Archive for June, 2012

Champerty and Assignment

Monday, June 25th, 2012

Assignment of legal malpractice actions is an interesting topic.  As a general concept, assignment of legal malpractice claims is disfavored.  Gurski v. Rosenblum and Filan, LLC,  276 Conn. 257, 271, 885 A.2d 163, 170 (Conn. 2005) (listing fifteen different jurisdictions which do not allow the assignment of legal malpractice claims).  Pennsylvania has allowed the assignment of legal malpractice actions.  Hedlund Mfg. v. Weiser, Stapler & Spivak, 517 Pa. 522, 539 A.2d 357 (1988); Ammon v. McCloskey, 440 Pa.Super. 251, 655 A.2d 549 (1995).  However, our Superior Court has recently ruled in the case of Frank v. Tewinkle, that champerty is a viable defense in assignment of contract cases against lawyers (the effect should be the same for legal malpractice cases).  The first question for most people (attorneys included) will be, what is champerty?  The court helpfully gives a definition in its opinion:

Long considered repugnant to public policy against profiteering and speculating in litigation, champerty is defined by Black’s Law Dictionary (8th ed.) as:

[a]n agreement between an officious intermeddler in a lawsuit and a litigant by which the intermeddler helps pursue the litigant’s claim as consideration for receiving part of any judgment proceeds;…an agreement to divide litigation proceeds between the owner of the litigated claim and a party unrelated to the lawsuit who supports or helps enforce the claim.

The court held:

Under Pennsylvania law, if an assignment is champertous, it is invalid.  An assignment is champertous when the party involved: (1) has no legitimate interest in the suit, but for the agreement; (2) expends his own money in prosecuting the suit; and (3) is entitled by the bargain to share in the proceeds of the suit.  Internal cites deleted.

This is an interesting decision, which should continue to restrict the ability of actions against lawyers to be assigned, and help keep Pennsylvania from straying too far from the national consensus on the issue of assignment of legal malpractice cases.

-Josh J.T. Byrne, Esquire

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Former Superior Court Judge Michael Joyce Disbarred

Wednesday, June 20th, 2012

The Disciplinary Board’s list of recent Supreme Court actions (last 60 days) has become a veritable whose who of the Pennsylvania judiciary and body politic, with the suspensions of Mark Ciaverella and Jane Orie and the retroactive disbarment of Michael Joyce.  Ciaverella, famous for his part in the “kids for cash” scandal has recently appealed his conviction, and former state senator Orie has also appealed her conviction (Jane’s sister Joan is waiting her own trial on similar charges).

You may remember Joyce as the Superior Court judge accused of faking an injury to defraud insurance companies of $440,000 while still scuba diving and golfing in Florida and Jamaica, and piloting a plane he bought, with the insurance money.  The Disciplinary Board cited the trust placed in judges in recommending disbarment.  Joyce will apparently be released from a half-way-house in August.

-Josh J.T. Byrne, Esquire

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Judge Removed from Bergrin Case

Tuesday, June 19th, 2012

In a new twist to the always interesting case of Paul Bergrin, the Third Circuit, Court of Appeals, has removed the judge overseeing the case, stating that his impartiality could reasonably be questioned.  For those of you who have not read our earlier posts on Mr. Bergrin, he is a former prosecutor turned criminal defense attorney who allegedly suggested one of his clients murder a federal witness saying “no witness, no case.”  Mr. Bergrin faced charges of witness tampering, racketeering, mortgage fraud, murder of a federal witness, drug trafficking, witness tampering and conspiracy.  The murder trial ended with a hung jury.  A retrial will be scheduled with a new judge.

-Josh J.T. Byrne, Esquire

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Large Legal Malpractice Claims Rising

Thursday, June 14th, 2012

We have previously blawged about the number of legal malpractice claims rising.  The most recent numbers from insurance broker Ames & Gough, as reported in the Insurance Journal, show some leveling off, but an increase in the number of claims with a reserve of more than $500,000, and multi-million dollar payments.  The large payments are related to large scale real estate and transactional work.

