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Carefully Drafted Engagement Letter Protects Law Firm From Claim That It Allowed SOL to Run

The case is Davis v. Cohen & Gresser, 2018 NY Slip Op 02542, a legal malpractice case filed against a law firm.

Davis alleged that the law firm allowed the statute of limitations to run on RICO claims by failing to name to key parties in a lawsuit. The court ultimately concluded that the statute of limitations had run on the claims. However, the law firm greatly strengthened its position by producing a copy of a carefully drafted engagement letter. The engagement letter demonstrated that the law firm was not retained to handle the RICO action.  Further, the law firm never filed an appearance in that lawsuit.

New York allows the statute of limitations to be tolled where there is a continuous representation of the client by the law firm. Davis attempted to argue that the continuous representation doctrine applied to his case. However, as the court explains, the engagement letter and the court record demonstrated that there was no continuous representation:

In opposing defendant’s prima facie showing that the claim is untimely, Davis had the burden of demonstrating the statute of limitations has been tolled or does not apply (see CLP Leasing Co., LP v Nessen, 12 AD3d 226, 227 [1st Dept 2004]). Davis cannot rely on the continuous representation doctrine to toll the statute of limitations as the doctrine “tolls the Statute of Limitations only where the continuing representation pertains specifically to the matter in which the attorney committed the alleged malpractice” (see Shumsky v Eisenstein, 96 NY2d 164, 168 [2001]).

The documentary evidence establishes that following decedent’s death, defendant did not represent the estate in the Devine action. The retainer agreements executed with defendant after the decedent’s death were explicitly limited to representing the estate in other litigation and not the Devine litigation. In addition, the evidence demonstrated that following decedent’s passing defendant never entered an appearance on the estate’s behalf while other law firms were substituted as counsel in the Devine action, made a motion to substitute the estate as plaintiff, and appeared on behalf of the estate, and ultimately settled with the Devine parties in May 2014 (see Matter of Merker, 18 AD3d 332, 332-333 [1st Dept 2005] [no continuous representation where plaintiff had “retained new counsel”]).

Further, the continuous representation doctrine does not apply where there is only a vague “ongoing representation” (Johnson v Proskauer Rose LLP, 129 AD3d 59, 68 [1st Dept 2015]). For the doctrine to apply, the representation must be specifically related to the subject matter underlying the malpractice claim, and there must be a mutual understanding of need for further services in connection with that same subject matter (see Shumsky, 96 NY2d at 168see also CLP Leasing, 12 AD3d at 227).

While the case was rejected because it was not filed within three years of the end of the attorney-client relationship, the lawyer’s defense was strengthened because of the careful drafting of the engagement letter.