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

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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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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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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Primis Corp. v. Milledge, Court of Appeals of Texas, Fourteenth District, Houston, May 27, 2010

Facts:  Defendants agreed to represent the plaintiffs in a certain lawsuit and plaintiffs paid the defendants a $5,000 retainer.  Plaintiffs contend the retainer was a "general retainer", while Defendants contend the retainer was specifically for the work to be performed on the particular lawsuit. 

Several weeks after plaintiffs paid the retainer, they were served with another suit wherein plaintiff sought confirmation of an arbitration award rendered against Primis Corporation.  Plaintiffs delivered the citation to the Milledge law office when no attorneys were present.  Soon thereafter, Samuel Milledge sent plaintiffs a letter noting the deadline to file an answer and requesting a retainer.  Plaintiffs never furnished the retainer and, eventually, a default judgment was entered. 

Primis then filed suit against Milledge asserting claims for negligence, breach of contract, and violations of the Texas Deceptive Practices Act.  The trial court found that Milledge owed Primis a duty to clearly and unambiguously advise Primis that Milledge would not be filing an answer for Primis.  Although the court noted that Milledge failed to give advice when legally obligated to do so and delayed handling a matter entrusted to his care, no damages were assessed against Milledge since Primis did not present expert testimony to establish that Milledge's negligence was the proximate cause of its injuries. 

Issue:  Whether expert testimony was necessary to establish proximate cause? 

Ruling:  Yes.

In a legal malpractice case predicated on professional negligence during litigation, expert testimony generally is required to determine whether the result of the underlying litigation would have been different but for the attorney's alleged negligence.

***

[Here] the trier of fact would have to assess whether, with reasonably prudent counsel, the trial court would have vacated or modified the arbitration award against Primis Corporation...The causation inquiry was beyond the trier of fact's common understanding, therefore, expert testimony was necessary for Primis to prove causation.

Lesson: To prevail in a legal malpractice action, Plaintiff must present expert testimony to establish that "but for" his attorney's negligence he would have prevailed in the underlying litigation. 

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Yousian v. Eisenberg, 34 A.D.3d 228 (2006)

NY Underlying Medical Malpractice Action

Student Contributor: Ally Shuster

Facts: Plaintiff went to hospital complaining of gastrointestinal pain. Over the next few months, Plaintiff underwent a series of tests in order to diagnose his condition. He underwent a sonogram, the results of which showed that he had stones in his gallbladder. Subsequently, he underwent surgery and was left with debilitating pain that he alleges to be a result of the surgery. Plaintiff retained Defendants and sued for medical malpractice. The Defendant attorneys failed to timely re-calendar the case, which is the  basis for this legal malpractice claim.

Issue: Is there a valid legal malpractice claim?

Ruling: No. There is no issue of fact as to whether the treatment Plaintiff received at the Hospital constituted medical malpractice.

Lesson: In order to win a legal malpractice claim, a Plaintiff MUST prove that he could win the underlying case. Although it was troubling that Defendant attorneys failed to timely re-calendar the case, Plaintiff did not prove that he would have been successful in the underlying case but for the Defendant attorneys’ negligence.

“In order to prevail in a legal malpractice suit, the clients must prove that their former attorneys were negligent and that they could have prevailed and recovered a judgment but for that negligence.” Tanel v. Kreitzer & Vogelman, 293 A.D.2d 420
 

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Ryan v. Powers & Santola, LLP, 2010 NY Slip Op 03827 (3^rd Dept. May 6, 2010)

Underlying Personal Injury Action

Facts:  Plaintiff Ryan was struck on the head by highchair while dining at a restaurant.  He then retained Powers & Santola to represent him in a negligence action against the restaurant. 

In response to the defendants’ motion to compel production of a verified bill of particulars and responses to outstanding discovery demands, the trial court issued an order in the underlying action providing that the matter would be dismissed if Ryan failed to provide the outstanding discovery.  Although Ryan eventually served discovery responses, a number of responses required more specific answers.  The trial court, thereafter, extended the discovery schedule twice with a conditional order that the action would be dismissed if plaintiff continued to fail to provide responses.  Ryan failed to comply and the matter was in fact dismissed. 

Subsequently, Ryan commenced a legal malpractice action against Powers & Santola for “failing to follow court orders…consenting to conditional orders…and failing to move to vacate the dismissal order”.  Ryan moved for partial summary judgment on the issue of liability. 

Issue:  Is Ryan’s alleged failure to cooperate with counsel in preparing discovery responses a viable defense to his action for legal malpractice?