-Josh J.T. Byrne, Esquire

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Counsel’s Failure to Discover Errors in Production Results in Waiver of Privilege

Wednesday, June 13th, 2012
On May 30, 2012, the New Jersey district court found that a waiver of privilege had occurred after defense counsel inadvertently disclosed privileged documents in the case of D’Onofrio v. Borough of Seaside Park. (http://law.justia.com/cases/federal/district-courts/new-jersey/njdce/3:2009cv06220/235668/127) During discovery, counsel had reviewed a total of 14 boxes of documents and a clerical employee was asked to the separate privileged and non-privileged documents. The employee was to then burn the non-privileged documents to a cd. The employee failed to separate the documents in four boxes. Counsel failed to review the contents of the cd, which contained privileged information.
Yet the defense counsel failed to correct this issue numerous times, including (1) an instance when the original cd was recalled to remove some of counsel’s comments; the cd was again produced containing the privileged information, (2) an instance when the cd was reproduced after plaintiff’s counsel informed the defendant’s counsel that the disk was unreadable and a quality control audit was performed on the cd prior to again producing the cd to plaintiff’s counsel, and (3) an instance in which plaintiff’s counsel informed the defendant’s counsel that documents on another cd containing information from the same source used by the defense were out of order, yet the defense counsel did not re-review the documents used for the cd.
The defense counsel did not discover the production of privileged material until eight months later when many of the documents were attached as exhibits to the plaintiff’s briefing on another matter. It was at this point that defense counsel realized that over 1,000 pages of privileged material had been produced. Defense counsel immediately requested return of the documents.
In making a ruling on the waiver of privilege, it was determined that though counsel’s initial attempts to prevent disclosure were reasonable, “counsel did not take reasonable steps to remedy the error.” It was further determined that defense counsel should have been aware that the error had occurred long before they discovered it. The three above-mentioned instances should have alerted counsel as to their error and that something had gone wrong with their production and privilege review. As a result, the court found that privilege was waived on the materials.

On May 30, 2012, the New Jersey District Court found a waiver of privilege had occurred after defense counsel inadvertently disclosed privileged documents in the case of D’Onofrio v. Borough of Seaside Park.  During discovery, counsel had reviewed a total of 14 boxes of documents and a clerical employee was asked to the separate privileged and non-privileged documents.  The employee was to then burn the non-privileged documents to a cd.  The employee did not separate the documents in four boxes.  Counsel did not review the contents of the cd, which contained privileged information.

The court noted the attorney did not correct this issue despite numerous opportunities, including: (1) an instance when the original cd was recalled to remove some of counsel’s comments; the cd was again produced containing the privileged information; (2) an instance when the cd was reproduced after plaintiff’s counsel informed the defendant’s counsel that the disk was unreadable and a quality control audit was performed on the cd prior to again producing the cd to plaintiff’s counsel; and (3) an instance in which plaintiff’s counsel informed the defendant’s counsel that documents on another cd containing information from the same source used by the defense were out of order, yet the defense counsel did not re-review the documents used for the cd.

The attorney did not discover the production of privileged material until eight months later when many of the documents were attached as exhibits to the plaintiff’s briefing on another matter.  It was at this point that defense counsel realized that over 1,000 pages of privileged material had been produced.  Defense counsel immediately requested return of the documents.

In making a ruling on the waiver of privilege, it was determined that though counsel’s initial attempts to prevent disclosure were reasonable, “counsel did not take reasonable steps to remedy the error.”  It was further determined that counsel should have been aware that the error had occurred long before they discovered it.  The three above-mentioned instances should have alerted counsel as to their error and that something had gone wrong with their production and privilege review.  As a result, the court found that privilege was waived on the materials.

This case is a perfect example of the rule we have previously espoused, that it is important to remember that you, not your employees, are responsible for what goes on in (and what goes or doesn’t go out of) your office.   Professional liability avoidance best practices includes careful management of staff.

-Josh J.T. Byrne, Esquire and Shilpa Kadoo (legal intern)

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Stradley Ronon v. Sovereign Bank (Round Two)

Tuesday, June 12th, 2012

Last month, Stradley Ronon Stevens & Young filed a declaratory action in the Eastern District of Pennsylvania, to put an “end to ongoing and baseless assertions and threats of malpractice” by Sovereign Bank.  Stradley had advised Sovereign Bank on a loan agreement with a mortgage financing company that went bankrupt after the agreement, and asked for a ruling that it did not commit legal malpractice in advising Sovereign Bank.  Stradley filed the action in an attempt to get ahead of the complaints made by Sovereign Bank.  Last week, Sovereign Bank responded with a legal malpractice action in the Philadelphia Court of Common Pleas, which alleges errors by Stradley in creating $200 million in loans to subprime lender Taylor, Bean & Whitaker Mortgage Corp.  The action by Sovereign Bank alleges, among other things, that two investors were omitted from a list of servicers.  Sovereign Bank asserts that the declaratory judgment action was merely an attempt by Stradley to secure what Stradley believes would be a more favorable forum.

