RCM Technologies and Buchanan Ingersoll Legal Malpractice Case

Henry Gottlieb at Law.Com reports this $10.6 million Legal Malpractice settlement between Buchanan Ingersoll and RCM Technologies over a stock registration agreement, today.  Here is the news article:

" A lawyer and two Philadelphia firms have agreed to pay $10.6 million to settle a claim that they botched work on a New Jersey company's stock transactions and failed to alert the company to the errors.

Buchanan Ingersoll & Rooney, the wind-down committee of defunct Clark, Ladner, Fortenbaugh & Young, and a former partner of both firms, Stephen Cohen, agreed to settlements of a malpractice complaint by computer and engineering consultant RCM Technologies of Pennsauken, N.J.

RCM accused Cohen of preparing a stock registration agreement that failed to memorialize a plan to restrict the rights of two key shareholders to sell their RCM holdings. That drafting, plus an alleged failure to alert RCM in time for remedial action, cost the company millions of dollars, according to the Morris County, N.J., suit.
How much the defendants paid was not included in stipulations of dismissal filed with the court. But RCM did disclose the sums in its March 27 annual report filed with the Securities and Exchange Commission.

A comparison of the dates of the stipulations of dismissal and the SEC filing shows that the Clark Lardner settlement in 2007 was worth $800,000 to RCM and that the company recovered $9.8 million -- $5.9 million after taxes -- in a March 16 settlement with Buchanan Ingersoll."
 
Real Estate Sales and Legal Malpractice

Real Estate sales and the plummeting economic scene have dominated the news cycles for months now.  Legal Malpractice litigation often follows economic disturbances, and this case, Walker v. Berman, 2009 NY Slip Op 50887(U) ; Decided on May 4, 2009 ; Supreme Court, New York County ; Stallman, J. is an example.  In this case plaintiff wanted to buy an apartment house, but got something different.

Unsophisticated buyer purchases a building at 151 West 76th Street, and relies on broker and attorney to guide buyer through what would turn out to be a difficult process.  In the end, buyer bought a "Class "B" Multiple Dwelling. Ex. G. A Class "B" Multiple Dwelling is a dwelling that is intended for use as the temporary abode of individuals and families; the classification includes hotels, lodging houses, rooming houses, boarding houses, boarding schools, furnished room houses, lodgings, club houses, colleges, and dwellings designated as private dwellings but occupied by one or two families with five or more transient boarders, roomers or lodgers in one household. Multiple Dwelling Law § 4. The Class "B" Multiple Dwelling designation also appears on the certificate of occupancy search ordered by plaintiff prior to agreeing to the purchase (Ex. N), and on the listing notice provided to plaintiff by defendant ."

Plaintiff sues attorney who defaults. [A quick look at the Lawyer's Diary shows no entry for this attorney.  A search of the OCA attorney directory shows that Ira L. Berman is disbarred.]  Plaintiff now tries to go after the broker, with negative results.

"After the contract was signed, but prior to closing, plaintiff informed Robin that there were some problems with the Certificate of Occupancy, and, allegedly, Robin advised plaintiff to confer with her attorney regarding the legal ramifications associated with the Certificate of Occupancy.

After the closing, plaintiff discovered that the Class "B" Multiple Dwelling classification is used for buildings operated as a Single Room Occupancy (SRO) dwelling, not a regular apartment building (i.e., a Class A multiple dwelling). Consequently, plaintiff asserts that she paid far more for the building that it is worth, believing it to be an apartment building, not an SRO. "

Result?  Plaintiff seems to lose all the way around.  Attorney defaults, has been disbarred, has no insurance defense, and broker is not liable.
 
Can This Happen in New York and is it Legal Malpractice

Questions of attorney billing, expenses and disbursements often surface in the guise of a legal malpractice defense.  Did the attorneys over bill ?  Did they over-charge for expenses?  May a law firm use Lexis or WestLaw as a profit center?  For example, if the law firm is paying a flat fee for legal research, may it charge hourly legal research rates to the client [not the attorney's time...legal research fees]

Here is a case from California, which arose after a NY legal malpractice case.  From the National Law Journal:

"A California plaintiffs' attorney has filed a lawsuit against a New York-based law firm on a behalf of a former client of the firm for what she claims is a hidden but widespread practice within the legal profession: law firms secretly profiting off legal research fees by overcharging clients.

Consumer protection attorney Patricia Meyer filed a suit against New York's Chadbourne & Parke on March 2 for allegedly overcharging J. Virgil Waggoner, a Texas businessman, by several thousands of dollars for computerized legal research. His bill was roughly $20,000 for the research, she said, but it should have been closer to $5,000. Waggoner v. Chadbourne & Parke, No. BC408693 (Los Angeles Co., Calif., Super. Ct.).

She did not serve the firm until May 1 because, she said, she did not want to compromise other investigations alleging similar claims.
Meyer of San Diego's Patricia Meyer & Associates said that many similar lawsuits are in the pipeline, noting that she has amassed evidence that shows at least a dozen other law firms are overcharging clients for legal research, but not telling them.
 
According to Meyer, profiting off fees, such as computerized legal research fees, without the clients' knowledge violates rules of professional conduct set forth by both the California and American bar associations, which limit the recovery of legal fees. She said that law firms can charge clients more for services than what they actually cost — they just have to let the client know upfront. "