Articles Posted in Lawyers and Legal Malpractice

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.

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.

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,

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.”

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

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.

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.

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.

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.

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,