Legal Malpractice

Continuous Representation in a Two Part Legal Malpractice Case

By (Andrew Lavoott Bluestone)

Gatto v Burke & Burke, NY Slip Op 32511, Nassau County, Justice Bucaria illustrates a two part transactional represent ion by attorneys of the clients in a  business sale case.  Facts are simple:  plaintiff sells restaurant to X and uses target attorneys as transactional counsel.  Sale documents do not have a security interest for Plaintiff-seller.  End of phase one.

Sale goes sour, and buyer files bankruptcy.  Seller again retains target attorney to represent them in suit against buyer and then in bankruptcy court.  Seller has no security interest and is treated as an ordinary creditor, losing the proceeds. 

Question is whether statute of limitations begins to run on mistake date when transaction closes without a security interest, or it there is continuing representation, or whether there are two different and non-continuing retentions such that the s/l has already run on the mistake.

Here, the court found that it was continuing.  Read the decision for the Justice's reasoning.  It is based upon the interconnectedness of the sale and the remedy work by the attorneys.

Result:  motion to dismiss denied.

Full post as published by New York Attorney Malpractice Blog on September 22, 2010 (boomark / email).