In an action involving Judiciary Law Section 487…

In an action involving Judiciary Law Section 487, the court considered the issue as to what type of matter fits into the definition in the statute, holding:

Contrary to the defendants’ contention, the cause of action alleging a violation of Judiciary Law Section 487 was not duplicative of the cause of action alleging legal malpractice. “ A violation of Judiciary Law Section 487 requires an intent to deceive, whereas a legal malpractice claim is based on negligent conduct ” (Moormann v Perini & Hoerger, 65 AD3d 1106, 1108 [2009] [citation omitted]; see Lauder v Goldhamer, 122 AD3d 908, 911 [2014]; Sabalza v Salgado, 85 AD3d 436, 438 [2011]).

Nevertheless, the Supreme Court should have granted that branch of the defendants’ motion which was for summary judgment dismissing the cause of action alleging a violation of Judiciary Law Section 487. A chronic extreme pattern of legal delinquency is not a basis for liability pursuant to Judiciary Law Section 487 (see Dupree v Voorhees, 102 AD3d 912, 913 [2013]). Further, the plaintiffs failed to allege sufficient facts demonstrating that the defendant attorneys had the “ intent to deceive the court or any party ” (Judiciary Law Section 487 [1]; see Schiller v Bender, Burrows & Rosenthal, LLP, 116 AD3d 756, 759 [2014]; Agostini v Sobol, 304 AD2d 395, 396 [2003]). Allegations regarding an act of deceit or intent to deceive must be stated with particularity (see CPLR 3016 [b]; Facebook, Inc. v DLA Piper LLP [US], 134 AD3d 610, 615 [2015]; Armstrong v Blank Rome LLP, 126 AD3d 427 [2015]; Putnam County Temple & Jewish Ctr., Inc. v Rhinebeck Sav. Bank, 87 AD3d 1118, 1120 [2011]). That the defendants commenced the underlying action on behalf of the plaintiffs and the plaintiffs failed to prevail in that action does not provide a basis for a cause of action alleging a violation of Judiciary Law Section 487 to recover the legal fees incurred.

Bill Birds, Inc. v Stein Law Firm, P.C., 164 AD3d 635, 637 [2d Dept 2018]

R. A. Klass
Your Court Street Lawyer

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If attorney regularly invoices client and client doesn’t object, then court assumes “ account stated. ”

When an attorney has billed a client for legal services rendered, the attorney will presumably send the client bill at regular intervals. If the attorney does regularly invoice the client and the client doesn’t object, then the court can assume there is an “account stated.” This is what occurred in Glassman v Weinberg, 154 AD3d 407 [1st Dept 2017], where the court held:

Plaintiff made a prima facie showing of his entitlement to summary judgment on his account stated claim by providing documentary evidence of the invoices, and an affidavit stating that he sent the invoices on a monthly basis to defendant, and that defendant received the invoices and failed to object to the invoices until this litigation (see L.E.K. Consulting LLC v. Menlo Capital Group, LLC, 148 A.D.3d 527, 528, 52 N.Y.S.3d 1 [1st Dept.2017]; Morrison Cohen Singer & Weinstein, LLP v. Waters, 13 A.D.3d 51, 52, 786 N.Y.S.2d 155 [1st Dept.2004] ).

R. A. Klass
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When Lawyers Engage in a Tug-of-War

man and woman in a tug-of-war, illustrating article by Richard Klass about a law firm ’s charging lien

He was an associate at a law firm that handled cases involving workplace discrimination, including cases based upon age, disability, gender, race, religion and sexual orientation discrimination. The associate decided it was time for him to transition from the law firm to another firm in which he would become a partner. Some of the law firm’s clients whose cases were handled by the associate elected to transfer representation from the former firm to the associate’s new law firm.

Law Firm’s Charging Lien

When an attorney commences a lawsuit or appears in a lawsuit, he is deemed the “attorney of record” in the case. One of the ramifications of being the attorney of record is that the attorney has the right to maintain a “charging lien” on any recovery in the case. This right is derived both from longstanding common law and statutory law, codified in New York’s Judiciary Law Section 475, which provides:

Section 475. Attorney’s lien in action, special or other proceeding. From the commencement of an action, special or other proceeding in any court or before any state, municipal or federal department, except a department of labor, or the service of an answer containing a counterclaim, or the initiation of any means of alternative dispute resolution including, but not limited to, mediation or arbitration, or the provision of services in a settlement negotiation at any stage of the dispute, the attorney who appears for a party has a lien upon his or her client’s cause of action, claim or counterclaim, which attaches to a verdict, report, determination, decision, award, settlement, judgment or final order in his or her client’s favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affected by any settlement between the parties before or after judgment, final order or determination. The court upon the petition of the client or attorney may determine and enforce the lien.

