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Breach of Fiduciary Duty in Legal Malpractice Gets Fees

Susan Chana Lask

A lawyer's breach of fiduciary duty alleged in a Legal Malpractice case refunds legal fees, or, disgorges fees from the lawyer. Alleging only a legal malpractice claim limits a client to damages for negligence, and that's if they exist. The difference between the causes of action are clear.

A prima facie case of legal malpractice under New York law, is established when the plaintiff proves: (1) the negligence of the attorney; (2) that such negligence was the proximate cause of the plaintiff's injury, and (3) that but for the attorney's negligence, the plaintiff would have been successful in the underlying action. C&F Pollution Control Inc. v. Fidelity and Cas. Co. of New York, 222 A.D.2d 828, 653 N.Y.S.2d 704 (3d Dept. 1995);Franklin v. Winard, 199 A.D.2d 220, 606 N.Y.S.2d 162 (1st Dept. 1993). On the other hand, a breach of fiduciary cause of action is "a considerably lower standard of recovery". It requires only that the plaintiff identify "a conflict of interest which amounted merely to a substantial factor in [the plaintiff's] loss" (Estate of Re v Kornstein Veisz & Wexler, 958 F Supp 907, 924 [SD NY 1997], appeal dismissed 159 F3d 1346 [2d Cir 1998] [at 1998 WL 477166, 1998 US App LEXIS 18632] [internal quotation marks and citation omitted])" Ulico Casualty Company v Wilson, Elser, Moskowitz, Edelman & Dicker et al., 56 AD.3d 1(1st Dept, 2008).

Disgorgement of fees was an issue in Ulico. The Ulico complaint alleged forfeiture of fees in addition to legal malpractice. The appellate court held that a breach of fiduciary claim is not redundant of a legal malpractice claim. The Ulico case makes clear that the attorney client relationship imposes on the attorney "[t]he duty to deal fairly, honestly and with undivided loyalty . . . including maintaining confidentiality, avoiding conflicts of interest, operating competently, safeguarding client property and honoring the clients' interests over the lawyer's" Cooperman, 83 NY2d at 472. The case concluded that summary judgment would not resolve the disgorgement of fee issue, and a plenary hearing would be required. 

I suggest legal malpractice complaints allege that the defendant attorney owed a duty of honesty, loyalty and zealous representation to the plaintiff.  With that allegation, you can then allege that the fiduciary duty was breached by billing for unnecessary work, or work that was in conflict to the client's interests or whatever the relevant facts of the breach of fiduciary duty related to fees would be.  You do not have to allege both causes of action. You can allege a breach of fiduciary duty without alleging legal malpractice.  Whatever you allege, always insure your facts are clear and concise according to the cause of action.   

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