"9 to 5" and Legal Malpractice

Legal Malpractice in Hollywood should come as no surprise.  We've commented on the widespread omnipresence of legal malpractice litigation, but had no idea we would be quoting Variety on the subject.  Here is their report on legal malpractice and the "9 to 5" screen, stage and trust saga as well as the cult classic Harold and Maude.

"The trust representing the late writer-director Colin Higgins has sued attorney Barry Hirsch for failing to properly represent his interests in the "9 to 5" stage musical.

Colin Higgins Prods. filed suit on Jan. 14 against Hirsch and his law firm in L.A. County Superior Court, accusing Hirsch of legal malpractice and breach of fiduciary duty. The trust seeks damages to be determined in a jury trial.

Among the many charges in the filing: Hirsch failed to adequately secure Higgins' rights to a live stage show from Patricia Resnick, the original scribe for the movie, and failed to advise the trustee in 2006 that the firm was representing Resnick at the time she was writing the book for "9 to 5: The Musical."

When the trustee asked how such a musical could be mounted without stage rights from Higgins Prods., Hirsch supposedly stated, "It may not be ethical, but it is legal."

According to the suit, Higgins, best known for penning "Harold and Maude," inked his deal with Fox to rewrite Resnick's "9 to 5" screenplay in 1979. Hirsch represented the writer-director and his shingle on various entertainment matters, including that contract.
 
Harbinger of Legal Malpractice Cases to Come?

As the economy has sunk, it is expected that legal malpractice cases will increase.  One reason is that cases previously thought to be unworthy will garner new luster; another is that in commercial circumstances there will be opportunities for cases.  Here is one example which did not work out for plaintiff.  As more sub-prime lending practices surface, we may expect to see further examples of this litigation, both in bankruptcy court and in district courts.

Law.Com reports the Dorsey saga.  "What started off as a run-of-the-mill loan arrangement turned into a decade of litigation for Dorsey & Whitney that could have cost the firm up to $4 million in malpractice verdicts -- until the 8th U.S. Circuit Court of Appeals tossed out the entire case Thursday.In 1999, a now-defunct investment bank in Minneapolis, Miller & Schroeder, packaged about $12 million in bonds and sold them to 32 banks. The banks then became the direct lenders to a Mohawk tribe in upstate New York which used the money to open a casino.

There was a problem, though. Miller & Schroeder hadn't gotten the go-ahead on the loan for the casino project from the National Indian Gaming Commission. Internal documents showed Dorsey lawyers knew this could jeopardize the entire project. They told Miller & Schroeder to go ahead with the financing anyway.

The casino was a huge failure and its management defaulted on the loans starting in 2000. The banks sued, but the casino administrators said they didn't have to repay the loans. Why? Because without the gaming commission's approval, the casino project itself wasn't valid -- and neither were the loans.

Litigation ensued. Miller & Schroeder, Dorsey's client, sued the casino management and the Mohawk tribe in bankruptcy court. Dorsey advised Miller & Schroeder to drop the tribe from the lawsuit, a strange decision. A federal district court in 2007 concluded that Dorsey made that decision only to prevent the disclosure of its mistake in advising Miller to proceed with the loans without getting the gaming commission's approval.

There was more: One of the banks involved, Bremer Business Finance Corp., sued Miller & Schroeder. Dorsey lawyers badly wanted to keep representing Miller, especially because a rival firm was pushing for the business, court records show. But could they ethically do so if their own error would be at the heart of Bremer's claim? Dorsey decided they could, and continued on the case. Finally, Bremer sued Dorsey, claiming that, in effect, Dorsey, by representing the arranger of the loan, also indirectly represented all the banks who eventually bought those loans.

Two federal courts -- a bankruptcy court and a federal district court -- basically agreed and ruled against Dorsey in judgments that added up to $900,000, according to stories in The National Law Journal. Those judgments also kept the door open for larger judgments in the future. But the Minnesota Supreme Court went the opposite way in a parallel case brought against Dorsey by the banks. That court ruled that Dorsey's conduct didn't amount to malpractice, and it discredited the idea that the banks, as third parties, were Dorsey clients all along. "
 
Thoroughbred Legal Malpractice Case

This case illustrates the difference between legal malpractice and all other litigation, the "case within a case."  Defendant attorneys admitted that they allowed a case to go into default, yet were successful in avoiding liability.  Their defense?  Even if we made the mistake, plaintiff could not have won the case after all.

From NY Lawyer comes this story:

"The 6th U.S. Circuit Court of Appeals dismissed a legal malpractice suit against a Cincinnati law firm that acknowledged its error for failure to prosecute a civil suit over the sale of a race horse, but argued that its client's suit would have failed on the merits anyway.

The 6th Circuit agreed on Jan. 12 that White, Getgey & Meyer Co., though it stipulated to legal malpractice, showed that the underlying suit by its client, Leonard Pivnick, would not have succeeded on the merits.

Pivnick purchased a one-year-old thoroughbred horse for $410,000 in a 1997 New York auction but failed to pay the auction house for the horse despite repeated demands, according to the ruling. Pivnick v. White, Getgey & Meyer Co., No. 07-4304 (6th Cir.).

The auction house, Fasig-Tipton Co., subsequently recovered the horse and sold it privately for $375,000. Eventually, the horse sold, after training as a racehorse, for $800,000, according to the court.

Pivnick sued the auction house, arguing that demand notices from Fasig-Tipton regarding the default did not make clear that it planned to sell the horse, and violated Kentucky's commercial code.