this situation must prove relief from the sentencing error allegedly caused by the malpractice, not the underlying conviction. We express no opinion on the alternative grounds for summary judgment, including the scope of this defendant–attorney’s duty, if any, to monitor the duration of supervised probation. Those issues were not briefed or argued on appeal and may be decided by the district court on remand.

The court considered the approach of other jurisdictions

These cases reflect the Restatement (Third) position we adopt today. Because Kraklio does not allege Simmons negligently caused his conviction, Kraklio need not prove relief from that conviction. But the relief-required rule still applies to the alleged sentencing error. That is, Kraklio must prove he obtained relief from his period of supervised probation that he claims Simmons should have ended sooner. See Restatement (Third) of the Law Governing Lawyers § 53, at 389 (“A lawyer is liable . . . only if the lawyer’s breach of a duty of care or breach of fiduciary duty was a legal cause of injury, as determined under generally applicable principles of causation and damages.”); id. reporter’s note cmt. d, at 397–98 (collecting cases holding collateral relief from the conviction is not required when the malpractice plaintiff does not challenge the conviction); see also Johnson, 136 P.3d at 80 (“An unlawful restraint of liberty can constitute harm . . . .”); Powell v. Associated Counsel for the Accused, 129 P.3d 831, 833 (Wash. Ct. App. 2006) (“His unlawful restraint beyond th[e maximum] period [allowed by law] was not  a consequence of his own actions.”).

The district court hearing Kraklio’s revocation challenge ruled that his probation actually had ended while he was incarcerated for the probation violation. We conclude this ruling constituted sufficient relief from the alleged sentencing error to avoid summary judgment under the relief-required rule.

Note the significant  improvements  in access to case information on the Iowa Supreme Court web page. (Mike Frisch)

March 18, 2018 in Clients | Permalink | Comments (0)

Tuesday, March 6, 2018

Attorneys Retained By Insurer Disqualified

The Washington State Court of Appeals Division One holds

An insurance defense lawyer who files a notice of appearance on behalf of an estate may not, after withdrawing from representation of the estate, later act on behalf of another client to remove the personal representative of the estate. The personal representative is a former client, and the lawyer must comply with Rule of Professional Conduct (RPC) 1.9, either by withdrawing from representation of the other client or obtaining consent from the estate's personal representative. A lawyer who does not comply is properly disqualified for having a conflict of interest.

The case has a complex cast of characters arising from an accident where both drivers were killed and the wife of one was severely injured. The estate of Harris sued the estate of Taylor Griffith (the 16 year old at fault driver), his parents and their insurer.

Moore is an attorney who was appointed personal representative of the estate of Griffith over the parents objection

The court commissioner ruled that given the potential for conflict between the Griffith parents and their son's estate, it was more untenable to appoint one of the parents than to appoint Moore. The commissioner expressed confidence that Moore would recognize his obligation as a fiduciary to be independent and impartial. The commissioner appointed Moore as personal representative by order dated December 8, 2015. The order specifically authorized Moore "to participate in litigation and to settle or assign claims" on behalf of Taylor's estate.


Travelers appointed attorneys Jacquelyn Beatty and Michael King to serve as additional defense counsel. Beatty filed a notice in the wrongful death action associating herself with Jaeger on behalf of the Griffith parents and Taylor's estate. King filed a notice associating with Jaeger as counsel "for defendants."

The parents were dismissed as defendants and the issues narrowed to only damages. The damages issue went to arbitration.


Represented by King, the Griffith parents filed a petition under the Trust and Estate Dispute Resolution Act (TEDRA), chapter 11.96A ROW, to remove and replace Moore as personal representative. The court consolidated this  petition with the pending motion to revise the commissioner's order appointing Moore. Both were set for consideration on April 29, 2016. By motions filed on March 31, 2016, the Harrises alleged that under RPC 1.9, Beatty and King could not continue to represent the Griffith parents. Beatty and King responded that the rule did not apply because Moore was not their former client.

Au contraire.

The court on standing

A court's formal finding of a lawyer's rule violation carries with it sufficient potential for adverse consequences to the lawyer to make the ruling appealable by the lawyer. United States v. Talao,222 F.3d 1133, 1138 (9th Cir. 2000). Accordingly, we conclude Beatty and King have standing to appeal the disqualification order. Whether the Griffith parents also have standing need not be decided.

And on the merits

An advisory opinion issued by the Washington State Bar Association addresses the precise situation Beatty and King found themselves in—a potential violation of RPC 1.9 by a lawyer retained by an insurance company:

The Committee reviewed your inquiry wherein you had been retained by an insurer to represent a city and a police officer employed by the city. You filed a Notice of Appearance on behalf of each of those clients. Subsequently, you learned that there was a conflict of interest between the two clients. You ask whether you can continue to represent the city after proper withdrawal from representing the police officer. The Committee was of the opinion that for the purposes of RPC 1.9, the fact that you filed a Notice of Appearance means that the police officer is a former client and you must therefore comply with the requirements of RPC 1.9. WSBA Rules of Profl Conduct Comm., Advisory Op. 1578 (1994) (emphasis added).

We agree with the advice of the Bar. A lawyer appointed by an insurance company to defend two clients, and who files a notice of appearance on behalf of each of them, may not continue to represent only one of those clients without satisfying the requirements of RPC 1.9. Beatty and King could not continue to represent only the Griffith parents without Moore's waiver of the conflict. Because Beatty and King did not comply with the rule, the order disqualifying them was properly entered.

(Mike Frisch)

March 6, 2018 in Clients | Permalink | Comments (0)