Legal Malpractice: Entrepreneur Claims Andrews Kurth Conflicts Cost Him His Company

legal malpractice conflictsTexas Lawyer reported that an entrepre-neur who sued a venture capital firm for defrauding him out of his company, has amended his complaint to add a legal malpractice claim against the law firm that represented him, AmLaw 200 member Andrews Kurth.

Kyle Samani co-founded Pristine Eyesight in 2013, to use Google glass to deliver a video communication platform, primarily for health care providers. It changed its name to Pristine, and its focus to enabling field workers, i.e., inspectors, technicians, process engineers, claims adjusters, etc., to col-laborate with remote colleagues via video communication.

Samani alleges that Pristine hired Andrews Kurth to prepare a financing agreement be-tween it and venture capital investor S3 Ventures, which along with two other venture capital firms, invested $5.4 in the company in 2014. The other firms aren’t named in the suit, but a sister company of S3, and two S3 executives, who also invested in Pristine,  are named in the suit.

However, while “Andrews Kurth purported to represent (Pristine’s) interests”, it actually represented “S3’s interests to the detriment of Kyle Samani”.

Samani claims that an Andrews Kurth lawyer who drafted the financing agreement told him, “‘I am about to send you a bunch of documents. It is my job to read them, so you should probably just go through and docusign them.'”

He states that he took that lawyer’s advice, not realizing – because it was never ex-plained to him – that Andrews Kurth was representing only Pristine, and not him per-sonally.

He alleges that a year later, after S3, its sister company, and its executives who had invested in Pristine, learned that some of its shares had traded privately for $1.20 a share, and that the company was on the verge of closing several more large sales con-tracts, they terminated him as CEO, “claimed the right to force a sale of (his) roughly 700,000 unvested shares in Pristine for $0.01 each”, and barred him from participating in governance of the company, even though he’s a member of its board.

The defendants allegedly bought his 700,000 shares for $7,000, even though they had a market value of more than $1 million.

“After the financing agreement was executed, the same one he was instructed not to read,…Mr. Samani was stripped of his job without cause, and stripped of his ownership of the company without compensation.”

Samani alleges that Andrews Kurth placed S3’s interests ahead of his interests, advised him not to read important documents before signing them, and failed to advise him of:

  • Obvious conflicts between S3 Ventures, its employees and the firm;
  • The conflict of interest between him and Pristine;
  • That he should hire his own counsel before signing the financing agreement;
  • His potential downside in the financing agreement.


Law Practice Risk Management:

I. Conflict of Interest

A. According to the Texas Lawyer article, Samani claims that Andrews Kurth (AK) “had a long relationship with S3, providing legal work to a number of S3 portfolio com-panies”, which is presumably the basis of his allegation that there were “obvious conflicts” between AK and S3.

However, Samani doesn’t allege that AK represented S3 in this matter, so there was no  violation of Texas Disciplinary Rules of Professional Conduct Rule 1.06. Conflict of In-terest: General Rule, which prohibits a lawyer from representing opposing parties to the same litigation, or representing a person if it:
(1) involves a substantially related matter in which that person’s interests are materially and directly adverse to the interests of another client of the lawyer…; or

(2) reasonably appears to be or become adversely limited by the lawyer’s or law firm’s responsibilities to another client or to a third person or by the lawyer’s or law firm’s own interests.

Samani will likely be unable to prove this allegation, because a lawyer is not precluded from representing a party in a matter, just because it once represented the other party or its partners, especially when the present representation is non-adversarial, as this one was.

B. Samani alleges that AK failed to inform him of the conflict between himself and Pris-tine. 

Rule 1.12. Organization as a Client states:

(a) A lawyer employed or retained by an organization represents the entity…

Section (e) states:

(e) In dealing with an organization’s directors, officers, employees, members, share-holders or other constituents, a lawyer shall explain the identity of the client when it is apparent that the organization’s interests are adverse to those of the constituents with whom the lawyer is dealing or when explanation appears reasonably necessary to avoid misunderstanding on their part. (Emphasis added)

Further, Comment 4 to Rule 1.12 states

4. …when the organization’s interest (becomes) adverse to those of one or more of its constituents…the lawyers should advise any constituent whose interest the lawyer finds adverse to that of the organization of the conflict… (and) that the lawyer cannot repre-sent such constituent, and that such person may wish to obtain independent represent-ation. Care should be taken to assure that the individual understands…the lawyer for the organization cannot provide legal representation for that constituent individual…(Emphasis added)

Here, Samani may have a stronger case, because in his role as Pristine’s CEO, he app-arently hired AK, was its primary contact, and approved payment of its bills, but claims to have been was unaware that AK represented only Pristine, but not him personally. As co-founder of the firm, its CEO, and a major, if not majority stockholder, he probably saw no distinction between himself and Pristine.

If AK informed him in writing at the start of its representation of Pristine, that it wasn’t also representing him personally, then it will likely prevail, but if it didn’t, it should have, if not at the start, then after it prepared the financing agreement, which while presumably in Pristine’s best interests, may have been “adverse to those of the organization’s constit-uents with whom the lawyer is dealing”, i.e., Samani.

Finally, Comment 5 to Rule 1.12 states in part:

5. A lawyer representing an organization may, of course, also represent any of its di-rectors, officers, employees, members, shareholders, or other constituents…

It’s unclear why AK didn’t represent Samani, as it doesn’t appear that representing both him and Pristine would have been adverse to either one.  However, it would have been adverse to S3, because AK would have been obligated to advise Samani not to sign a financing agreement that gave S3 “the right to force a sale of (Samani’s) roughly 700,000 unvested shares in Pristine for $0.01 each”, which Samani alleges was well-below their market value.

Samani’s counsel will likely try to prove that AK didn’t represent Samani in order to aid S3. If he succeeds, then AK may face a potentially large judgment, and punitive dam-ages.

AK should have either represented both Samani and Pristine, or advised Samani to ob-tain his own counsel. The onus is on the law firm to clarify which party it is – and isn’t – representing, so if AK failed to do so, it may be found to have committed malpractice.

Will a jury of Kyle Samani’s peers – which will include small business owners, if his attorneys are adept at jury selection – believe him if he testifies that he thought AK was representing both himself and Pristine, the company he co-founded and led? Al-most certainly yes.

II. Engagement Letter

If AK produces a properly drafted engagement letter signed by Samani, then it will almost certainly prevail, perhaps via summary judgment. However, based on the com-plaint, it appears that AK either didn’t send Samani an engagement letter, or did, but didn’t require him to sign and return it, before it began work on the financing agreement.

If true, that was a mistake, because an engagement letter may have eliminated any confusion by Samani: according to legal malpractice insurer the Bar Plan, a properly drafted engagement letter will “clearly define” the “client, scope, subject matter and goals of the representation.”, disclose any potential conflict of interest, and set forth “the client’s right to independent counsel”.

Just as a kingdom was lost for want of a nail, Andrews Kurth may find that a legal malpractice claim was lost for want of an engagement letter.

