Legal Malpractice

Transactional Work and Continuous Representation in Legal Malpractice

By (Andrew Lavoott Bluestone)

Today we report on a recent US District Court case, in Southern District of New York, authored by Judge Sullivan  which has an excellent discussion of the traditional rule, of continuous representation,  the origins of the rule and its relation to the continuous treatment concept of medical malpractice.  Transactional legal work such as drafting of contracts, preparing wills, and performing closings of real estate may have negative results years later. How does the statue of limitations and its exceptions apply?

MIG, INC., v. PAUL, WEISS, RIFKIND, WHARTON & GARRISON, L.L.P., No 09 Civ. 5593 (RJS)UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2010 U.S. Dist. LEXIS 29548; March 29, 2010. concerning the drafting of corporate documents in 1997 that had real world consequences in 2009.  Eventually the Chancery Court of Delaware and its highest court found that mistakes in the corporate shareholder documents would cost MIG about $ 130 million,  Their legal malpractice case has been dismissed on statute grounds.  The documents were drafted in 1997, but "On October 13, 2004, while advising MIG on a series of proposals for the "sale of the majority of MIG," PW issued a memorandum informing the MIG Board of a potential problem with the COD. (FAC P 21; Decl. of Paul C. Gluckow in Supp. of Def.'s Mot. to Dismiss or Stay ("Gluckow Supp.") Ex. B (Mem. from James M. Dubin & Jeffrey D. Marell to the Board of Directors of Metromedia International Group, Inc. (Oct. 13, 2004) (the "2004 Memo")).) The 2004 Memo informed MIG that an "inconsistency" or "ambiguity" in the COD could be read to provide the Preferred Holders with greater financial rights than either MIG or PW had intended.
 

On April 16, 2009, the Delaware Chancery Court concluded that the COD entitled preferred shareholders to "double-dip," or be paid twice for the accrued dividends. (FAC PP 28, 30.) See Metromedia I, 971 A.2d at 906-07 (Del. Ch. 2009); In re Appraisal of Metromedia Int'l Group, Inc. (Metromedia II), No. 3351-CC, 2009 Del. Ch. LEXIS 92, 2009 WL 1509182, at *3 (Del. Ch. May 28, 2009)

New York's statute of limitations for legal malpractice is three years. See N.Y. C.P.L.R. § 214(6). The claim accrues when the [*17] malpractice is committed. Shumsky v. Eisenstein, 96 N.Y.2d 164, 166, 750 N.E.2d 67, 726 N.Y.S.2d 365 (2001). Accordingly, the three years begins to run "when all the facts necessary to the cause of action have occurred and an injured party can obtain relief in court." Williamson ex rel. Lipper Convertibles, L.P. v. PricewaterhouseCoopers LLP, 9 N.Y.3d 1, 8, 872 N.E.2d 842, 840 N.Y.S.2d 730 (2007) (quotation omitted); accord McCoy v. Feinman, 99 N.Y.2d 295, 301, 785 N.E.2d 714, 755 N.Y.S.2d 693 (2002). "In most cases, this accrual time is measured from the day an actionable injury occurs, even if the aggrieved party is then ignorant of the wrong or injury." McCoy, 99 N.Y.2d at 301 (quotation omitted).

New York does, however, recognize a limited exception to the three-year bar. The continuing representation doctrine "'recognizes that a person seeking professional assistance has a right to repose confidence in the professional's ability and good faith, and realistically cannot be expected to question and assess the techniques employed or manner in which the services are rendered."' Shumsky, 96 N.Y.2d at 167 (quoting Greene v. Greene, 56 N.Y.2d 86, 94, 436 N.E.2d 496, 451 N.Y.S.2d 46 (1992)). In such cases, the three-year statute of limitations will not begin to run until the representation ends. See Glamm v. Allen, 57 N.Y.2d 87, 94, 439 N.E.2d 390, 453 N.Y.S.2d 674 (1982)."  We'll continue this discussion.
 

Full post as published by New York Attorney Malpractice Blog on April 08, 2010 (boomark / email).