Legal Malpractice Law Review : Professional Responsibility Case Summaries & Commentary : Bennett J. Wasserman : LegalMalpractice.com : Lawyer Malpractice & Legal Ethics

Black v. California Appellate Project, Court of Appeals of California, Second District, Division Four, June 4, 2010 (Unpublished).

Facts: Plaintiff was convicted of first degree burglary, and based on his prior criminal history, was sentenced to 38 years to life.  Plaintiff appealed and the appellate court affirmed his conviction.  Shortly thereafter, Black filed an action for negligence against the California Appellate Project, the organization that had appointed his defense counsel.  The trial court dismissed Black's negligence action and Black appealed.

Issue: Is a public interest organization liable for the quality of legal services rendered by an attorney that it selects and appoints to handle pro bono matters? 

Ruling: Yes. 

CAP argued that, based upon prior California decisions, Plaintiff first needed to establish a duty on the part of a government entity that could lead to potential tort liability for professional malpractice.  It argued that under the California Tort Claims Act, government tort liability depends on the existence of a statute, and Plaintiff failed to cite any statute guaranteeing that CAP would provide him with legal representation free of attorney neglect or fault. 

The Court, however, looked to CAP's website which provided that its duty included not only the appointment of counsel on behalf of indigent criminal defendants, but also the evaluation of "appointed counsel's performance in order to match attorney skill and experience with the complexity level of each particular case," "review appointed counsel's work," and "provide a quality control function, helping to ensure that panel attorneys have available the resources necessary to provide effective representation..."

The Court further noted that CAP was not a "governmental entity" and, moreover, its work did not involve the type of "policy decisions" that are insulated from liability under the Tort Claims Act. 

Finally, the Court rejected CAP's argument that it was entitled to quasi-judicial immunity: 

[T]he availability of the immunity turns on whether the person is functioning as an advocate or a nonadvocate...[T]he acts performed by [CAP was] not judicial in nature...[The acts] involved selecting defense counsel; they may also have involved substantive review of appointed counsel's appellate representation.  [CAP's] role n no way involved fact-finding or other quasi-judicial functions.

Lesson: Public interest organizations that engage in something more than the mechanical process of appointing counsel do not appear to be protected from professional negligence actions in California.

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Gere v. Louis, Superior Court of New Jersey, Appellate Division, August 25, 2010 (Unpublished)

Facts:  Plaintiff alleged that her former attorney, Louis, wrote a letter to the adversary, without her authorization, that she was waiving her right to a one-half interest in a marina in the underlying matrimonial proceeding.

Plaintiff retained a new attorney, DeBartolo, to represent her in a post-judgment plenary hearing concerning the issue.  After Plaintiff's cross-motion seeking to maintain equal ownership of the marina was denied, she retained yet another attorney, Soranno.  During the pendency of the post-judgment matrimonial litigation, Soranno negotiated a new settlement with Plaintiff's ex-husband, prior to obtaining a ruling on whether Plaintiff had in fact waived her interest in the marina by way of her former attorney's representations to the adversary.

The new settlement provided that Plaintiff would share equally with her former husband in the net proceeds of the sale of the marina's real estate, and she would be entitled to 40% of all monies arising out of the marina's business operations. 

When questioned about the new settlement in open court, Plaintiff represented that given all the facts and circumstances, she thought the agreement was fair, reasonable, and the "best [she] could do."  She further represented that by signing the agreement, she was waiving her right to later argue that the agreement was unfair.  Plaintiff's attorney did qualify the foregoing representations, however, by indicating that Plaintiff reserved her right to bring malpractice actions against Louis and DeBartolo.

Plaintiff did eventually bring malpractice actions against Louis and DeBartolo.  The trial court held that, under Puder, Plaintiff could not settle and sue.  Plaintiff appealed. 

Issue:  Can Plaintiff pursue malpractice actions against her former attorneys after entering into a purportedly "fair and reasonable" settlement in the underlying litigation? 

Ruling:  No.  If a Plaintiff has a first agreement and is involved in litigation to enforce that first agreement, but decides to enter into a new settlement while the litigation is still pending, Plaintiff is bound by that new settlement, even where she only agrees to enter into the new settlement with a carve-out for a malpractice action.

The Appellate Division based its ruling on the fact that Plaintiff may have been successful in establishing that her former attorney acted without her permission at the plenary hearing, and might even have been able to recoup fees.  As in Puder, however, she chose a different remedy -- to negotiate and settle the matter before the conclusion of the plenary hearing.  The Court distinguished the case from Ziegelheim and Guido: 

[T]he Court in Ziegelheim...recognized that after denial by the Family Court of the plaintiff's application to set aside the challenged settlement agreement, the plaintiff was left with only one remedy -- the legal malpractice action...That is not the case here.

The Court recently decided Guido...and explained that Ziegelheim represented the standard to be applied in legal malpractice cases, while Puder represented a 'limited exception' to Ziegelheim, applying equitable principles...In Guido, unlike here, the plaintiffs did not represent that they were satisfied with the settlement.  Here, Plaintiff made that affirmative representation.

We do not conclude that Plaintiff was required to await the motion judge's decision [in the plenary hearing]; however, we do acknowledge the rule established by Ziegelheim recognizing the sole remedy of a malpractice action as a critical factor in that decision.  That was not the case here.

