New York Real Estate Lawyer Blog

Every day parties hire lawyers to "resolve" a dispute, to "negotiate" a transaction, to "settle" a matter that has arisen between two entities or individuals. The attorney often jumps into the fray (swords raised), has discussions with the other lawyer, and, sometimes, those communications get garbled leaving the process damaged, the parties angry, and the matter not resolved. "Garbled" is the polite term, but a less idealistic view might suggest that the negotiations got garbled by the fact that lawyers have their own interests of professional reputation, or purse strings, or other undisclosed reasons for muddying the water. Personally, I don't respect attorneys who practice that way, but they will all have excuses as to why the communication was presented in the way it was. So, what am I to do, I cannot contact a party represented by another lawyer?

Can I have my client contact the other client directly, and can I tell them what to say?

Truthfully, I have counseled my clients to contact the other side directly, without the filter of an attorney; but I have often been concerned that such advice, while practical, might not be ethical or responsible under our code of professional ethics. In my gut, I always thought it proper, but I had a nagging sense that other attorneys might disagree. I thank my bretheran at the NYSBar Association who have now set forth an ethics opinion sanctioning such conduct by issuing an opinion about when and how a New York attorney might advise their client to contact the other side directly.

Bottom line-- Parties to a legal matter have the right to communicate directly with each other. A lawyer may advise a client of that right and may assist the client regarding the substance of any proposed communication. The lawyer’s assistance need not be prompted by a request from the client. Such assistance may not, however, result in overreaching by the lawyer.

So, you signed the retainer with an attorney, litigated a case or resolved the matter, but now have a fee dispute with your lawyer over fees, malpractice, or something else. You are considering a lawsuit against that attorney, or that attorney may have sued you to recover her fees. You look at your retainer agreement and see that in contains a provision requiring arbitration under Part 137 (22 NYCRR 137 et seq.). What is that, and if you win, does your attorney get the right to re-litigate the finding of the fee arbitrators.

The answer to whether an attorney may litigate the arbitration finding and request a new trial ("de novo") in the courts is a complex issue that has actually been litigated by attorneys seeking to avoid the findings of the fee arbitrators. Try to follow the chain of thought:

First, either party may reject a Part 137 arbitration award and sue for a de novo trial.

22 NYCRR 137.8. De novo review.

(a) A party aggrieved by the arbitration award may commence an action on the merits of the fee dispute in a court of competent jurisdiction within 30 days after the arbitration award has been mailed.

However, the parties can waive their right to a trial de novo in advance “in a form prescribed by the Board of Governors.” (emphasis added)

22 NYCRR 137.2. General.

(c) The attorney and client may consent in advance to arbitration pursuant to this Part that is final and binding upon the parties and not subject to de novo review. Such consent shall be in writing in a form prescribed by the Board of Governors.

But what did the Board of Governors intend for the word “form” to mean? A “written waiver form”, or a “style” or “manner”? The answer seems to appear in supplementary directives promulgated by the Board, as follows:

The Board of Governors is mandated to write “guidelines and standards”, essentially supplementary directives that provide further guidance as to the Part 137 rules.

22 NYCRR 137.3. Board of governors.

(g) The board of governors * * * shall adopt such guidelines and standards as may be necessary and appropriate for the operation of programs under this Part, […]

(emphasis added)

The introductory paragraph of the “Standards and Guidelines”, confirms that these are indeed the guidelines and standards mandated by 22 NYCRR 137.3(g) (quoted above).

STANDARDS AND GUIDELINES

Pursuant to Part 137 of the Rules of the Chief Administrator, Title 22 of the Official Compilations of Codes, Rules and Regulations of the State of New York, the following Standards and Guidelines are promulgated by the Board of Governors of the New York State Attorney-Client Fee Dispute Resolution Program ("Board") to implement the Attorney-Client Fee Dispute Resolution Program and Part 137.

The Board of Governors, however, interpret 137.2(c)’s use of the word “form” to mean that an explicit waiver of de novo review is required only if the waiver is to bind the client.

STANDARDS AND GUIDELINES
SECTION 6 THE FEE DISPUTE RESOLUTION PROCESS

B. Prior Written Agreements Between the Attorney and Client Under Section 137.2.

2. Under section 137.2(c), the attorney and client may consent in advance to submit to arbitration that is final and binding and not subject to a trial de novo. To be valid on the part of the client, such consent must be knowing and informed and obtained in the manner set forth in section 6(B)(1) of these Standards and Guidelines, except that the retainer agreement or other writing shall also state that the client understands that he or she is waiving the right to reject an arbitration award and subsequently commence a trial de novo in court.