Further reading:

Pristine Inc. co-founder sues S3 Ventures LLC alleging unjust termination – Austin Business Journal

Tech Lawyer Analyzes Kyle Samani’s Case  


Legal Malpractice: Parental Child Abduction Leads to $1.4M Verdict

Family Law MalpracticeLater this year, the New Jersey Supreme Court will issue its ruling in Innes v. Marzano-Lesnevich, et al, on the issue of whether a non-client who prevails in a legal malpractice action can recover legal fees.[i]

The court heard the matter last October. Marzano-Lesnevich’s attorney, and The New Jersey State Bar Association, which participated as amicus, urged the court not to expand on its 1996 ruling in Saffer v. Willoughby that clients who prevail in a legal malpractice action may recover their legal fees.

Marzano-Lesnevich’s lawyer argued “a lawyer does … owe a duty to a non-client and can be sued, but to now expose the attorney on top of that for attorneys’ fees is going too far.”[ii]

Justice Barry Albin countered “logic, fairness and public policy”[iii] suggest that non-clients should be able to recover counsel fees if they’re the victims of their adversaries’ lawyers’ malpractice.

The court’s ruling will conclude a saga that spans 11 years and two continents.

Custody Dispute and Abduction

In 2004, Peter Innes and Maria Jose Carrascosa, who were divorcing, got into a custody dispute over their five year-old daughter, Victoria.[iv]

During the dispute, Carrascosa, a native of Spain, took Victoria there without Innes’ consent, in violation of their co-parenting agreement, and ignored a court order to bring her back.

She was able to take Victoria to Spain, because a few weeks after signing the co-parenting agreement in October, 2004, she fired her divorce lawyer, who was holding the child’s passport in trust, and he sent it with the rest of his file to her new divorce lawyer, Marzano-Lesnevich, who gave it to Carrascosa during a meeting in December.

Carrascosa took Victoria to Spain in January, 2005, and she has been raised there by Carrascosa’s parents ever since. Innes petitioned a Spanish court to have Victoria returned to the US[v], but his petition was denied, as were his appeals. The Spanish court also ordered Victoria to remain in Spain until she turns eighteen.

The last time Innes saw his daughter was in Spain, in autumn, 2005[vi]. He testified that he hasn’t gone back to Spain, because fourteen criminal complaints had been filed against him there, and three were still pending. He denied committing any crime, or abusing Carrascosa or Victoria, but believed he would be unjustly accused and imprisoned if he went back, given the wealth and position of Carrascosa’s family, and the notoriety of the case, which has been covered by Spain’s media, and sparked demonstrations when American and Spanish judges met in Spain to discuss Victoria’s return to the US.

Innes also testified that he has been unable to maintain a relationship with Victoria, as Carascosa’s family refuses delivery of the Christmas and birthday gifts he sends her. He posts messages for her on, a website he maintains.

Divorce and Incarceration

Carrascosa, who is an attorney admitted to practice in the European Union, returned to New Jersey without Victoria in 2006 for her and Innes’ divorce trial.

That August, the court awarded Innes sole custody of Victoria, and ordered Carrascosa to return her to the US, but she failed to comply.

She was arrested in December, 2006, and held until 2009, when she was convicted of willful interference with child custody, and sentenced to 14 years in prison. She was paroled in 2014, and then held in Bergen County Jail until April, 2015[vii], on a contempt of court charge, for violating the order to return her daughter to the US.

She was released after Innes, who has since remarried and now has a young son, wrote to the court saying he was not opposed to her release, if she returns to Spain to be with their daughter.

Legal Malpractice Lawsuit, Trial, and Appeal

Innes sued Marzano-Lesnevich and her firm for his and Victoria’s emotional distress, alleging that Carrascosa used the released passport to “abduct”[viii] Victoria.

The firm filed 3rd-party complaints against Innes’ divorce attorney and Liebowitz, Carrascosa’s prior divorce attorney, but both were dismissed.

It also filed a motion for summary judgment, arguing that Marzano-Lesnevich had no duty to Innes, because she didn’t know the child’s passport was being held in trust, she was never asked to become the trustee of the passport, and the trusteeship remained with Liebowitz, who is named as trustee of the passport in the co-parenting agreement.

Her attorney/partner argued “we had no right to not turn over the passport to the mother”, who was the custodial parent.[ix] The court denied the motion, ruling that “defendants owed a duty to Innes”.[x]

At trial, a jury awarded Innes just over $1.4M: $700,000 for his emotional distress, $424,000 for his daughter’s, and $292,332 in interest and attorneys fees.

Marzano-Lesnevich and her firm appealed the lower court’s denial of their motion for summary judgment, and the jury award. The appeals court upheld the lower court’s denial of the motion, and Innes’ award for emotional distress, interest, and attorneys’ fees, but threw out his daughter’s award, because “there was simply no testimony regarding her emotional distress, meaning the jury’s award was based upon speculation”.[xi]

Innes responded: “Because she is…in Spain, I could not offer any proof of her emotional harm. (But)…a 4-year-old child, who is taken from her father, is certain to have been emotionally harmed”.[xii]

Marzano-Lesnevich then appealed Innes’ award to the New Jersey Supreme Court, which granted review only on the issue of whether Innes can recover his legal fees.

Declaratory Judgment Action

While the Supreme Court was deciding if it would hear Marzano-Lesnevich’s appeal, Innes sued her firm’s legal malpractice insurer to collect his judgment. However, the court granted the insurer’s motion for summary judgment, ruling that its policies don’t cover Innes’ claim, because (1) “it was first made prior to the policies’ term”, and (2) the policy excludes coverage for errors and acts the law firm “could have reasonably foreseen…might become the basis of a claim or suit”.[xiii]

As a result, Innes must collect his judgment, which totals $833,815 in damages + interest, directly from Marzano-Lesnevich and her firm.

Based on the court filings and ruling, this appears to be the sequence of events:

  • The firm didn’t have malpractice insurance when it released the passport in December, 2004.
  • In January, 2006, the firm received a letter from an attorney representing Innes “in an action against your firm”[xiv] (he sued in October, 2007).
  • The firm applied for malpractice insurance in September or October, 2006, but didn’t disclose the letter from Innes’ attorney, or that it had released the passport, or that the child was taken to Spain, even though the application asked if a claim had been made against any of the firm’s attorneys in the past five years, or if any of them knew of any act or error that might lead to a claim being made against them.
  • The first malpractice policy the firm bought after releasing the passport covered errors or omissions it committed only during the policy period, which was 10/23/06 – 10/23/07, i.e., it didn’t cover Prior Acts, which are errors or omissions committed before a policy’s inception date.
  • The firm didn’t seek coverage for Innes’ claim from its malpractice insurer, so Innes sought a declaratory judgment that he was a third-party beneficiary of the firm’s policies, and they covered his claim.
  • The insurer filed a counterclaim, seeking a declaratory judgment that its policies didn’t cover Innes’ claim.

