Andrew Rubin, Esq.

Case highlights importance of navigating procedural barriers to legal malpractice litigation

Legal malpractice litigation can be an important avenue for holding a negligent attorney accountable for damages caused by poor representation. It is important, though, to work with experienced legal counsel to build a case that has legal merit and isn’t impeded by any procedural technicalities.

A good example of such a case is that of a broker-dealer for the financial services firm Investacorp Inc. When a client filed a claim against the firm with the agency that would become the Financial Industry Regulatory Authority (FINRA), the firm hired legal counsel to defend the company and the broker in arbitration proceedings. The broker later hired his own attorney when the firm decided to settle the case, though both ended up settling the claim. After settlement, the broker was fired and the firm filed regulatory forms reporting his contribution to the settlement with the client. 

The broker later filed an employment arbitration claim with FINRA alleging lost business as a result of his being named on the regulatory form, and he was successful in having his named removed from the forms after a FINRA hearing. Unfortunately for him, he received only a small portion of the damages he sought for lost business. Later, taking another crack at those losses, he filed a legal malpractice lawsuit against the law firm his former employer hired in the initial FINRA claim, arguing that the law firm had a conflict of interest in representing both him and his former employer, that the firm failed to adequately represent his interests with respect to the proceeding, and that the firm gave his former employer advice that led to his loss of business.

Ultimately, the case was resolved on appeal in favor of the law firm on the grounds the legal malpractice case was the broker’s attempt to hold the law firm accountable for the loss of business damages he was largely unable to obtain from his employer in previous arbitration proceedings. The court based its decision on the doctrine of collateral estoppel, which prevents the religitation of an issue that a plaintiff has already tried or had the opportunity to try. The doctrine may apply to arbitration as well as litigation.

Building a successful legal malpractice claim is not necessarily easy, and there is a lot of legwork that needs to be done. Working with an experienced legal malpractice attorney helps ensure one has the best chance at effectively navigating the substantive and procedural requirements associated with these claims. 

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