Cases this Week in Legal Malpractice

1. Rechberger v. Scolaro, 2007 NY Slip Op 9277, FOURTH DEPARTMENT

This case points out the principal of privity between individuals, corporations and the attorneys.  Defendant met its burden by establishing as a matter of law that it had no attorney-client relationship with plaintiffs. Contrary to the contention of plaintiffs, their unilateral belief that they had an attorney-client relationship with defendant does not by itself confer upon them the status of clients. Also contrary to plaintiffs' contention, defendant's representation of a corporation of which plaintiffs were shareholders does not establish that defendant had an attorney-client relationship with plaintiffs, in the absence of documentary evidence to the contrary.

2.   Resnick v Zurich North America, 2007 NY Slip Op 9218, SECOND DEPARTMENT

This case is about notifying the legal malpractice carrier of a potential case.  Carriers have increasingly been able to avoid or disclaim coverage on the basis of lack of notice.

“Plaintiffs in the underlying case moved to vacate a default saying that they had been prevented from serving and filing a note of issue by a stay issued in a bankruptcy proceeding However, in opposition to the motion, it was revealed that, in fact, the bankruptcy proceeding was not filed until June 2000, more than two years after the order directing the service and filing of a note of issue, and approximately a year-and-a-half after the Sapir action had been dismissed. In July 2003 the Supreme Court denied the plaintiffs' motion to vacate the The defendants disclaimed coverage based on the plaintiffs' failure to have provided timely notice. The defendants contended that the plaintiffs were or should have been aware of a potential malpractice claim no later than July 2003when their motion to vacate the default in serving and filing a note of issue in the Sapir action and to restore the case to the calendar was denied.”

3.. Wallenstein v. Cohen,2007 NY Slip Op. 9023, SECOND DEPARTMENT

This case illustrated the collateral estoppel or res judicata effect of an attorney fee dispute ruling on a later legal malpractice case.  In short, any award of a fee to the attorney [whether 100% or $1] follows this rule: “The determination fixing the value of the defendants' services necessarily determined that there was no malpractice.”

4. TVGA Engineering Surveying Inc. v. Gallick, 2007 NY Slip Op, 8491, 4th Department

“A cause of action for legal malpractice must be based on "the existence of an attorney-client relationship at the time of the alleged malpractice"; while a cause of action for breach of the fiduciary duty of an attorney extends both to current and former clients and thus is broader in scope than a cause of action for legal malpractice. As a result of an attorney's fiduciary duty, the attorney may not represent parties whose interests are adverse to the attorney's former clients in matters that are substantially related.

Legal Malpractice News This Week

The NYLJ reported a Court of Appeals case today which permitted a law firm to charge hourly rates followed by a contingent fee.  Not so remarkable, perhaps, but the numbers are staggering.

In Lawrence v. Miller, the law firm billed $ 18 million in hourly rates, asked for and received $ 5 million in “gifts.”  After that they negotiated a 40% contingent fee from the elderly widow.  Their contingent fee promises to be in the $ 40 million range.

Ex parte interviews of non-party physicians can now be required by the court.  This effectively means that when a plaintiff starts a medical malpractice case, all of his non-defendant treating physicians not only have to give up their records, but plaintiff may be required to sign HIPPA releases allowing the defense attorney to speak privately to the non-party treating physicians.  No notes need be given to plaintiff.

We wonder how long before attorneys do the same thing to prior and subsequent attorneys in legal malpractice cases.

Milberg Weiss is a defendant in a $40 million legal malpractice law suit brought by Sam Wiley, who himself is described as a “colorful Texas billionaire”  The action comes after a class action case which never reached court, and was settled, prematurely says the plaintiff.

Finally, the US Supreme Court seems ready to defer to criminal defense attorneys and state court determinations of ineffective assistance of counsel.  In the case of Arave v. Hoffman, the Supreme Court will weigh the obligation of lawyers to explain to their clients the consequences of not accepting a plea agreement.

For more on legal malpractice check out the New York Attorney Malpractice Blog.