NY: Negligent Representation? No Fee.
Campagnola v. Mulholland, Minion & Roe, (pdf)
76 N.Y.2d 38 (N.Y. 1990); 555 N.E.2d 611
N.Y. Underlying personal injury action
Student Contributor: Jason Klein
Facts: Plaintiff was struck by a car while working as a crossing guard and was permanently disabled. Plaintiff retained Defendant to pursue a claim for personal injuries and agreed to a contingency fee of one third for any money recovered. The owner of the car that struck Plaintiff was insured for only $10,000. Plaintiff herself was insured under a Government issued policy for underinsured benefits for $100,000. The Government policy required consent prior to the settlement of any claim against the person deemed responsible for the insured’s injuries. Defendant failed to notify the Government insurance company before settling with the car owner for $10,000, of which $3,150 was deducted as a fee and $550 for expenses. When Plaintiff submitted a claim under the Government issued policy, her claim was denied because the settlement with the car owner was made without consent. Plaintiff commenced this action against Defendant seeking $100,000 in damages for malpractice and Defendant asserted an affirmative defense to reduce any recovered damages by the amount Defendant would have received as attorneys’ fees and expenses in the personal injury action.
Issue: In a malpractice action against an attorney, can the attorney deduct the “hypothetical” fee that would have been payable to the attorney in the underlying action?
Ruling: No. An attorneys’ malpractice constitutes a failure to honor faithfully the loyalty owed to a client. Thus, the plaintiff’s recoverable damages are not limited by a deduction for the fee that she would have paid the defendant had the defendant properly performed the contract of representation.
The Lesson: A reduction in the plaintiff’s recovery equal to what the attorney would have earned but for his negligence, is impermissible because a negligent attorney is precluded from collecting a fee.
I don't know how I feel about this. Not allowing a deduction of fee seems like punishing a lawyer doubly for his actions. I wonder, whether in medical malpractice cases, a doctor is paid for negligent services?
I agree with the holding in this case. I think that the case presents another example of the importance of protecting clients from lawyers who act in an unethical manner. Although lawyers are sworn into the bar and claim that they will uphold the ethical rules of professional conduct, that is unfortunately not what happens in practice.
I agree with this ruling. A negligent lawyer should not be able to reduce the plaintiff’s recovery by the amount of the contingency fee the attorney would have earned had he/she not been negligent. This was particularly appropriate in this case. Since the judge noted here that the negligent attorney performed no services to obtain the disputed sum, so there was no quantum meriut claim for the amount.
Once again, although the Court reaches a reasoned result, I think there could be another side. The client's recovery, had the attorney not been negligent, would have been reduced by legal fees. If the client chose a more experienced attorney, perhaps this incident would never have occurred, but again her recovery would have been reduced.
The more just result here would be to either reduce the recovery OR take the amount due as legal fees and place them into a victims compensation fund as some courts are doing with punitive damages.
The attorney's affirmative defense here completely misses the point. The plaintiff is in the position he is in (suing the attorney for malpractice) because the attorney failed to effectuate the duties owed to the plaintiff. Essentially, he did not act properly as the plaintiff's attorney and thus is not deserving of a fee. To reduce the plaintiff's damages by the hypothetical attorney's fee is basically giving the attorney his fee. While the attorney may still be liable to the plaintiff for significant monetary damages even if a fee were to be deducted, it is the underlying principle which makes such a practice unpalatable. Moreover, the attorney clearly is not considering the fact that because of his negligence, his former client now has to expend money to hire another attorney to carry out the malpractice claim. This is even more reason not to deduct any monies on behalf of the attorney from the plaintiff's damages. The plaintiff has in reality suffered monetary damages (not to mention the emotional distress/stress of an additional lawsuit) outside of the $100,000 because of the attorney's negligence.
I agree with the decision because it's only fair to the client that the negligent attorney does not deduct the "hypothetical" fee that would have been payable to the attorney in the underlying action when he is claiming credit for unearned attorney fees. A contrary decision of allowing a negligent attorney to be able to deduct what they would have earned would be not only be an unjust result but would also deter the public policy of promoting loyalty towards clients.
Although it would seem like an obvious answer that a lawyer would not be able to collect his fee in the face of malpractice. But what if the attorney has provided substantial services toward the case that were not part of the malpractice action? should an attorney who made a small procedural error that led to a poor result also be forced to forgoe extensive research and document generation expense recovery?
I think Mr. Feinstein makes a good point. Is this a bright line rule? or can an attorney just not recover for services rendered as the result of his negligence. I think that in some cases it can be a fine line as to what the attorney may or may not recover. But, generally I agree with the holding and think its only fair that a client need not have their judgment reduced in order to pay a negligent attorney fees.
I agree with Todd, would this rule still apply if the malpractice was much less than the legal fee.
Even if the attorney incurs substantial expenses in undertaking a client's case, if he breaches the duty he owes to his client then he should not be able to deduct the expenses or the attorney's fees he would have earned from a judgment in a malpractice action. If an attorney makes a small procedural error and files a claim a day after the statute has expired, the attorney's fees he would have earned are going to be canceled out by the attorney's fees that the client is going to incur in retaining counsel to prosecute the malpractice action.
Not every minor mistake is going to lead to malpractice, but if it does then it is the client who is to be made whole, not the attorney.
In response to Mr. Feinstein, while I agree with the point you are making, I think it is a fine line. It would be very time consuming for a court to needle through every service that the attorney has performed for the client to determine whether or not that service was associated with the legal malpractice.
I agree with Mr. Henn. I like the "either-or" proposition as a constructive method of remedying the proverbial reward the court gives a client if their attorney is negligent during the course of representation, or alternatively assisting victims of crime.
Also, here is some entirely debatable food for thought:
This case produces a great many side-effects which expose attorneys to unintended liability. This includes savvy clients who do not want to pay legal fees. The message to these litigants is clear: If you have accrued extensive legal fees, and your attorney was negligent in any way, minuscule or otherwise, a malpractice cause of action may save you some money. If you don't want to pay your attorney's fees, sue your attorney for malpractice.
At the end of the day, there are many "coulda", "shoulda", "woulda's" that any attorney will face. Why should an attorney pay damages that make the client whole, and not be paid for their work had the client been made whole from the start? A whole client would have paid their attorney fees. The costs associated with litigation are the costs of doing business in the justice system.
As Ms. Goldberg stated, "Not allowing a deduction of fee seems like punishing a lawyer doubly for his actions."
It does become a fine line and it would appear as if lawyers were being rewarded for committing malpractice if they are permitted to deduct their fee. The fee is regarded as contingent for a reason and is contingent on the lawyer's ethical handling of the case at hand.
It does become a fine line and it would appear as if lawyers were being rewarded for committing malpractice if they are permitted to deduct their fee. The fee is regarded as contingent for a reason and is contingent on the lawyer's ethical handling of the case at hand.
It does become a fine line and it would appear as if lawyers were being rewarded for committing malpractice if they are permitted to deduct their fee. The fee is regarded as contingent for a reason and is contingent on the lawyer's ethical handling of the case at hand.