Andrew Lavoott Bluestone
Attorneys are problem solvers; sometimes serial problem solvers. Legal problems in litigation are common. Clients move from attorney to attorney. Sometimes the change is after a problem. Legal malpractice practitioners are called in after a poor outcome in the litigation.
Before clients find a legal malpractice practitioner they often consult with many other attorneys. They ask what to do and whom to blame. In a very well intentioned manner those lawyers discuss the poor outcome with the clients. Their diagnosis of “legal malpractice” is what moves the client along to the specialist.
Those consulted generally have a strong opinion about legal malpractice. The interim attorneys will listen to the client and then rate the work of other attorneys on an attorney malpractice scale. Clients may be told that another lawyer has committed “legal malpractice.” But, is it “legal malpractice” or merely a departure?
What are the reviewers really saying when they talk of legal malpractice? In general, they have correctly determined that another attorney fell below the standard of good practice. That’s a departure, but just the start of the analysis of legal malpractice.
“Departure” is but the first of four elements of legal malpractice and the easiest to discern. Attorneys make abundant mistakes, hesitations and wrong turns for both human and institutional reasons. Lack of sufficient knowledge, miscalculation, inattention, family crises, personal character flaws, substance abuse problems, physical problems all create mistakes. Overbooking is a common issue.
Institutionally, attorneys overbook themselves in an attempt to work to full capacity as do airlines and restaurants. Long delays between court dates or between litigation events require that multiple cases be worked on at the same time. For attorneys who practice in contingent fee areas, there is no guarantee of cash flow. A common practice is to file more cases than one might service at any given time. Large firms cultivate a pyramidal scheme of partners and associates, and those associates must be kept at work. So it goes.
Departure is the first of the four elements of legal malpractice. This article will catalogue the four elements and sub-elements of legal malpractice as an attempted guide in whether any particular legal outcome is “legal malpractice” and whether it can be successfully prosecuted.
In order to recover damages for legal malpractice, a plaintiff must demonstrate that the attorney “failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession” (Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y.2d 438 (2007); Leder v. Spiegel, 9 N.Y.2d 836 (2007)) and that the attorney’s breach of this duty proximately caused plaintiff to sustain damages (McCoy v. Feinman, 99 N.Y.2d 295 (2002)), beyond which a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages bur for the lawyer’s negligence. Davis v. Klein, 88 N.Y.2d 1008 (1996). Finally, there must be ascertainable damages. Legal malpractice is always the comparison between the actual and the hypothetical better outcome but for the departure.
As a second element, plaintiff must plead and prove that the departures “from good and accepted practice were the proximate reason for the loss sustained.” O’Callaghan v. Brunelle, 84 A.D.3d 581 (1st Dept. 2011). Another way of saying this is that plaintiff must demonstrate the likely outcome of the underlying action or transaction or that the poor outcome could not have incurred any damages except because of negligence of the attorney. Hamoudeh v. Mandel, 62 A.D.3d 948 (2d Dept. 2009); Markowitz v. Kurzman Eisenberg, Corbin Lever & Goodman, 82 A.D.3d 719 (2d Dept. 2011). This is the same kind of proximate cause as in any tort action.
Standing is one aspect of proximate cause. One must have a right to sue the attorney before the attorney’s departure proximately cause damage. Privity of contract, no longer necessary in almost any other sphere of the law, still obtains here.
In legal malpractice cases against criminal defense attorneys, the proximate cause of the damages is the guilty plea, or conviction, not representation. This determination is viewed as a policy decision by the Courts. Carmel v. Lunney, 70 N.Y.2d 169 (1987); Britt v. Legal Aid Soc’y, 95 N.Y.2d 443, 444, (2000); Dumbrowski v. Bulson, 19 N.Y.3d 347. To state a cause of action for legal malpractice arising from negligent representation in a criminal proceeding, a plaintiff must allege his “actual” innocence or a colorable claim of innocence of his crime.
