Professional Liability Insurance Feed


Business FeesLawyers are usually well aware of the three-(3)-year statute of limitations period to commence a legal malpractice action. However, many are unaware that an action to recover unpaid legal fees opens the door to limited counterclaims for legal malpractice, regardless of the timing.

The best way to avoid having to sue for fees is great accounting practices. Sending invoices on a regular basis and promptly addressing delinquent accounts minimizes an attorney’s exposure.[1] Two recent decisions, discussed below, serve as practical reminders that commencing a legal action to recover unpaid legal fees should be the practitioner’s remedy of last resort.

Limitations Period for Legal Malpractice Claims

The three (3) year limitations period for legal malpractice claims is set forth in CPLR § 214(6). The period is calculated from the date of the alleged malpractice, irrespective of the date of discovery. See Farage v. Ehrenberg, 996 N.Y.S.2d 646 (2d Dept. 2014).  The only circumstance which will have a “tolling effect” on a legal malpractice claim is where the attorney provides continuous representation to the client “…with respect to the matter underlying the malpractice claim.” See Debevoise & Plimpton, LLP v. Candlewood Timber Group LLC, 102 A.D.2d 571, 959 N.Y.S.2d 43 (1st Dept. 2013).  There, the limitations period is tolled until the ongoing representation of a client with the particular matter is completed. Id.  This suggests an absolute bar for any legal malpractice claim asserted after the three (3) year limitations period closes.  Consequently, many practitioners hold the misapprehension that they bear little-to-no risk if they commence an action to collect unpaid legal fees more than three (3) years after the representation ended.  This is incorrect.

Recent Decisions of Note

Balanoff v. Doscher, 2016 NY Slip Op 04896 (App. Div. 2d Dept. June 22, 2016) underscores the risks of collections actions for legal fees.  Plaintiff sued to collect legal fees, and the defendant counterclaimed, asserting legal malpractice.  The lower court granted Plaintiff’s motion to dismiss the counterclaims.  The Appellate Division reversed, finding that the counterclaim for legal malpractice should not have been dismissed “…to the extent that counterclaim seeks to offset any award of legal fees…”  This counterclaim, which ordinarily would be time-barred by limitations period imposed by CPLR § 214(6), is afforded the benefit of the relation-back doctrine, as codified in CPLR § 203(d).  The Balanoff Court unambiguously sets forth the limitations of counterclaims pursuant to CPLR § 203(d), holding that the provision may serve “…only as a shield for recoupment purposes, and does not permit the defendant to obtain affirmative relief…”

Lewis, Brisbois, Bisgard Smith, LLP v. Law Firm of Howard Mann, 2016 NY Slip Op 05484 (App. Div. 2d Dept. July 13, 2016) treads in murkier waters.  The facts are procedurally convoluted, and the wording of the decision is ambiguous.  In an action to recover unpaid legal fees, defendant asserted nine counterclaims.  Plaintiff moved to dismiss the counterclaims.  Plaintiff’s motion was granted only with respect to the first counterclaim.  On appeal, the Appellate Division affirmed the lower court’s decision that counterclaim alleging “professional negligence” was timely.[2]

The difficulty arises when considering the damages sought in the legal malpractice counterclaim. Rather than demand a “refund,” “recoupment,” or “offset,” defendant demanded “an amount to be determined at trial, plus interest.” Lewis Brisbois. The Appellate Division held that the legal malpractice counterclaim was timely “…to the extent of the demand in the complaint.” Id. The decision does not address the counterclaim demands whatsoever. 