Ruling:  Yes.  The Court held that:

A claim of legal malpractice will be sustained if the plaintiff establishes…that [he] would have succeeded on the merits of the underlying action but for the attorney’s negligence…We agree…that the plaintiff’s conclusory assertions – that ‘but for’ defendants’ alleged negligence, they ‘would have been able to prosecute all causes of action to a successful outcome’ – failed to establish their prima facie entitlement to summary judgment…There are questions of fact as to whether plaintiff failed to cooperate with defendants in providing them with information and documents necessary for motion practice after the underlying action was dismissed.

Lesson: A former client’s failure to cooperate is a question of fact in assessing the liability of the attorney in a malpractice action.  Failure to cooperate, more likely than not, would prevent plaintiff from establishing that “but for” his former counsel’s malpractice, he would have prevailed in the underlying action.   

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Michael Viner et al. v. Charles A. Sweet et al. 30 Cal. 4th 1232 (Cal. 2003)

CA Underlying corporate transaction

Student Contributor: Evan Michael Hess

Facts: Plaintiffs retained Defendant and his law firm for a corporate transaction. After negotiating an employment termination agreement, the Plaintiffs brought a legal malpractice suit alleging seven claims, encompassing and array of agreements stemming from negligent representation / misrepresentations by the Defendants to the Plaintiffs. A jury awarded the Plaintiffs damages on all seven claims, with the Court of Appeals reducing the damages award. On appeal, the Defendants contend that in a transactional
malpractice action, the plaintiff must show that but for the alleged malpractice, a more favorable result would have been obtained, and that the Plaintiffs would not have entered into the transaction (a “no deal” scenario).

Issue: Must the plaintiff in a transactional legal malpractice action prove that a more favorable result would have been obtained but for the alleged negligence?

Ruling: Yes. The Supreme Court of California held that:

1) there is “nothing distinctive about transactional malpractice that would justify a relaxation of, or departure from, the well-established requirement in negligence cases that the plaintiff establish causation by showing either (1) but for the negligence, the harm would not have occurred, or (2) the negligence was a concurrent independent cause of the harm”;
2) “Determining causation always requires evaluation of hypothetical situations concerning what might have happened, but did not. In both litigation and transactional malpractice cases, the crucial causation inquiry is what would have happened if the defendant attorney had not been negligent”;
3) There must be investigation into what would have happened but for the lawyer’s alleged negligence.

Lesson: Plaintiffs seeking damages in an action for legal malpractice stemming from an underlying transaction must show both but for causation, just as in litigation malpractice actions. A malpractice case will not be successful if the Plaintiff does not prove that the underlying case had merit.

 

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Milbank, Tweed, Hadley & McCloy v. Boon, 13 F.3d 537 (2nd Cir. 1994)

NY Underlying Representation: Prospective Purchase of Bankrupt Company's Assets

Student Contributor: John Anzalone

Facts: Defendant Law firm represented Plaintiff through an agent in her attempt to purchase the assets of a bankrupt company. Problems occurred with the deal and the Agent was dismissed by the Plaintiff. Agent then told Firm that he wanted to buy the assets of the bankrupt company. Despite knowing that Plaintiff still sought to purchase the assets, Firm told Plaintiff that it would represent Agent in his attempt to purchase the assets. Plaintiff objected to this subsequent representation of Agent. Agent outbid Plaintiff with Firm's assistance. The jury found that Firm's representation of Plaintiff's Agent breached its fiduciary duties to her and was a "substantial factor in preventing her from obtaining assets she sought in the transaction."

Issue: Was the determination that Firm breached its duty to its former client by representing Plaintiff's agent in the same transaction incorrect?

Ruling: In affirming the lower court, the Second Circuit held that the Firm breached its fiduciary duty to Plaintiff, based on the following considerations:
1) Firm committed a serious breach of its fiduciary duties to Plaintiff as a former client by representing a party with interests adverse to the Plaintiff in the same transaction.
2) The nature of this breach triggers the prophylactic rule so plaintiff has to prove that Firms' actions were a substantial factor in its damages instead of the normal requirement of proximate cause.
3) The jury could have found that Firm's action were a substantial factor in Agent purchasing the assets rather than Plaintiff because their presence could have given Agent more credibility. The jury could have found that the deal moved forward because Agent and Firm agreed to use Plaintiff's money in an escrow account for Agent's purchase too. This potential usage also could have been held as interfering with Plaintiff's negotiations because she had to take action to protect her funds from usage by her former agent.
4) There was factual evidence supporting that Firm used confidential information gained from Plaintiff in its representation of Agent because it knew that Plaintiff was not willing to bid higher than she had previously stated to them. 

Lesson: If an attorney or a law firm is alleged to have breached their fiduciary duty to the client they are subject to the prophylactic rule that will make it easier for a plaintiff to prove the proximate cause element of the legal malpractice cause of action. The burden will be reduced from “but for” to “substantial factor”.

