A New Way to Award Attorney’s Fees

Posted on April 7, 2011 by Richard Klass

The “American Rule” governs most cases in United States’ courts, where each party to the litigation bears its own costs and attorney’s fees (as opposed to the “English Rule,” according to which the loser of the litigation is chargeable with the winner’s attorney’s fees). There are three exceptions to the “American Rule,” which are when there is:

(a) an agreement between the parties pertaining to attorney’s fees;
(b) a statute which awards reasonable attorney’s fees to the “prevailing party;” or
(c) a court rule provides for attorney’s fees.

Out With The “Old” Ways

Generally, courts around the country use one of two methods to determine the amount of “reasonable attorney’s fees” to be awarded to a party: (1) the “lodestar” method and (2) the “Johnson” twelve-factor method (these methods were the two existing methods endorsed by the US Supreme Court in Hensley v. Eckerhart, 461 US 424 (1983)).

The “lodestar” method figures out the reasonable attorney’s fee to be awarded — which is basically the product of the attorney’s usual hourly rate multiplied by the number of hours worked (for example: $3,500 attorney’s fees award based on 10 hours of the attorney’s hourly rate of $350). After figuring out the product, the fee may be adjusted by the court as part of the court’s fee-setting method — a starting point (if you will) for an initial estimate before considering the particulars of the case’s circumstances.

The “Johnson” method came about from a case titled Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir. 1974), in which the court envisioned a one-step inquiry into attorney’s fees, based upon twelve factors, allowing the court to rely more on its experience and judgment with both the attorney and type of case involved. Market forces, which generally influence the hourly rate charged, are not to be the sole determining factor under this method.

In theory, courts that adopted the “lodestar” method were expected to consider fewer variables than the “Johnson” method; in practice, however, many courts consider the same set of variables under both methods to arrive at a fee amount. Some court decisions held that the “Johnson” factors should be applied after applying the “lodestar” calculation; some held that many of the “Johnson” factors were subsumed into the initial calculation.

The Presumptively Reasonable Fee

In a Decision rendered in April 2007 by the United States Court of Appeals for the Second Circuit in the case of Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany, the Second Circuit held that it was abandoning the traditional “lodestar” method in favor of the concept of the “presumptively reasonable fee.” (The Second Circuit Court of Appeals covers cases in the federal courts of New York and Vermont). The Decision actually stated that the term, “lodestar method,” was a metaphor that has “deteriorated to the point of unhelpfulness.”

The Second Circuit decided to switch over to a new method of figuring out the reasonable attorney’s fee to be awarded to a prevailing party termed the “presumptively reasonable fee.” This new way asks the court to bear in mind all of the case-specific variables, including the reasonable hourly rate that a paying client would be willing to pay if he was able to negotiate with his attorney. In determining that, the court should consider, among other things, the “Johnson” factors and the fact that a reasonable, paying client would likely want to spend the minimum amount necessary to effectively litigate the case.

The Forum Rule

The Decision also highlighted a particular issue involved in setting fees — the “forum rule.” To determine the general hourly rate, the court has to consider the “community” in which the court sits; in federal courts, it has generally been the geographic area of the district in which the court is located. The Second Circuit recognized that that area could be skewed, depending on the district. So, the court clarified that a district court may use an out-of-district rate (or a rate in between in-district and out-of-district) if it is clear that a reasonable, paying client would have paid the higher rate; however, the court will presume that a client will either hire counsel located within the district or counsel whose rates are consistent with those of local counsel. The presumption may be rebutted if it can be shown that hiring higher-priced, out-of-district counsel was reasonable under the circumstances.

Like all considerations involved in deciding whether to bring a lawsuit against someone, the issue of attorney’s fees is an important one. Without effective, compensated counsel, a litigant with a true cause may be deprived of “his day in court.” Fee-shifting statutes and agreements for attorney’s fees ensure that each side to a dispute knows the risks of his conduct — whether it be the breach of a contract or commission of an act that a statute or court rule is designed to protect.

by Richard A. Klass, Esq.

copyr. 2011 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.

R. A. Klass
Your Court Street Lawyer

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The Wrong Side of the Tracks Costs Law Firm $800,000.