There is no corresponding required wording for an attorney to explicitly waive his right to a de novo trial. The clear meaning of Standards and Guidelines 6.B.2. is that no client can be bound by an inadvertent and unknowing agreement to waive his rights to a new trial of the issue. From 6.B.2.’s silence with respect to attorneys, it seems fair to assume that they are expected to know the law and therefore are not similarly protected.

However, despite this seemingly clear chain of law, at least two Courts have ignored the wording of Standards and Guidelines 6.B.2. Instead, the Courts have ruled that 22 NYCRR 137.2(c)’s use of the word “form” refers to “written waiver form” Model Form UCS 137-14 (11/01), entitled: “Consent To Submit Fee Dispute To Arbitration Pursuant To Part 137.2(c) Of The Rules Of The Chief Administrator And To Waive Right To Trial De Novo”.

Further,in one case, the Court unilaterally expanded the protection against unknowing waiver explicitly given only to the client in 6.B.2. and decided that this protection also covered the attorney, permitting him to avoid the otherwise clear language he drafted for inclusion in his retainer agreement stating that the arbitration “will be binding” on both the client and the law firm.

A de novo review, however, may not be what the attorney seeking to avoid the arbitration award wants. Recall, the client may have had a concern about legal malpractice, breach of fiduciary duty or other claims under Judiciary Law Section 487. Is it really in the attorney's best interest to avoid the arbitration award and seek de novo review?

Bottom line-- under the existing loop hole, several courts have allowed attorneys who promised binding arbitration to avoid the binding arbitration promised.

The plaintiff in McColgan v. Brewer owned a part of what was a larger parcel of property owned by M. Kelley. During construction of the New York State Thruway, the state of New York acquired the middle part of the original Kelley parcel.

As a result, Kelley owned two separate parcels, one west of the Thruway and the other east of the Thruway. The physical layout required Kelley, and now the plaintiff, to use Albert's Lane to reach Route 32. Kelley's southern neighbors entered into a series of right-of-way agreements with the owners of the northern parcels to secure access to Route 21 via Alberts Lane in 1953. Kelley was never a party to these right-of-way agreements granting an easement between her property and Route 32.

The plaintiff purchased the Kelley parcels. Prior to purchasing the subject property, the plaintiff (1) hired the defendants Rothe Engineering & Construction and Donald Brewer to conduct a survey of the subject property, (2) hired the Attorney defendant Philip Kirschner to determine if the easterly portion of the property had access to Route 32 via Alberts Lane, and (3) obtained insurance from the defendant Chicago Title Insurance Company through a local agent, Abbacy Abstract, to insure against any losses that he would incur if the landlocked portion of the property did not have access to Route 21.

The plaintiff then amended the zoning of the subject property to develop and use it as a pipe yard. Thereafter, he was informed that the right-of-way agreement over Albert's Lane did not benefit the landlocked portion of the property. The plaintiff then filed a claim under his insurance policy, which Chicago Title Insurance rejected.

Here, the plaintiff has filed claims (1) against Rothe Engineering & Construction and Donald Brewer for negligence and breach of contract, (2) against Kirschner for legal malpractice, and (3) against Chicago Title for fraud and breach of contract.

At the trial level, (1) Chicago Title moved for summary judgment arguing Kelley's southern neighbor's right-of-way agreement benefited the Kelley parcels, (2) the plaintiff moved for partial summary judgment to hold that his landlocked property was not benefited by the right-of-way agreement, and (3) Kirschner moved to preclude certain expert testimony in the plaintiff's expert disclosure, and the plaintiff cross-moved for costs and sanctions based on filing a frivolous motion.

The trial court denied Chicago Title's motion for summary judgment, granted the plaintiff's cross motion for partial summary judgment, and denied the cross motions relating to the expert disclosure. Kirschner appealed on the grounds that the right-of-way agreement established a benefit to the plaintiff's property.

The court, ruled that Kelley's neighbors were the only grantees of the agreement stating, "As neither Kelley nor her successors in interest were grantees with respect to the right-of-way agreements with the other landowners, such agreements do not benefit the landlocked portion of plaintiff's property as a matter of law."

Regarding the Attorney Kirschner's motion on precluding expert testimony, the court held that Kirschner failed to demonstrate the plaintiff's actions were willful or that he was prejudiced as a result.