***

Plaintiff, here, only had to decide whether she would accept a settlement or await the judge's decision on the issue of her waiver.  She was not in a situation where, choosing the latter, she would be left without a claim.  This was not an 'all-or-nothing' decision for Plaintiff; it was a decision with options and she chose to accept the [new] settlement.

***

Litigated cases are settled everyday where plaintiffs and defendants have to weigh the costs and benefits of settling or allowing a judge or jury to decide their fate.

Lesson:  If a plaintiff chooses to negotiate and voluntarily enter into a settlement of her claims before giving the court an opportunity to pass on the former allegedly inadequate settlement negotiated by a purportedly negligent attorney, she will waive her right to bring a malpractice action and will be bound by the terms of the new settlement.

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Nason v. Fisher, 36 A.D.3d 486; 828 N.Y.S.2d 51 (2007)

NY: Underlying Commercial Transaction

Student Contributor: Colleen Gaedcke

Facts: The plaintiff retained the defendant attorneys based on one of the defendant attorneys representation that he was experienced in handling commercial partnership cases. The plaintiff brought a cause of action against the defendant for false representation in violation of NY Judiciary Law section 487, but the court dismissed the action for the plaintiff’s failure to establish the statutory requirement of “chronic and extreme pattern of legal delinquency.” Additionally, the plaintiff also brought a legal malpractice claim against the defendants. The plaintiff’s claimed that the defendant’s alleged violation of Disciplinary Rules are evidence of malpractice.

Issue: Whether the court properly granted the defendant’s motion for summary judgment, dismissing the legal malpractice claim?

Ruling: Yes.

Lesson: Allegations of violations of Disciplinary Rules may be evidence of malpractice, however such a violation alone will not establish that the attorney’s conduct was the “but for” cause of the plaintiff’s loss.

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Williams v. Bashman, 457 F. Supp. 322 (E.D. Pa. 1978)

 PA: Underlying  tort action.

Student Contributor: Colleen Gaedcke

Facts: The plaintiff retained the defendant, a partner at the defendant law firm, to represent her in her personal injury case against the a homeowner and the city of Philadelphia. A year passed without any communication between the plaintiff and the defendant, until the plaintiff sent the defendant a letter inquiring about the status of her case. The plaintiff received a letter from another attorney at the defendant law firm stating that he was representing her in her case against the City. Plaintiff did have one conversation with the defendant partner where he assured her that the case was in court. Another year passed and the defendant partner left the defendant law firm. The defendant law firm never filed the plaintiff’s case. The plaintiff claimed that the “defendant firm failed to exercise within the scope of their employment reasonable professional care and diligence in their representation of the plaintiff.” As a result of this failure the plaintiff claims that she was unable to recover compensation for her injuries and that her claim was barred by the statute of limitations.

Issue: Whether the plaintiff defendant law firm was liable for legal malpractice?

Ruling:  Yes.

1.) “When a plaintiff alleges that the defendant lawyer negligently provided services to him or her as a plaintiff in the underlying action, he or she must establish by the preponderance of the evidence that he or she would have recovered a judgment in the underlying action in order to be awarded damages in the malpractice action, which are measured by the lost judgment.”

2.) Here, the court found that the defendant law firm was responsible for her case, including conducting discovery to determine the merits of her case and proving the elements if necessary at trial.

3.) The defendant law firm owed the plaintiff a duty to exercise reasonable profession in the prosecution of her claim and they negligently breached that duty which was the proximate cause of the plaintiff’s loss of damages.

Lesson: An attorney who signs a retainer agreement with a client has a duty to exercise reasonable care in representing that client. A breach of this duty may be the proximate cause of the client’s damages and thus the attorney will be liable for legal malpractice.

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Gamer v. Ross, 2008 NY Slip Op. 2107 (App Div. 2d Dept)

NY: Underlying personal injury action; missing discovery causes summary judgment dismissing complain

Student Contributor: Josh Aronson

Facts: In the underlying case, the plaintiff was injured when he tripped and fell over wires and debris while roller skating on a public sidewalk adjacent to a construction site. The plaintiffs retained the defendants to commence a negligence action against the owner of the construction site as well as a contractor who had performed construction work on the site. Both of the plaintiff’s complaints were dismissed on summary judgment and motion to dismiss respectively. The plaintiff then brought action against the defendant to recover damages for legal malpractice, alleging that the defendants were negligent in their handling of the two underlying actions by failing to conduct proper discover that would have enabled them to successfully oppose the summary judgment and motion to dismiss. The defendant claims that the plaintiffs could not have succeeded in the underlying actions because the wires and construction debris over which the plaintiff tripped were open and obvious conditions that were not inherently dangerous. Furthermore, the defendant contends that the plaintiffs could not have succeeded in the underlying actions because they failed to adduce any evidence showing that the landowner of the construction site or its contractor caused or created the alleged dangerous condition.

Issue: Must the defendant in a legal malpractice action establish that their negligence would not have prevented the dismissal of the plaintiffs underlying actions?

Ruling: Yes. The court found that the landowner and its contractor would have had sufficient notice of the dangerous condition and therefore would have been liable for injuries resulting from its failure to correct the danger. As a result, the Court found that the burden was on the defendants in the malpractice action to establish that the missing discovery—which they failed to do, would not have prevented the dismissal of underlying actions.

Lesson: The defendant in a legal malpractice action must establish that “but for” the negligence claimed by the plaintiff, the outcome of the underlying action would not have changed.  

