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This is a legal malpractice action arising out of a real estate purchase. Viktoriya Bakcheva retained the Law Offices of Stein & Associates to represent her in the purchase of a condominium unit. She alleged that the lawyers did not properly investigate the transaction because the Unit at issue had a second floor above the first floor. The problem – the second floor was not as described in the condominium documents or the certificate of occupancy. (It would appear that a prior owner of the unit had added an additional floor to the unit without obtaining a permit or the permission of the condominium association. As one might imagine, the lawyers’ motion for summary judgment was denied. They appealed and did no better in the Appellate Division.

The explanation:

We agree with the Supreme Court that the defendants were not entitled to summary judgment dismissing the legal malpractice cause of action. Although the defendants established their prima facie entitlement to judgment as a matter of law, the plaintiff raised a triable issue of fact in opposition. Specifically, the plaintiff submitted evidence that she had informed the defendants, prior to the closing, that the main portion of the apartment was on the seventh floor of the building and that the apartment included a second level. According to the plaintiff, the defendants committed malpractice because they failed to recognize the illegality of the second level, since neither the certificate of occupancy nor the approved condominium offering plan authorized the existence of an eighth floor to the condominium (see id.).

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The case is pending in New York. A divorce firm sued its former client for fees. She promptly brought a legal malpractice claim. The trial court refused to dismiss the counterclaim. It held: “With respect to the proposed counterclaim for legal malpractice, defendant Ms. Parada alleges that as a result of plaintiff’s failure to complete certain tasks in the underlying divorce proceeding, Ms. Parada was forced to enter into an unfavorable settlement agreement with her ex-husband. Affirmation of Peter Hanschke dated February 26, 2019, Exh. C, ¶ 22. Although plaintiff argues that Ms. Parada’s allegations are speculative and that she will not be able to show that plaintiff’s actions caused Ms. Parada to enter into this agreement, it cannot be said at this stage that the proposed counterclaim is palpably insufficient or completely devoid of merit so as to warrant denial of her motion to amend. Cruz v. Brown, 129 A.D.3d 455, 456 (1st Dep’t 2015). Further, Ms. Parada provided a reasonable excuse for her delay in asserting this claim as the underlying divorce proceeding finally settled in December 2018 and defendant moved promptly thereafter to amend her counterclaims.”

Comment: My point here is that it if you sue for fees, you should expect to litigate a malpractice counterclaim every now and then. I make no comment on the merits of the allegations, which do appear quite speculative and difficult to prove.

See Davidoff Hutcher & Citron v. Maria Del Pilar Nava Parada, 2019 NY Slip Op 31121(U)

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One issue that arises frequently is whether an agreement between two lawyers to share fees on a case is enforceable.

Rule 1.5(e) provides that:

(e) A division of a fee between lawyers who are not in the same firm may be made only if:

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Disciplinary investigations can be frustrating and time-consuming. Responding poorly to one can have serious consequences in that the punishment is often increased for those who do not acknowledge that they made an error. In Debra Cohen v. Patricia King, AC 40834 Connecticut Court of Appeals, Debra Cohen attempted to bring a defamation complaint against the disciplinary counsel who signed a disciplinary complaint against her. Ms. King moved to dismiss on the basis of the litigation privilege – which generally provides immunity for in-court statements and testimony. The trial court granted the motion to dismiss and the Court of Appeals affirmed. It noted that “statements made in a grievance proceeding were shielded by absolute immunity” and that the act of filing a grievance was also protected. This is an excellent and well-considered opinion. Witnesses have to be able to speak freely in disciplinary proceedings. Lawyers should not be able to use the threat of litigation to silence their critics or former clients.

Ed Clinton, Jr.

 

http://www.clintonlaw.net

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It is generally well-settled that a party cannot sue the laywer who represents an opposing party. In the case Hitchcock v. USAA Casualty Insurance Company, (M.D. Florida) (6:18-cv-1986-ORL-28TBS), Hitchcock sued USAA after a she became subject to a large judgment in a personal injury action. She alleged that USAA should have settled the case within the policy limits. What makes her case interesting is that she also tried to sue USAA’s lawyers. The court dismissed that action on the ground that there was no attorney-client relationship between Hitchcock and the law firm. Nor was Hitchcock an intended third-party beneficiary of the attorney-client relationship.

http://www.clintonlaw.net

Ed Clinton, Jr.

