Posts Tagged ‘legal malpractice defense’

Who Will Defend You?

Friday, October 19th, 2012

Most people understand that when they purchase insurance, they are agreeing to allow their insurer to select defense counsel for them should an action be brought against them.  Most attorneys understand that when defense counsel is assigned to a legal malpractice action defended by their professional liability carrier, there is the possibility of a conflict of interest between the desires of the client law firm and the designers of the insurer.  The Texas law firm of Coats, Rose, Yale, Ryman & Lee, when sued for legal malpractice, decided it could not abide by the provision of their insurance policy which gave their insurer the right to select defense counsel.  The law firm retained its own counsel, independently of its insurer, Navigators Specialty Insurance Co., and then sued the insurer when the insurer refuse to pay the attorneys fees.

In November 2011, U.  S.  District Judge Sidney Fitzwater granted summary judgment for Navigators.  Coats Rose appealed and a three-judge panel affirmed Judge Fitzwater’s decision earlier this week.  The appellate panel adopted Judge Fitzwater’s opinion which found both the law firm and insurer had the same incentive to defeat the claim, despite the insurers reservation of rights under the policy not to cover fraudulent willful violations of the statute.

Attorneys who represent defendants in legal malpractice actions are, as a rule, acutely aware of the potential for conflict in their cases.  The attorneys do all within their power to minimize that potential.  However, there are times when clients feel an attorney hired by their insurer cannot protect their interests.  On those occasions, the law firm is certainly entitled to hire its own counsel, but  they will generally have to do so out of their own pocket.

-Josh J.T. Byrne, Esquire

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$34.5 Million Verdict in Legal Malpractice Case

Tuesday, May 1st, 2012

A Los Angeles jury awarded $34.5 million dollars to a group of investors who had brought a legal malpractice action against the law firm Holland & Knight last week.   The verdict against Holland & Knight followed a seven week trial and six days of deliberation.  The verdict on legal malpractice, fraud and breach of fiduciary duty claims came despite the law firm’s denial that it had ever represented the plaintiffs.  After the $34.5 million dollar verdict, the jury retired to consider additional punitive damages, before a deal was worked out to avoid punitive damages.

Plaintiffs in the action were investors in real estate.  Plaintiffs alleged developer, Shi Shailendra, their former partner had defrauded them, and Holland & Knight had protected Shailendra’s interests.

This case graphically illustrates the necessity of making sure attorneys identify not only who they represent, but who believes they are represented by the attorney.  Making the scope and nature of your representation (or non-representation) abundantly clear is a good way to avoid professional liability claims.

-Josh J.T. Byrne, Esquire

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Morgan Lewis Professional Liability Case Revived

Tuesday, April 24th, 2012

The Federal Circuit Court of Appeals has breathed new life into a decade old legal malpractice and fraud action against Morgan Lewis.  The action involves an incorrectly filed patent application for a type of electronic billboard.  A Federal District Judge in California had granted a motion for summary judgment on statute of limitations grounds, but that has been overturned by the three judge Circuit Court of Appeals panel.  The panel found that the statute of limitations for legal malpractice had expired, but the fraud claim (for covering-up the malpractice) was tolled under California’s equitable tolling law during a period the case had been pursued in state court and had not expired.

-Josh J.T. Byrne, Esquire

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The Umpires Strike Back

Wednesday, March 28th, 2012

The Lima, Pennsylvania firm of Phillips Campbell & Phillips, has been sued in Ft. Worth, Texas, for legal malpractice by the Professional Association of Golf Officials.  This is not the first time the firm has been in the news for actions brought against it by sports officials.  The action asserts the firm represented the Association for over twenty years, but did not provide appropriate representation with respect to a recent collective bargaining agreement.  The Association asserts the firm, and Mr. Campbell in particular, did not understand and advise the Association on the terms of the agreement.  The Association paid the firm yearly, but was allegedly not provided with billing statements to show what services had been provided.  The Association terminated their agreement with the firm at the end of 2011, and alleges the firm “set out on a warpath” to destroy their bargaining position with the PGA.  The petition filed by the Association asserts the firm demanded payment for work done after it was terminated, and provided confidential information to the PGA.  The association asserted claims of legal malpractice, breach of fiduciary duty, and breach of contract.  Mr. Campbell asserts this action is in retaliation for his filing of an action in Delaware County to collect fees from the Association.

Whatever its merits, the action again Phillips Campbell & Phillips is indicative of the old maxim that the easiest way to get sued for legal malpractice is to sue your clients for fees.  At least one source has stated that at least one out of four actions to recover fees result in counterclaims of malpractice.  As a result, actions to recover fees can result in increases to your professional liability premiums.  While it is not always possible to avoid actions to recover fees, professional liability avoidance requires the practitioner think twice (or three times) before commencing actions for fees.

-Josh J.T. Byrne, Esquire

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Know your professional liablity insurance policy!

