Legal Malpractice

The Increasing Importance of Breach of Fiduciary Duty in Legal Malpractice

By (Andrew Lavoott Bluestone)

In law, sometimes a single case decision opens the flood gates.   This is an oft-heard argument, with a rarely seen result, yet in legal malpractice the Ulico v. Wilson Elser, 56 AD3d 1 (1st Dept, 2008) case seems to have accomplished the re-awakening of "breach of fiduciary duty."

As an example, see Colucci v. Arisohn, 2009 NY Slip Op 32053(U).  There the claim was that plaintiff had been involved in a medical billing scheme which went into the 70+ million range, and involved Beth Israel Hospital.  He hired attorneys who at the same time were representing another plaintiff in a qui tam whistle blower action.  The plaintiff [relator] in such a case may reap a significant reward, and here, a Mr. Perez did.

Colucci ended up pleading guilty to Grand Larceny and settling a civil suit as a defendant.  He felt that his own qui tam information was taken from him by the attorneys and used in the Perez case, all to the attorney's benefit.

The interesting aspect of this case is that the legal malpractice case was dismissed on the basis that a criminal defendant who cannot demonstrate actual innocence may not sue for legal malpractice.  Plaintiff's Judiciary Law section 487 case was dismissed as too similar to the legal malpractice case.

The Breach of fiduciary duty matter, however, remains vital, and in the case.  Based upon Ulico the court held:

"The attorney-client relationship imposes on the attorney `the duty to deal fairly, honestly and with undivided loyalty...including maintaining confidentiality, operating competently, safeguarding client property and honoring the client's interests over the lawyers [Matter of Cooperman, 83 NY2d 465 (1994).  Thus any act of disloyalty by counsel will also comprise a breach of the fiduciary duty owed to the client."

"The Labaton Defendants argue that plaintiff's breach of fiduciary duty-based claims (as well as fraud, usurpation of economic opportunity and unjust enrichment claims) should be dismissed because they are duplicitive of plaintiff's malpractice claims.  This argument is rejected."

Full post as published by New York Attorney Malpractice Blog on September 15, 2009 (boomark / email).