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Moores v. Greenberg 834 F.2d 1105, (1st Cir. 1987)

Fed'l Underlying Longshoreman's Act personal injury

Student Contributor: Ryan O'Donnell

Facts: Longshoreman was injured during the course of his employment and was able to collect compensation benefits through his employer. He then retained an attorney to bring a  liability claim against the ship owners. The ship owners allegedly made two settlement offers of $70,000 and $90,000, which the attorney did not communicate to the client. The third party liability claim was subsequently lost, and the client brought this malpractice claim against the attorney claiming that he would have accepted the settlement offer had he been informed of it. The attorney was found to be liable for $12,000, and he appealed the verdict claiming that the settlement offers were too meager to be relayed.

Issue: Is a lawyer required to communicate all reasonable settlement offers?

Ruling: Yes. A lawyer has a duty to use a degree of skill, diligence, and judgment necessary to the practice of his profession and which others who are similarly situated ordinarily possess. “As part and parcel of this duty, a lawyer must keep his client seasonably appraised of relevant developments, including opportunities for settlement.” The court implies that an attorney might not have a duty to communicate offers only when they are “so divorced from a realistic appraisal of the merits,” and unresponsive to the upside and downside of the litigation.

Lesson: A lawyer has a duty to keep his client informed of relevant developments, including opportunities for settlement. Lawyers are obliged to promptly communicate to the client settlement offers and all matters that may be relevant to the client’s appreciation and understanding of the matter.

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Teamsters Chauffeurs, Warehousemen and Helpers, Local 764 v. Greenawalt, 919 F. Supp. 774 (M.D. Pa. 1996)

PA Underlying labor dispute.

Student Contributor: Colleen Gaedcke

Facts: The plaintiff, a union, sued the defendant, former union counsel, for legal malpractice for allegedly improperly advising the former union president and co-defendant to collect a severance pay. According to union by-laws, union officers are not supposed to get severance, however the plaintiffs argue that the defendant got a severance pay in the form of a car. The defendant used the car during his assignment as union president, but when he left the defendants allegedly made an arrangement that transferred the car to the defendant in exchange for the car’s fair market fault payable to the union.

Issue: Whether the plaintiff’s suit was timely filed?  

Ruling: No. The plaintiff’s cause of action accrued more than two years prior to them filing the action therefore their action is time-barred.
1.) Pennsylvania’s statute of limitations for a legal malpractice claim is two years.

2.) “A cause of action accrues under Pennsylvania law and the limitations period begins to run when ‘the plaintiff knows, or reasonably should know, 1) that he has been injured, and 2) that his injury has been caused by another party’s conduct.’”

3.) Here, the plaintiffs were aware of some potential wrong doing as early as September of 1991 however they failed this action in December of 1993. Thus, the “plaintiff unreasonably and unjustifiably waited too long to file this action.”

Lesson: In Pennsylvania, an attorney cannot be sued for legal malpractice where the alleged malpractice occurred more than two years prior to the date the action was filed.

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Chimento v. Parsons, Powell & Lane, LLC, Superior Court of New Jersey, Appellate Division, January 5, 2010

Facts:  Plaintiff brought suit against a casino after his chair collapsed and, allegedly, caused him to sustain back and shoulder injuries.  Although Plaintiff's attorney in the underlying matter sued the casino for negligent maintenance, he failed to assert a claim against the manufacturer of the chair.  After the statute of limitations expired, Plaintiff's attorney learned of the identity of the manufacturer. 

Eventually, Plaintiff retained another attorney in the underlying matter who successfully filed an amended complaint naming the manufacturer and obtained default judgment for approximately $300,000.  Upon learning of the judgment, Plaintiff's former attorney asserted his right to compensation.  Plaintiff, however, elected to bring the instant action in light of his former attorney's failure to name the chair manufacturer in the initial complaint. 

Plaintiff's former attorney moved to dismiss arguing that the chair manufacturer had ceased to exist as a legal entity before Plaintiff's accident.

Issue:  Can a former client successfully pursue a legal malpractice action based on his attorney's failure to pursue claims against a defunct entity? 

Ruling: No. 

The Court noted that the chair manufacturer and its successor in interest had ceased to exist as financially viable entities before Plaintiff's accident.  The assets of both entities had been sold by a court appointed receiver for the benefit of the manufacturers' creditors. 

[E]ven assuming that [the former attorney] deviated from the standard of professional competence expected of attorneys in this State by failing to name [the manufacturer] as a defendant in Plaintiff's underlying cause of action, such a deviation was legally inconsequential because [the manufacturer] was not a legally or commercially viable entity at the time of Plaintiff's accident.

Lesson: Plaintiff cannot pursue a malpractice action for his attorney's failure to name a defendant, unless he can first prove that he had a possibility of collecting on a recovery against that defendant.  Otherwise, as a matter of law, the attorney's alleged negligence is not a proximate cause of any damages sustained by his client.

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Hubert v. Bartels, United States District Court, District of New Jersey, February 4, 2010

Facts:  This legal malpractice action arose from an underlying products liability action by the Huberts for defective breast implants.  At the mediation of the underlying matter, Plaintiffs agreed to settle.  During further negotiations, however, Plaintiffs became dissatisfied with the final form of the agreement and filed a motion to be released from the settlement.  The court held that the settlement was enforceable and the parties had agreed to a form of release.  Plaintiffs assented to the terms of the settlement as modified by the court.