Bottom Line-- the case is going to trial against the attorney and the title company.

As much as the law changes, it stays the same. Oliver Wendell Holmes, an original legal theorist, revolutionized the understanding of law when he reconceived common law as a theory of social inquiry. Arguing that the law was, in fact, a social reconstruction of ever-changing historical contexts, we are more aware of the interlinked effect of evolution and revolution on legal developments. Whereas in the old days, quill and ink were novel, today, intangible computer files are subject to conversion analysis and e-mails are increasingly accepted in contract and communications law.

One statute, however, has outlasted fleeting technologies and changing socioeconomic conditions through resurrection. A recent decision by the Court of Appeals [Shmueli v. NRT N.Y. Inc., 68 AD3d 479 (2009)] has breathed new life into New York State legal malpractice law and draws from a law which is more than 700 years old. A near facsimile translation of the oldest statute in Ango-American jurisprudence, Judiciary Law 487, prohibits New York attorneys from engaging in practices that deceives any party or any court in any pending proceeding. The statute guarantees that lawyers remain ethically conscious while performing their professional responsibilities and reinforces the personal accountability for their actions both inside and outside the courtroom. While time will tell, the New York State Judiciary Law 487 is designed to deter abusive litigation tactics and misuse of client funds in connection with litigation with the threat of criminal misdemeanor and potential treble (read triple) damages to the injured party in a civil action. Whereas a legal malpractice claim may be based upon negligence, a claim under Judiciary Law 487 must plead that a defendant had an intent to deceive.

Furthermore, the Third Dep't ruled in Amalfitano v. Rosenberg, 12 NY3d (2009), that treble damages may be sought whether or not a court believes there was, in fact, a material misrepresentation of fact because the costs of plaintiff's legal representation may be a proximate result of that material misrepresentation. That is, in the absence of a material misrepresentation of fact, the court reasons that no claim nor legal expenses would have resulted. The ruling in Amalifitano eliminates monetary concerns that may have deterred potential opposing parties and as a consequence, there will likely be a considerable increase in claims under Judiciary Law 487.

Bottom Line-- clients and third parties mishandled by deceptive tactics have a newly invigorated, but long established tool to review deceit in New York.

Does a client have the right to bring a legal malpractice case against the attorney who forced, recommended, or otherwise allowed the client to knowingly accept in New York?

Generally, New York does not bar claims for legal malpractice arising from a litigation settled by the former client. A client may sue her former attorney after settling a case if the attorney compelled the settlement. In Latimore v. Bergman, (2nd Dep’t 1996), the plaintiffs sued their former counsel for legal malpractice asserting that the defendant had forced a settlement in a previous personal injury action. The court denied the defendant’s motion for dismissal and summary judgment articulating that a settlement in a previous case does not preclude a plaintiff from seeking the full damage amount that would have otherwise flowed from her attorney’s negligence. Latimore v. Bergman, 637 N.Y.S.2d 777 (2nd Dep’t 1996).

See also, Leone v. Silver & Silver, LLP., 880 N.Y.S.2d 676, (2nd Dep’t 2009), where the same Appellate Division ruled a client may sue her former attorney after settlement if the attorney compelled the settlement, and in doing so, failed to protect client interests within reasonable skill and knowledge and that breach of duty caused actual damages. Unless the former attorney-defendant can prove with evidence that the defendant had indeed protected client interests within reasonable skill and knowledge OR that the breath of duty did not cause actual damages, a legal malpractice suit after settlement will survive a motion to dismiss.

Obviously, each case is fact specific, but don't be deterred from having your case reviewed by a competent legal malpractice attorney in New York.

There are many attorneys in New York, but when it comes to buying your home, a commercial business, or other transaction involving New York State real estate, you really should hire an attorney that handles real estate transactions. Real estate transactions can get complex. Hiring a real estate attorney has the practical advantage of simplifying the process.

How do you identify a real estate lawyer you want to work with?

One way to find a real estate lawyer is through referrals from family or friends. Ask your family or friends whether the real estate attorney was attentive to their questions, available by telephone, took their calls personally. Personal attention and attentiveness deserves a premium when you are purchasing what will likely be your most expensive asset.

