Tuesday, April 15, 2014

WHEN ALL ELSE FAILS - SUE THE LAWYERS

A colleague, and sometimes respected adversary, recently published a short and informative, article discussing the perils of fee collection for attorneys which I think is helpful and informative.

What does an attorney do to avoid being the subject of a malpractice served as a defensive counter claim to an attorney's action to recover on an unpaid account?

There is no simple answer.

Beyond initial inquiry into the financial ability of a client when an initial engagement retainer is being prepared, and beyond being certain that a client is regularly and properly informed of the work as it is in progress there is no "fail-safe" mechanism to prevent the former clients from filing a counter claim allegation that the services rendered proximately caused the client pecuniary damage to the client.

The writer  makes many time honored suggestions for the practitioner to keep in mind in the management of client account receivables.  Each suggestion has a place to consider.

The suggestions are really trademarks of good client management and good business practice which are mandated - and necessary in the area where the "services" are often critical in commercial business decisions - but also these suggestions are very important to clients whose concerns are not in the commercial areas of the law.

Each class of clientele requires an attorney to provide not only competent legal services, but competent communication of what has been done for the client, and the time and costs to do so.

It is a process of communicating to the client what is being done, when it is being done, and the lawyer standing ready to be responsive to clients inquires as the work is in progress that will lessen the client's use of a counterclaim to a non payment action.

If an attorney regularly invoices a client for services rendered, but the client stands mute, the attorney has performed the critical communication link and prima facie established a right to payment under a theory of law recognized to be an "account stated" - but even good bookkeeping, and client communication is not a guarantee that issues of malpractice will not surface.

The article outlines some of the helpful hints so as to avoid defensive counterclaims. None are guarantees that defensive malpractice fee suits will not be filed and the article discusses the mandatory rules for fee collections being governed by mandatary fee dispute mediation and the differing statute of limitations provisions for a legal malpractice claim, (three years) as compared to the statute of limitations for te enforcement of a retainer contract ( six years).

Sometimes no matter what is done a client will be critical and/or complain and lest we forget, in some instance, when all else fails, "sue the lawyer" is the last drum heard when the smoke settles.

Thursday, April 3, 2014

"WHEN EVERYTHING ELSE FAILS - SUE THE LAWYERS" - DECEIT ON THE COURT



Section 487 of the Judiciary Law permits the imposition of punitive damages when the actions complained demonstrate the attorney committed a deceit either upon the Court, or any party, in a pending action.

Generally conduct which is deceitful is criminal in nature - hence punitive damages are awarded separate from compensatory damages.

Punitive damages are awarded as part of the purpose of penal law which is to penalize. Civil law damages are intended to be compensatory for the loss suffered without inquiry necessarily into the intent which caused the damages.


Judiciary Law § 487 "descends from the first Statute of Westminster, which was adopted by the Parliament summoned by King Edward I of England in 1275."  
(See Amalfitano v Rosenberg, 12 NY3d 8, 12 [2009].) The statute reads in its entirety:
§ 487. Misconduct by Attorneys
An attorney or counselor who:
1. Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party; or,
2. Wilfully delays his client's suit with a view to his own gain; or, wilfully receives any money or allowance for or on account of any money which he has not laid out, or becomes answerable for,
Is guilty of a misdemeanor, and in addition to the punishment prescribed therefor by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action.


"A violation of Judiciary Law § 487 (1) may be established either by the defendant's alleged deceit or by an alleged chronic, extreme pattern of legal delinquency by the defendant'."
(Boglia v Greenberg, 63 AD3d 973, 975 [2d Dept 2009] and the opinion by the Court of Appeals discussed the origin of this rule of law in New York.as being traced to "the first Statute of Westminster...in 1275" and the Court found that " a cause of action for attorney deceit ...exists asa prat of New York 's common law before the first New York statute governing attorney deceit was enacted in 1787" and as such are subject to a six year statute of limitations and not a three year statute.

This decision did not delve into the interpretation of the statute but rather the application in terms of determining the timeliness of enforcement.

In the case before the Court of Appeals it was noted that initially the motion court had denied the defendant attorney motion to dismiss the claims as Defendants claimed the action was time barred because the action had not been filed within three years of the claimed event.

On appeal the intermediate appellate court reversed that order and granted the defendant's Morton and dismissed the complaint finding that the action was time barred as it was not filed within three years of the claimed event, but on appeal to the Court of Appeals the complaint was restored - the order of the Appellate Court reversed, and the matter remanded to the motion court to proceed because the application of the statute was determined to be governed by a six year statute.

The decision made no comment on the sufficiency of the claims of either party, at this stage of the matter, because the order of the Court of Appeals applies to the procedural aspect of the case and nothing further.

The net effect is that the case is returned to the motion court for the parties to continue with discovery and such other and further remedies as may be then available to each party, but the order is significant because it clarified the time limitations within which such claims may be filed. `

The seemingly disposal of this case now is revived and so to speak, rises again to begin anew, but in the wake of that journey this case has left a "trail mark" decision on this issue for others to be guided accordingly.