Posted on February 1, 2011 by Richard Klass

The Long Island Railroad (LIRR) leased one of its old rail yards in Queens to a recycling company. One of the recycling company’s employees was working the late shift on a rainy evening in 2003. That rainy night, he was assigned the task of welding on a portion of the metal fence surrounding the yard with an acetylene torch. He got up on a ladder, climbed up several rungs, and started to weld. At that point, the injured worker got a shock from the welding equipment. The ladder then shifted in the mud and he fell to the ground, suffering severe injuries. Since that incident, he was unable to work, having become disabled, and having had several surgeries to his back and knee.

The injured worker hired a law firm to bring a personal injury claim against the owner of the yard under New York’s Labor Law Section 240 known as the “Scaffolding Law.” That law firm brought a petition to file notices of claim against the MTA (Metropolitan Transportation Authority) and the LIRR. The Supreme Court Justice dismissed the petition, indicating in his decision that, as to the MTA, the reason for the late notice of claim was not meritorious and, as to the LIRR, no notice of claim was needed and that the law firm merely needed to timely commence a lawsuit under New York’s Public Authority Law. Needless to say, the time within which the injured worker needed to commence the lawsuit against the LIRR had already passed by the time of that decision. The injured worker retained Richard A. Klass, Your Court Street Lawyer to sue the personal injury law firm for legal malpractice.

Time-barred by the Statute of Limitations:

The concept of a “ Statute of Limitations ” is that people are afforded a certain amount of time to take action concerning a legal claim they may have; if that period of time passes without taking action, then the ability to pursue the legal claim has been waived. Most people are familiar, for instance, that in New York State the statute of limitations period within which to file most personal injury cases is three years from the date of accident. In this particular case, though, the Statute of Limitations period within which to sue the potentially liable parties was shorter (to a period of one year and thirty days) because the personal injury claim was against the LIRR, a governmental authority under a special statute.

Once the judge had dismissed the injured worker’s lawsuit, thus leaving him without recourse to recover monetary damages for his injuries, the law firm was exposed to the legal malpractice claim brought against it because it was alleged to have “blown” the statute of limitations by neglecting to timely file the lawsuit against the LIRR.

In legal malpractice cases, the statute of limitations in which to sue an attorney is three years from the date of malpractice under New York’s CPLR Section 214(6). Since many times in litigation, attorneys who have committed malpractice continue representing their clients for months or years afterward, there is also a concept of “ continuous representation. ” This means that the statute of limitations “clock” does not start to tick until the attorney has stopped representing the client in the matter.

Proving the underlying case under Labor Law Section 240:

A legal malpractice case is a very difficult type of litigation for one particular reason: Assuming that the lawyer ‘screwed up’ as much as possible, doing everything as wrong as could be done or failing to do any of the right things, it still might not matter — the ultimate question for purposes of liability for legal malpractice will be whether there was any merit to the underlying case that the lawyer was hired to handle. Rephrased: Would the client have won “but for” his lawyer?!

New York’s Scaffolding Law provides that owners of real estate, such as the LIRR, are “strictly liable” for injuries suffered by workers who fall from a ladder or scaffold under almost all circumstances, with limited exceptions, such as if there was a lack of adequate safety devices. This basically means that the landowner is responsible to pay for all of the worker’s damages for his injuries, including medical bills, lost wages, and pain and suffering. An exception to holding the landowner strictly liable under the Scaffolding Law is where the injured worker is found to have been the “ sole proximate cause ” of his injuries. In this case, the law firm being sued for legal malpractice argued that, in the event the LIRR had been sued, the injured worker would not have prevailed anyway because this exception to the Scaffolding Law would have applied because he knew not to weld in the rain. In response, the injured worker claimed that his employer at the yard instructed him to weld in the rain and that he was not going to be insubordinate.

Separate and apart from the Scaffolding Law issue, the law firm argued that there was no proof of exactly where the fall occurred to establish that it happened on the LIRR’s property. In response, a surveyor was retained to survey the area surrounding the old rail (now recycling) yard, and Deeds dating back to the 1800s were obtained. These documents were produced to establish the legal ownership of the location where the fall took place. This was a necessary element of the case in order to prove that the LIRR would have been liable for injuries to workers on its property under the Scaffolding Law.

The legal malpractice case came up for a pre-trial conference. Attorneys Richard A. Klass and Stefano A. Filippazzo appeared at the conference on behalf of the injured worker. The law firm being sued for legal malpractice finally settled with the injured worker for $800,000 to settle the action and pay for his injuries and extensive medical lien.

by Richard A. Klass, Esq.

copyr. 2011 Richard A. Klass, Esq.