What about finding an attorney on the internet. As you can see, at Klose & Associates, we believe that the internet and e-mail are essential tools in a real estate attorney's arsenal. We handle most of our transactions by constant electronic contact with real estate brokers, clients, title agents, banks and mortgage brokers. You get prompt service, prompt response to your questions, and all parties are privy to the major steps to a real estate transaction. Make sure that the real estate lawyer you hire will meet your particular needs.

Beware, not all real estate transactional attorneys also know how to deal with real estate litigation. Litigation real estate lawyers handle lawsuits involving adverse possession, zoning and planning (Article 78), and other types of litigated issues. The morass of real estate law means that a litigation attorney needs to know how and where to look for cases that are similar to the ones involving yours.

Bottom Line-- understand that different real estate attorneys bring different skills and knowledge to a transaction or litigated matter. You should call several to be sure that they have the experience you need for your matter. Ask questions regarding your concerns, including billing rates, whether there is a flat fee, hourly fee, or contingency basis. While estimated costs in litigation are hard, they may not be in a transactional situation.

As simple and obvious as it sounds, don’t hire a lawyer for your real estate case that does not practice real estate

Two parties settle a long running dispute, then one become disenchanted, can that party sue her attorney for negligence in "forcing" a settlement. There are all sorts of ramifications, both for the clients and their attorneys. Here's one case.

In 2005, Joseph and Teresa Guidos settled a shareholder dispute with Allstates WorldCarger Inc. Two years later, the Guidos filed a malpractice suit against their attorneys from the settlement alleging that Joseph Guido was ‘stripped’ of his majority shareholder as a result of ineffective representation. The New Jersey Supreme Court decided a client can sue for malpractice if ‘particular facts’ serve as evidence of as attorney incompetence even in light of the fact that the client might have originally accepted the settlement. Does that make sense?

Dismissed on summary judgment, but reversed on appeal, the appellate court found that genuine issue of material fact as to whether the clients would have taken the settlement, whether the attorneys reasonably explained the significant details, and whether the clients understood the ramifications of the settlement before it became final. The attorneys argued that the "malpractice claim" was based on ‘hindsight bias’ or 'buyer's remorse" because the clients simply wish they had acted differently.

The consequences of the New Jersey ruling are immense for both attorneys and clients because of the potential that making the attorney liable in this type of situation pits the attorney against the client, having an adverse impact on the attorney-client relationship, and militating against the traditionally strong policy of favoring dispute resolutions and settlements.

The fact that clients have survived summary judgment suggests that lawyers will become a more attractive target for malpractice suits if they fail to detail objections or concerns – in writing – regarding a settlement before it becomes final.

Bottom line-- there are important issues to consider for both clients and attorneys (and their malpractice insurers).

Chalk one up for the diligent little guy here. Cite-884 N.Y.S.2d 634 (2009)

In a recent New York State case involving claims for legal malpractice arising from the failure of an attorney to adequately and timely respond to a fire insurance claim loss, the person injured by the malpractice was able to keep the malpractice insurer responsible even after the target attorney failed to notify his insurer of the malpractice claim.

As discussed in this New York Real Estate Lawyer Blog in the past, late notice of a claim defenses have been harder and harder for the insurance industry. In this New York case, the negligent attorney failed to respond to plaintiff’s repeated attempts to obtain insurer information until after the policy notification period had lapsed. The insurer denied coverage for "late notice," but under an applicable statute the claimant had the right to give notice after policy period had lapsed.

In denying the motion for summary judgment, the court held required the insurance company to indemnify the attorney for his malpractice, noting that there are circumstances in which injured parties can notify insurers of claims after the policy notification period has lapsed. Insurance Law Section 3420(a) so long as notice of the claim is as soon as reasonably possible once the insurer’s identity is discovered.

In this case, the claimant's new attorney was diligent in attempting to ascertain the identity of the insurer and notified the insurer promptly after discovering its identity.

The Bottom line-- injured parties in New York legal malpractice actions have some potential leeway when notifying the target insurance company of the claim, so long as it is diligent in ascertaining the identity of the insurer.

The New York State Supreme Court (Shafer, J) reiterates that to sue an attorney for malpractice arising out of alleged negligent will preparation there must be an attorney client relationship before the beneficiaries may sue for legal malpractice in New York. That is, there must be "privity" of contract between the attorney and her client before the client has standing to sue for legal malpractice. For a complete copy of the recent decision Leff v Fulbright & Jaworski, LLP.

Beneficiaries of wills who get less than they think they are due often call us to determine if they have any claims against the attorney. The answer in New York State tends to be who, if anyone, may sue for legal malpractice when attorneys make mistakes planning estates.