Practically, the charging lien gives the attorney the right to collect his legal fees from any moneys recovered in the lawsuit, even once the attorney is no longer representing the client. This is based on the premise that when an attorney is dismissed without cause, he is entitled to a lien to secure payment of his reasonable fees and costs incurred prior to the date of substitution of counsel. See, Sequa Corp. v. GBJ Corp., 156 F.3d 136 [2 Cir. 1998].

Agreement to Determine the Amount of Lien

When a client discharges an attorney without cause, the attorney is entitled to recover compensation from the client measured by the fair and reasonable value of the services rendered whether that be more or less than the amount provided in the contract or retainer agreement (Matter of Montgomery, 272 NY 323 [1936\]). As between them, either can require that the compensation be a fixed dollar amount determined at the time of discharge on the basis of quantum meruit (Reubenbaum v. B. & H. Express, 6 AD2d 47 [1 Dept. 1958]) or, in the alternative, they may agree that the attorney, in lieu of a presently fixed dollar amount, will receive a contingent percentage fee determined either at the time of substitution or at the conclusion of the case. See, Lai Ling Cheng v Modansky Leasing Co., Inc., 73 NY2d 454 [1989].

In one of the cases which the associate took with him to his new law firm, the former firm retained Richard A. Klass, Esq., Your Court Street Lawyer, to enforce its charging lien. The two firms came to an agreement, which was so-ordered by the judge, that the former law firm maintained a charging lien against any recovery in the case and that the amount of that lien would be determined at the conclusion of the litigation (assuming there would be a recovery from the defendants).

Entitlement to Attorney’s Fees in Proportionate Contribution to Case

The workplace discrimination case settled and the net legal fee sat in escrow as per the attorneys’ agreement pending resolution of their division amongst the two law firms. Unfortunately, the two firms were unable to come to terms as to the percentage split and requested that the judge hold a hearing to determine the allocation of fees.

The judge granted the law firms’ request for a hearing on the issue of the charging lien. It was noted that the court’s determination would be centered on determining the proportionate contributions of both prior and substitute counsel, citing to the case of Mason v. City of New York, 2016 WL 2766652 [SDNY 2016]. As stated in Buchta v Union Endicott Cent. School Dist., 296 AD2d 688, 689–90 [3 Dept 2002], “In assessing each firm’s proportionate contribution, we focus on the time and labor spent by each, the actual work performed, the “difficulty of the questions involved, the skill required to handle the matter, the attorney’s skills and experience, [and] the effectiveness of counsel in bringing the matter to resolution.”

A hearing was held in which both the partner in the original law firm and the associate/partner in the new law firm testified as to the services rendered on behalf of the clients in the case. The prior law firm’s partner testified as to all of the intake and pre-litigation tasks performed before substitution of counsel, including compiling evidence; interviews of clients; review of vast collection of evidence including email communications, video recordings and audio recordings. The former associate testified as to all of the services he rendered both at his old and new firms. Unfortunately for the former firm, it was unable to produce contemporaneous time records for services rendered while the former associate was in its employ. Based upon the testimony of the attorneys and the documents produced at the hearing, the judge apportioned the net legal fee between the two law firms.

Practice Tip:

It is critical for attorneys to enter and keep time records for all time spent working on their cases. Contemporaneous time records are important if the attorney must file a lien or prove time spent on a case. Equally important, a law firm should ensure that its attorneys, paralegals and support staff submit their time records in case the firm needs to justify its fees on a case.

Richard A. Klass, Esq.


Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn, New York. He may be reached by phone at (718) COURT●ST or at RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.

©2017 Richard A. Klass.
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Difference of Opinion regarding Mandatory Attorney Fee Dispute Arbitration

The Fee Dispute Resolution Program (22 NYCRR Section 137) was created to mandate arbitration of fee disputes between attorneys and their former clients in civil matters. It has been subject to differing opinions among different departments leading to divergent opinions on the issue of whether or not an arbitration is necessary when the former client fails to object the validity of the underlying fee.

In 2000, the Second Department determined in Scordio that when there is a fee dispute between an attorney and a former client, the attorney was not required to send notice to the former client informing them of their rights to arbitrate when there was no dispute or objection to the reasonableness of the attorney’s fees. Scordio v. Scordio, 270 A.D.2d 328 (2nd Dept. 2000).