One could argue that a party asserting an otherwise untimely malpractice claim may now seek affirmative recovery. However, it more likely appears that the Court was performing a cursory analysis of the counterclaims to see if they satisfied the requirements of CPLR § 203(d).  Pursuant to CPLR § 203(d), an otherwise untimely counterclaim is permissible only if it “…arose from the transactions, occurrences, or series of transactions or occurrences, upon which a claim asserted in the complaint depends, it is not barred to the extent of the demand in the complaint.”  Counterclaims are limited to the extent of the demand in the original complaint. See Goldberg v. Sitomer, Sitomer & Porges, 97 A.D.2d 114, 469 N.Y.S.2d 81 (App. Div. 1st Dept. 1983) aff’d 63 N.Y.2d 831, 472 N.E.2d 44 (1984). As such any counterclaim to an action to collect a sum certain of legal fees appears necessarily limited to recoupment. See Alvarez v. Attack Asbestos Inc., 287 A.D.2d 349, 731 N.Y.S.2d 431 (1st Dept. 2001).  Here, the Lewis Brisbois Court summarily held that the “subject counterclaims…all arise from the transactions and occurrences upon which the complaint depends,” noting that the appellant failed to address the CPLR 203(d) issue—leaving little for the Court to deliberate.  The decision did not give the basis of its finding.  The Court also held that the counterclaim for legal malpractice was timely “to the extent of the demand in the complaint.”  Again, the Court gave no rationale behind the determination.

At first glance, Lewis Brisbois may indicate a change in this area of practice.  However, a closer reading suggests that the Court was simply stating legal conclusions and terms of art in the absence of argument from the appellant.  It seems unlikely that the Court would break with decades of legal precedent on an issue that was not disputed.


While neither Balanoff nor Lewis Brisbois signals a sea change in the law governing counterclaims for legal malpractice, they exemplify the prudence of good accounting practices.  Regular and consistent accounting is quite simply the best preventative measure against large accounts receivables and exposure in any later recoupment efforts.[3]


* This article was prepared by Andrew R. Jones, Esq. of the New York City-based law firm of Furman Kornfeld & Brennan LLP.  A longer form version was published in the NYSBA Winter 2016 Journal. Andrew works as part of a team of 15 lawyers devoted to the defense of attorneys and other professionals in malpractice and disciplinary matters.  For more information about the above topic or the author, please visit:

We trust that the above article was useful and thought provoking; however, please note that it is intended a general guide only, not a complete analysis of the issues addressed, and readers should always seek specific legal guidance on particular matters.

For more information on LPL coverage generally and how conflict checking and client selection can affect the exposure of your firm to malpractice claims, contact USI Affinity today.


[1] For a more in-depth discussion of the limitations period for legal malpractice actions, seeHow to Avoid Being Sued When Collecting Legal Fees,” Professional Liability Defense Quarterly, 7:2: pp. 8-12 (Spring 2015).

[2] Although the counterclaim for legal malpractice was found to be timely, the Appellate Division dismissed a number of the other counterclaims as duplicative. When concurrent claims are based upon the same set of operative facts as the legal malpractice claim, the concurrent claims will be properly dismissed as redundant. See Ullman-Schneider v. Lacker & Lovell-Taylor, P.C., 121 A.D.3d 415, 944 N.Y.S.2d 72 (1st Dept 2014).


[3] See Footnote 1.


Shutterstock_285087869To a busy practicing attorney, the importance of appropriate bedside manner can easily be overlooked. However, the practitioner must always be mindful that each client has a real world problem that needs solving. The client is looking to his or her attorney for representation in connection with a legal issue, but at times, the client is also looking for a sympathetic ear. It is critical for the practitioner to listen to the client’s concerns, remain available to the client throughout the representation and keep the client involved in all phases of the client’s matter. Above all, the practitioner should treat each client as the practitioner’s most important client. Appropriate bedside manner will lead to happier clients, potential new referrals and also serves to minimize the risk of malpractice claims.[1]

Several factors assist the practitioner in refining his or her bedside manner. The importance of listening cannot be overstated. When meeting with a client for the first time, the busy practitioner must be willing to provide the client with sufficient time to tell his or her story. In an effort to streamline the meeting, the practitioner may attempt to rush the client to “cut to the chase” and steer the client towards providing only the relevant information. This may leave the client feeling frustrated that the attorney is either unable or unwilling to spend the time necessary to understand the client’s problem. It may also serve to undermine the client’s confidence in the attorney’s ability properly represent the client’s interests.[2]

The background of the legal issue is important to the client, and it should therefore be important to the practitioner to listen and fully understand the client’s position. This may also help to understand whether there may be any alternative means available to resolve the client’s matter. Attorneys are often tasked with counselling clients on areas that extend beyond the law. Occasionally, a client simply needs to “vent.” The practitioner should be prepared to provide a caring and sympathetic ear, which should aid in building the relationship between the practitioner and client and ultimately boost the client’s confidence in the attorney’s ability.  