As upheld by this Court, New York is one of the few states which recognizes the "doctrine of privity," meaning that, when the decedent died, she may be the only one who could have sued the attorney for screwing up the estate plan. This rule is relaxed in the presence of “fraud,
collusion, malicious acts, or other special circumstances, but one must investigate and carefully investigate the facts to survive dismissal under those cases.

In this case, the Estate was valued at nearly $90 million. Shortly after the Husband's death, his son from a prior marriage made a claim under an old separation agreement with the first wife, wherein the Husband agreed to give "no less than one-half of his probate estate" to the son.

The claim for malpractice alleged that the Husband's New York attorneys failed to consider this agreement when drafting the most recent estate plan. Indeed, the attorneys admitted that they had only discovered the agreement when responding to the son's claim against the Estate.

After settling the case with the Son, the attorneys faced suit by the new Wife contending the attorneys committed legal malpractice by failing to inform the Husband about the existence of the separation agreement.

Not only did Justice Shafer dismiss the claims on the ground that the Wife had no "standing" to sue the attorneys, but that her claims for malpractice were speculative because there was no evidence to suggest that he would have indeed changed his plans had he known of his agreement.

This court finds that the evidence does not indicate that plaintiff was ever involved in a joint estate plan with her husband, or that a relationship approaching 'near privity' with defendants vis-a-vis Leff's estate plan existed such as might make defendants plaintiff's attorneys with regard to Leff's personal estate plan.

This ruling makes sense in this case. If you read the facts, it was clear to the Judge that the Husband and Wife never consulted with the defendant attorneys together, that only the Husband sought their advice on the Estate Planning, and that she had her own attorneys for such planning issues. The Wife repeatedly denied knowing nothing about the estate plans of her Husband, so she had a hard time showing that these lawyers were representing her. Even if she had proven the relationship, there was nothing but speculation that the Husband would have done anything differently.

The bottom line: if the wills are not "reciprocal," Husband and Wife should understand that there is an inherent conflict of interest in having one attorney do both estate plans. As hostile as you may feel, there may be no claim for legal malpractice, but you are welcome to contact our New York Legal Malpractice consultants to discuss the facts.

Since lawyers have been lawyers, there has always been pressure to release the age old bonds of the attorney client privilege in favor of letting non-professionals practice law. Never more so has this pressure been as intense as in the real estate industry where many states permit non-lawyer participants do all sorts of acts that attorneys did or should do. For example, real estate brokers in some states are permitted to draft and review and prepare the contract of sale in a real estate transaction. Not only does having an attorney present raise the level of the transaction, but it also insulates parties from the self-dealing that can often occur if an attorney is not looking into the matter.

To its credit, New York State has generally avoided the trend to permit non-lawyer quasi professionals invade the traditional attorney client relationship. The reason for this is that we believe in New York that the professional, confidential fiduciary relationship between client and attorney is tantamount to making the system work.

Recently, a New York State appellate court censured an attorney who formed a company using non-lawyers to provide closing services in the sale of foreclosed properties. The attorney contended that the services his law firm (company) provided were "clerical" in nature, and did not amount to the practice of law. Despite his "previously unblemished record," however, the Court disagreed, finding that he violated ethical cannons by aiding non-attorneys in the unauthorized practice of law. Specifically, the Court held that the services performed by his closing company "were of the character usually performed by lawyers, and were formed pursuant to a contract that required an admitted attorney as a necessary presence."

After winning the contract to conduct the closing, the attorney used a non-attorney paid by the attorney to serve as general manager (she also owned a majority share in the company), and then performed all of the closing scheduling, prepared closing figures and attended closings. The attorney shared profits and losses with the non-attorney, who also happened to be a joint signatory on a non-interest-bearing trust account, used to disburse sale proceeds. [This attorney must not have taken Ethics 101 in law school].

At the same time, the attorney had only minimal involvement reviewing deeds and title searches which were also conducted by closing company. He did not exercise supervisory authority over [the non-attorney], who administered all of the closing services.

Although the complaint initiated from an attorney competitor, the respective ethics panels confirmed that the practices of the closing company violated basic tenets of ethics laws found in the Disciplinary Rules of the Code of Professional Conduct. Such violations included aiding a non-lawyer in the unauthorized practice of law and sharing legal fees with a non-attorney.