Lessons Learned

I. Law practice risk management:

A. A co-parenting agreement that prohibits a child from traveling abroad unless both parents consent, should include safeguards that prevent any “shenanigans” regarding the child’s passport, i.e., it should specify procedures to be followed if the passport is entrusted to the attorney of one of the parents, and that attorney stops representing the parent.

B. Communication between new, prior, and opposing counsel is vital. Liebowitz should have contacted Innes’ attorney as soon as Carrascosa fired him, and Marzano-Lesnevich, as soon as he found out that she was Carrascosa’s new attorney, and arranged to be replaced as trustee of the child‘s passport.

Failing that, Marzano-Lesnevich should have contacted Innes’ attorney about replacing Liebowitz as passport trustee, as soon as she reviewed the co-parenting agreement.

Instead, Marzano-Lesnevich gave the passport to Carrascosa, and later claimed that this was permissible, because the co-parenting agreement “was moot”, i.e., “it had been repudiated by both parties immediately.”[xv] In that case, she should have contacted

Innes’ attorney about either revising or terminating it.

II. Legal malpractice:

Non-clients can sue attorneys for malpractice. According to attorneys McAvoy and Schnake, “while a lawyer typically does not owe a duty of care to non-clients, an attorney may owe a fiduciary duty to persons, though not strictly clients, (who)…relied on the attorney’s professional capacity.”[xvi]

In this case, the appeals court held that “it was entirely foreseeable that (Carrascosa’s) possession of the daughter’s passport would facilitate her ability to move from the country…giving the passport to the wife was a breach of (Marzano-Lesnevich’s) duty.”

III. Legal malpractice insurance:

The money that Marzano-Lesnevich and her firm saved by not buying malpractice insurance until after releasing the passport, is a fraction of the $833K judgment they owe Innes, which their malpractice insurer would have been obligated to pay, if they had been properly insured.

However, legal malpractice insurance is a claims-made and reported policy, not an occurrence policy, like auto or property insurance, so to trigger it, you must be insured on the date you commit an error, and the date a claim is made against you due to that error, and the date you report that claim to your insurer.

Since you can’t predict any of those dates in advance, and you may not even know you made an error until incurring a claim months or years later – as happened to Marzano-Lesnevich – the only way to always be covered is to buy malpractice insurance when you first open your practice, and renew it every year that your practice remains open.

As long as you do so, your coverage will be retroactive to the inception date of your first policy, i.e., you’ll get another year of Prior Acts coverage with each renewal. Then, if you’re sued for work you did on or after the inception date of your first policy, and before the inception date of your current policy, and you report the claim to your insurer during your current policy period, then your Prior Acts coverage will obligate your insurer to protect you (subject to policy exclusions, etc.)

Conversely, if you don’t renew your policy one year, then you’ll lose all of your Prior Acts coverage; the next policy you buy will cover any errors or omissions you commit only on or after the inception date. For example, if a firm was insured from Jan. 1, 2000 – January 1, 2016, but didn’t renew or buy Extended Reporting Period coverage, then starting at 12:01 AM on January 1, 2016, it would no longer be insured for claims arising out of errors or omissions it committed before then. Even if it bought coverage on Jan. 2, 2016, that policy would cover it only for any errors or omissions it commits between that date and Jan. 2, 2017.

End notes

  1. Booth, Michael, “Justices Mulling Counsel Fees For Non-Clients In Legal Mal Cases”, NEW JERSEY LAW JOURNAL, October 27, 2015,
  2. Id.
  3. Id.
  4. Zaremba, Justin, “Insurance Doesn’t Have to Pay $1.4M Over Law Firm’s Mistake in Custody Dispute”, NJ ADVANCE MEDIA, September 14, 2015,

  1. See PETER INNES and VICTORIA SOLENNE INNES, by Her Guardian PETER INNES, Plaintiffs–Respondents, v. MADELINE MARZANO–LESNEVICH, ESQ., and LESNEVICH & MARZANO–LESNEVICH, Attorneys At Law, i/j/s/a, Defendants–Appellants/Third–Party Plaintiffs, v. MITCHELL A. LIEBOWITZ, ESQ., PETER VAN AULEN, ESQ. and MARIA JOSE CARRASCOSA, Third–Party Defendants, DOCKET NO. A–0387–11T1,
  2. Id.
  3. Kibret, Markos, “Mother in bitter Bergen County child-custody case is freed after 8 years in jail”, THE RECORD, April 24, 2015,
  4. See note 5 above.
  5. Gallagher, Mary Pat, “Matrimonial Firm to Go on Trial for Allegedly Aiding in Child’s Abduction”, NEW JERSEY LAW JOURNAL, July 6, 2010 ding_in_Childs_Abduction (found on;wap2)

  1. See note 5 above.
  2. Sampson, Peter J., “Court hands win, loss to Hackensack law firm, Hasbrouck Heights dad seeking girl’s return from Spain”, THE RECORD, April 8, 2014,
  3. Id.
  4. See “PETER INNES, Plaintiff, v. SAINT PAUL FIRE and MARINE INSURANCE COMPANY and TRAVELERS COMPANIES, INC., Defendants. United States District Court, D. New Jersey. Civil Action No. 12-234”,
  5. Id.
  6. See note 5 above.
  7. McAvoy, Terrence P., and Schnake, Katherine G., “Non-Client Awarded Damages for Emotional Distress”,

Lawyers for the Profession® Alert, May 20, 2014, citing Innes v. Marzano-Lesnevich v. Leibowitz, 435 N.J. Super 198, 87 A.3d 775 (April 7, 2014),

Legal Malpractice: Andrews Kurth Hit With $200M Verdict

Legal Malpractice Andrews Kurth $200 Million VerdictBloomberg BNA reported that Houston-based oil and gas law firm Andrews Kurth was hit with a $200M legal malpractice verdict by a Harris County District Court jury, a figure equal to about two-thirds of the firm’s reported gross revenue in 2014.


The claim arises out of a dispute between Scott Martin and his brother Ruben over management of Martin Resources Management Corp. (MRMC), a drilling rig supply company that was started in 1951 as a successor to a firm founded by their father. In 2002, it became the general partner in Martin Mid-stream, which stores and distributes natural gas, provides marine transportation, and manufactures sulfur. MRMC also owns 35% of publicly-traded Martin Midstream Part-ners, L.P.

Ruben Martin was CEO of MRMC, and chairman of the company’s board of directors, while Scott Martin was Executive VP and a member of the board.

According to a court ruling in another case involving Scott Martin and MRMC, an “in-ternecine power struggle over the control of MRMC arose between Ruben and Scott. Ruben contended that Scott was trying to take control of the company, while Scott took the position that it was Ruben’s goal to “freeze” Scott out from corporate management. Beginning in 2006, the brothers’ relationship began to deteriorate regarding the general direction of the company, and their collegial relationship was finally fractured in 2007, when Ruben decided that MRMC should seek to acquire a refinery, while Scott opposed the move.”

