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Legal Updates for Lawyers' Professional Liability

Legal Updates for Lawyers’ Professional Liability – RESULTS

Legal Updates for Lawyers’ Professional Liability – January 2026

January 1, 2026

Carol VanderWoude (Philadelphia, PA) and Aaron Moore (Wilmington, DE) secured a Delaware Supreme Court affirmance of the dismissal of a complex legal malpractice claim. The plaintiffs—seven affiliated property development companies and their owners—had been sued by their bank for defaulting on multiple credit lines totaling about $7 million plus attorneys’ fees. Our client defended those suits, which ultimately settled for the full amount owed, plus interest and fees. The plaintiffs later alleged malpractice, claiming our client should have advised an earlier settlement to avoid legal fees, expert costs, additional interest, and lost business opportunities. The trial court dismissed the claims because the plaintiffs’ expert lacked relevant experience and their damages were speculative, and the Supreme Court affirmed.

Aaron Moore (Wilmington, DE) obtained dismissal of an unjust enrichment claim brought by a condominium unit owner against the attorneys who represented her condominium association. The unit owner claimed that the law firm was liable to her for unjust enrichment in connection with legal fees it received from the association for legal services provided in their efforts to collect on past due assessments owed by the unit owner. Pursuant to the association’s governing documents, the charges were passed on to the unit owner. The court agreed that the fees paid to our client by the condominium association were properly earned.

Michael Jacobson (New York, NY) obtained dismissal of a legal malpractice suit that also alleged breach of fiduciary duty, fraudulent misrepresentation, and a Judiciary Law § 487 violation. The plaintiff had retained our clients to pursue an employment discrimination claim, which was compelled to arbitration and ultimately rejected after a four-day hearing. We argued the malpractice complaint lacked allegations of negligence and causation, the additional claims were duplicative, and § 487 does not apply to arbitration. The court agreed and dismissed all claims.

Maria Nudelman and Michael Jacobson (both of New York, NY) were successful in having their motion to dismiss granted in a legal malpractice and breach of fiduciary duty case. Our client represented the plaintiffs in an underlying landlord-tenant proceeding commenced against them by the Department of Housing Preservation and Development of the City of New York (HPD). The plaintiffs allegedly failed to correct over 20 Building Code violations. Our client was retained by the managing agent of the buildings and appeared as counsel and executed a Consent Order on behalf of all the respondents proceeding, including the plaintiffs. The Consent Order gave the plaintiffs and the other respondents until June 30, 2021, to pay $37,500 to HPD, and if they failed to make the payment, a judgment for that amount could be entered against them. The plaintiffs claimed that they never knew about the Consent Order and as a result, a $375,000 judgment was entered against them. We moved to dismiss, arguing that the claim was barred by the statute of limitations and that the breach of fiduciary duty claim was simply duplicative of the malpractice claim and should also be dismissed. The court agreed and dismissed both counts.

Diane Toner and Matthew Flanagan (both of New York, NY) were successful in defending an appeal from the denial of the plaintiff’s motion to set aside the verdict following unanimous jury verdict in favor of our clients. The plaintiff, Hyon S. Yi, as administrator of the Estate of Chin W. Yi, commenced this action against our clients alleging causes of action for legal malpractice, breach of contract, breach of fiduciary duty, and a violation of Judiciary Law § 487. The plaintiff alleged that our clients committed legal malpractice by: (1) failing to assert claims in the underlying action; (2) changing the terms of the retainer agreement to a contingency agreement after discovering that settlement of the underlying action was imminent; (3) failing to assert direct shareholder claims against the corporate defendant in the underlying action; (4) failing to assert fiduciary duty claims against the majority shareholders of the corporate defendant; (5) failing to seek a receivership or attach the assets of Eastern Farms; (6) and failing to demand prejudgment interest in the second underlying action brought in 2015. The jury found in favor of our clients on all counts. Diane Toner was able to secure dismissal of the plaintiff’s appeal by arguing that the order denying the plaintiff’s motion to set aside the jury verdict was an intermediate order from which there was no right of direct appeal once the final judgment was entered, and that plaintiff did not appeal from the final judgment. The Appellate Division agreed and dismissed the appeal.

Jack Slimm (Mount Laurel, NJ) successfully defended an attorney who specializes in the representation of school boards in a grievance before the New Jersey Office of Attorney Ethics (OAE). The grievance was filed by a plaintiff’s attorney, who argued that our client violated the rules of professional conduct in connection with his arguments to the court at the trial level and on appeal. The OAE rejected the grievance, finding that the allegations of racist and misogynistic behavior by defense counsel were unfounded, that the attorney did not disrespect the court either at trial or on appeal, that the attorney did not lie about the defendant’s defenses, and did not make any false statements of fact in response to the plaintiff’s grievance. 