Judiciary Law §§484 and 495 bar non-attorneys and voluntary associations or corporations from requesting or receiving compensation for "preparing deeds, mortgage, assignments, discharges, leases or any other instruments affecting real estate," the panel wrote.

"We thus find that respondent has committed professional misconduct by forming a corporation with a non-lawyer for the provision of those services, failing to exercise oversight of its activities or employees and failing to safeguard sale proceeds in an adequate manner."

The Bottom Line-- while not always understood by non-attorneys, the rules governing the unauthorized practice of law by non-attorneys is designed to protect the consumer and clients using the services. While attorneys may be more expensive, they are charged with fiduciary obligations that are closely regulated and controlled by other attorneys and the State of New York. Because of this confidential relationship, clients can expect to have their confidences protected by a professional New York real estate attorney, who is also duty bound to know what she is doing.

Hire an attorney, don't be "penny wise, pound foolish."

In today's day and age, attorneys, rightly and wrongly, get bad reputations from the public. Often these negative reputations are undeserved, but, as a profession, we lawyers need to do a better job of protecting that status as a profession by acting "professional." So, what is it that small business people, real estate clients, and the simple estate planning clients need, and what is it that causes such clients to complain to the ethics board?

Ethics in the hometown practice of law can be complex and potentially dangerous for the local attorney who has practiced for years, given of themselves to the community and knows many in the community. What can your personal lawyer do, and what should you expect? When should you make a complaint to the local grievance committee?

Traps for the Unwary

Ethics grievances are most commonly filed against solo practitioners and lawyers at small law firms, because these are the lawyers on the "front line," for many clients who have never dealt with the legal system, are often at wits end, or stressed by a major financial hardship (divorce) or transaction (purchase of real estate). With increased stress and unfamiliarity with the process, friction often arises between the attorney and the client. When the dispute arises, clients often dispute the fees, and are generally surprised by the amount of time and care it takes to resolve even the most mundane problems.

Obviously, many ethics cases arise from fee disputes, matrimonial law, and real estate transactions because people are emotionally attached to the proceedings or transactions. In residential real estate transactions the real estate closing is the first and only time people deal with attorneys, who often know the issues inside and out, but fail to explain such transactions which are often the biggest and most important investment for these clients, making the relationship even more difficult.

The same stress, sense of loss, and tension is created when attorneys draft wills and then handle the probate process, which can be cumbersome and painfully slower than expected.

Needless to say, there are often common themes to attorney grievances which can be resolved by confident clients and communicative attorneys. For example, many ethics complaints emanate from the turbulence, delays and erratic nature of certain legal matters, especially real estate, probate, and litigation. When the client doesn't know what to expect in terms of money, time, or process, the attorney is the one who can expect a disgruntled client, who might file an ethics complaint.

The failure of communication is cause of the breakdown of the attorney client relationship. When the client and the attorney understand the process, communicate the pitfalls, and understand the potential problems, then both the attorney and the client win.

As professionals attorneys have to understand that the small town practice of law is a service business where results matter, but if a client understands the process and the pitfalls through communication, both parties exit the relationship with the attorney's reputation in tact. The first step to such communication is taking the client's call or returning it promptly.

What to Expect from your Attorney!

1. Expect to be educated about the process.

2. Expect to understand the attorney's role in resolving the matter. We don't make business or personal decisions for you, we explain the ramifications of each course of conduct.

3. Don't expect to win everything there are limitations to what an attorney can do.

4. Expect realistic even conservative estimates as to what result can be accomplished, and in what time frame.

5. Expect to speak to your attorney personally and expect a return telephone call or email.

6. Call or contact and expect updates.

7. Consider and get honest appraisals or estimates of the positive and negative results and occurrences in your matter.

8. Don't expect the sugar coating on the situation.

Credibility, cooperation and communication are hallmarks of a good relationship. I strongly believe that attorneys' "bad reputations" are fostered by the utter inability to communicate with their clients and the public at large. If we are going to improve the relationships it is going to come through communication and education.

Bottom line.

For all of you real estate, matrimonial, probate, and litigation clients out there, remember, you deserve full communication, dignity, and respect. If you are not getting it, you can move to another attorney, or demand it from your attorney.

That respect, however, is mutual. When your attorney tells you that a certain course of conduct MAY result in a negative outcome, you have to respect the fact that you chose that course of conduct. Stated differently, it's not your attorney's fault you just lost your real estate down payment because you failed to apply for a mortgage in accordance with the contract.