According to the original petition in this case, and other court filings, by January, 2008, the situation had deteriorated to the point that litigation “was imminent”, as Scott Martin believed his brother was trying to marginalize his role in the company, and dilute his shares.

Their mother Margaret attempted to mediate a settlement, and after several discussions in which Andrews Kurth “was closely involved” as counsel for Scott Martin, a document entitled “Margaret’s Settlement Proposal”, signed by Ruben Martin, was presented to Scott Martin and Andrews Kurth.

Andrews Kurth “then altered the document in a number of respects”, and “assured Scott that it would protect his and SKM’s interests while settling the dispute with Ruben”. (SKM is a partnership owned by Scott Martin and his wife Kim).

Scott Martin signed the settlement agreement, but a few months later, concluded that his brother wouldn’t comply with the agreement’s terms, and had Andrews Kurth sue Rue-ben Martin on his behalf in an attempt to enforce it.

However, although Scott Martin won some damages, “the Settlement Agreement was ultimately held to be unenforceable upon appeal. The Texas appellate courts determined that…it was no more than an unenforceable agreement to agree.” Further, Andrews Kurth billed Scott Martin over $3M in fees and costs for what was “ultimately a doomed effort”.

After that, “nearly a dozen lawsuits followed that engulfed” Scott Martin and SKM, which wouldn’t have occurred “if the Settlement Agreement did what it was intended to do: settle the disputes between Scott and his brother.”

The dispute and litigation finally ended when Scott Martin sold his interest in MRMC back to the company, however, he alleges that he had to do so at a discount.

Legal Malpractice Suit

Scott Martin sued Andrews Kurth for making “a number of errors…which prejudiced Plaintiffs in the litigation” against Ruben Martin, including:

  • “Not advising Scott to resign as a trustee for a trust for Ruben’s heirs” when their dispute  led to litigation. “This led to an adverse judgment against Scott of over $3,000,000.” (The award was overturned on appeal)
  • “Failing to draft an enforceable agreement.”
  • “Failing to advise Scott of the fiduciary/liability ramifications of filing a shareholder derivative lawsuit against MMRC’s directors and employees”. As a result, “Scott was sued three times…resulting in two adverse judgments against him.”

He also alleged that internal firm emails mocked him and his “precarious financial condition”

Trial and Verdict

A trial was held, and on Nov. 11, a 12-person jury found Andrews Kurth 100% negligent, and awarded Scott Martin $167 million for the loss of his ownership in MRMC, if cal-culated as of 10/2/2012, and more than $29 million for fees and expenses incurred.

Post-trial motions

After the trial, Martin requested a hearing for judgment, which the judge set for November 23rd. Andrews Kurth then filed a motion to continue the hearing until at least Dec. 14.

Among other things, the firm wants the court to examine the date of injury used to calculate damages. The court asked the jury to calculate Scott’s loss-of-stock-value claim based on three possible dates of injury, Oct. 2, 2012, Aug. 12, 2010 and June 10, 2008. The jury calculated damages at $167 million, $99 million and $82 million for each of the dates, respectively.

Attorneys for the firm claim the plaintiff did not pick the date until after the jury decision, and then picked Oct. 2, 2012, the date with the highest value.

“Tens of millions of dollars hang on the determination of this issue alone, yet we have no authorities to support their post-verdict selection,” the firm said in its filing.

Firm’s statement

“We will remain committed to the post-verdict and appellate process and we are confident that we will ultimately be vindicated,” said Bob Jewell, managing partner of Andrews Kurth, in a statement.

Shortly after the suit was filed in 2013, Jewell described Scott Martin’s suit as simply an attempt to avoid paying the more than $2 million in outstanding fees. “Scott Martin’s claim has no merit…Andrews Kurth represented him in a professional and competent manner more than five years ago, and he received an unquestionably positive result in connection with that representation.” Jewell added that Martin was intricately involved in directing the litigation, and expressed no complaints about legal services he was receiving when he signed a promissory note in 2010 to pay the fees.

Martin et al. v. Andrews Kurth LLP, case number 2013-61098, 234th Judicial District Court of Harris County, Texas.


Texas Lawyer reported that the case been settled, although “terms of the pre-judgment settlement are confidential”.  The case went to mediation in January. The parties filed a Motion to Dismiss on April 6, and the judge signed it on April 7th.

Legal Malpractice: Court Upholds $9M Award Against IP Firm Over Abandoned Patent

IP 12%

The New York Law Journal (reg. req’d.) reported that a federal judge refused to overturn a nearly $9 million patent malpractice verdict against an IP law firm, and lifted a stay on enforcing it.

In Protostorm v. Antonelli, Terry, Stout & Kraus, 08-cv-931, Eastern District Judge Pamela Chen said that jurors had “more than adequate evidence in the record” to support a finding that the law firm had a duty to prosecute Protostorm’s patent application.

She also ruled that the law firm didn’t preserve a non-patentability argument tied to the recent U.S. Supreme Court decision in Alice Corp. Pty, Ltd. v. CLS Bank International, 134 S.Ct. 2347 (2014).

According to its complaint, Protostorm, which was created to develop and market an invention to track online gaming activity and target advertising, retained Antonelli, Terry to submit a provisional patent application to the U.S. Patent Office in June, 2000.

To get the benefit of a priority date, the company had one year to file a non-provisional application that discussed the subject matters the invention claimed to be patenting.

Protostorm claimed that: *Antonelli, Terry filed an international application two days before the deadline, which listed about 86 countries and regions where Protostorm could seek patent protection, but failed to check the box designating the United States as one of those places.

*The law firm concealed its mistake, said the application likely would take years before getting an initial review, and didn’t inform Protostorm that it had lost its patent rights until shortly before the 2008 malpractice action was filed.

Antonelli, Terry filed a motion for summary judgment, arguing that its attorney-client relationship with Protostorm ended in 2001. Carl Brundidge, who had been a partner at the firm, said he sent a letter to Protostorm that October, saying that Antonelli, Terry wouldn’t take any further action on the application until Protostorm paid part of its outstanding balance.

Peter Faulisi, an inventor and cofounder of Protostorm, said he didn’t get the letter until after he spoke with an attorney at the firm in 2007.

The court denied the firm’s motion for summary judgment.

The case was tried in July, 2014. The jury awarded Protostorm $6.9 million in compen-satory damages, and $1M in punitive damages: $900,000 against the firm, and $100,000 against Brundidge.

After post-trial litigation on damages allocation, Judge Chen assigned all compensatory damages to the firm for the acts of its attorneys, but reduced them by 4%, because the jury had found that Protostorm was 4% at fault.

She thus entered a judgment for Protostorm of $6.7 million in compensatory damages, just over $1 million in pre-judgment interest, plus the $900,000 punitive damages award against the firm, and the $100,000 punitive damages award against Brundidge

Request to Set Aside the Verdict
Antonelli, Terry; attorney Brundidge; and Frederick Bailey, an attorney at the firm, moved to set aside the verdict pursuant to Federal Rule of Civil Procedure 50(b).