The practitioner must explain what the client should expect going forward. For example, if the client retains the practitioner for representation in connection with injuries sustained in a motor vehicle accident, the practitioner should explain the discovery process. The practitioner should explain that the client will receive authorizations that must be executed and returned expeditiously. The client must be prepared to attend a deposition. The client should also be advised that he or she may have to attend an independent medical examination. The practitioner should use best efforts to avoid surprises and ensure that the client understands what is to come.[3]

The client should be kept involved in the process and should receive periodic updates regarding the status of the client’s matter. A client should never have to guess or be kept in the dark regarding the status of his or her matter. The client should know what the practitioner is doing and why. The client should be provided with motions and/or other correspondence and have the opportunity to offer suggestions. When sending correspondence to the court or to an adversary, the client should be copied. In this way, the client feels involved and is reminded that the practitioner is working hard towards resolving the client’s matter.

The client must be timely advised of all important developments that take place. The practitioner must take the time to explain how each development impacts the client’s matter. For example, if an adversary files a summary judgment motion that may dispose of some or all of the client’s claims, the client must be timely advised. The practitioner must provide the client with a full and frank analysis of the potential outcome(s). Keeping the client involved is a useful risk management tip, as a well-informed client may be less likely to later assert a claim if there is a bad result, especially if the client was fully advised that the bad result was a possibility. Bad news should be delivered with compassion to the extent possible. The practitioner should also consider whether certain news requires a personal phone call or whether a written communication is appropriate. It is fair to say that a phone call is a much more appropriate way to deliver bad news.

 The practitioner must spend appropriate time preparing the client for such things as depositions or other important meetings. For example, the practitioner should ensure that the client is adequately prepared for his or her deposition. The practitioner should spend time with the client preparing for the types of questions that will be asked, and why those questions will be asked. A well prepared client will make a much better presentation and be a much better witness. During the course of the deposition, the practitioner should remain focused on the questions being asked and prepared to make timely objections. All too often an attorney defending a deposition is busy looking at his or her cell phone. Such lack of attention can leave a client frustrated and with a feeling that the attorney is not fully invested in the outcome of the client’s matter.         

The practitioner must be responsive to the client’s questions. One of the biggest complaints clients have about their attorneys is that they are not responsive. If a client calls or emails with questions about his or her matter, a good rule of thumb is to acknowledge the inquiry within twenty-four (24) hours – if not sooner. Often, it may not be possible to provide a detailed response to the client right away; however, the practitioner (or someone on the practitioner’s behalf) must acknowledge the inquiry and advise the client that his or her question will be answered as quickly as possible.  

Good bedside manner means that the practitioner understands that representing a client is more than simply advocating the law. The practitioner must take steps to ensure the client is heard, feels part of the process and is made to understand the intricacies of the legal system in a manner which is understandable to the client. A good bedside manner will likely keep clients happy, and a happy client is likely to refer friends and relatives in need of legal advice.

 For more information on Professional Liability Insurance, contact USI Affinity today.  1.855.USI.0100

[1] See, noting that good attorney-client relations may help prevent malpractice claims, as a client satisfied that an attorney has used his or her best efforts may be less likely to commence a malpractice claim.

See also, which addresses the correlation between a doctor’s poor bedside manner and medical malpractice claims.

[2] See, noting that by exercising good bedside manner, attorneys may be able to significantly reduce the chances of a legal malpractice claim.