To all prospective client and attorney relationships--note to self-- get the fee agreement in writing, because the terms can come back from the grave to bite you.

In New York State there is a rule of evidence known as CPLR § 4519 (the “Dead Man’s Statute”), which is designed to protect the dead from transactions that occurred during their life. Although there are many exceptions to the general rule that an interested party may not testify as to transactions with the deceased, there are many ways that the rule can change the outcome of litigation, including disciplinary or legal malpractice claims against attorneys.

In one reacent case, a long time client of a New York attorney died, leaving a sizeable estate. The attorney represented the estate in the sale of the family home and kept in contact with the Decedent's daughters, who were co-administrators. Eleven days after their mother's death, the attorney issued a check payable to himself, and did so several more times over the course of 13 months to the tune of $100,000 from his escrow account.

Upon learning of the sizeable fees paid to himself, the daughters demanded an accounting and a check for the remaining monies. In response, the attorney conceding that he did not have a fee agreement in writing, and claimed that the now dead mother had either given the money as a gift or orally told him that the fees were for legal work performed, and the daughters filed a complaint with the Departmental Disciplinary Committee.

The Committee charged the attorney with various charges of misconduct: for conduct involving dishonesty, fraud, deceit, or misrepresentation, in violation of DR 1-102(A)(4); misappropriation of funds in violation of DR 9-102(A); violation of DR 9-102(B)(4) regarding (4) engaging in conflict of interest in violation of DR 5-101(A); conduct reflecting adversely on Zalk’s fitness as a lawyer in violation of DR 1-102(A)(7).

During the hearing, the referee took testimony about the transactions with the dead mother on the ground that the plain language of the Dead Man’s Statute did not preclude the attorney from relying on his conversations with the deceased to describe the fee arrangement because an attorney's disciplinary proceeding was not,“against the executor, administrator or survivor of the deceased person.”

On appeal, the Appellate Division found that the attorney engaged in professional misconduct, and ruled that the Dead Man’s Statute precluded him from using his testimony to disprove the charges.

In reversing, New York's highest court, the Court of Appeals found that the Dead Man’s Statute only applied to testimony “against the executor, administrator or survivor” of the deceased. By the court’s reasoning, the attorney was testifying as a witness on his own behalf against the disciplinary charges, and therefore could offer testimpony that would that potentially cut against the parties’ interests in the contingent future proceeding. For you attorneys out there, the case is cited at In re Zalk, 2008 WL 2367490 (N.Y. 2008).

The bottom line-- get your fee arrangement in writing.

I have to comment on this scam because many lawyers are getting slammed, and I routinely get solicited from my private web-site for this type of scam:

Someone representing an Asian company goes onto my web-site and tells me they need to collect a six figure judgment against "suppliers" in New York or other states. The source is my actual web-site (Static Form) and is NOT a spam based e-mail. So someone is actually taking the time to go to my web-site-- Thanks, but NO thanks. I suppose they see that I do large litigation type cases, including some breach of contract (collection-type cases).

The overseas company seems legitimate. One time, I had my trusty family member with contacts in Europe actually call the company to see if it was legitimate. The e-mail address appears to be from a recognized, established, publicly-traded Asian (or whatever nationality) company.

Credible sources say that other attorneys have actually commenced communication with the potential "client" by e-mail, entered into engagement letters, obtains documents supporting the debt (or judgment) and begins to work "collect" on the new matter. Some have, unfortunately, even "settled the debt" with the company that "owes" the money. As part of the satisfaction, the debtor provides the attorney with a bank check. The attorney deposits the bank check, deducts his/her fee and arranges for a wire to the overseas client. The bank wires the funds
before the bank check clears, and the check is forged, causing the bank to reverse and sometimes freeze the the attorney's account (usually escrow accounts).

Obviously, this is a serious problem that can lead to immediate disbarment for failure to protect the escrow funds. Please, whether you are a lawyer or not, beware of scam artists bearing "gifts," including bank checks.

Use extra diligence in accepting matters initiated by overseas parties not known. You have a responsibility to protect yourself and your clients. Although the allure of international business litigation can be mesmerizing, please ensure that your client selection processes avoid this common problem.

The forged bank check is also a common problem for everyday businesses.

According to an American Bar Association, real estate lawyers are being sued more often for bad advice arising from real estate transactions According to a recent study of various insurance companies, and their claims between 2004 and 2007, malpractice claims against lawyers related to real estate transactions climbed four percentage points to 20 percent of all such malpractice cases between 2003 and 2007, a four percent jump.

