Legal Malpractice

An Unusual Fee Arrangement and Legal Malpractice

By (Andrew Lavoott Bluestone)

This case presents a most unusual fee arrangement and litigation strategy in which the attorneys took on a large number of discrimination cases against a single employer, fashioned a reverse payment strategy for themselves and then settled a large number of discrimination cases through arbitration and other ADR means.  Was this malpractice? 

In MICHAEL S. JOHNSON, DONNA DYMKOWSKI, PATRICIA LONG-CORREA, , -against- NEXTEL COMMUNICATIONS, INC.,  LEEDS, MORELLI & BROWN, P.C., ;07 CV 8473 (GBD); UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK;2009 U.S. Dist. LEXIS 35137;March 31, 2009,  we see a longish explanation of how the attorneys adequately advised their clients and why there was no conflict.  This case is notable for its definitions.

Breach of Fiduciary Duty:  To state a claim for breach of fiduciary duty in New York, 3 "plaintiff must allege three elements: (1) the existence of fiduciary relationship; (2) knowing breach of a duty that relationship imposes; and (3) damages suffered." Nay ex. rel. Thiele v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 05 Civ. 10264, 2006 U.S. Dist. LEXIS 52074, 2006 WL 2109467, at *6 (S.D.N.Y. July 25, 2006) [*10] (quoting Carruthers v. Flaum, 388 F. Supp. 2d 360, 380 (S.D.N.Y. 2005)) (internal quotation marks omitted).
 

Common Law Fraud: In New York, to establish common law fraud, the plaintiff must show that the defendant (1) made a material false representation or omission of an existing fact; (2) defendant made such false representation with knowledge of its falsity; (3) with the intent to defraud; (4) which plaintiffs justifiably relied upon to their detriment. Compudyne Corp. v. Shane, 453 F. Supp. 2d 807, 831 (S.D.N.Y. 2006) (citing Kline v. Taukpoint Realty Corp., 302 A.D.2d 433, 754 N.Y.S.2d 899 (2nd Dep't 2003)); Century Pacific, Inc. v. Hilton Hotels Corp., 528 F. Supp. 2d 206, 217 (S.D.N.Y. 2007) (citing PPI Enters., Inc. v. Del Monte Foods Co., No. 99 Civ. 3794, 2003 U.S. Dist. LEXIS 16006, 2003 WL 22118977, at * 19 (S.D.N.Y. Sept. 11, 2003)). Additionally, in the complaint, the plaintiff must specify the particulars of the alleged [*20] fraud such as the misleading statements along with the speaker, time, place, individuals involved, and specific conduct at issue. Sullivan v. Kodsi, 373 F. Supp. 2d 302, 306 (S.D.N.Y. 2005) (citing United Feature Syndicate, Inc. v. Miller Features Syndicate, Inc., 216 F. Supp. 2d 198, 221 (S.D.N.Y. 2002)); Dover Ltd. V. A.B. Watley, Inc., 423 F. Supp. 2d 303, 317 (S.D.N.Y. 2006) (citing Acito v. IMCERA Group, Inc., 47 F.3d 47, 51 (2d Cir. 1995)).
 

Full post as published by New York Attorney Malpractice Blog on July 31, 2009 (boomark / email).