Legal Malpractice

Not Plaintiff's Attorney, But Still Owes a Duty in Legal Malpractice

By (Andrew Lavoott Bluestone)

Privity of contract is an important element of legal malpractice.  For policy reasons [and to avoid infinite and endless litigation] courts enforce a rather strict requirement that one may sue their own attorney, but not the opponent's in legal malpractice. There are exceptions.

In LYDIAN PRIVATE BANK d/b/a VIRTUALBANK, -v- RICHARD A. LEFF, UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 48756
June 8, 2009, we see a well enunciated set of rules for the combination of breach of fiduciary duty and legal malpractice by Judge Laura Taylor Swain.

" "An action for legal malpractice requires proof of three essential elements: (1) the negligence of the attorney; (2) that the negligence was the proximate cause of the loss sustained; and (3) proof of actual damages." Mendoza v. Schlossman, 87 A.D.2d 606, 606-7, 448 N.Y.S.2d 45 (2d Dep't 1982). In some cases, a lawyer may owe duties to a nonclient that are actionable in a legal malpractice claim if his client has a fiduciary relationship with the nonclient, to the extent that action necessary to prevent or rectify the [*9] breach of a fiduciary duty owed by the client to the nonclient falls within the scope of his representation. 4 In order to state a claim for negligence, a plaintiff must demonstrate "(1) a duty owed by the defendant to Plaintiff, (2) a breach thereof, and (3) injury proximately resulting there from." Solomon by Solomon v. City of New York, 66 N.Y.2d 1026, 1027, 489 N.E.2d 1294, 499 N.Y.S.2d 392 (N.Y. 1985).

FOOTNOTES

4 As one court noted in In re Food Mgmt. Group, LLC, 380 B.R. 677, 708-10 (Bankr. S.D.N.Y. 2008) (citing Law Governing Lawyers § 51(4)), a lawyer owes a duty to a nonclient when and to the extent that:
(a) the lawyer's client is a trustee, guardian, executor, or fiduciary acting primarily to perform similar functions for the nonclient;

(b) the lawyer knows that appropriate action by the lawyer is necessary with respect to a matter within the scope of the representation to prevent or rectify the breach of a fiduciary duty owed by the client to the nonclient, where (i) the breach is a crime or fraud . . . ;

(c) the nonclient is not reasonably able to protect its rights; and

(d) such a duty would not significantly impair the performance of the lawyer's obligations to the client.

The duty imposed by [this] rule . . . arises [*10] when the lawyer knows that appropriate action by the lawyer is necessary to prevent or mitigate a breach of the client's fiduciary duty. . . . [A]ctual knowledge by the . . . Defendants is not required to impose liability predicated on this theory. The . . . Defendants cannot escape liability if they closed their eyes to what someone with their 'superior intelligence' would find obvious. [However, the plaintiff] cannot predicate liability . . . on the . . . Defendants' failure to investigate facts beyond those of which they were otherwise aware."
 

Full post as published by New York Attorney Malpractice Blog on July 07, 2009 (boomark / email).