Plaintiffs subsequently brought this action for malpractice alleging that they did not receive an adequate settlement for their claims in the underlying action.

Issue:  Can a Plaintiff bring a malpractice suit against his attorney after entering into a settlement in the underlying matter? 

Ruling:  Yes. 

Decision:  In making its decision, the Court analyzed the New Jersey Supreme Court's two seemingly contradictory opinions on the issue:  Ziegelheim and Puder: 

[In Puder], the original attorney had obtained a divorce settlement to which the client originally agreed...The client then consulted another attorney who expressed the opinion that the settlement was "ridiculously inadequate."...The client fired the original attorney and filed a malpractice lawsuit against the original attorney which was stayed pending the outcome of a hearing on the enforceability of the settlement worked out by the original attorney...After six days of testimony in the hearing to enforce the settlement, but prior to any ruling on the enforceability of the settlement, the parties informed the motion judge that a new settlement had been reached...The new settlement was substantially similar to the disputed settlement, and the new settlement was found by the motion judge to be entered into knowingly and voluntarily.

The client in Puder then sought to litigate the stayed malpractice action against the original attorney...Holding that the public policy of New Jersey encouraging settlements was the determinative factor, the Supreme Court of New Jersey held that the second settlement barred the client's claim against her original attorney.

In doing so, the New Jersey Supreme Court distinguished an earlier case concerning matrimonial legal malpractice...In Ziegelheim, a client entered into a settlement agreement in a divorce action allocating about fourteen percent of the marital assets to the client after the client's lawyer advised her that she could expect no more than ten to twenty percent of the marital property after a trial...One year later, the client sought to set aside the property settlement and recover from her original attorney in a malpractice case...After the property settlement was found to be enforceable, the malpractice case went forward...The Supreme Court of New Jersey held that the malpractice action against the attorney should have been allowed to go to trial, because there was a genuine dispute concerning the competence of the original attorney, including the attorney's advice on the likelihood of the client receiving no more than twenty percent of the marital assets after trial.

The Court found that the facts of this case were more in line with Ziegelheim, since Plaintiffs did not enter into a second settlement after obtaining advice from new counsel.  Rather, "a settlement was reached and was found enforceable after the Plaintiffs sought release from the deal they had struck...Having received information about the enforceability hearing in 2000 that there may have been a defect in the professional advice they received from Defendants...they filed the instant suit."  Recognizing the possibility that Plaintiffs may have received a more favorable settlement with different legal representation, the Court allowed Plaintiffs to pursue their malpractice action, despite the settlement in the products liability matter.

Lesson:  The fact that a party entered into a settlement in the underlying matter, does not mean that the party had competent representation.  Accordingly, an underlying settlement will not always bar a subsequent malpractice action.

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730 J&J, LLC v. Polizzotto & Polizzotto, Esqs., Supreme Court of New York, Appellate Division, Second Department, January 12, 2010

Facts:  Plaintiff commenced a legal malpractice action to recover damages for the defendant attorneys' alleged failure to secure a deficiency judgment.  Defendants argued the action was time barred under New York's three year statute of limitations.  Plaintiff argued that the statute of limitations was tolled during the time Defendants continued to represent them in the underlying matter.

Issue:  Is the statute of limitations for legal malpractice matters tolled during the time the allegedly negligent attorney continues his representation? 

Ruling:  Yes.  A cause of action for legal malpractice accrues on the date the malpractice was committed.  Nevertheless, under the doctrine of "continuous representation," the statute of limitations is tolled while the attorney continues to represent the client in the same matter in which the malpractice allegedly occurred: 

The parties have a mutual understanding that further representation is needed with respect to the matter underlying the malpractice claim.

Lesson:  In New York, the three year statute of limitations in legal malpractice actions will be tolled where the purportedly negligent attorney continued his representation in the underlying matter after the malpractice was committed.

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Szaferman, Lakind, Blumstein, Blader & Lehman v. Parise, Superior Court of New Jersey, Appellate Division, February 24, 2010

Facts:  Defendants retained Plaintiff attorneys in an underlying residential construction matter.  Upon the submission of summary judgment motions in the underlying matter, defendants instructed their attorneys to cease all legal work.  The attorneys advised of the need to prepare for upcoming court events and trial. 

Prior to trial, however, the underlying litigation was dismissed upon entry of a mutual release, which included the parties' agreement to satisfy their respective counsel fees and costs.  Despite this agreement, defendants paid only half of the outstanding legal fees and costs.  In response to Plaintiff's efforts to collect the remainder of their fees, Defendants filed an action for malpractice.  Specifically, Defendants disputed the reasonableness of certain time entries, cited to alleged billing irregularities, and asserted that the fees charged were excessive for the work performed. 

The lower court dismissed the malpractice claim for failure to obtain an expert report.  Defendants appealed.

Issue:  Is the reasonableness of attorney's fees an issue of  "common knowledge," or is an expert opinion necessary? 

Ruling:  An expert opinion is necessary: 

Expert testimony is required in cases of professional malpractice where the matter to be addressed is so esoteric that the average juror could not form a valid judgment as to whether the conduct of the professional was reasonable.  This is because the duties a lawyer owes to his client are not known by the average juror.