Tuesday, February 7th, 2012

The recent District of Colorado decision, Davis & Associates v. Westchester Fire Insurance, No. 10-cv-03126-REB-CBS, emphasizes the importance of understanding the terms of your professional liability insurance policy.  The case involved a law firm which created a trust in 2004, with the intent of allowing the client to qualify for Medicaid benefits.  Despite the trust, an application for Medicaid was denied on March 15, 2007.  An appeal of the application for benefits was taken, the decision was reversed at first, but ultimately the denial was upheld by a decision on September 4, 2007.  The client claimed that after the Final Agency Decision was issued, the firm was direct to seek judicial review of the Final Agency Decision.  The firm filed a motion for reconsideration, and mistakenly believing that tolled the time for appeal, did not file a timely appeal.  The client, utilizing another attorney, unsuccessfully attempted to appeal the decision.

In March 2009, the firm was made aware that the client was considering a malpractice claim, and referred the matter to Westchester Fire Insurance Company (”WFIC”), its professional liability insurance company, which refused to provide coverage.  It was undisputed that the firm was insured continually under successive WFIC lawyer’s professional liability policies from April, 2007, through April 1, 2010.  However, as with most professional liability policies, the policies were claims made policies.

The court held:

Its undisputed that the Bates claim against the plaintiffs was reported first to WFIC on March 29, 2009.  Therefore, coverage under the 2008 – 2009 Policy, which was effective from April 1, 2008, to April 1, 2009, is at issue here.  The Bates claim was not first reported to WFIC during the coverage period of the 2007 – 2008 Policy.  Therefore, the 2007 – 2008 Policy does not provide coverage for the Bates claim.

The court determined that WFIC was not obligated to provide a defense for the firm because the allegations in the Complaint show that, at the inception of the 2008 – 2009 Policy (April 1, 2008), the firm had a reasonable basis to believe that it had breached professional duties owed to its client, and that the breaches might result in a claim against the firm.  The court agreed that because the claim (or potential claim) had not been reported during the 2007-2008 policy period, there was no duty to defend or indemnify.

This case highlights the importance of understanding your professional liability insurance policy, and the importance of timely reporting potential claims.

-Josh J.T. Byrne, Esquire (H.T. Jeffrey B. McCarron, Esquire)

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Recent Pennsylvania Legal Malpractice Opinions

Wednesday, February 1st, 2012

Although not strictly speaking a “legal malpractice” decision, the Eastern District of Pennsylvania’s decision in Travelers Indem. Co. v. Stengel, 2011 WL 6739458 (E.D. Pa. 2011), is of interest in terms of legal malpractice defense, and the case history shows how convoluted these actions can get.  The case was a contribution action arising out of an underlying legal malpractice action, which arose out of an underlying wrongful use of civil proceedings (Dragonetti) action, which in turn arose out of a zoning appeal.

Travelers was pursuing the action as an assignee of the rights of  a couple by the name of Sanford.  Stengle represented the Sanfords in bringing a zoning appeal, which included a RICO claim against the T members of the Board of Supervisors, although the Sanfords filed the RICO claim pro se, Stengle drafted it.  Immediately thereafter, representation was taken over by Stengle’s co-defendant Berry who filed an amended RICO complaint.  The amended complaint was dismissed, and two members of the Board brought a wrongful use of civil proceedings action against the Sanfords.  The attorneys assigned by the Sanfords’ insurer, the Nelson firm, did not file an answer to the Supervisor’s complaint, and a judgment was entered against the Sanfords for $3,030,000.  The Sanfords then brought a legal malpractice action against the Nelson firm.  Travelers, as insurers for the Nelson firm settled the legal malpractice action and the wrongful use action by paying the Supervisors $1,500,000.  The Travelers v. Stengle case, seeking contribution from Stengle and Berry, followed.

The court granted summary judgment in favor of Stengle and Berry, finding that the Nelson firm and Stengle and Berry were not joint tortfeasors, and as they were not joint tortfeasors there could be no contribution. The court reasoned Stengle and Berry owed the Sanfords a different duty than  the Nelson firm, that different experts would be needed to prove the two cases, and that the acts were severable in time.  Importantly, “neither individual was able to guard against the acts of the other.”  The court also found that the harm was so far removed from Stengle and Berry’s actions that it was not foreseeable and could not constitute proximate cause.

In Javaid v. Weiss,  2011 WL 6339838 (M.D. Pa. 2011), the court granted dismissal of the plaintiffs legal malpractice claims finding that the complaint was too speculative.  The court also found that defendants had raised significant questions about whether the claim was barred by the two year statute of limitations for a professional liability claim.  Although plaintiff had asserted a separate count of breach of contract, the court found he had not “adequately pled a separate claim for breach of contract, but has instead simply repackaged his allegations of negligence and recast them as a breach of contract claim.”  This decision is a strong reiteration of the concept that a legal malpractice claim sounding in contract must be based on the breach of an explicit contractual term.

What is the the malpractice or professional liability avoidance takeaway from these cases?  There are two obvious lessons from the Travelers case: 1) do not over-plead, and 2) file answers to complaints in a timely manner.  The case also will be useful when defending legal malpractice or wrongful use of civil proceedings claim which include cross-claims for contribution.  From the Javaid case we learn that if you do not breach an explicit contract provision, you will have a good statute of limitations defense for cases that are filed more than two years after the alleged negligence.

