Legal Malpractice

When is a Legal Fee not Really a Legal Fee

By (Andrew Lavoott Bluestone)

Collateral Estoppel and Legal Malpractice have an interesting intertwining existence.  Put briefly, once an attorney is awarded a legal fee [by a court, an arbitrator, or a judicial hearing officer] a subsequent legal malpractice case fails on the basis that a court has already implicitly determined that there can be no legal malpractice, because no fee may be awarded in the face of legal malpractice.  This principal has been criticized as circular, and basely favoring attorneys. 

Here, in York v Landa ;2008 NY Slip Op 10614 ;Decided on December 30, 2008 ;Appellate Division, Second Department we see a rare variation on the theme.  Attorney represents plaintiff in a matrimonial and agrees with the client that she will pay a compromised fee of $ 75,000, for which he obtains a lien.  When she does not pay, he enforces that lien.  Later she sues him for legal malpractice, and surprisingly, does not have her suit dismissed.
 

"The doctrine of collateral estoppel "bars relitigation of an issue which has necessarily been decided in [a] prior action and is decisive of the present action' if there has been a full and fair opportunity to contest the decision now said to be controlling'" (Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195, 199, quoting Buechel v Bain, 97 NY2d 295, 303-304 [emphasis added]). Pursuant to this doctrine, a legal malpractice action generally will be barred by the defendant's "successful prosecution of a prior action to recover fees for the same legal services which the [plaintiff] presently allege[s] were negligently performed" (Pirog v Ingber, 203 AD2d 348, 348-349; see Blair v Bartlett, 75 NY 150; Altamore v Friedman, 193 AD2d 240, 244-248).

Here, in support of his motion to dismiss the complaint, the defendant failed to establish that the services for which he secured payment through the November 2002 settlement agreement with the plaintiff were "the same legal services" as those which are the subject of the instant legal malpractice action (Pirog v Ingber, 203 AD2d at 348; see Blair v Bartlett, 75 NY at 154 [medical malpractice action barred where defendant physician's complaint in prior action to collect payment for his services involved "the same services which are set forth in the complaint in the action now before us, as the malpractice sued for"] [emphasis added]).

Moreover, only those facts which "must have been proved" by the defendant in the underlying matrimonial action can be deemed to have been necessarily decided in that action (Blair v Bartlett, 75 NY 150, 154). Regardless of how the defendant's motion in the underlying action was denominated, the true nature of the relief sought in that motion was not payment for services rendered to the plaintiff, but the enforcement of the November 2002 settlement agreement, which fixed the amount owed to the defendant at $75,000. Thus, in procuring the order dated March 13, 2007, the defendant was not required to prove that he performed legal services for the plaintiff, or that those services were worth $75,000 (see Resnick v Resnick, 24 AD3d 238; cf. Chisholm-Ryder Co. v Sommer & Sommer, 78 AD2d 143, 145-146). Rather, the only issue actually before the court was whether the defendant and the plaintiff had entered into a valid, enforceable agreement requiring the plaintiff to pay the defendant $75,000.

Thus, the issue of whether the defendant committed legal malpractice was not necessarily decided in the underlying action, and the plaintiff is not precluded from raising that issue in the instant action. Accordingly, the Supreme Court properly denied the defendant's motion to dismiss the complaint as barred [*3]by collateral estoppel. "

Full post as published by New York Attorney Malpractice Blog on January 27, 2009 (boomark / email).