Art credits: page one, Hjørring – Hirtshals Line in Northern Denmark. Photograph by Tomasz Sienicki, 2003.

The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.

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Striking the Affirmative Defense of Statute of Limitations in a Legal Malpractice Action

Posted on December 17, 2010 by Richard Klass

When a former client sues his attorney for legal malpractice, the defendant-attorney/law firm will almost invariably put forward, as part of its defense of the law suit, the Affirmative Defense of Statute of Limitations. In New York State, the period in which an attorney may be sued (whether for a tort [civil wrong] or breach of contract) is generally three (3) years from the date of malpractice. If the client does not sue the attorney/law firm within the applicable Statute of Limitations period, then the case is “time barred” and may be dismissed as having been filed too late.

When the defendant attorney alleges in his Answer to the law suit that the action is barred by the Statute of Limitations, it is essential to deal with the issue as soon as practicably possible. One effective way is to make a motion to the trial judge to “strike” (or dismiss) the Affirmative Defense from the Answer. Civil Practice Law and Rules [CPLR] Section 3211(b) provides that a party may move to strike an affirmative defense.

Affirmative Defense – Statute of Limitations:

In a recent case, the defendant law firm asserted the Affirmative Defense that the legal malpractice action was barred by the applicable statute of limitations. In response, Richard A. Klass, Your Court Street Lawyer, brought a motion to dismiss the Affirmative Defense. The motion requested that this affirmative defense be stricken, since it was alleged that the plaintiff-injured person brought the action within the applicable three-year statute of limitations period, as specified in CPLR 214(6).

CPLR 214(6) provides that “an action to recover damages for malpractice, other than medical, dental or podiatric malpractice, regardless of whether the underlying theory is based in contract or tort” must be commenced within 3 years.

The cause of action for malpractice accrues at the time of the act, error or omission. See, Julian v. Carrol, 270 AD2d 457 [2d Dept. 2000]; Goicoechea v. Law Offices of Stephen Kihl, 234 AD2d 507 [2d Dept. 1996]; Shumsky v. Eisenstein, 96 NY2d 164 [2001].

In the recent case, the allegation of legal malpractice against the defendant law firm was that there was a ‘blown’ statute of limitations because the law firm did not timely sue the potentially liable party. In that situation, the New York State Court of Appeals (New York’s highest court) has held that a cause of action for legal malpractice accrues against the attorney when the statute of limitations expires on the underlying action for which the attorney was retained. See, Shumsky v. Eisenstein, supra. In Burgess v. Long Island Railroad Authority, 79 NY2d 777 [1991], the Court of Appeals held:

A person has one year from the date a claim accrues to commence an action against a public authority such as LIRR (Public Authorities Law Section 1276(2). The complaint must contain an allegation that at least 30 days have elapsed since the authority was presented with a demand or claim and that the authority has neglected or refused to adjust or pay the claim. This “stay” of 30 days is not counted as part of the limitations period and the plaintiff therefore may serve a complaint at any time up to one year and 30 days after the claim has accrued.

In the case, the plaintiff’s incident was alleged to have occurred on June 4, 2003. According to Public Authorities Law §1276, an action would have to have been brought against the LIRR within one year and thirty days after the incident. The defendant law firm was alleged to have failed to timely do so and the time in which to do so passed on their ‘watch.’

The Continuous Representation Toll:

The accrual of the three-year statute of limitations is ‘tolled’ during the period of the lawyer’s continuous representation in the same matter out of which the malpractice arose under the theory that the client should not be expected to question the lawyer’s advice while he is still representing the client. See, Lamellen v. Kupplungbau GmbH v. Lerner, 166 AD2d 505 [2d Dept. 1990]; Shumsky v. Eisenstein, supra. Under the continuous representation doctrine, there must be clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and the lawyer. See, Kanter v. Pieri, 11 AD3d 912 [4 Dept. 2004]; Lamellen v. Kupplungbau GmbH v. Lerner, supra; Clark v. Jacobsen, 202 AD2d 466 [2 Dept. 1994].

In the case, the defendant law firm was alleged to have continuously represented the injured plaintiff up until August 2007, as represented by the proceedings brought on his behalf and the correspondence between the parties. Accordingly, the Statute of Limitations in which to sue the defendant law firm for legal malpractice for having missed the opportunity to have sued the proper party for the incident that resulted in the client’s injury started ticking when the law firm no longer represented him.

R. A. Klass
Your Court Street Lawyer

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