-Josh J.T. Byrne, Esquire

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Sweeten Sentenced

Thursday, January 26th, 2012

Bonnie Sweeten, the “hoax mom” paralegal who is a poster child for the axiom that an attorney needs to know what is going on in his or her office, has been sentenced.  Ms. Sweeten has been sentenced to 8 years and 4 months in prison for wire fraud and identity theft.  Ms. Sweeten’s case is an important lesson in malpractice and professional liability avoidance.

-Josh J.T. Byrne, Esquire

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2010 Ethics Review

Thursday, January 12th, 2012

The Disciplinary Board of the Supreme Court of Pennsylvania has published its year end statistics.  Discipline last year included:

  • 55 Informal Admonitions
  • 16 Private Reprimands
  • 8 Probations
  • 2 Public Censure
  • 34 Suspensions
  • 45 Disbarments
  • 106 Reinstatements Granted
  • 1 Reinstatement Denied

The 45 disbarments are the most in Pennsylvania’s history, at least since 1973 (although not completely linear, the number of disbarments has increased with the number of lawyers in the Commonwealth).  The disciplinary decisions of the Supreme Court in the last sixty days include, among others, an attorney who overdrew her IOLTA account and did not respond to clients’ inquiries about their cases; an attorney who failed to appear for a private reprimand; and an attorney who allowed a client to give testimony he knew was false, and did not honor a letter of protection to a doctor.  Many of the legal malpractice and professional liability themes most commonly repeated on this blog are found in these opinions, communicating with clients, taking care of client funds, and responding to problems when they arise.

-Josh J.T. Byrne, Esquire

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Pennsylvania Professional Liability- Key Case

Friday, November 18th, 2011

An important initial question in legal malpractice cases is necessarily whether the attorney actually represented the client for the matter in which the attorney was allegedly negligent.  Privity between the parties is necessary to maintain an action against a professional.  A lawyer owes allegiance only to his client so there is no duty or obligation for a lawyer to act for the benefit of anyone except his client.  Smith v. Griffiths, ___Pa.Super.___, 476 A.2d 22, 26 (1984).  Although whether privity existed is often a clear cut question, there can be some very murky waters.

One of the most helpful cases in navigating those waters is Atkinson v. Haug, 424 Pa. Super. 406, 622 A.2d 983 (Pa. Super. 1993).  The court in Atkinson affirmed the concept that a plaintiff cannot unilaterally impose an attorney-client relationship on a lawyer.  An attorney-client relationship exists only if 1) the purported client sought advice or assistance from the attorney; 2) the advice sought was within the attorney’s professional competence; 3) the attorney expressly or impliedly agreed to render such assistance; and 4) it is reasonable for the putative client to believe the attorney was representing him. The court also set forth a list of factors that can be used to determine if an implied attorney-client relationship exists.  According to the Atkinson court one may consider whether there was a fee agreement, retainer, discussion about the legal ramifications of the deal, a request for legal services by the plaintiff, or legal services offered by the lawyer.  Id.

Going into a professional liability case against an attorney, the first question to answer is did the attorney owe a duty to the putative client.  Atkinson is very useful in answering that question.

-Josh J.T. Byrne, Esquire

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Treating Everything Put on the Internet as if It Could be Blown Up as an Exhibit

Tuesday, November 1st, 2011

In Zimmerman v. Weis Markets,  Judge Saylor of the Northumberland County Court of Common Pleas ordered plaintiff to reveal passwords to his MySpace and Facebook accounts.  Plaintiff sought compensation for injuries he sustained while operating a fork-lift at the Weis Markets’ warehouse.  Counsel for the defendant had viewed the public portion of his Facebook page where he was shown wearing shorts after having sustained his injuries.  Plaintiff had testified he never wore shorts because he was embarrassed by the scar from the surgery he had.  Citing McMillen v. Hummingbird Speedway, Inc., 2010 Pa. Dist. & Cnty. Dec. LEXIS 270 (Jefferson Co. Com.Pl. 2010), Judge Saylor ordered plaintiff reveal his passwords, stating “no privilege exists in Pennsylvania for information posted in the non-public sections of social websites, liberal discovery is generally allowable, and the pursuit of truth as to alleged claims is a paramount ideal.”

This decision is, of course, important for lawyers in pursuing and defending personal injury actions.  However, it could also have implications in legal malpractice actions.  There is nothing that would prevent a plaintiff in a legal malpractice action from using this opinion to gain access to an attorney’s Facebook page or other social media website.  Most lawyers are cognizant enough to avoid posting any sensitive information where it might be publicly available, but when it is password protected they often feel a certain impunity.  Remember, the nasty things you have to say about other counsel, opposing parties, and/or judges will be subject to discovery if a legal malpractice or wrongful use of civil proceedings action arises out of your case.  The appropriate use of social media sites is an important question for every professional, not just lawyers.  The best practice is to not reduce anything to writing that you would not mind seeing blown up as evidence in a trial against you.

-Josh J.T. Byrne, Esquire

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