Josh J.T. Byrne (Philadelphia, PA) won a motion to dismiss a complaint with prejudice in the Eastern District of Pennsylvania in a legal malpractice action stemming out of the criminal investigation into Nicole Daedone and her “orgasmic meditation” company OneTaste.

Scott Eberle (Pittsburgh, PA) achieved a dismissal of a complaint alleging abuse of process on preliminary objections in the Court of Common Pleas of Allegheny County. The complaint alleged the defendant attorney abused process by filing a meritless complaint that contained false allegations for the purpose of “extorting” the insurance company and earning a fee. The trial court found that the plaintiff’s claim failed to state a claim upon which relief can be granted, stating that the primary focus of the plaintiff’s averments were not on alleged abuse of process after it was initiated, but on the alleged ill intentions in initiating the process in the first place. The court noted that the plaintiff had not and could not state a claim for wrongful use of civil proceedings because the plaintiff settled the underlying action and, therefore, could not allege a favorable termination. 

Scott Eberle and Gregory Graham (both of Pittsburgh, PA) obtained a damage-limiting ruling on a motion to dismiss in the District Court for the Western District of Pennsylvania. The case involved defamation per se allegations against our client, a local public broadcasting organization, that were claimed to have resulted in over $30 million in business losses. Via motion to dismiss, Scott and Greg were able to successfully argue that the claim had to be limited in time to a narrow window, thus limiting the plaintiffs’ ability to recover the extensive damages they sought.

Gregory Graham (Pittsburgh, PA) achieved a summary judgment dismissal in the Court of Common Pleas of Allegheny County. The case involved claims of legal malpractice arising from divorce proceedings. 

Nicholas Chrysanthem (New York, NY) obtained summary judgment in a legal malpractice case that arose from an underlying real estate deal that fell apart. The plaintiff claimed that our client failed to properly cancel a real estate contract and alleged the loss of a $175,000 security deposit and unspecified loss of opportunity income. The court initially dismissed the duplicative breach of fiduciary cause of action and the negligent infliction of emotional distress cause of action on our pre-answer motion to dismiss. After the conclusion of discovery on the malpractice cause of action, the court granted summary judgment to our client. 

Nick also obtained pre-answer dismissal of a legal malpractice case against our client who was sued for legal malpractice because his associate neglected to oppose a threshold motion in the underlying auto case. The underlying court granted that threshold motion, in part, and denied it, in part. The plaintiff retained a new attorney without firing our client. The new attorney commenced a malpractice action against our client and refused to substitute as attorney of record in the underlying action. We moved to dismiss the case on a number of issues pre-answer, but primarily because the legal malpractice action was premature and the plaintiff could not prove that “but for” the failure to oppose the underlying threshold motion he would have been able to prove that he had a “serious injury” or actual damages. The court granted our motion to dismiss the legal malpractice complaint. 

Dante Rohr (Orlando, FL) recently secured dismissal of the latest in a series of filings brought by a former client against his attorneys alleging malpractice in the handling of his workers’ compensation and potential American with Disabilities Act claims. The first complaint, filed in state court, was stayed pending final disposition of the plaintiff’s claims in arbitration pursuant to the arbitration provision in the parties’ Retainer Agreement. However, rather than bringing the action in arbitration as directed, the plaintiff refiled his complaint in federal court, adding a plethora of federal causes of action. We argued that none of the pled federal causes of action stated a cause of action under Rule 12(b)(6). The court agreed, dismissing all federal causes of action with prejudice. Because the remaining claims arose solely from state law, the court declined to exercise its subject matter jurisdiction over those claims. Back in state court, more than two years had passed since the entry of the order compelling the plaintiff to bring his claims in arbitration. Because the plaintiff failed to do so, the court dismissed the previously stayed action with prejudice.

*Prior Results Do Not Guarantee a Similar Outcome

Legal Updates for Lawyers’ Professional Liability – January 2026 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 © 2026 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 MEDeSatnick@mdwcg.com.
 