The decision in Scordio would ordinarily lend to the notion that an attorney may pursue collection of his fees without notice to a client of his right to arbitration but the rules regarding arbitration of fee disputes were modified and expanded in 2002, and now lists exceptions to when a notice to a client of his right to arbitrate can be waived. In Wexler & Burkhart, the court held that a reading of the Rules in this way would “effectively eviscerate Part 137 of the Rules, a comprehensive scheme for the informal and expeditious resolution of fee disputes between attorneys and clients through arbitration and mediation.” Wexler & Burkart LLP v. Grant, 12 Misc.3d 1162(A) (Nassau Cty. 2006).

The court in Rotker determined that “the rules of the appellate division establish a clear public policy in favor of the arbitration of attorney-client fee disputes.” Rotker v. Rotker, 195 Misc.2d 768 (Westchester Cty. 2003). Rotker was a matrimonial case where the attorneys for the wife instituted a retainer lien against her for non-payment of her fees. The attorneys asserted that since the client had not disputed the fees, under Scordio, they were entitled to payment without arbitration. The court held that even if it was determined that counsel was not fired for cause, the attorneys were required to provide the client notice of her rights to arbitrate the dispute, with said notice given in writing. If the client then failed to avail herself of her right to arbitrate after 30 days of mailing the notice, the right to arbitration would be waived. Id at 790-791.

The court in Rotker went so far as to hold that the failure of former counsel to send the 30-day notice, regardless of whether or not there is a dispute, would mandate the dismissal of any action for unpaid counsel fees. Rotker at 791.

The basic tenet held in these decisions is the idea that if the Scordio argument is used as a means to avoid Rule 137, then nearly anyone can circumvent the protections that Rule 137 was meant to provide. Wexler & Burkhart LLP at 214;

The position of the Wexler & Burkhart decision and the Rotker decision was most recently supported in Noel F. Caraccio, where the court held that regardless of whether there was an objection or dispute as to the fees when they were billed, the attorney was still required to send the 30-day notice of the right to arbitrate. Noel F. Caraccio PLLC v. Thomas, 29 Misc.3d 1230 (A) (City Ct., Rye 2010); Rotker at 791.

Thus, it is questionable as to whether Scordio remains good law, and as such, it is prudent to notify the former client of his rights to arbitrate the fee in order to prevent a dismissal of an attorney’s action for payment.

— Elisa S. Rosenthal, Esq.
Associate
Law Office of Richard A. Klass
Copyr. 2014

Elisa S. Rosenthal, Esq. is an associate of the law firm of Richard A. Klass, Esq.. She practices primarily in the areas of commercial litigation, debt collection/enforcement of judgments, legal malpractice and real estate litigation. She may be reached by phone at (718) COURT-ST [(718) 268-7878)] or www.courtstreetlaw.com.

———–
copyr. 2014 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.


R. A. Klass
Your Court Street Lawyer

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Defendants in Mortgage Foreclosure Cases May Recover Their Attorney’s Fees and Expenses under Real Property Law Section 282

A defendant/mortgagor who prevails in the successful defense of a mortgage foreclosure proceeding may be entitled to recover his  reasonable attorney’s fees and expenses under Real Property Law Section 282, which provides as follows:

Section 282. Mortgagor’s right to recover attorneys’ fees in actions or proceedings arising out of foreclosures of residential property

    1. Whenever a covenant contained in a mortgage on residential real property shall provide that in any action or proceeding to foreclose the mortgage that the mortgagee may recover attorneys’ fees and/or expenses incurred as the result of the failure of the mortgagor to perform any covenant or agreement contained in such mortgage, or that amounts paid by the mortgagee therefor shall be paid by the mortgagor as additional payment, there shall be implied in such mortgage a covenant by the mortgagee to pay to the mortgagor the reasonable attorneys’ fees and/or expenses incurred by the mortgagor as the result of the failure of the mortgagee to perform any covenant or agreement on its part to be performed under the mortgage or in the successful defense of any action or proceeding commenced by the mortgagee against the mortgagor arising out of the contract, and an agreement that such fees and expenses may be recovered as provided by law in an action commenced against the mortgagee or by way of counterclaim in any action or proceeding commenced by the mortgagee against the mortgagor. Any waiver of this section shall be void as against public policy.
    2. For the purposes of this section, “residential real property” means real property improved by a one- to four-family residence, a condominium that is occupied by the mortgagor or a cooperative unit that is occupied by the mortgagor.

In an appropriate case, where the mortgage provides for the recovery of the mortgagee’s attorney’s fees and expenses, the above statute applies, and the subject real property constitutes residential real property (one family) that is the mortgagors’ home, the court may award the defendant legal fees and costs.

by Richard A. Klass, Esq.

———–
copyr. 2014 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.


R. A. Klass
Your Court Street Lawyer

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