Here in New Jersey, when a lawyer fails to act with competence or neglects to uphold the standards of his or her profession, clients can sue him or her for legal malpractice. This might be the case when an attorney acts fraudulently, fails to follow the client's instructions or misses a vital deadline, for example. In these cases, clients can often recover financial damages.
However, these cases are not always as clear-cut as they may seem. Just last week, a New York state appeals court ruled that a real estate attorney cannot be sued for legal malpractice, even though he acted with negligence. This is because in that case, his former client failed to prove that the lawyer's negligence caused damages.
The lawyer in this case had been hired by a realty company to sell a building in an arrangement that would defer capital gains taxes. Interestingly, the lawyer had no experience with these transactions, but he took the job anyway.
The owners of the realty company claimed the lawyer told them he knew how to perform this type of transaction; but the lawyer told the court he told the owners he was not familiar with this type of work and that the owners said they would take care of the details.
Nonetheless, the court said that the lawyer was negligent either way because he took on a sales contract that he was not qualified to handle. The lawyer did handle the contract improperly and the realty company owners were then not able to accomplish what they had hoped--to defer capital gains taxes.
However, the court ruled that the lawyer cannot be sued for legal malpractice because the realty company did not prove that it would have been able to complete its part of the exchange had the lawyer done his job properly. In other words, although it was proven that the lawyer was negligent, it was not proven that this negligence in itself caused the harm.
The realty company has not yet decided whether it will appeal.
Legal malpractice cases are quite complicated and those who think that their lawyers were negligent are wise to talk to an experienced legal malpractice attorney about whether it would be a good idea to file a claim.
Source: Reuters, "Lawyer may have been negligent, but no malpractice: appeals court," July 31, 2012
- Our firm handles similar situations to the one discussed in this post. If you would like to learn more about our practice, please visit our New Jersey Legal Malpractice page.