The Court concluded that Defendants' alleged dissatisfaction with the amount of legal fees charged, supported only by their personal experience in paying other attorneys was not a sufficient factual basis for their malpractice claim.  The Court also rejected Defendants' argument that the jury ought to disallow all contested charges, unless Plaintiff provides sufficient justification.

Lesson:  An expert opinion is necessary to successfully dispute the reasonableness of attorney's fees.

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Flaherty-Wiebel v. Morris, Downing & Sherred, Court of Appeals, Third Circuit, June 10, 2010

Facts:  At the request of their client, Wiebel (Plaintiff's former husband), the Defendant attorneys drafted a pre-nuptial agreement.  Plaintiff was advised that Defendant attorneys had drafted the agreement on behalf of Wiebel.  Plaintiff was represented by separate counsel during the negotiation of the agreement.

The agreement provided that Plaintiff owned 49% of a certain entity ("Entity") and Wiebel owned 51%.  In actuality, Wiebel owned 99% and his son owned the remaining 1%.  Upon the execution of the pre-nuptial agreement, Plaintiff married Wiebel. 

Approximately four years later, Wiebel filed for divorce.  Plaintiff subsequently brought this litigation, alleging (1) that the Defendant attorneys' misrepresentations in the pre-nuptial agreement concerning her ownership interest in the Entity disadvantaged her in the negotiation of her property settlement agreement, and (2) that the attorneys' allegedly breached certain Rules of Professional Conduct.

Issue:  Does a violation of the Rules of Professional Conduct constitute legal malpractice?  What is the extent of an attorney's duty to a non-client? 

Ruling:  The Court affirmed the New Jersey Supreme Court's holding in Baxt v. Liloia, 714 A.2d 271 (1998), and held that a violation of the Rules of Professional Conduct cannot sustain a cause of action for legal malpractice: 

New Jersey does not recognize an independent cause of action for the violation of the Rules of Professional Conduct, but violations of these rules may be used to support a claim of legal malpractice.  New Jersey courts have defined legal malpractice as negligence relating to an attorney's representation of a client.

Accordingly, the Court held that it was necessary for Plaintiff to establish that she was the Defendant attorneys' client.  Plaintiff could not do so and argued that Defendants owed her a limited duty under Petrillo v. Bachenberg, 655 A.2d 1354 (N.J. 1995). 

In Petrillo, the Court held that an attorney representing the seller of property had a duty not to provide misleading information regarding the property to potential buyers who the attorney knew, or should have known, would rely on the information.  In order to determine whether the duty applied here, the Court first ascertained the purpose of the document.  The Court concluded that the attorneys had drafted the pre-nuptial agreement to memorialize the parties' agreement, not to induce either party to enter into the agreement.  Accordingly, the Court held that Petrillo did not apply:

[A]n attorney who puts into writing an agreement between two parties does not vouch for the representations either party has made to the other. The attorney only puts into writing the representations that the parties intend to make to each other. The act of drafting does not make the attorney responsible for the accuracy of the statements placed on paper.

Lesson:  A violation of the Rules of Professional Conduct, in and of itself, cannot serve as a basis for a malpractice action.  An attorney, by undertaking the task of setting forth the understanding of two individuals in a writing, does not owe non-clients the duty to verify the accuracy of a party's representations therein.

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Chatterjee v. Due, 511 F. Supp. 183, 1982 A.M.C. 2970 (E.D. Pa. 1981)

Admiralty Law: Wrongful Death Settlement

Student Contributor: John Anzalone

Facts: Decedent was killed in a maritime ship collision in Pennsylvanian waters. Plaintiff, mother of the deceased, sues Defendant Law Firm that negotiated on behalf of one ship owner with her son-in-law in his suit to collect damages for her son's death. Plaintiff claims no settlement regarding son's death occurred because her son-in-law was not authorized to represent her interest as her son's sole heir. Defendant entered into the settlement without her consent and her son-in-law received the proceeds of the settlement based on his forgeries.

Issue: Did Defendant-Lawyers owe the non-client Plaintiff any legal duty? 

Ruling: The court granted Defendant's motion to dismiss, holding that Defendant owed the plaintiff no legal duty of representation, based on the following considerations:
1) The theory allowing beneficiaries to sue a testator's attorneys despite a lack of privity is not applicable here because the protection of a beneficiary's interest and the testator's intent only occurs if a will is validly drawn. Further, in a will, an attorney is on notice that the testator's intent depends on their services. Will beneficiaries are allowed to sue because they are intended successors to a continuing attorney-client relationship between the attorney and the testator
2) Here, there is no will involved that would become defective through the acts of Defendant
3) Additionally, a reasonable attorney would have no reason to question his opponent's authority to enter into a settlement.
4) Furthermore, Plaintiff's claim fails because she cannot show that she was damaged by Defendant's negligence unless she was foreclosed from some right or property because the settlement was valid and not effected by fraud. Her allegations against her son-in-law undermine this because if they were true, the settlement would be invalid and not binding upon her.
5) Even if there was a valid settlement binding upon her, there is no duty running between Defendant and Plaintiff.

Lesson: A plaintiff has to be actually damaged before they can sue a lawyer for malpractice. Additionally, attorneys can agree to make payments from their client to their adversary if a reasonable lawyer would conclude that there was no reason to doubt their adversary's authority to agree to the settlement. 