Among the grounds that it cited in its 50(b) motion was the 2014 U.S. Supreme Court decision in Alice Corp. Pty, Ltd. v. CLS Bank International, 134 S. Ct. 2347, in which the Court said that a computer-implemented method to weigh certain risks between parties in foreign currency transactions was not a patent-eligible invention.

According to the firm, an “avalanche of precedent” now examining Alice, said creations like Protostorm’s were “unpatentable abstract ideas”, i.e., ineligible for a patent, thus rendering a patent malpractice action defective.

Judge Chen ruled that Antonelli, Terry was “procedurally barred” from arguing that “(1) Protostorm cannot show patentability under 35 U.S.C. §§ 101 and 103, which is nec-essary to establish proximate cause, and (2) Protostorm failed to prove damages”, because it didn’t raise these arguments in its Rule 50(a) motion.

“ATS&K’s Rule 50(b) motion contends that Protostorm did not carry its burden to show proximate cause because it offered insufficient proof on two requirements for patent-ability. Under Point I of its motion, ATS&K asserts that as a matter of law, the hypo-thetical claims drafted by Protostorm’s expert…were directed to an unpatentable ab-stract concept under Section 101, as recently discussed by the Supreme Court in Alice Corp. Pty, Ltd. v. CLS Bank International, 134 S.Ct. 2347 (2014)… Although Defend-ants’ oral Rule 50(a) motions at trial challenged the patentability of the Protostorm invention, the grounds stated by their trial counsel were altogether different from the Section 101 and 103 arguments raised in the Rule 50(b) motion.”

Further, “ATS&K acknowledges that it didn’t “press an argument under Alice and its progeny until after trial.” None of the Defendants offers any explanation for why they did not raise the Alice argument at any point prior to or during the trial, given that Alice was decided a month before trial commenced…The fact plaintiffs might have been aware of a potential Alice issue before trial does not absolve defendants of their responsibility to raise the issue and thereby put plaintiffs on notice,” Chen ruled.

The firm also argued that “because patent eligibility is a pure question of law, it may be raised for the first time in a Rule 50(b) motion…the question of patent eligibility can be answered by reference to the language of the hypothetical claims alone, (so) there were no additional facts that Protostorm could have presented at trial to remedy deficiencies in its proof on causation and patent eligibility, and therefore Protostorm is not prejudiced by the Court addressing the issue at this late stage.”

However, Chen ruled that “the resolution of the patent eligibility issue requires additional facts or expert testimony that is absent from the trial record, and that Protostorm would be prejudiced by not having had the opportunity to adduce additional evidence in re-sponse to Defendants’ belated patent eligibility argument. Since the patent eligibility causation issue is not a purely legal matter, Defendants’ failure to raise it in a pre-trial motion prevents it from raising it in this Rule 50(b) motion”.

Chen then ruled on the parts of Antonelli, Terry’s 50(b) motion that weren’t procedurally barred:

*The evidence failed to demonstrate that the firm was responsible for drafting the final patent application;

*The firm was entitled to judgment as a matter of law on its statute of limitations defense, because there was no evidence that it concealed malpractice or that Protostorm had a reasonable expectation of representation after 2001;

*There was no showing of malicious or willful intent to warrant an award of punitive damages;

*Protostorm’s proof on patentability was deficient because prior art anticipated the Protostorm invention.

Chen ruled that “the Court is compelled to deny the motions unless, when viewing all of the evidence in the light most favorable to the plaintiff, there is “such a complete ab-sence of evidence supporting the verdict. . . ., or the evidence in favor of the movant is so overwhelming that reasonable and fair-minded persons could not arrive at a verdict against it.” This stringent standard has not been met here.”

Chen thus denied the firm’s request to set aside the verdict, and stated that the Court wouldn’t hear any motion to reconsider its order.


Law Practice Risk Management
This case stemmed from the simplest of errors – the failure to check a box on a patent application. A logical way to prevent such errors is to have a second set of eyes review every patent application before it’s filed.

Attorney Paul Swanson provides a compelling behind-the-scenes analysis of this case, and also offers these risk management tips:

  1. “Obtain written retainer agreements that include “scope of representation” and “with-drawal from representation” provisions.  Had ATS&K entered into a formal retainer ag-reement, it might have had an opportunity to limit the scope of its representation… according to plaintiff’s expert witness and the revisionist history that often characterizes patent legal malpractice allegations, ATS&K was supposed to have closely inspected the application and discovered its various flaws.  In actuality, ATS&K (wasn’t) involved in any substantive patent application drafting.  Had a written retainer agreement been drafted, the firm may well have been able to limit its representation explicitly.  It could also have included a provision that the firm may withdraw for non-payment of fees or costs reasons.”
  2. *“Send letters confirming the closure of case files and cessation of representation.  Despite the passage of years that could have supported a viable statute of limitations defense in this case, the court could not grant a motion for summary judgment on that ground because of the “continuing representation” rule…(whereby) the statute of lim-itations is tolled for as a long as there is a mutual understanding between the attorney and client of the need for further representation regarding the specific subject matter un-derlying the malpractice litigation.  The continuous representation rule is especially pointed in patent matters because patent prosecution activities take place over long periods of time with sequential periods of inactivity.

Protostorm’s principals were never unequivocally told that ATS&K and Hogue would no longer represent Protostorm.  Rather, the attorneys’ oral conversations with Proto-storm’s principals left them with the impression that their attorneys would be taking care of PCT procedural requirements and that Protostorm should expect nothing to happen with re-spect to patent prosecution for an extended period of time.

Faced with these mixed factual messages, the Court could not grant summary judgment in patent counsel’s favor on statute of limitations grounds.  Had a closing letter been written, however, a statute of limitations defense may well have been a dunk shot for dismissal of Protostorm’s malpractice claims…”

  1. “Do not assist non-practitioners or non-lawyers in preparing and filing patent ap-plications;…you should know the USPTO credentials of those with whom you are col-laborating on patent matters in order to protect yourself from aiding and abetting the unauthorized practice of patent law. The involvement of unsupervised, non-patent practitioners in the preparation and filing of the second provisional patent application cast a large dark cloud of legal uncertainty over Protostorm’s PCT patent application.  While it may be tempting to work with a client’s slicing and dicing arrangements re-garding patent application preparation, doing so can lead to the untoward facts that characterize this case.  According to ATS&K’s ethics expert witness…(the) unauthorized filing of a second provisional patent “by itself, would have severely reduced if not elim-inated the likelihood that any patent would have been ever been enforced in litigation or otherwise.”

Legal Malpractice Insurance
There are two lessons here:
*You can’t predict when you’ll be sued for malpractice, so the only way you’ll always be covered is to buy malpractice insurance when you first open your practice, and renew it every year that your practice remains open.