One obvious example of lack of proximate cause occurs when the underlying claim was already barred by the statute of limitations before commencement even though the attorney’s negligence was “clearly inexcusable.” Dempster v. Liotti, 2011 NY Slip Op 4408 (2d Dept. 2011). Another example would be one in which it is clear that plaintiff was responsible for her own problem, such as failing to cancel a contract of sale. Bells v. Foster, 83 A.D.3d 836 (2d Dept. 2011)
Other examples arise in the settlement of the underlying case. Rupert v. Gates & Adams PC, 83 A.D.3d 1393 (4th Dept. 2011); Tortura v. Sullivan Papain Block McGrath & Cannavo, P.C., 21 A.D.32d 1082, 1083 (2d Dept. 2005); Bernstein v. Oppenheim & Co., 160 A.D.2d 428,430 (1st Dept. 1990). Plaintiff claimed shortcomings in divorce representation, which then was resolved in a global settlement which itself resolved a bankruptcy proceeding. “In doing so, plaintiff precluded pursuit of the very means by which defendants’ representation of plaintiff in the matrimonial action could have been vindicated.”
Nevertheless, the rule generally remains that a legal malpractice action remains viable if it alleged that the settlement of the action was effectively compelled by mistakes of counsel. Garnett v. Fox, Horan & Camerini, 82 A.D.3d 435 (1st Dept. 2011). Beyond the scope of this article is a contrary line of matrimonial cases in the First Department in which mere settlement (along with the rote allocution that the client was satisfied with the attorney’s work) deprives them of a legal malpractice cause of action. Harvey v. Greenberg, 82 A.D.3d 683 (1st Dept. 2011); Weissman v. Kessler, 78 A.D.3d 465 (1st Dept. 2010); Katebi v. Fink, 51 A.D.3d 424 (1st Dept. 2008).
Bankruptcy filings are often associated with legal cases gone wrong, and factor into the analysis of standing. Assets of the debtor are property of the estate, and not property of the debtor. A pre-petition legal malpractice lawsuit or potential cause of action becomes an asset of the estate. Failure to disclose a pre-petition legal malpractice cause of action in the schedules of a bankruptcy petition deprives the plaintiff of the legal capacity (standing) to sue for malpractice later. It is the trustee, and only the trustee, in bankruptcy who has that standing. Whelen v. Longo, 7 N.Y.2d 821 (2006).
Attorney fee awards may similarly deprive plaintiff of standing to bring the action, or may be enunciated as “blocking” plaintiff from suing under res judicata. Mahler v. Campagna, 60 A.D.3d 1009 (2d Dept. 2009). The reasoning goes that legal fees may not be awarded in the face of legal malpractice, and if legal fees are awarded, in arbitration, id., or as a charging lien (Siegel v. Werner & Zaroff, PC, 270 A.D.2d 119 (1st Dept. 2000)), or as an application for fees in a bankruptcy matter (Breslin Realty Dev. v. Shaw, 72 A.D.3d 258 (2d Dept. 2010)), or in other circumstances, then there could have been no malpractice, whether the issue was raised or not. Hence, when plaintiff sues for legal malpractice after an attorney fee has been awarded, the case is dismissible under res judicata or collateral estoppel.
‘But For’ Issues
The third element of legal malpractice is “but for” which has become the shorthand for the “case within a case” or “lawsuit within a lawsuit.” It is not completely clear where “proximate cause” ends and “but for” begins, but they are doctrinally different. Every negligence case requires “proximate cause” but only legal malpractice cases require “but for” causation.
This requirement is a distinctive “feature of legal malpractice actions arising from an attorney’s alleged negligence in preparing or conducting litigation.” It is additional to the element of proximate cause, requiring the jury to find the hypothetical outcome of other litigation before finding the attorney’s liability in the litigation before it. McKenna v. Forsyth & Forsyth, 280 A.D.2d 79 (4th Dept. 2001). Failure to allege “but for” causation is sufficient to dismiss the case. Waggoner v. Caruso, 14 N.Y.2d 874 (2010). Success “but for” the negligence of counsel is the required proof in this comparison between the actual and the hypothetical better outcome. Davis v. Klein, 88 N.Y.2d 1008 (1996). Courts often determine that the allegations of a complaint are “speculative.” As an example, one court found “in any event” that causation was “speculative and otherwise unsubstantiated by the record.” 180 E. 88th St. Apt. v. Law Off. of Robert Jay Gumenick, 84 A.D.3d 582 (1st Dept. 2011). Another example discusses whether a doctor would have purchased an apartment but for the attorney’s negligence. Stackpole v. Cohen, Ehrlich & Frankel, 82 A.D.3d 609 (1st Dept. 2011). The court reviewed testimony that the doctor was aware of the “horrors” of amending the certificate of occupancy several years earlier in an unrelated transaction, and so she could not blame the attorneys for this particular outcome.