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Leder v. Spiegel 9 N.Y.3d 836, 872 N.E.2d 1194 (2007)

NY: Underlying Will Contest

Student Contributor: Ryan O'Donnell

Facts: Defendant represented plaintiff in an underlying probate matter. Rather than accept a settlement offer, plaintiff decided to continue to trial, where they were unsuccessful in challenging the will. The plaintiff bases his malpractice claim on defendant’s advice on the prospect of success in the underlying case, and that he would have accepted the settlement were it not for his attorney’s advice. There was no documentary evidence showing that plaintiff refused to settle strictly based on defendant’s advice.

Issue: Is an attorney liable for legal malpractice if he was not the proximate cause of the client’s damages, even if he negligently represented his client?

Ruling: No.

"In order to sustain a claim for legal malpractice, a plaintiff must establish both that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action 'but for' the attorney's negligence"

The failure to demonstrate proximate cause mandates the dismissal of a legal malpractice action regardless of whether the attorney was negligent. Since there was no evidence that the defendant’s advice was the sole basis for refusing the settlement, the defendant was not the proximate cause of the plaintiff’s loss, the defendant attorney was not liable for malpractice.

Lesson: Even an attorney who negligently represents his client will not be liable for malpractice if he is not the “but for” cause of the client’s damages. To establish liability based on the loss of a settlement opportunity, the plaintiff must prove that but for the attorney’s negligence he would have accepted the settlement offer. A court will not rely on bare allegations of fact by a plaintiff without documentary evidence to prove proximate cause. 

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Leder v. Spiegel, 9 N.Y.3d 836, 840 N.Y.S.2d 888 ( 2007)

Student Contributor: Maninder (Meena) Saini

NY Underlying will contest

Facts: Plaintiff (attorney) unsuccessfully represented defendants (clients) in a will proceeding and the defendants refused to compensate the plaintiff for the work done on their behalf. The plaintiff then petitioned for legal fees. The defendants counterclaimed for legal malpractice, alleging that “but for” the plaintiff’s negligent representation, which was failing to anticipate that certain evidence would be inadmissible, they would have settled. The plaintiff moved for an order dismissing the defendants’ counterclaim. The lower court dismissed the defendants’ counterclaim. Defendants appealed.

Issue: Did the defendants allege a prima facie case of legal malpractice?

Holding: The appellate division held that the defendants’ counterclaim alleging that the plaintiff failed to anticipate the court’s evidentiary ruling does not establish proximate cause. The plaintiff actively encouraged the defendants to settle but they refused to accept it. Thus, the defendants failed to make a prima facie case of legal malpractice. The lower court’s decision was affirmed.

Rule: “In order to sustain a legal malpractice claim, a client must establish that the attorney failed to exercise ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages, and that the client would have succeeded on the merits of the underlying action “but for” the attorney's negligence.”
Lesson: The plaintiff must be able to show that the attorney’s negligence was the proximate cause of the damages. The dismissal of a legal malpractice action is warranted if the plaintiff fails to demonstrate proximate cause regardless of whether the attorney was negligent. 

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Aquino v. Kuczinski, Vila & Associates, P.C. 39 A.D.3d 216, 835 N.Y.S.2d 16 (A.D.1st Dpt. 2007)

Student Contributor: Maninder (Meena) Saini

NY Underlying personal injury action

Facts: On July 4, 2002, plaintiff-client slipped and fell in the lobby of a casino that caused back injuries. On July 9, 2002, plaintiff retained an attorney to represent her in this matter. The attorney wrote letters to the casino on two separate occasions, advising them of the plaintiff’s claim and requesting insurance information and surveillance footage. The casino failed to send the requested information. In July 2004, the plaintiff contacted the attorney where he told her no action was commenced and the two-year statute of limitations had expired. Plaintiff then brought a lawyer malpractice action against the attorney and law firm alleging the failure to investigate plaintiff’s case and to timely commence an action.

Issue: Did the plaintiff show that “but for” the negligence of the attorney she would have prevailed in the litigation?

Ruling:: The Appellate Court held that plaintiff failed to show she would have succeeded on the merits of the case “but for” the attorney’s negligence. Specifically, the court stated that “[d]efendants' negligence in failing to investigate plaintiff's case and timely commencing an action does not relieve plaintiff of her burden of proving that she would have prevailed in that litigation but for defendants' negligence”.

 In order for a plaintiff to succeed on a lawyer malpractice claim, a plaintiff must plead and prove  a prima facie case of legal malpractice. The proximate cause element of he cause of action requires that she demonstrate that she would have succeeded on the merits of the underlying claim “but for” the attorney's negligence.