As long as you do this, your coverage will be retroactive to the inception date of your first policy, i.e., you’ll get another year of Prior Acts coverage with each renewal. Then, if you’re sued for work that you did on or after the inception date of your first policy and before the inception date of your current policy, your Prior Acts coverage will obligate your insurer to protect you (subject to the policy’s exclusions, etc.)

Conversely, if you don’t renew your policy one year, then you’ll lose all of your Prior Acts coverage; the next policy that you buy will provide coverage for any errors or omissions that you commit only on or after the inception date and on or before the expiration date.

In this case, the work was done in 2000 and 2001, and the suit was filed in 2007, so the firm would’ve been covered only if it had coverage in effect on both dates, and had re-newed it every year in between.

*Make sure your policy limits are adequate. Even small firms in practice areas that generate high-value malpractice claims, i.e., Patent/IP, Securities, and Plaintiff’s Med. Mal., need policies with multi-million dollar limits. This is partly because the malpractice policies available to them have “eroding limits”, whereby the insurer deducts legal fees and costs from the policy’s per claim limit as it pays them, which reduces the amount available to pay any settlement or judgment. If the per claim limit is used up before the claim is resolved, then the firm must pay all additional defense costs and any judgment or settlement out-of-pocket.

Of the damages awarded in this case, the $6.7M in compensatory damages and $1M+ in pre-judgment interest would generally be covered by malpractice insurance, if the policy limit was sufficient, and for that to be the case, the limit would had to have been $7.7M plus legal fees, which were likely over $1M, given that the litigation lasted for seven years and the case was tried to a verdict.

In other words, the firm would have needed a policy with a per claim limit of at least $9M, and more likely $10M to be fully covered for this claim. That’s a high limit for what appears to be a small firm, and would carry a high premium, but the alternative is to fund a multi-million dollar judgment out-of-pocket.

Legal Malpractice: Get Rich or Sue Your Lawyer: 50 Cent Seeks 75M From Law Firm

Legal Malpractice

The Connecticut Law Tribune reported that Curtis James Jackson III, the Grammy award-winning rap artist whose stage name is 50 Cent, is suing his former law firm for $75 million for malpractice and inadequate representation in business matters.

Jackson, who filed for Chapter 11 bankruptcy last July, filed his malpractice suit against the law firm of Garvey Schubert Barer in U.S. Bankruptcy Court in Connecticut.

Headphones Venture

According to the court filings, Garvey Schubert Barer represented Jackson from 2010 through 2014, including in various matters involving Sleek Audio LLC, which develops audio headphones.

Jackson reached an agreement with Sleek Audio to develop and market a wireless headphone called “Sleek by 50”, in hopes of duplicating the success of Dr. Dre, Jay-Z, and other rap artists who had released their own lines of headphones. He invested a total of $2 million in the company.

However, Jackson alleges that Sleek Audio never marketed or sold the Sleek by 50 headphones, so he created SMS Audio, LLC in 2011 to develop and market headphones under his own brands, “Street by 50” and “Sync by 50.”

Jackson claims that Garvey Schubert Barer and its attorneys told him that his headphones didn’t infringe on Sleek Audio’s intellectual property rights.


Sleek Audio filed an arbitration claim against Jackson for lost profits and revenues, due to the similarities between the “Sleek by 50” headphones and Jackson’s SMS headphones. The arbitrator ruled in favor of Sleek Audio, and ordered Jackson to pay it $18.4 million.

His malpractice suit alleges that “GSB and attorneys Beckner, Moon and Trinchero failed to employ the requisite knowledge and skill necessary to confront the circumstances of the case.” Further, “among GSB’s numerous failures was its inexplicable decision not to call technical and damages experts to rebut expert testimony offered by Sleek — failures relied upon by the arbitrator in crediting Sleek’s experts and entering an eight-figure award in Sleek’s favor.”

Law Firm Response
Business Insider reported that the law firm issued this statement in response to Jackson’s lawsuit: “… Mr. Jackson’s complaint against GSB omits a number of relevant facts and misstates a number of others…Our attorneys properly counseled Mr. Jackson and his sophisticated team of financial and operational advisors about the transactions and the arbitrations with Sleek…We look forward to demonstrating that our attorneys handled the Sleek matters appropriately in all aspects.”


Law Practice Risk Management:

The firm’s strategy in defending the arbitration may have been sound, but it could still lose the case if it didn’t fully document it, and communicate it to Jackson, its client.

Legal Malpractice Insurance:

This lawsuit is further proof that business law firms, especially those that handle intellectual property matters, need to have a malpractice insurance policy with high limits.

Put aside Jackson’s $75M demand, which is likely inflated. The $18M arbitration award against him is real – although he may not have paid it, due to his bankruptcy filing – and if he prevails, the law firm could be facing a judgment of that much, plus interest. The total payout may exceed $20M, including defense costs.

Further, even if the law firm prevails, its defense costs will likely be well into six figures; seven figures, if the case is tried, because experts will be needed to testify about the soundness of the firm’s handling of the arbitration, and Sleek Audio’s damages.

Firms that skimp on their malpractice insurance policy limits in order to save on their premium, regret their decision after being served with a “high-dollar” lawsuit, because if their policy limit is exhausted by payment of legal fees and costs before the case is resolved, then they’ll have to fund future costs + any judgment or indemnity payment out-of-pocket.

A complicating factor is that the Garvey firm has about 100 lawyers, and firms that size generally have a Self-Insured Retention (SIR) of $100,000 or greater per claim on their malpractice policy, which means that their insurer won’t make any payments until the SIR has been exhausted.

The higher the SIR, the lower the premium, but if a firm chooses a high SIR, i.e., $1M or greater, in order to save money on its malpractice premium, and it gets sued in a high-dollar matter, those premium savings will be more than offset by its payment of its SIR.

Firms need to do a thorough analysis of their malpractice claims history and their current practice before choosing an SIR.



Garvey Schubert petitioned the Connecticut bankruptcy court to transfer the case to New York, where the work was done.


“50 Cent is closer to emerging from bankruptcy after a judge approved a plan this week for the rapper to pay up to $23.4 million in future earnings to his creditors.

The Grammy Award-winning artist, whose real name is Curtis James Jackson III, filed for chapter 11 bankruptcy last summer after losing a $7 million defamation lawsuit brought by a woman after he released a sex tape of her.

He also owes $18.1 million to Sunburst Bank and Sleek Audio LLC over a failed headphones venture; $4 million to mortgage lender SunTrust Banks Inc. STI, +0.60%  ; and $1.2 million to ASCAP for advance payments on song royalties. All told, his debts total $32.6 million.

Under the plan approved Wednesday by a judge in Hartford, Connecticut, 50 Cent will repay between 74% and 92% of his debts over the next five years. The filing listed 50 Cent’s assets, including a 21-bedroom Connecticut mansion once owned by boxer Mike Tyson, valued at $8.25 million, which will be sold; about $10.6 million in cash and securities; and a Bentley valued at $167,000. He also included 70% of whatever he wins from a pending malpractice lawsuit.” (Emphasis added)



Family Law: Malpractice Risks and Remedies (Part II of II)

bridge_the_gap_1332691857Part I examined the types of legal malpractice claims commonly filed against Family Law attorneys. The risk management measures discussed here will help them avoid such claims.