Firm Highlights

Thought Leadership

SIU Gets a Boost: NJ Supreme Court Affirms Insurers' Right to Litigate, Not Arbitrate, Fraud Claims

In a significant win for insurers' Special Investigation Units, the New Jersey Supreme Court clarified that statutory insurance fraud and racketeering claims may proceed in court rather than through PIP arbitration. At issue was whether insurance fraud claims brought under New Jersey's Insurance Fraud Prevention Act (IFPA) and the state's Anti-Racketeering Act (NJ RICO) are subject to mandatory arbitration under the Automobile Insurance Cost Reduction Act’s (AICRA) PIP dispute-resolution framework. Allstate had sued a network of medical practices, physicians, and related corporate entities, alleging a scheme to extract more than $1.7 million in PIP benefits through fraudulent and misleading billing. The trial court dismissed Allstate's complaint and compelled arbitration, reading AICRA's arbitration clause — which covers "any dispute regarding the recovery of... benefits" under PIP coverage, N.J.S.A. 39:6A-5.1(a) — as sweeping in fraud and racketeering claims along with routine benefit disputes. The Supreme Court affirmed the Appellate Division's reversal, adopting Judge Gilson's opinion below (480 N.J. Super. 566 (App. Div. 2025)) as its own reasoning. The Court held that IFPA and RICO claims fall outside the scope of AICRA's PIP arbitration mechanism because that "streamlined and specialized" process cannot grant the relief those statutes contemplate — treble damages, injunctive relief, broad discovery, and joinder of third parties — and because arbitrators lack authority to award compensatory or treble damages to an insurer. The Court also rejected the argument that Allstate's own Decision Point Review Plans independently compel arbitration, finding those plan provisions no broader than AICRA's own arbitration clause. Notably, the Court expressly disagreed with the Third Circuit's contrary holding in GEICO v. Mt. Prospect Chiropractic Center, 98 F.4th 463 (3d Cir. 2024), concluding it is not bound by that federal interpretation of New Jersey law. Insurers retain the right to pursue IFPA and RICO claims in the Law Division, with a jury trial. For SIU units and NJ insurance carriers, this decision is a significant win: it forecloses defense clinics' primary procedural tool for shunting fraud investigations into limited-scope PIP arbitration, where treble damages, RICO relief, and meaningful discovery were never realistically available. Carriers building cases against fraudulently structured clinics, straw-owned practices, or coordinated billing networks can now proceed with confidence that a well-pleaded IFPA/RICO complaint stays in the Law Division rather than being diverted to arbitration on a motion to compel. Practically, this strengthens SIU's leverage in settlement negotiations, preserves civil discovery tools (subpoenas, depositions, joinder of related corporate entities) critical to unwinding complex ownership and referral schemes, and resolves the split with the Third Circuit in favor of NJ insurers — at least as a matter of state law. Expect increased reliance on IFPA civil actions, rather than PIP arbitration demands, as SIU's primary enforcement vehicle going forward.

blue facade of a hospital sign against blue sky

Result

Defense Verdict in Complex Medical Malpractice Trial

Casey Alan Coyle Joins Marshall Dennehey's PA Appellate Practice as a Shareholder in Harrisburg and Philadelphia

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Marshall Dennehey Expands Leading Pennsylvania Appellate Practice With Addition of Shareholder Casey Coyle

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Result

Summary Judgment Secured for Life Insurance Agent

Thought Leadership

Congress Passes Financial Exploitation Prevention Act

On June 25, 2026, the House passed the Financial Exploitation Prevention Act of 2025 (“the Act”) by a vote of 414 to 2. The Act allows financial advisors and firms to delay suspicious transactions regarding the accounts of clients who are 65 or older, if they believe financial exploitation has occurred or is about to take place. With the advancement of technology and AI, the House’s overwhelming bipartisan passage of the Financial Exploitation Prevention Act represents an important step in strengthening the financial industry’s ability to combat the growing threat of elder financial exploitation. The Act recognizes what advisors have long known that financial professionals are often the first to detect suspicious behavior but have historically lacked clear legal authority to intervene before irreversible financial harm occurs. From the industry’s perspective, the bill accomplishes several important objectives, including the following: (1) Provides a practical “pause button” by allowing financial professionals to temporarily delay certain transaction requests when there is a reasonable belief that a senior or vulnerable adult is being financially exploited; (2) Empowers financial professionals to act by providing greater certainty that firms can act in good faith to protect clients without unnecessary legal risk; and (3) Strengthens investor protection without sacrificing client rights by allowing temporary delays based on a reasonable suspicion of exploitation, which is intended only to allow additional review and not to deny clients access to their money indefinitely. In sum, the Financial Exploitation Prevention Act will equip financial professionals with practical, carefully tailored tools to stop suspected financial exploitation before client assets are lost. By allowing firms to temporarily delay suspicious transactions under defined circumstances, Congress is recognizing the critical role advisors play as the first line of defense against increasingly sophisticated fraud schemes. The Act strikes an appropriate balance between protecting vulnerable investors and preserving individual financial autonomy, while reinforcing collaboration among advisors, families, and law enforcement to combat financial exploitation. The bill now awaits Senate action.