Lawyers are getting sued for errors in real estate transactions with alarming frequency, and were second only to attorneys handling personal injury claims, which also rose in frequency.

Real estate transactions apparently went bad in a variety of ways for the lawyers. Such claims stemmed from conflicts of interest, closing and contract-drafting errors, and problems linked to zoning and escrow issues.

The study results are based on a survey of insurance companies that provide legal malpractice coverage in the United States and Canada, with 18 U.S. and six Canadian companies responding to the investigation.

Finding lawyers willing to take New York State legal malpractice claims against other lawyers can often be difficult.

Should we go to trial, or take the money? According to a recent study, the "right" answer generally depends upon whether you are a plaintiff or a defendant in the civil lawsuit.

According to the study, in a full sixty-one (61%) percent of cases analyzed, plaintiffs who failed to settle the case prior to trial often received less at trial (approximately $43,000 less). To the contrary, defendants who refused to settle and made the "wrong" decision, were wrong in only twenty-four (24%) percent of cases analyzed, but paid a much higher price for being wrong ($1.1 million). So, should you listen to your attorney?

The study looked at 2,054 cases that went to trial from 2002 to 2005, and tried to account a number of different factors relating to the lawyers, the case and the court. [See, September 2008 issue of the Journal of Empirical Legal Studies–co-authored by Blakeley B. McShane, a graduate student at the Wharton School of the University of Pennsylvania, Martin A. Asher, an economist at the University of Pennsylvania, and Randall L. Kiser principal analyst at DecisionSet, a consulting firm that advises clients on litigation decisions, found at http://www3.interscience.wiley.com/cgi-bin/fulltext/121400491/HTMLSTART]. While there are many different variables to consider, the study raises provocative questions about legal advice to go to trial, and the debate rages whether the lawyers are giving impartial advice when their pocketbook is part of the equation. While most cases settle, critics of the profession have long argued that lawyers have an incentive to recommend trial to collect fees.because of contingency fees or because they would be paid large fees to ready the case for trial.

Critics of the study note that cold hard statistics mean nothing when contemplating settlement of a particular case because each case rises and falls on specific facts, under laws which are decided by different judges. The study tried to account for those possibilities, however, finding that factors such as years of experience, the lawyer’s law school, and the size of the firm did not really impact whether the parties made the right decision to go to trial.

The bottom line– A good lawyer has to be able to tell clients that a judge or jury might see the case differently, and they might lose at trial– settle, don’t gamble. For the client and the attorney making the decision-- remember, there are many factors -- fees included.

The huge law firm, Reed Smith, is facing suit over fees paid by one of its former not-for-profit clients. Law.com reports that the not-for-profit alleges that the high demands on partners to increase profits ultimately led to “excessive” fees in a routine employment discrimination case, originally quoted to be $50,000 but ballooned to reportedly more than $960,000.

Recent litigation brought by the foundation is proceeding on several grounds, including breach of contract, breach of fiduciary duty, fraud and legal negligence. In permitting the case to move forward the judge ruled that the client faithfully paying fees to the law firm did not mean that they could not later complain about their excessive nature. Good news for clients who pay their fees.

According to the court,

"The complaint has specifically alleged billing fraud, excessive billing, and billing for unnecessary services (fee-churning) and secretly elevating billing rates without the consent of the plaintiff and related allegedly improper billing practices."

According to the report by Law.com, the claims by the not-for-profit related to "fee-churning," survived dismissal. [Definition: One example of fee churning might be where the law firm assigns multiple associates and partners who all review and re-review each correspondence, pleading, or other legal document].

The complaint reportedly alleges that the law firm overstaffed the case, failed to describe billing entries by subject matter or activity, secretly raised the rates of the lawyers billing and at rates which exceeded those promised, according to the report in Law.com.

That is the question in a recent lawsuit filed in Rockland County Supreme Court.

Most real estate attorneys would say that closing with out a certificate of occupancy on a newly constructed house is not a good idea, even a departure from accepted standards.

A certificate of occupancy is the legal notice by the municipality that the house is habitable and constructed in accordance with the building permit. Accordingly, when purchasing a residential piece of real property to be occupied as a dwelling, the attorney should recommend a certificate of occupancy. The failure to have a c/o means that occupancy of the premises "illegal," and the failure to have that document means that any occupancy violates the law.

Although we cannot comment on pending lawsuits, here are the contentions of the parties.