One particularly unique issue is the attorney judgment rule. Iocovello v. Weingrad & Weingrad, 4 A.D.3d 208 (1st Dept. 2004); Rosner v. Paley, 65 N.Y.2d 736 (1985). “Attorneys are free to select among reasonable courses of action in prosecuting clients’ cases without thereby exposing themselves to liability for malpractice.” Id. Questions as broad as the selection of unsuitable experts (Dimond v. Salvan, 78 A.D.3d 407 (1st Dept. 2010); Dimond v. Heinz Pet Prods. Co., 298 A.D.2d 426 (2d Dept. 2002)), the selection of questions on cross-examination and what causes of action to bring are subsumed within the attorney judgment rule.
Fourth and last, damages in a legal malpractice case are designed “to make the injured client whole.” Shayne, supra; Campagnola v. Mulholland, Minion & Roe, 76 N.Y.2d 38 (1990). Those damages are calculated dependent upon the situation in which the legal malpractice case arises. The simplest case is that of a personal injury action never started, in which the statute of limitations has run. There, the finder of fact must determine the value of a hypothetical judgment (Mckenna v. Forsyth & Frosyth, supra) that would have been obtained had the attorney commenced the action. Put another way, the measure of damages is generally “the value of the claim lost.” The value of a more tangible lost asset is another basis.
Plaintiff must plead and prove actual ascertainable damages as a result of the attorney’s negligence. Barnett v. Schwartz, 47 A.D.3d 197 (2d Dept. 2007). Mere speculation about a loss from an attorney’s “alleged omission is insufficient to sustain a prima facie case of legal malpractice.” Scicilano v. Forchelli & Forchelli, 17 A.D.3d 343 (2d Dept. 2005)
Collectability is an issue in the determination of damages. After plaintiffs prove that they would have obtained a specific dollar verdict they then have to prove (in the 2d, 3d or 4th Department) how much of that verdict would be collectible. It may be proven inter alia, by demonstration of insurance coverage, available assets or future income. Damages recoverable are limited to the amount that “could or would have been collected” in the underlying action. Schmitt v. McMillian, 175 A.D. 799 (1st Dept. 1916); Vooth v. McEachen, 181 N.Y. 28 (1905). Collectability of a “hypothetical judgment against the underlying tortfeasor is a factor to be considered by the trier of fact.” Schmitt v. McMillian, 175 A.D. 799 (1st Dept. 1916); Vooth v. McEachen, 181 N.Y. 28 (1905). In the First Department, the burden in on defendant to show non-collectability.
Legal malpractice consists of four elements. Almost anyone can recognize the first. In most cases the departure is obvious, patent and prominent. Proximate cause and ascertainable damages are fairly east to determine, after looking at privity and standing.
The major battleground in legal malpractice is in the “case within a case” analysis. Plaintiffs lose underlying cases all the time even in the best of representations. In trip and fall cases, there are defenses of notice, reasonable care and de minimus defects. In car cases, there are defenses of lack of serious physical injury, in medical malpractice there are medical judgment defenses. Any may undermine the “but for” analysis. There must be ascertainable or provable damages that can be collected.
In all cases, the underlying matter is subject to technical defenses of statute of limitations, standing, collateral estoppel, res judicata, as well as the more general defense that “plaintiff would have lost the case.” It is here that the major battle on otherwise obvious legal malpractice cases takes place.
Andrew Lavoott Bluestone is an attorney located in Manhattan, New York, specializing in Legal Malpractice Litigation. He is board certified in Legal Malpractice by the American Board of Professional Liability Attorneys, an adjunct law professor and the author of the New York Attorney Malpractice Blog, at blog.bluestonelawfirm.com.