Legal Malpractice

Legal Malpractice in Russia and Here

By (Andrew Lavoott Bluestone)

One theme of this blog is that where ever attorneys represent clients [all over] there will be legal malpractice claims.  GUS Consulting GMBH v Chadbourne & Parke LLP ;2010 NY Slip Op 05672 ;Decided on June 24, 2010 ;Appellate Division, First Department  is a prime example.  This case involves the Russian Tax Police, gas service across Europe and legal malpractice here in the US.  Can one get any more global?
 

"The complaint alleges that the SP Structure was illegal under Russian law, specifically Decree No. 529, and that the Russian tax police undertook an investigation because the SP Structure was illegal. However, the contention that the SP Structure was illegal under Russian law was rejected in an arbitration brought against plaintiff CIS Emerging Find Limited (CISEF) in which CISEF asserted that its contract with the claimant was void because it was part of the SP Structure that was illegal under Decree No. 529. Since the issue was actually and necessarily decided in the arbitration, in which CISEF had a full and fair opportunity to litigate the issue, CISEF and the other plaintiffs, who are admittedly in privity with it, are precluded from relitigating it herein (see Kaufman v Eli Lilly & Co., 65 NY2d 449, 455 [1985]; Active Media Servs., Inc. v Grant Prideco, Inc., 35 AD3d 165 [2006]). Thus, to the extent the complaint is based on allegations that Chadbourne negligently advised plaintiffs that the SP Structure was legal, although risky, under Russian law, the malpractice claim is foreclosed.

Summary judgment dismissing the entire legal malpractice action was correctly granted [*2]because CAIB failed to present evidence in admissible form sufficient to raise a triable issue of fact as to proximate cause, which requires a showing that Chadbourne's alleged failure to warn it of potential criminal consequences of its use of the SP Structure proximately caused reasonably ascertainable damages (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434 [2007]; Barbara King Family Trust v Voluto Ventures LLC, 46 AD3d 423, 424-425 [2007]). CAIB submitted no admissible evidence to dispute Chadbourne's showing that the 1999 tax police raid was precipitated by a terminated employee in an effort to delay CAIB's discovery of his theft of 100,000,000 shares of Gazprom stock. Further, the shares of Gazprom stock that were "arrested" by Russian authorities following the 1999 raids were eventually released to CAIB, and no formal criminal prosecution was ever commenced against CAIB or any of its affiliates or officers. CAIB's claim that, had Chadbourne properly advised it of potential criminal exposure, it would have changed or ceased its use of the SP Structure and then would have been able to maintain its presence in Russia and grow its business there over the next six years, while the Russian economy rebounded, is too speculative to support a legal malpractice claim (see AmBase ."
 

Full post as published by New York Attorney Malpractice Blog on July 07, 2010 (boomark / email).