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The Iowa court of appeals decided a case, P&C Sierra v. John M. Carroll, 18-0826, which illustrates a common problem in the legal malpractice jurisprudence. Here, the plaintiff sold real estate to a third party, Richard Brown. According to the plaintiffs, their lawyer Mr. Carroll allegedly forgot to record the real estate contract and the mortgage. The owner of the property then borrowed money from a bank which did record a mortgage. This meant that the interests of the plaintiffs were junior to the interest of the bank. The transaction occurred in 2008.

Plaintiff argued that they were injured in 2012, when Brown stopped paying on their installment note. The court disagreed and found that the plaintiffs were aware, as early as 2009, that there was problem with their security interest in the property. Therefore, the lawsuit, filed in 2017, was untimely. Iowa has a five-year statute of limitations for legal malpractice claims.

This is a classic case where a plaintiff waited too long to file suit. Once the plaintiff realized that the lawyer may have made an error, the plaintiff discovered the injury and the statute of limitations began to run.

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May an insurance company sue the defense firm that it hired where it alleges that the defense firm did not meet the standard of care? In Florida, according to Arch Insurance Company v. Kubicki Draper, 4-D17-2889, the insurance company may not file suit because it lacks privity with the law firm.  The insurance company alleged that it hired the firm to defend a case for one of its insureds. The law firm allegedly failed to raise the statute of limitations defense, which caused the insurance company to incur a loss.

The privity defense holds that a plaintiff cannot sue a defendant unless he was “in privity” with that defendant. Here, even though the insurance company hired the law firm to defend its insured, there was no privity because the law firm was responsible only to its client, the insured. The court rejected the insurance company’s public policy arguments:

The insurer nevertheless argues public policy and common sense dictate that an insurer should be able to pursue legal malpractice claims against defense counsel retained to represent its insureds. According to the insurer:

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One question that comes up over and over again is “How do I prove that the lawyer (who I am unhappy with) was my lawyer?” How do I demonstrate an attorney-client relationship.

This video has some basic thoughts on that issue:

https://youtu.be/oBFGn4SaD-I

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The case is Knox v. Aronson, Mayefsky & Sloan, LLP, 2018 NY Slip Op 9030. The plaintiff was represented in her divorce by two law firms and she sued both firms in this legal malpractice case. Plaintiff lost a custody fight with her ex-husband and was ordered to pay attorney fees when she failed to comply with a court order to return the child to New York from Connecticut. She sued the Aronson firm for bad advice (alleged) and for failing to move for attorney fees. The reasoning is instructive:

Turning first to plaintiff’s legal malpractice cause of action against AMS, she alleges that AMS was negligent in failing to move for attorneys’ fees, resulting in her failure to receive an undetermined award to pay her attorneys. This claim fails because plaintiff’s various successor counsel had ample time and opportunity to make such a motion, and in fact one did (although it was purportedly abandoned) (see Davis v Cohen & Gresser, LLP, 160 AD3d 484, 487 [1st Dept 2018]).

Even assuming AMS was negligent in failing to move for attorneys’ fees, by agreeing as part of the settlement[2] to forgo any award of attorneys’ fees except for $20,000, plaintiff cannot show that but for AMS’s negligence she would not have sustained the loss (see generally Tydings v Greenfield, Stein & Senior, LLP,43 AD3d 680, 682 [1st Dept 2007], affd 11 NY3d 195 [2008] [to establish proximate cause, the plaintiff must demonstrate that “but for” the attorney’s negligence, plaintiff would have prevailed in the matter in question; failure to demonstrate proximate cause mandates the dismissal of a legal malpractice action regardless of whether the attorney was negligent]); 180 Ludlow Dev. LLC v Olshan Frome Wolosky LLP, 165 AD3d 594, 595 [1st Dept 2018] [“While proximate cause is generally a question for the factfinder. . . it can, in appropriate circumstances, be determined as a matter of law”]).