Professional Liability

A former client filed a lawsuit against Bilzin Sumberg, asserting causes of action for malpractice and breach of fiduciary duty. The claims were dismissed as the trial court determined the two-year statute of limitations for malpractice claims runs when the client initially suffers concrete loss as a proximate cause of the alleged malpractice. The client appealed.

Specifically, the plaintiff was involved in a real estate development project with another individual. He retained Bilzin Sumberg to provide legal guidance. The business relationship eventually went south, and the plaintiff alleged that the other individual was aided by Bilzin Sumberg in manipulating him to sign documents and remove him from the partnership and trust between 2015 and 2017. This lawsuit was initiated in February 2020 and argued that Bilzin Sumberg, as the plaintiff’s counsel did not protect his interests. Bilzin Sumberg filed a motion to dismiss, alleging the statute of limitations had expired. The motion to dismiss was granted.

On appeal, the Third District Court of Appeal reviewed whether the plaintiff was correct in that the trial court erred in applying the first-injury rule to this transactional legal malpractice case and should, instead, apply the finality accrual rule. The district court agreed with the trial court’s application of the first-injury rule because the related bankruptcy case in this matter would not determine whether Bilzin Sumberg committed malpractice. Rather, it would only have the effect of potentially reducing the damages alleged by the plaintiff. The plaintiff had alleged suffering economic loss more than two years prior to the filing of this February 2020 case. Accordingly, the fact that the bankruptcy case may recover some, or all, of those losses was irrelevant. Thus, the trial court’s order on the motion to dismiss was affirmed.

 

_{Legal Update for Lawyers’ Professional Liability – January 2023 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2023 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}