Marshall Dennehey Announces 2026 Ohio Super Lawyers and Rising Stars

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Marshall Dennehey Announces 2026 Ohio Super Lawyers and Rising Stars

Result

Summary Judgment Secured, Preserving $750,000 in Coverage for Insured in Major Trucking Liability Dispute

Ray Freudiger and Michael A. Roberts (both of Cincinnati) successfully obtained summary judgment on behalf of their client in a coverage dispute arising from a May 19, 2022, motor vehicle accident. A permissive driver operated a box truck for an interstate trucking company and caused severe injuries to two tort victims. Prior to the accident, the insured had procured a commercial auto policy for the trucking company with stated limits of $1,000,000. Following the accident, the insurer initiated a declaratory judgment action asserting that only reduced bodily injury limits of $25,000/$50,000 applied and later counterclaimed, alleging it would not have insured the driver had he been properly submitted for approval under the policy. After extensive discovery, briefing, and oral argument, the court rejected the insurer’s attempt to shift responsibility for the $750,000 in coverage it was legally required to provide for permissive drivers under Ohio law, granting summary judgment in favor of the insured and preserving $750,000 in liability exposure.

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

We successfully obtained a no-cause jury verdict in a 13-day wrongful death trial. The decedent, a 59-year-old man, was admitted to the emergency room on February 15, 2019, with complaints of abdominal pain, decreased appetite, and constipation, despite the use of laxatives. The patient did not complain of any nausea, vomiting, or diarrhea. He had a significant medical history including diabetes, hypertension, prior coronary artery stenting, morbid obesity (with past gastric bypass surgery), longstanding ventral hernia, and back pain. A CT scan revealed multiple hernias and a potential closed-loop bowel obstruction, leading to a surgery consultation. Our client, an emergency general surgeon, interpreted that the patient did not have a closed loop or any significant obstruction and recommended non-surgical management. The patient was approved to have clear liquids, and had a vomiting incident shortly after, but our client was not notified. The patient was returned to NPO status, and after improving overnight, he was returned to “clears” and additional medical and renal consults were ordered. Our client did not receive any communications from the residents/nurses of any changes in the patient’s condition. On February 18, 2019, two rapid responses were called due to increased heart rate and vomiting. It is believed that the vomiting resulted in aspiration, causing sepsis, ultimately leading to the patient’s death. During the trial, the plaintiff’s sole medical expert highlighted imaging on the wrong hernia, which called into question all of his opinions in the case. We made key objections related to the expert testimony, limiting what the allegations were, and preventing new allegations from being made. After approximately two and a half hours of deliberating, the jury returned a no-cause verdict. 

Thought Leadership

New Jersey Expands Family Leave Protections Effective July 17, 2026

On January 17, 2026, Governor Murphy signed into law legislation expanding the New Jersey Family Leave Act (NJFLA). Beginning July 17, 2026, significant amendments to the NJFLA will expand job-protected family leave to smaller businesses and more employees across the state. The new law broadens coverage by lowering the threshold for private employers from 30 employees to 15 employees, meaning many smaller businesses will now be subject to the NJFLA. Employees of state and local government agencies will continue to be covered regardless of the size of the employer. The amendments also make it easier for employees to qualify for leave. Under the revised law, an employee will be eligible after three months of employment and at least 250 hours worked during the preceding 12 months, replacing the previous requirement of 12 months of employment and 1,000 hours worked. Currently, New Jersey's Temporary Disability Insurance (TDI) and Family Leave Insurance (FLI) programs provide eligible employees with wage replacement while they are on leave but do not independently guarantee job protection. The recent amendments to the New Jersey Family Leave Act (NJFLA) expand these protections by extending job-protected leave to additional employees. Under the amended law, employees receiving TDI or FLI benefits may be entitled to return to the same position they held before taking leave, or to an equivalent position with the same seniority, status, pay, and benefits. Although the legislation also states that it does not expand or modify an employee's reinstatement rights under the NJFLA, the amendments appear to provide job protection to eligible employees receiving TDI or FLI benefits without requiring them to separately satisfy the eligibility requirements of the NJFLA or the federal Family and Medical Leave Act (FMLA). As a result, some employees may be entitled to longer periods of job-protected leave than were previously available under existing law. With these amendments, New Jersey continues to strengthen workplace protections by expanding access to job-protected family leave for eligible employees. These changes significantly expand access to job-protected family leave and may require employers to update their leave policies, employee handbooks, and HR practices. Notably, employers who were previously not required to administer NJFLA may need to amend their policies and/or create new protocols to come into compliance with the NJFLA. Failure to do so would prove costly, as the penalties for non-compliance are significant.

Portrait of Carolyn Schweizer, with text below: Philadelphia Office Managing Attorney

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Marshall Dennehey Names Carolyn Schweizer New Philadelphia Office Managing Attorney