[3] See, noting that informed clients that feel they are part of the legal process may be less likely to commence a malpractice action.


* This article was prepared by Andrew R. Jones, Esq. and Bain R. Loucks, Esq. of the New York City-based law firm of Furman Kornfeld & Brennan LLP.  Andrew and Bain work as part of a team of 15 lawyers devoted to the defense of attorneys and other professionals in malpractice and disciplinary matters.  For more information about the above topic or the authors, please visit:

We trust that the above article was useful and thought provoking; however, please note that it is intended a general guide only, not a complete analysis of the issues addressed, and readers should always seek specific legal guidance on particular matters. 

For more information on LPL coverage generally and how conflict checking and client selection can affect the exposure of your firm to malpractice claims, contact USI Affinity today.

Conflict Check Systems and Maintaining Conflict Database


For DMW - shutterstock_93823924For many practices, there has been a recent uptick in the mobility of both lawyers and clients from firm to firm. This significant departure from traditional practices has required law firms to establish and maintain a reliable conflict checking system to avoid unnecessary conflict-based malpractice claims.

Many attorneys view the conflict checking process as a chore, but a necessary evil when taking on a new case or bringing in a new employee. However, performing a conflict check does not have to be a dull or daunting. The best practice is to have a methodical procedure in place that prevents a file from being opened until a conflicts check has first been performed. Several types of conflict software exists for all law firm sizes, and virtually every firm has some kind of document management or file management system with search capabilities that can also be utilized.

If a conflict exists, it must be identified and where possible resolved through the use of appropriate conflict waiver agreements before proceeding with the client. If a known conflict of interest is not immediately addressed, the law firm basically is a “sitting duck” for a legal malpractice claim if a problem subsequently develops. This is because at any point where a client loses a case, or suffers a financial loss in connection with a matter involving a transaction in which the “conflicted” law firm is providing legal services, the client will blame the law firm once the conflict is revealed. Judges and juries do not look favorably on professional liability claims concerning a conflict of interest and the claims are difficult to defend. The mere appearance of impropriety from an undisclosed conflict of interest is highly inflammatory to jurors. The onus is on the law firm to protect itself.

Even when conflict waivers are executed, conflict situations still pose risk, and circumstances arise where the conflict is, or becomes, unwaivable. In such situations, the client loses out financially, having invested fees in one law firm, only to have to retain new counsel, and/or the law firm may be exposed to disqualification on the matter. Worse, if the client is disappointed in the result of the underlying matter, the conflict could form the basis of a legal malpractice suit, alleging that the client would not have proceeded with the underlying case or transaction “but for” the undisclosed or unwaivable conflict.

So what are some necessary elements for establishing and maintaining an effective conflicts check system? Here is a helpful checklist that all law firms can employ to avoid potential conflict problems:

  • Before opening any new file, perform a conflicts check. If this procedure is used, it will prevent a file number from being assigned, and will prevent a lawyer from doing any work and billing the client until the conflict search is complete and documented.
  • The law firm should prepare formal written conflict checking and resolution procedures, which set forth the law firm’s position with respect to conflicts of interest.
  • Ensure that your chosen conflict checking system can search name variations and spellings and show any party’s relationship with any client and the nature of that relationship. To properly identify conflicts, the current and former names of every person or entity represented by the law firm must be entered, as well as that of employees and lateral hires.  As noted, conflicts software is readily available, and law firms of all sizes can utilize such software to search all active and closed files – the results may even yield helpful information to the case itself.
  • A conflict check is only as good as the information submitted to the conflicts computer system. The most technologically advanced conflicts software in the world is useless if the information submitted is not accurate. Therefore, quality control -- such as training and supervision of support staff -- is essential.
  • In the event that a conflict exists, it must be identified and addressed by a formal or ad hoc conflicts committee in the firm. The originating attorney should not be involved in the evaluation and determination of the potential conflict as their objectivity may be questioned.
  • If a conflict is identified, the use of an appropriate conflict waiver agreement may resolve the conflict. However, enter into such waivers with caution as noted above.
  • Conflict checks should be performed: (i) before opening a new case; (ii) before a new matter for an existing client is opened; (iii) whenever a new party, attorney, witness or expert enters the representation; and (iv) whenever the firm decides to interview perspective new employees.

