Defense Digest

New Jersey Requires a Joinder of Legal Malpractice Counterclaims in Fee Suits

On February 2, 2004, New Jersey's Appellate Division held that in fee-collection cases by attorneys, a client's counterclaim for legal malpractice is mandatory.   In Vogt v. Toll, A-2192-02T5 (February 2, 2004), the attorney, Ms. Toll, represented her client in a divorce action.  The case was tried to a verdict.  Following the verdict, the attorney sued for her fee.  The client failed a timely answer and was defaulted.  Later, the client moved to vacate the default based on the representation that she had not been properly served.  The court granted the motion and permitted the client to file an answer and counterclaim for legal malpractice.  However, in discovery it was shown that the client was, indeed, served with process in the fee case.  Therefore, the answer was stricken because it was filed out of time.  The attorney then obtained a default judgment for her fees.  Subsequently, the client filed a separate action against the attorney for legal malpractice since she was barred from doing so the first time around. 

In that case, John Slimm, of our firm's Cherry Hill, New Jersey office, moved for summary judgment arguing that the counterclaim for legal malpractice was mandatory and should have been joined in the initial fee claim.   The court agreed and dismissed the action.  On appeal, New Jersey's Appellate Division issued an opinion holding, for the first time, that counterclaims for legal malpractice are mandatory in fee disputes.  Therefore, the Appellate Division affirmed Judge Sweeney's trial ruling dismissing the legal malpractice action with prejudice since it was barred by New Jersey's Entire Controversy Doctrine. 

The case is significant because many attorneys (and judges) thought that after the court's decision in Olds v. Donnelly, 150 N.J. 424 (1987), the Entire Controversy Doctrine was abolished in connection with legal malpractice actions.  However, as pointed out by the Appellate Division in Vogt v. Toll, the Doctrine is still alive and well in certain circumstances.  Attorneys and judges have been reading too much into Olds v. Donnelly and have been under the misimpression that the Doctrine did not apply at all in legal malpractice cases.  Now, with the Appellate Division's decision in Vogt v. Toll, attorneys can properly argue that the Doctrine does apply to fee cases.  It now requires the client to bring an action for legal malpractice in the fee case, otherwise, it will be barred.

For further information on this case, which was handled by Jack Slimm of our Cherry Hill, New Jersey office, you may contact Jack at (856) 414-6021 or jslimm@mdwcg.com. 

*  Jack, a shareholder in our Cherry Hill, NJ office, can be reached at (856) 414-6021 or jslimm@mdwcg.com.