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Stephens v. Downey, 53 Pa. 424 (1866)

PA: Underlying  Estate Action.

Student Contributor: Colleen Gaedcke

Facts: The court clerk entered a judgment on February 18, 1854 in an estate action that became a lien when the final judgment was entered on the February 28, 1854. The defendant’s attorney, filed a challenge to the final judgment however the writ was not entered into the docket on time.

Issue: Whether an attorney can be held liable for the negligence of a prothonotary (court clerk) for failing to timely enter a lien in the docket?

Ruling: No.

1) It is the prothonotary’s statutory duty to entering a lien on the docket.
2) A client cannot hold her attorney liable for “…the error of an officer of the tribunal in which the judgment was obtained, and whose positive duty it was to have entered it on the judgment docket."

Where it is the duty of the prothonotary to enter the final judgment in a suit on the judgment docket and he neglects to do so, the attorney who has charge of the claim is not liable for damages resulting from the loss of the lien.

Lesson: An attorney will not be liable for the negligence of court officers.

Editor's Note: But what if the attorney played any role in the court officer's error? For example, would the attorney's lack of diligence, which is a departure from the standard of care, be considered a "substantial factor" in the untimely entry of the judgment, which may have caused actual damage to the client?

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Senate Ins. Co. v. Tamarack Am. 14 A.D.3d 922; 788 N.Y.S.2d 481 (2005)

NY Underlying Real Estate Transaction

Student Contributor: Natalie Resto

Facts: The attorney, who was employed full time by the Lawrence Group, Inc. as its general counsel, represented the plaintiff when it purchased some real estate property for $2,600,000. The Lawrence Group was a holding company for various insurance underwriting and agency components, which included the plaintiff. The Lawrence Group and the seller of the land later filed for bankruptcy. The plaintiff argued that because of the lien on the property it was out $2,600,000. The attorney then left the Lawrence Group and affiliated with a firm on an “of counsel” basis.
The plaintiff brought this legal malpractice action against the attorney. The attorney provided notice of the action to the defendant insurance company, which had issued a “claims made” policy to the firm. The defendant insurance company denied the coverage because it was provided “only to the extent such lawyer performs services on behalf of the named insurance,” and since the attorney rendered services as an employee of a corporation separate from the named insured, his acts fell within an exclusion contained in the policy. The defendant moved for summary judgment and the lower court granted the motion based on the policy language with respect to an attorney acting “of counsel.” The plaintiff appealed.

Issue: Does a policy issued to the law firm provide coverage for legal malpractice of an attorney who is affiliated with the law firm on an “of counsel” basis?

Ruling: Not when the policy at issue defined an “insured” to include, among others, “each lawyer acting as ‘of counsel,’ but only to the extent such lawyer performs services on behalf of the firm.” Id. at 923.

Lesson: New York’s Code of Professional Responsibility provides that the term “of counsel” nay be used “if there is a continuing relationship with a lawyer or law firm, other than as a partner or associate.”

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Sitar v. Sitar, 50 A.D.3d 667, 854 N.Y.S.2d 536 (2008)

NY Underlying Commercial Transaction: Conflicts of Interest

Student Contributor: Maninder (Meena) Saini

Facts: Client (plaintiff) brought an action against attorney and attorney's law firm (defendants), alleging legal malpractice. This action arose out of attorneys' representation of plaintiff in the sale of the plaintiff’s business to his son and daughter-in law. The attorney was a member of the plaintiff’s board of directors and acted as an attorney for both the plaintiff and his son in the transaction. The purchase price of the business was to be determined according to the profits made while under the control of the plaintiff’s son and daughter-in-law. The complaint alleged that the attorney was aware and did not disclose to the plaintiff that the new owners had engaged in unauthorized behavior that lowered the value of the business. The court granted the defendant’s motion to dismiss complaint for failure to state cause of action insofar as asserted against him and his law firm. The plaintiff then appealed.

Issue: Were the plaintiff’s allegations sufficient to state a cause of action to recover damages for legal malpractice?

Ruling: The appellate court held that the complaint  asserted  valid causes of actions for legal malpractice and breach of fiduciary duty because there was a conflict of interest since the attorney represented both sides of the underlying transaction and he was aware of important information that should have been disclosed to his client-plaintiff.   A legal malpractice action requires proof that the attorney “failed to exercise the ordinary and reasonable skill and knowledge commonly possessed by a member of the legal profession.”

Lesson: It is commonly known within the legal profession that a lawyer is considered to be a fiduciary to each client. A lawyer must consider carefully whether it is appropriate to  represent parties on both sides of a single transaction since  potential conflict of interests may materialize.  Unless the conflict is knowingly an voluntarily waived by all sides, it may be impossible for the attorney to proceed with representation.  In this case, the attorney had a duty to communicate to the plaintiff the information that adversely affected the plaintiff’s business. 