Lesson: Even though the attorney was negligent in failing to investigate the plaintiff’s case and timely commence an action, the plaintiff failed to prevail  because she could not demonstrate a "but for" causation utilizing the "trial within a trial"  method of proof.  

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The Texas Supreme Court’s new opinion (October 30, 2009) in Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National Development and Research Corporation  holds that

1. “collectibility” must be determined no earlier than the time of the underlying judgment, and
2. “a malpractice plaintiff may recover damages for attorney’s fees paid in the underlying case to the extent the fees were proximately caused by the defendant attorney’s negligence.”

The first holding seems non-controversial, whereas the second may or may not open Pandora’s box (more on that in a separate comment posted immediately below this one).  Yet there is another consequence of the Akin Gump decision – hidden and significant – that reporters and commentators may have missed.

Because the holding on the first two issues required reversal, the Texas Supreme Court declined to review the lower court’s ruling regarding contingent fee offsets. The contingent fee offset issue is simple: If a lawyer’s malpractice results in the loss of a collectible judgment of $1,000, but the client had a 40% contingent fee agreement with the lawyer, is the client entitled to recover $1,000 or $600? If one applies a pure “but for” causation analysis the answer should be $600, because even if the case had been handled perfectly, the client would only have netted $600. Yet, the Dallas Court of Appeals held that the client’s damages are not to be offset by the amount of the lawyer’s contingent fee. Because the Supreme Court declined to review this issue, the Dallas Court’s ruling remains the law.

The Dallas Court observed:

Akin Gump was entitled to its contingency fee only if NDR prevailed in the [underlying] Panda lawsuit. Due to Akin Gump's negligence, NDR did not prevail and thus Akin Gump did not earn its contingency fee. To give the firm a credit for a contingency fee it failed to earn would be to reward its wrongdoing.

Is this logical? Does it conform the Texas Supreme Court’s reaffirmation of the “but for” standard for causation in Akin Gump? Are there any other reasons to disregard a lawyer’s contingent fee interest in determining the amount of damages?

The Dallas Court also held:

To secure the damages it would have been awarded in the Panda lawsuit, NDR was required to pay two sets of lawyers and endure the aggravation of a second lawsuit and a second appeal. The attorney's fees and expenses incurred to prosecute a legal malpractice suit are not recoverable as damages, absent some statute or agreement not applicable here. Simply put, NDR must pay attorneys twice to be in the same position it would have been in absent Akin Gump's malpractice. It should not be forced to “pay” a contingency fee that Akin Gump never earned. (citation omitted).

Does the Texas Supreme Court’s new ruling that attorneys’ fees may be recovered as damages remove the logical underpinning for the Dallas Court’s ruling on the contingent fee offset?

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The Texas Supreme Court’s new opinion in Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National Development and Research Corporation holds that

a malpractice plaintiff may recover damages for attorney’s fees paid in the underlying case to the extent the fees were proximately caused by the defendant attorney’s negligence.

Prior to this holding, Texas courts had generally disfavored the recovery of attorneys’ fees qua damages unless allowed by statute or contract.

At first glance, the Akin Gump Court’s holding appears straightforward and logical, and in some cases will be easy to implement. For example, if a lawyer fails to file an answer, resulting in a default judgment, the plaintiff should be able to recover the fees it must pay a second attorney to have the default set aside. In this example, 100% of the extra fees are attributable to cleaning up the first lawyer’s mistake. Most cases, however, are not so cut and dried. 

I fear several unintended consequences from the Court’s ruling: 

• First, will there be a new class of cases in which there are no damages but attorneys fees? For example, if a lawyer obtains a total victory for the client, will the client (perhaps hoping to bargain for a fee reduction) comb the record for inconsequential errors that nevertheless may have increased the total fee by some amount?
• Second, will the new rule be used to avoid summary judgment in cases in which the undisputed facts prove the negligence caused no damages? Take appellate malpractice. If a trial court decides as a matter of law that the client would have lost the appeal regardless of the malpractice, will the client’s claim now survive based on a “fact issue” regarding increased appellate costs due to the negligence?
• Third, how much will the rule expand the number and costs of mandatory expert witnesses? Expert testimony is needed to prove causation in all but the most obvious situations. Alexander v. Turtur & Assocs., Inc., 146 S.W.3d 113 (Tex. 2004).(PDF) Doesn’t this mean a new set of experts will be needed in every malpractice case in which the plaintiff seeks attorneys’ fees as damages? The experts will need to review the record and opine whether the malpractice proximately caused an increase in attorneys’ fees and, if so, how much.

Question: Does Akin Gump open Pandora’s box or is it simply a logical extension of “but for” causation? Are there any special rules or limits that should apply?

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