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

Barry v. Barry, App. Div. of N.J., October 29, 2010 (Unreported)

NJ: Underlying Matrimonial Case

Facts: The Plaintiff’s former law firm appeals an order denying its motion to intervene in a matrimonial case, contending that Plaintiff’s current counsel  mishandled the case. The former firm obtained a final judgment of divorce, entitling Plaintiff to half of defendant’s pension benefits. Subsequently, Plaintiff learned that Defendant/Spouse had been receiving pension benefits for 10 years without her knowledge. Plaintiff questioned the former firm as to why she hadn’t received her share of defendant’s pension to which it admitted that it did not timely serve a qualified domestic relations order with the State Division of Pensions.

After it conceded this failure to file and fault for consequential non payment, the former firm attempted to correct its mistake. It filed an amended supplemental order to the final judgment of divorce. The Division informed Plaintiff she would receive a check monthly going forward and former firm took no further action. Plaintiff’s present attorney sought payment of ten years of pension benefits from defendant that plaintiff had not received. The Court denied the application. Plaintiff neither moved to reconsider nor filed an appeal from the denial. The former firm took no action until it filed a motion to intervene, stating that plaintiff’s counsel failed to argue that defendant was unjustly enriched and that the motion judge erred by not establishing a constructive trust. And although the former firm failed to serve the qualified domestic relations order for 10 years, the divorce decree entitled plaintiff to half of defendant’s pension.

Issue: Whether Plaintiff’s former firm may intervene to mitigate its damages in a potential legal malpractice lawsuit?

Ruling: The Court, treating this as a motion for reconsideration since the former firm is rearguing the fact that the motion judge erred by not granting plaintiff reimbursement for 10 years of pension benefits, affirmed the motion judge’s holding. Intervention was not warranted because the application was untimely, primarily because the time to reconsider the prior order expired and may not be enlarged. The former firm waited months before it filed its motion to intervene, which proved fatal.

While R. 4:50-1 allows for relief from an order to a party or party’s legal representative, the former firm was neither a party nor counsel for Plaintiff. It filed the motion to limit its potential exposure in an expected legal malpractice lawsuit, not because plaintiff rehired the firm to pursue the unpaid benefits. If plaintiff were granted the benefits, any damages resulting from the former firm’s negligence would be reduced. Although plaintiff would benefit from a ruling amending the order, the former firm does not represent plaintiff and, therefore, the R 4:50-1 is inapplicable.

Lesson: When an attorney is  faced with a possible malpractice claim, and has the opportunity to correct the mistake in the underlying case, it should do so quickly as the time limitations for reconsideration/intervention are strict and short.
 

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Duncan v. Lord, 409 F.Supp. 687 (E.D. Pa, 1976)

Underlying action: legal malpractice money damages

Student Contributor: Ryan O'Donnell

Facts: Attorney was found liable for malpractice. In a post trial brief, he asserted that the amount plaintiff would have recovered should be reduced in the malpractice action by the amount of what the attorney’s fee he would have collected.

Issue: Should an award of damages in a malpractice action be reduced by the amount of attorney’s fees the attorney would have collected?

Ruling: No. A deduction of a hypothetical contingent fee fails to compensate a plaintiff fully for a loss of settlement or jury verdict. Any fee which a plaintiff in a malpractice action might have had to pay had the attorney successfully prosecuted the underlying matter or transaction is cancelled out by the attorney’s fees the plaintiff incurred in retaining counsel to establish that the defendant committed malpractice.

Lesson: Courts will not deduct a hypothetical contingent fee from an award because the plaintiff has to incur those expenses and possibly more to prosecute the malpractice action. To take away that hypothetical fee from the award would not fully compensate a plaintiff to “make them whole” again.
 

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Prospect Rehabilitation Services, Inc. v. Squitieri, 392 N.J. Super. 157 (App. Div. 2007)
NJ Underlying Commercial Action

Student Contributor: Melissa Goldberg

Facts: Plaintiff sued a nursing home for overpayment of rent and construction advances in an underlying action in which Plaintiff’s lawyer had failed to include a Medicare claim. Plaintiff fired its attorney and tried to, unsuccessfully, amend its complaint in the underlying action to include the Medicare claim. Eventually, Plaintiff settled with the nursing home voluntarily in the underlying action and sued its attorney for malpractice. The trial court dismissed Plaintiff’s legal malpractice complaint because it found Plaintiff settled voluntarily with the nursing home, and thus, was precluded from recouping any additional monies from its attorney. The Plaintiff appealed arguing that it only settled as an attempt to mitigate damages, and that it was not necessary to exhaust all appeals before bringing the malpractice action.

Issue: Whether the Plaintiff could successfully assert a cause of action for malpractice after settling in the underlying action without exhausting all appellate remedies?

Ruling: Yes, Plaintiff could assert a cause of action for legal malpractice against the defendant attorney to recoup damages under the Medicare claim, since:

1. Plaintiff never represented that the settlement with the nursing home was an acceptable settlement of all of its underlying claims;
2. Plaintiff entered into the settlement in an effort to mitigate its damages; and,
3. There is no requirement that all appellate remedies available in an underlying action be exhausted prior to asserting a claim for legal malpractice.

Lesson: As long as a litigant enters into a settlement in the underlying action in an effort to mitigate damages, it does not have to exhaust all appellate remedies prior to asserting a cause of action for legal malpractice.

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