I. Screen Potential Clients Carefully – Turn Away Potential Problems

Problem clients are not only more likely to sue you, they can disrupt your practice even if they don’t sue you. According to legal malpractice insurer LAWPRO, these are warning signs of a problem Family Law client (bottom of page):

Has changed lawyers two or more times;

  • Owes money to  the previous lawyers;
  • Criticizes the previous lawyers;
  • Has unreasonable/unrealistic expectations about the case;
  • Places unreasonable demands on you and your staff, i.e., insists that immediate attention be given to every aspect of his case;
  • Either cannot or will not provide proper financial disclosure;
  • Instructs you to take positions that you believe lack merit.

If you detect two or more of these warning signs when interviewing a potential new client, don’t hesitate to decline the case. Confirm your declination via a non-engagement letter.

II. Use Engagement Letters

  • Use an engagement letter on every case that you accept. Specify who you’re representing and the services you’ll perform, and your retainer, billing rate, and billing procedures.
  • Answer any questions the client has about the letter clearly and completely: that’s the time to prevent misunderstandings.
  • Don’t begin working on a matter until you’ve received a signed copy of the engagement letter from the client, and the retainer check has cleared.

III. Develop Strong Client Relationships

  • Build a strong relationship with each client by being an active listener. This will help you understand a client’s needs, and identify the issues and      outcomes that are most important to him/her.
  • Manage the client’s expectations about the cost, timeframe, and outcome of the  matter. Explain early on how the law applies to the client’s case, and the range of possible outcomes that may occur. Offer your best estimate of costs and timeframe, but explain that there are factors beyond your control that may cause the case to cost more and take longer to resolve than you expect.
  • Work with each client to develop a strategy for their case, counseling them when their positions are improper or unrealistic. A client’s feelings and needs, and thus their goals may change as the matter progresses, so check with  them periodically, and get them to refocus if their emotions lead them to suggest actions that are irrational or damaging. Never let a  client’s ”anger, greed, and grief… impede a successful legal resolution”.
  • Keep your clients updated about their case, and ensure that they understand what’s  happening.
  • Obtain clients’ input about the terms of any settlement negotiations, and keep them involved throughout the process.
  • Fully explain the settlement terms of a divorce, separation agreement, etc., to a client before he/she signs it.

IV. Document Your Files

According to attorneys Simpson, Borja, and Ashmore of Wiley Rein “The strong emotional component associated with (family law) matters makes it…critical to document thoroughly all key communications and decisions”.

  • Document your file after every interaction with a client. Include the information your client gave you, your advice to the client, the client’s instructions to you, and your response to those instructions. For important matters,      supplement your notes with a letter or email to the client confirming the discussion and any action that you’re going to take.
  • Document your file in detail: “Telephone conference with client regarding…”, not “telephone conference with client.” Create a “paper trail” showing the work that you did, and that the client was well-informed and      participated actively in the decision-making.
  • If a client’s emotional state leads him/her to be uncooperative or make irrational decisions about the matter, document that.

V. Implement Sound Billing Practices

  • Provide a new budget to the client if your fees and costs will far exceed your estimate.
  • Consider using “evergreen retainers”, whereby clients pay a fixed amount whenever their initial retainer declines by a certain percentage, i.e., 50%.
  • Bill frequently, i.e., every 30 days, rather than infrequently, i.e., every 90 days: your bills will be smaller, and thus more likely to be paid. You’ll also be able to identify “non-payers” earlier.
  • Describe your services in detail: a client who can understand the work you did is likely to …pay promptly.
  • Don’t bill for red-flag” items like intra-office conferences and file review unless the client approved it beforehand.
  • If a client is in arrears beyond an amount and time period that you deem reasonable, and payment isn’t imminent, consider withdrawing from the case (but do so in accordance with the Rules of Professional Conduct).
  • Don’t sue for fees without first considering the amount you’re owed versus the time and cost of prosecuting the suit (the ratio should be at least 2:1), the probability that your client will file a counter-claim for malpractice, and  your chances of collecting on the judgment if you prevail.

VI. Embrace Technology

Many attorneys use calendaring and conflicts-checking software, but few take full advantage of technology to reduce their malpractice risk.

According to the Massachusetts LOMAP “one essential technology to incorporate into your practice”, which will reduce your malpractice risk and increase your productivity, is “a law practice management program”, which will help you:

  • Manage clients and matters;
  • Conduct IOLTA accounting;
  • Keep track of deadlines and tasks;
  • Track time and create invoices;
  • Check for conflicts;
  • Manage documents

Some programs even enable your clients to access their case details and status, which can be an enormous time-saver for you and your staff.

Law practice management programs are available via a CD/DVD or download that you buy and install on your computer, or online via a monthly subscription; online programs allow you and your staff to access your case files “24/7” from any location that has Internet access.

These programs will reduce your risk of incurring a malpractice claim due to a conflict, calendaring error, lost file, etc., and will enable you to work more efficiently, which will give you more time for substantive matters like researching and applying the law. This in turn will reduce your risk of incurring the second most common type of malpractice claim filed against Family Law attorneys: failure to know or properly apply the law.

VII. Know Your Limitations

Seek expert advice where appropriate:

  • For complex tax law or estate planning issues, a lawyer who specializes in that area;
  • For business valuations, a forensic accountant;
  • For jewelry, antiques, fine art, etc., an appraiser.

VIII. Use Checklists

IX. Keep Learning

Given the complexity of family law, and the fact that legislation and case law frequently change, practitioners should actively take CLE courses.


The demands of your busy practice may prevent you from implementing risk management measures, but not implementing them makes you more susceptible to a legal malpractice claim and the resulting costs: lost billable time defending the claim, expenditure of your malpractice insurance deductible and a higher premium when you renew, damage to your reputation, stress, etc.

Further, remember that good risk management is good practice management, and good practice management will make you successful and presumably happy.

So in conclusion, good risk management will make you happy!

About the author:
Curtis Cooper is principal of Lawyers Insurance GroupLegal Malpractice Insurance Brokers, which procures comprehensive legal malpractice insurance at the lowest possible cost.

Connect with me:

View Curtis Cooper's profile on LinkedIn


Family Law: Legal Malpractice Risk and Remedies (Part I of II)

Gap-In-MountainFamily Law attorneys are sued for malpractice more often than attorneys in every other practice area except Real Estate and Plaintiffs’ Personal Injury, according to the American Bar Association’s most recent Profile of Legal Malpractice Claims.

