Pennsylvania Legal Malpractice and Ballard Spahr

Law.Com reports that the law firm of Ballard Spahr won a jury trial yesterday.  Beyond the usual legal malpractice issues and testimony, there was plenty of star power [in a law sort of way] as " famed Florida litigator Roy Black of Black Srebnick Kornspan & Stumpf represented Epstein along with Boca Raton-based Lance W. Shinder and local counsel Marc R. Steinberg, managing partner of Rubin Glickman Steinberg & Gifford in Lansdale, Pa.

His attorneys said in court documents that Crusader was never mentioned at the meeting with Epstein and Kaplinsky and that Epstein met with Crusader, and its then-executive -- now gubernatorial candidate -- Tom Knox, on his own in February 1999. "

"A Montgomery County jury vindicated Ballard Spahr Andrews & Ingersoll on Monday in a breach of fiduciary duty suit brought against the firm by a man seeking between $17 million to $30 million in lost profits plus interest and punitive damages.

Plaintiff Saul R. Epstein originally claimed the firm and Alan S. Kaplinsky, the firm's consumer financial services group chairman, committed legal malpractice, breached their fiduciary duty and interfered with a prospective contractual relationship, according to court documents. In Epstein v. Kaplinsky, Epstein claimed the firm shared his prospective business interests with another firm client involved in similar work, according to court documents.

An 11-to-1 jury found that Ballard Spahr owed a duty to Epstein but found by the same margin that neither Kaplinsky nor the firm breached that duty, according to Ballard Spahr partner Darryl May who acted as in-house counsel for the firm during the case. "

Right to Independent Counsel in Malpractice Cases

This case, Elacqua v. Physicians Reciprocal Insurers is a medical malpractice matter, in which the doctors had both covered and non-covered claims against them  Naturally, the insurance company had coverage for certain of the claims.  Although this case is in the medical malpractice area, it is fully applicable to legal malpractice.

The insurer was under an obligation to inform the doctors that they could have independent counsel, at the insurer's cost, to represent them.  The failure to inform the doctors could amount to deceptive business practices under Business Law 349. 

The NYLJ reports: "Drs. Mary S. Elacqua and William Hennessey alleged deceptive business practices because they were not told they were entitled to choose independent counsels, at the insurance company's expense, to represent them when a conflict of interest arose between covered and uncovered claims in the malpractice case against them. They were each represented by lawyers assigned by their insurance company.

The state Court of Appeals recognized the obligation by an insurer to provide independent representation to insureds in Public Serv. Mut. Ins. Co. v. Goldfarb, 53 NY2d 392 (1981), the Third Department panel said.
Yet, according to last week's ruling, a lawyer for Physicians' Reciprocal Insurers and the company's general counsel both acknowledged that its "practice is not to inform its insureds with whom it has conflicts that they have the right to select independent counsel at defendant's expense." In fact, the Third Department noted that in a 2005 ruling in the same case, Elacqua v. Physicians' Reciprocal Insurers, 21 AD3d 707, it confirmed that insurers have an "affirmative obligation" to inform insureds of their rights.

"Here, the partial disclaimer letters sent by defendant to its insureds - including plaintiffs - failed to inform them that they had the right to select independent counsel at defendant's expense, instead misadvising that plaintiffs could retain counsel to protest their uninsured interests 'at [their] own expense,'" Justice Karen K. Peters wrote for the panel. "Equally disturbing is the fact that defendant continued to send similar letters to its insureds, failing to inform them of their rights, even after this Court's pronouncement in Elacqua I."

Bankruptcy Trustee's Action in Legal Malpractice against Alston & Bird

Law.Com reports that "Alston & Bird and and the bankruptcy trustee for one of its former clients, the beleaguered Friedman's Jewelers Inc., are on the verge of settling a suit over allegations that the firm committed legal malpractice. "

"Alston & Bird, which served as Friedman's outside general counsel from the 1990s until the company terminated their relationship in 2004, contributed to some of those troubles, according to Alan Cohen, Friedman's bankruptcy trustee. He filed a complicated adversary complaint on behalf of the Friedman's Creditor Trust against the law firm and five other defendants in the U.S. Bankruptcy Court for the Southern District of Georgia in January 2007.

The first claim is that Alston & Bird committed legal malpractice by failing to disclose material facts related to Friedman's $85 million investment in Crescent Jewelers Inc., which became irrecoverable when Crescent declared bankruptcy in 2004.

In the second claim, the trustee complains about the fees Alston charged Friedman's. He claims that Alston took $5 million in legal fees but did not give an equivalent value of services. In the third claim, the trustee alleges that Friedman's -- while it was insolvent -- paid Alston almost $700,000. That's more than the company should have paid, given its financial posture, under the Bankruptcy Code, according to the trustee.

Now, more than a year later, the parties are close to striking a deal to resolve those disputes. "

Legal Malpractice, Judiciary Law 487 and Frivolous Conduct

The case of Rozen v. Nite Rider Group, Inc. seems to be going on in three different venues.  There was the original case, based on loans and property noldings, there is a legal malpractice case, and apparently there is also a Judiciary Law 487 case too. "This motion by former defense counsel, Russ & Russ, P.C., Jay Edmond Russ, Daniel P. Rosenthal, Kenneth J. Lauri and Ira Levine, (the Russ attorneys), for an order dismissing the parties' motions for sanctions on the moving parties for engaging in frivolous conduct as defined in 22 NYCRR 130-1.1, or, in the alternative, staying a hearing on the aforesaid motions, dated March 18, 2008, and March 24, 2008, until a decision is rendered on the Russ attorneys' motions to dismiss the complaint in an action brought against them by Rozen for breach of section 487 of the Judiciary Law (pending under Index Number 19442/2007), and another action brought against them for malpractice (pending under Index Number 01462/2008)"

Here, "After the trial concluded, the plaintiffs became aware that a certain parcel of real property situate in Mattituck, New York, which had been the subject of financial transactions between the parties, and on which it was understood at the time of trial that defendant Sally Omar held an option, was no longer subject to that option. The option had, on May 12, 2007, been assigned by Omar to her attorneys, seemingly in lieu of payment of fees. Plaintiffs assert that settlement offers extended to the Omar defendants, and their business entities, were not transmitted to them by defense counsel insofar as the offers involved the Mattituck property to which the defendants no longer held any interest."

Now, sanctions are sought against the attorneys, even though they are no longer in the case. "In March of 2008 both the plaintiffs and the defendants moved for a hearing to impose sanctions on Russ & Russ, P.C., and those professionals affiliated with them, for engaging in [*2]litigation conduct which satisfies the definition of frivolous conduct as set forth in 22 NYCRR § 130-1.1. (Motion Sequence No. 008 and No. 009.). It is alleged that the conduct of the moving parties undermined the integrity of the judicial process and increased the legal fees of the plaintiffs. Specifically that : "It was the intention of the Russ & Russ Attorneys to take the option to the Mattituck property from the Omars and then cause the Rozens to incur extensive delays and expense so that they would relinquish their rights to the Mattituck property without the knowledge that the Russ & Russ Attorneys sought to develop and profiteer from the property." Rosen OSC dated March 18, 2008, ¶ 11. "