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Pechko v. Gendelman,  20 A.D.3d 404; 799 N.Y.S.2d 80 (2nd Dept. 2005)

NY Underlying Medical Malpractice Action

Student Contributor: Natalie Resto

Facts: The plaintiff underwent a mammogram while a patient with Doctor #1, who, she claimed, told her that the mammogram was normal. Later that year she underwent a mammogram with Doctor #2 and was diagnosed with cancer. The surgeon recalled seeing in the first mammogram certain “micro-calcifications” that were “suspicious of cancer.” The plaintiff sued Doctor #1 for medical malpractice. During the course of representation, the attorney who was representing her forwarded the mammogram films to a radiologist for evaluation, who before the evaluation misplaced them. The plaintiff then retained an appellate law firm to represent her in the medical malpractice action. Doctor  #1 moved for summary judgment arguing that the films constituted key evidence, and that the loss of that evidence irreparably prejudiced his ability to defend the action. The lower court granted the doctor’s summary judgment because the plaintiff failed to counter the motion with expert affidavits sufficient to create issues of fact. The plaintiff then brought this action against the law firm to recover damages for legal malpractice for failing to properly defend her against the summary judgment motion in the medical malpractice action.  The law firm argued that because it was not responsible for the loss of the mammogram film, which occurred before it was retained, its negligence was not the proximate cause of the plaintiff’s damages. The law firm moved for a motion to dismiss for failure to state a claim. The lower court denied it and the law firm appealed.

Issue: Was the law firm negligent in its representation of the plaintiffs in a medical malpractice action?

Ruling: Yes. The court found that the motion was properly denied because the absence of the mammogram films did not require the conclusion that the plaintiff would be unable to establish the law firm’s negligence. Here the firm did not rebut the plaintiff’s claim that they were negligent in failing to obtain secondary evidence concerning the films.

Lesson: Even when a court’s determination in an underlying medical malpractice action may be read as holding that the plaintiff will be unable to establish the merits of the medical malpractice action, that determination should not be given collateral estoppel effect against the plaintiff when he or she has alleged that the determination in the underlying action was the result of his or her attorney’s negligence.

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Scott v. Calpin, U.S. District Court, New Jersey, March 2, 2010

Facts:  The Defendant attorney moved to dismiss a professional negligence action against him for failure to submit an Affidavit of Merit pursuant to N.J.S.A. 2A:53A-27.  The New Jersey Affidavit of Merit Statute requires "an affidavit of appropriate licensed person stating that there exists a reasonable probability that the care, skill, or knowledge exercised or exhibited in the treatment, practice or work that is the subject of the complaint, fell outside acceptable professional or occupational standards or treatment practices".  Plaintiff, thereafter, submitted an Affidavit from an attorney licensed in Pennsylvania. 

The Defendant attorney objected to the Affidavit, arguing that "pursuant to [the New Jersey Affidavit of Merit Statute] such an Affidavit for a legal malpractice matter must be from an attorney licensed to practice law in the State of New Jersey," since the New Jersey Affidavit of Merit statute defines "licensed persons" as "attorney[s] admitted to practice law in New Jersey".  

Plaintiff, however, pointed to the portion of the Statute which provides that "the person executing the Affidavit shall be licensed in this or any other State; have particular expertise in the general area of specialty involved in the action...for a period of at least five years".

Issue:  Can an attorney licensed in another state provide a valid New Jersey Affidavit of Merit? 

Ruling:  Yes.  The Court recognized that "the overall purpose of the [Affidavit of Merit] statute is `to require plaintiffs in malpractice cases to make a threshold showing that their claim is meritorious, in order that meritless lawsuits readily could be identified at an early stage of litigation."  The Court further noted that the Statute's definition of "licensed person" applies to the class of persons for whom an Affidavit is required.  

Accordingly, it ruled: 

Plaintiff produced an affidavit from an appropriately licensed attorney with over thirty years of experience in the areas of family law and divorce proceedings and who has attested to the "reasonable probability" that Defendant's representation of the Plaintiff fell below "the acceptable standard of care" required of attorneys in divorce proceedings.

Lesson:  An experienced attorney licensed in a state other than New Jersey can provide the affidavit required by N.J.S.A. 2A:53A-27 in legal malpractice actions.

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Boone v. Bender, Supreme Court of New York, Appellate Division, June 22, 2010

Facts:  Defendant attorneys represented the plaintiff in a matrimonial action which ended in a settlement.  Subsequently, the plaintiff commenced this malpractice action alleging that defendants compromised their level of advocacy and coerced her into entering into the settlement.  The defendants moved for summary judgment dismissing the complaint, and the Supreme Court denied the motion.  Defendants appealed.

Issue:  Can Plaintiff pursue a malpractice action after consenting to a settlement in the underlying matter? 

Ruling:  No. 

A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel. 

Applying that standard to the instant case, however, the Court found that:

[T]he plaintiff was satisfied with the defendants' representation of her, that she had discussed the terms of the settlement with the defendants, that she understood that she would have the right to a trial if she did not wish to enter into the stipulation, that she had not been threatened or forced into entering into the stipulation, that she was entering into the stipulation voluntarily and of her own free will, that she had not taken any medications that would hamper her ability to understand the court proceedings, and that she had no additional questions for the defendants.

Accordingly, the Court concluded that plaintiff's subsequent "unhappiness" with the settlement did not rise to the level of legal malpractice.  Further, the Court found that the attorneys' reasonable exercise of judgment in pursuing settlement did not constitute malpractice, and the plaintiff's allegation that defendants did not pursue her claims "zealously" was mere speculation.

Lesson:  Conjecture, conclusory allegations of malpractice, and mere dissatisfaction concerning a settlement that was entered into voluntarily, do not constitute the necessary factual or legal basis upon which to pursue a subsequent action for professional negligence.