The profile doesn’t specify the types of malpractice claims that are filed against Family Law attorneys, but an analysis of such claims by legal malpractice insurer Lawyers Professional Indemnity Co., supplemented by further research, reveals that they generally fall into one of these categories:

I. Poor Communication

  • Failure to inform client, i.e., that even though he transferred the marital home as part of his divorce settlement, he’ll still be liable for the mortgage if his name is on it and his ex-wife doesn’t make the payments. More gen- erally, failing to manage client expectations, i.e., regarding the likelihood of achieving the desired outcome, such that the client is angry or disappointed when those expectations aren’t met.
  • Miscommunication with client, i.e., explaining the terms of a divorce settlement, vis-itation agreement, etc., incorrectly or unclearly, thus causing the client to make a decision that he/she otherwise wouldn’t have made. More generally, failing to clarify the client’s responsibilities vs. the attorney’s responsibilities, resulting in an error or omission that damage’s the client’s case.
  • Failure to obtain client’s consent, i.e., to enter into negotiations for or to include cer-tain terms in a divorce settlement, visitation agreement, etc. (May be due to mis-communication.)
  • Failure to follow client’s instructions, either intentionally, i.e., the attorney disagreed with them, and didn’t communicate that to the client, or unintentionally, i.e., the attorney either forgot or misunderstood them.

II. Failure to know or properly apply the law:

  • Improperly determining a) whether a client is entitled to receive or obligated to pay spousal or child support, or b) the amount and/or duration of such support.
  • Failure to properly transfer assets from the other spouse’s retirement plan, resulting in an unanticipated tax liability for the client spouse; negotiating a settlement agreement that stipulates that the spouses will divide the assets in the other spouse’s retirement plan, but that plan isn’t divisible; etc.

III. Inadequate discovery of facts or inadequate investigation

  • Inaccurately assessing the value of marital assets.
  • Failure to retain an expert to examine hard-to-value assets like a business, antique  collection, etc.
  • Failure to uncover hidden assets that would have been subject to equitable dis-tribution.
  • Failure to identify all issues that need to be addressed in a settlement agreement, litigation, etc.

IV. Failure to Properly Draft Legal Documents

  • Administrative failure: a drafting error or omission in a contract or agreement.
  • Substantive failure: drafting an agreement that includes terms that the client opposes (may be due to miscommunication).

V. Conflict of Interest

  • Representing a spouse in a divorce after initially consulting with the other spouse.
  • Being a family’s “family lawyer”, and then representing one of the spouses in a divorce.
  • Drafting a will for a couple, and then representing one of the parties in a divorce.

VI. Fee Disputes  

  • Charging fees that are excessive or unreasonable relative to the assets at stake and/or the result obtained.
  • Charging fees far greater than the initial estimate.

 VII. Other 

  • Failure to act in a timely manner, i.e., not filing a motion or request for pendente lite relief on time, thus pressuring a cash-strapped client to accept a reduced settlement.
  • Failure to identify and choose the most favorable jurisdiction for a client’s matter when more than one jurisdiction is available.

Part II of this article will discuss risk management measures that Family Law attorneys can take to avoid these and other types of malpractice claims.

About the author:
Curtis Cooper is principal of Lawyers Insurance GroupLegal Malpractice Insurance Brokers, which procures comprehensive legal malpractice insurance at the lowest possible cost.

Connect with me:

View Curtis Cooper's profile on LinkedIn


More Lawsuits Spur Attorney Hiring, Which Spurs More Lawsuits Against Attorneys


lawsuit-bits 231% of lawyers with hiring authority said that their firm plans to add new positions in the second half of 2013, and 50% said their firm is seeking to fill vacancies, according to a survey by staffing firm Robert Half Legal.

55% of the respondents expect increased litigation work to drive their firm’s hiring, the most of any practice area.

Law firms should seize this opportunity to grow revenues in an otherwise stagnant market, but also be mindful of the high incidence of malpractice lawsuits in this area of practice.

CNA, a leading legal malpractice insurer, was so concerned about the frequency and severity of litigation-related malpractice claims filed against its law firm insureds, that it conducted a claims analysis.

Twelve categories of claims were identified, including:

Failure to understand the law or prepare, which was the most common category (18% of claims). 12 separate allegations comprised these claims, from the subjective: inadequate preparation for trial, lack of investigation, etc., to the objective/substantive: failure to know or react to a statute of limitation or other deadline, naming an improper party/failing to name a proper party, etc.

Subjective allegations frustrate attorneys, because their decision-making and expertise is being second-guessed, i.e., how much investigation or trial prep is “adequate”? Ac-cording to CNA, these allegations may be “simply based upon a bad result…(or) can be related to a client that, for cost reasons, limited the amount of work performed by the law firm”. 

The best way to negate these claims is “continuous and effective communication with the client and documentation. Any strategic decisions, such as how much investigation to conduct, must be discussed with the client and the agreed upon plan must be documented.” 

To avoid “objective” claims, i.e., missed deadlines, “law firms should exercise robust supervision over associates and paralegals that may not be as experienced. Careful calendaring and reacting to the calendar and deadlines are also important”.   

7% of the claims arose out of allegations of a conflict of interest, which CNA states “have always been a common claim in legal malpractice claims”. However, given the large number of law firm mergers and acquisitions in recent years, “it has become more difficult for law firms to avoid all potential conflicts of interest.”

Further, while attorneys recognize the difference between potential conflicts and actual conflicts, and that not all actual conflicts are equally damaging, “jurors often see conflict situations as much more black and white, and often serious in all instances.”

As a risk management measure, CNA recommends that law firms “either designate an individual in the firm to conduct conflict analyses, hire conflicts counsel or work with outside counsel.” They should also send “‘closure letters’ to clients as soon as the work on the file is completed. The conflict analysis for a former client is often less strict than that for a current client.”

5% of the claims arose out of an alleged failure to communicate properly with a client regarding, i.e., settlement, expert retention, and a newer area, e-Discovery; CNA believes e-Discovery claims are “likely related to the failure of the attorney to effectively communicate litigation holds to their clients.” The clear risk-management solution is better client communication, which is also the foundation of good client service. The fact that “failure to communicate with the client is typically the number one ethical grievance against attorneys in most jurisdictions” should provide further incentive for attorneys to agree on a strategy with the client at the outset of a case, keep the client informed as it pro-gresses, and document their client communications. An attorney who doesn’t have time to draft a letter should send an e-mail.

Finally, the claims analyzed by CNA were distributed among 22 areas of practice: commercial litigation – defense (15%) and plaintiff (9%), civil litigation – defense (9%) and plaintiff (9%), and employment law (8%) generated the most claims.

The stress, cost, and lost productivity associated with legal malpractice claims are so onerous, that attorneys will benefit greatly by implementing the risk management measures recommended by CNA to reduce their exposure.


Informed Consent is Key to Client Care
Strategies for Avoiding Communication-based Malpractice Claims
Calendar and Docket Control: Choosing and Using the Best System
10 Calendar and Docket Control Training Topics for Your Staff
Best Practices for Avoiding Client Conflicts of Interest 
Conflicts of Interest Risk Management and Self-Audit

For hundreds more links on these and other topics, visit Firm Risk Management Linkbrary