While the declaratory action did not stop the legal malpractice lawsuit from being filed, it will be interesting to see if Stradley is able to maintain the forum of its choice.

-Josh J.T. Byrne, Esquire

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And the survey says . . .

Wednesday, June 6th, 2012

In memory of the late Richard Dawson, we present a compilation of lists of legal malpractice errors.  Most, like the American Bar Association’s, have calendaring issues as the number one cause of malpractice.  There is a reason for this, calendaring issues, and missed deadlines are the number one cause of legal malpractice actions, representing more than one third of all cases.  Other lists, such as these presented to the Kentucky Bar, include some practical advice about screening (my favorites are on the list on page 20 from the President of Wisconsin Lawyers Mutual Insurance Company, including: “What your client heard matters more than what you said.  Corollary: Nobody remembers what anyone said.”).  On the flip side of the coin, here is a list for clients avoiding legal malpractice by their lawyers.  This list, most closely resembles the advice I give when lecturing on malpractice avoidance.  Finally, below is a list the Jeff McCarron, Kathy Carson and I came up with several years ago:

Five big tips

  • Managing expectations
    • Communicate enough information for clients to make informed decision
    • Not just “anything can happen” or “the jury may disregard the law” but why.
      • Always relate analysis back to legal concepts
    • If there is a problem, let the client know
      • ie: there is a good chance you will lose because. . .
  • Document in writing
    • Let clients know of problems in writing
      • need to provide sufficient information to know how to act
        • Client- know when and how to resolve the case
        • Company- know what reserves to set
      • If things are not going to get better- let the client know that, and why, and what to do.
  • (For defense counsel only) Client is the insured
    • As a general rule all communications going to company should go to client.
      • Don’t report to company that client is bad witness without letting the client know as well.
    • Must act in the interest of the insured.
      • Can act for insurer only as long as interest of insurer does not conflict
    • Must communicate settlement offers to insured so they can object- even if insurance contract says insurer has absolute right to settle- it then becomes problem of insurer
  • Know and understand the rules
    • This is a rule and statute based profession.
      • Know the rules of the court you are in
        • Pennsylvania is perverse- Just because it worked one place, does not mean it will work somewhere else
  • Preserve your issues!
    • In pleadings
    • At trial
  • Do not rely on support staff without independent verification
    • If something has to be filed make sure you can verify that it was filed before the applicable deadline
    • “I gave it to secretary or copy room” not acceptable”
    • If not filed in a timely fashion address it.
      • Don’t just hope court will ignore untimeliness
        • File motion- and explain why not filed timely

-Josh J.T. Byrne, Esquire

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Sen. Jane Orie Sentenced

Monday, June 4th, 2012

Former State Senator Jane Orie was sentenced today to a prisons sentence of 2 and 1/2 to 10 years on corruption charges.  Legal experts had been expecting a severe sentence because of Ms. Orie’s lack of apparent remorse and use of forgeries to attempt to discredit one of the witnesses against her in a previous trial, not to mention her position as a legislator, and previous experience as a prosecutor.  Ms. Orie’s sentence shows once again, as if Nixon wasn’t enough, that the cover-up is at least as likely to get you as an initial error.

-Josh J.T. Byrne, Esquire

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New York Limits Damages in Criminal Legal Malpractice Cases

Monday, June 4th, 2012

In a unanimous decision last Thursday, the New York Court of appeals ruled that a plaintiff suing his former defense attorney for legal malpractice, cannot recover non-pecuniary damages.  The case of Dombrowski v. Bulson, reaffirms in the criminal context the general rule in New York that a cause of action for legal malpractice does not afford recovery for any item of damages other than pecuniary loss, so there can be no recovery for emotional or psychological injury, or in the criminal case, loss of liberty.  The court stated:

Allowing this type of recovery would have, at best, negative and, at worst, devastating consequences for the criminal justice system.  Most significantly, such a ruling could have a chilling effect on the willingness of the already strapped defense bar to represent indigent accused.

This is a far different measure of damages and view of policy than is currently seen in either Pennsylvania or New Jersey, and a reminder that the law with respect to legal malpractice (especially in the criminal defense context) vary greatly from state to state.

-Josh J.T. Byrne, Esquire

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