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Hall v. Cohen, Michigan Court of Appeals, February 18, 2010

Facts:  The defendant attorney represented plaintiff in a matrimonial matter, and after settlement of the matrimonial action, plaintiff brought suit against her attorney for malpractice.  The trial court granted summary judgment in favor of the defendant attorney, and granted the attorney's counterclaim for unpaid legal fees.  Plaintiff appeals.

Issue:  Can Plaintiff sue for malpractice after consenting to a settlement in the underlying matrimonial action? 

Ruling:  No.  The Court first set forth the standard for pursuing a malpractice action after settlement in the underlying matter:

When a settlement is compelled by the mistakes of the plaintiff's attorney, the attorney may be held liable for causing the client to settle for less than a properly represented client would have accepted...Additionally, a cause of action for legal malpractice may be raised when it can be shown that the client's consent to the settlement was compelled because prior misfeasance or nonfeasance by the attorney left no other recourse.

In applying that standard to the facts of this case, the Court noted that Plaintiff's statements under oath at the settlement hearing indicate that she "knowingly and voluntarily" entered into the agreement.  Further, Plaintiff was unable to demonstrate that her attorney's alleged failure to enforce prejudgment orders, or her alleged threat to withdraw from the action, caused her to settle.  Accordingly, the Appellate Division affirmed the trial court's decision to dismiss Plaintiff's complaint and award payment of outstanding legal fees.

Lesson:  Where Plaintiff knowingly and voluntarily settles her action, and cannot present any factual basis upon which the Court can conclude that her decision to settle was the result of her attorney's professional negligence, Plaintiff may not "settle and sue."

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Cole v. Cole, N.J. App. Div. February 8, 2010

Facts: Defendant allegedly failed to pay his attorneys for services rendered, and the attorneys sought to impose a lien under N.J.S.A. which attaches to a verdict, report, decision, award, judgment, or final order in the client's favor.  The trial court made a determination as to the proper amount of the lien and ordered its judgment to be paid.  Defendant argued that the trial court should not have decided the issue while a malpractice action was pending.

Issue:  Can the Court enter and enforce an attorney's lien while a separately filed legal malpractice action is pending? 

Ruling:  Yes.  Holding a plenary hearing to determine the amount of the attorney's lien within the underlying action is in accordance with the generally accepted procedure regarding attorney's liens in the absence of a motion to stay: 

While arguably a client may be entitled to a stay of the adjudication of any attorney's lien issue pending the outcome of a legal malpractice case, the record does not indicate that defendant sought such a stay. 

***

Ordinarily, an attorney will not be able to collect fees for services that were negligently performed.  As a result, a fee arbitration award will be stayed pending the outcome of a related legal malpractice case provided the court finds a 'substantial basis' for the legal malpractice action.

While defendant sought to vacate the judgment in his motion for reconsideration, he did not, in the alternative, seek a stay of its enforcement.  Under these circumstances, we find no error in the trial court's action determining the amount of the attorney's lien, and entering and enforcing a judgment for the attorney fees owed.

Lesson:  In the absence of a motion to stay pending resolution of a separately pending legal malpractice action, courts may properly determine and enforce attorney's liens in the underlying matter.

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Roof Technical Services, Inc. v. Hill, 679 F.Supp.2d 749 (N.D.Texas 2010)

Underlying Patent/Trademark Matter

Facts:  Plaintiff invented a roof venting technique and retained Defendant Hill to secure patent protection.  In the instant action, Plaintiff alleged that it was unable to obtain patent protection due, in part, to Defendant's failure to timely submit a conforming application to the U.S. Patent and Trademark Office.  Based on that allegation, Plaintiff filed suit in the United States District Court, Northern District of Texas.  Since there was no diversity of citizenship, the Court examined whether the action "arose under" federal patent law to establish jurisdiction.

Issue:  Can a legal malpractice action based on underlying patent law issues be brought in federal court? 

Ruling:  Not where a determination of the professional negligence action requires only application of federal law. 

Plaintiff argued that it properly brought the malpractice action in federal court, since a determination would require the Court to (1) analyze whether its invention was patentable under federal law; (2) the standard of care against which Defendant's conduct would be measured requires reference to patent regulations and guidelines; and (3) the determination of damages requires a valuation of the allegedly lost patent. 

The Court, however, found Plaintiff's argument to be unpersuasive and held that the action was "traditionally" a state case.  The Court found that federal jurisdiction would be inappropriate, since there was, apparently, no need to "determine the meaning of federal patent law".  Rather, the issues raised required "only application of federal law to the specific facts of the case". 

Furthermore, the Court explained that while "there is a federal interest in the uniform application of patent laws...that interest is not implicated here, where no patent rights are actually at stake."

No patent has issued for [Plaintiff's] invention and none will issue.  Thus, even if the Court must decided patent law issues, those decisions will not create or destroy any patent rights such that uniformity in the way patents are issued or enforced will be threatened.  In other words, the determinations that might occur in this action do not justify resort to the experience, solicitude, and hope of uniformity that a federal forum offers on federal issues.

***

Boiled down, this action is about Defendant's [alleged] failure to meet deadlines and communicate with their clients.  Patent issues are merely floating on the periphery.  Thus, this action does not belong in federal court.

Lesson:  Actions that require only the application of federal law to make a determination with regard to plaintiff's legal malpractice claims, do not sufficiently "arise under" federal law for purposes of establishing federal jurisdiction.

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