In the wake of recent publicity that lying to a government agent is a crime, 18 USC Section 1001, here is a set of simple instructions should two FBI agents appear in person at your home or place of business:
FBI Person – I’m Agent so and so and with me is Agent so and so and we would like to ask you a few questions:
Person – May I have your card?…Thank you. I’m going to ask you to talk to my lawyer. He will be happy to answer your questions.
I often receive phone calls and emails from people who believe that they have a legal malpractice claim against their current lawyer. Most of these claims are not malpractice claims, often because the underlying matter or lawsuit is not finished.
So, someone calls and says that her lawyer missed court dates, forgot to take a deposition and did not disclose an expert on time. My question is this: “How much money did you lose because of that alleged mistake by the lawyer?” Very often, the answer is (a) the case is still pending and I hired a new lawyer to fix the mistakes of the former lawyer or (b) I settled the case and received a settlement payment.
If the answer is “a”, there is no legal malpractice case as this time, although there may be a case in the future.
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:
The case is captioned Robert Iuffues Webb II v. Janice Holmes, 2018 IL App (3d) 170167. Webb, who is not licensed to practice law, alleged that he had assisted Holmes with certain federal litigation. It is not clear exactly what the federal litigation involved. He alleged that he entered into an oral agreement with Holmes that he would assist her with the federal litigation in exchange for $150 plus 10% of any settlement. Eventually, after the case was filed, Holmes retained an attorney and settled her case.
The trial court dismissed Webb’s complaint and the Appellate Court affirmed. The court based its decision on the Illinois Attorney Act 705 ILCS 205/1 which prohibits a nonlawyer from earning compensation as a lawyer.
Conclusion: obviously the court reached the correct result. What is somewhat remarkable is that these allegations resulted in a published opinion given the well-settled law.
The case is Alexander Prout v. Anne C. Vladeck & Vladeck, Raskin & Clark, P.C., 18 CV 260 (S.D. New York June 10, 2018). Prout alleged that he retained Vladeck to represent him in connection with claims against his former employer, Invesco. He further alleged that Vladeck advised him to reject Invesco’s settlement offer of $1.0 million and to instead file litigation. According to Prout, Vladeck failed to timely file his claims and some of those claims (Family Medical Leave Act and Sarbanes-Oxley Act) were barred by the statute of limitations. As a result, he was forced to accept a reduced settlement amount. The facts of the underlying employment law claims are complex and the opinion sets those facts out in some detail. The court concluded that the allegations stated a claim for legal malpractice under New York law because the lawyer allegedly allowed the statutes of limitations to run on the FMLA and Sarbanes-Oxley (Whistleblower) claims.
For further information on legal malpractice claims, please consult our webpage on legal malpractice. https://www.clintonlaw.net/legal-malpractice.html
One issue that arises frequently in legal malpractice cases is – to whom does the lawyer owe a duty? Here, a condominium owner sued the lawyer for the condominium association for breach of contract. The court dismissed the case and the Colorado Supreme Court affirmed the dismissal.
The Colorado Supreme Court followed well-settled law in holding that the association’s lawyer owed no duty to an individual condominium owner. The lawyer represents the association, an organization composed of individual members. Just because a condominium owner is a member of that group does not create an attorney-client relationship.
The Court reasoned that any other holding would hurt the lawyer’s duty of loyalty to his client, the Association. Further, allowing the lawsuit to proceed would allow “an unforeseeable and unlimited number of people” to make claims against lawyers.
The case is captioned William Molim Siu v. The Cavanagh Law Firm, 1-CA-CV 17-0601 (Arizona Court of Appeals).
Siu sued his former lawyer for alleged negligence in handling Siu’s divorce case. The divorce case was heard by an Arbitrator who ruled that certain property owned by Siu before the marriage became community property when it was deposited in joint accounts. Siu tried to appeal but his appeal [of the underlying case] was dismissed. Siu alleged that his lawyer had (a) contracted away his right to appeal, and (b) failed to retain a forensic accounting expert.
Cavanagh moved for summary judgment and his motion was granted. Siu appealed. The Court of Appeals found that there was “substantial evidence to support the Arbitrator’s decision [in the underlying divorce case.]” Therefore, Siu could not prove that any error by the lawyer was the proximate cause of his alleged loss.
One question which comes up frequently is whether a client can sue his former lawyer for legal malpractice based on what the client believes is an inflated legal bill.
A legal fee dispute is essentially a breach of contract case filed by the lawyer against the former client. Here the specific complaint was that the lawyer did not explain that, under the fee agreement, the lawyer was not required to refund any portion of the client’s deposit.
“Plaintiff next argues defendants breached a fiduciary duty to plaintiff by failing to properly advise him as to the non-refundable aspect of the retainer agreement. “In entering a contract at the outset of a representation, the lawyer must explain the basis and rate of the fee . . . and advise the client of such matters as conflicts of interest, the scope of the representation, and the contract’s implications for the client. . . .” Restatement (Third) of the Law Governing Lawyers § 18 cmt. d (Am. Law Inst. 2000). RPC 1.4(c) states, “A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”
An estate hired a lawyer to act as the co-executor of the estate. The lawyer was paid on a percentage basis – 3% of the gross amount of the Estate. (In Illinois this type of payment arrangement is illegal. However, in Kentucky is it is perfectly legal). Of note is that the maximum fee in Kentucky is 5% – the lawyer only charged 3%. For those with an understanding of economics, that would indicate a working market in Kentucky where there is bargaining power on both sides of the transaction. In addition, the lawyer’s firm charged over one million in legal fees to the estate. These were apparently hourly charges.
As a result of the fee agreement, the lawyer/executor collected a large fee, in excess of $300,000. The executor then sued the lawyer for legal malpractice for charging excessive fees. (The executor could not sue for breach of contract because the lawyer complied with the terms of the contract and the court approved the payments).
Result: summary judgment for the lawyer. This passage of the opinion sets out the key issues in the dispute:
The law firm inserted a fee-shifting clause in its retainer agreement, providing that the “prevailing party” was entitled to attorney fees. The text of the clause is as follows: “”In the event of a dispute between you and the firm regarding any matters relating to the retention . . ., the prevailing party shall be entitled to recover reasonable attorney’s fees” (emphasis added)”
This clause was no doubt intended to allow the lawyers to recover their collection costs in fee litigation. However, because the jury found that they committed malpractice (the opinion does not explain why), the jury awarded plaintiff her attorney fees. The trial court struck the fee award but the Appellate Division reinstated the fee award.
Comment: Lawyers should be cautious before inserting fee-shifting language in fee agreements.
Chicago Legal Malpractice Lawyer Blog