As conflict-based malpractice claims are among the most rapidly increasing problem areas in the legal profession, the proper identification and resolution of conflicts of interest has become a major concern facing law firms today. However, an established conflict-checking system can help effectively detect and minimize conflict-based problems before they arise.*


* This article was prepared by Andrew R. Jones, Esq. and Ashley R. Graham, Esq. of the New York City-based law firm of Furman Kornfeld & Brennan LLP.  Andrew and Ashley work as part of a team of 15 lawyers devoted to the defense of attorneys and other professionals in malpractice and disciplinary matters.  For more information about the above topic or the authors, please visit:

We trust that the above article was useful and thought provoking; however, please note that it is intended a general guide only, not a complete analysis of the issues addressed, and readers should always seek specific legal guidance on particular matters.

For more information on LPL coverage generally and how conflict checking and client selection can affect the exposure of your firm to malpractice claims, contact Mike Mooney at 800.265.2876 x 11441 or click here to email Mike Mooney

Reputational Coverage and Why You Need It

Shutterstock_500205292A good reputation is more valuable than money, as it can take a lifetime to build one, but only a moment to destroy it. If you are a practicing lawyer, chances are you’re insured for professional malpractice, but what you are far less likely to have insured is your good name.

Bad News Spreads Fast, Particularly Bad News

Thanks to the immediacy of news and social media, there has never been a bigger threat to a lawyer’s reputation than is true today. When you are shopping for lawyers’ professional liability insurance, it is important to keep in mind that reputation-related catastrophes can happen to any law firm or lawyer, often without warning.

There are many things that can quickly damage the reputation of a lawyer and his firm, such as:

  • Being misquoted in the media
  • Negative Internet reviews
  • Malicious hacks of social media channels
  • Negative word-of-mouth
  • Whistleblowing by disgruntled employees or clients
  • Poor financial performance

As you have insurance to cover other disasters and risks, it is critical to ask your insurance broker about policies to ensure that you will be protected and have coverage that will cover the complex process of rebuilding trust in the aftermath of an incident that may tarnish your reputation.

USI Affinity’s Comprehensive Reputation Coverage

With six new policy enhancements, USI Affinity offers comprehensive reputation coverage for attorneys. Should your firm be negatively impacted due to false accusations made publicly, USI Affinity has negotiated up to $25,000 reimbursement of reasonable fees, costs and expenses for consulting services provided by a public relations firms for each crisis event, up to $50,000 for all crisis events in a policy period. Payments made are not subject to a deductible.

For more information about how we can protect your good name as well as that of your law firm, contact USI Affinity today.

Cyber Breach Prevention Ethical Duty for Law Firms

Shutterstock_254824216Hackers are executing sophisticated data breaches on large and small companies all over the world, making the need to protect your law firm from the dangers of cyber breach more important than ever.

Although many lawyers prefer to believe that their firm is unlikely to be the target of a hack, such thinking often proves to be naïve. Cyber criminals are continually adapting looking for easy targets and sources of potentially valuable data. Because law firms are essentially warehouses of client and employee data, they should acknowledge that they are not immune to such attacks.

Personally Identifiable Information

Law firms are often considered to be perfect targets by cyber criminals looking to hack into businesses that keep lots of data containing personally identifiable information (PII) but lack protective security. Some examples of PII include:

  • Names, identifying numbers, symbols, or other identifiers assigned to particular individuals
  • Information that describes anything about a person
  • Information that indicates actions done by or to a person
  • Information that indicates a person possesses certain characteristics

Most, if not all, law firms possess a great deal of PII. This information was historically kept in paper files, but is not stored electronically for the most part. The most commonly reported cyber breach reported by law firms is related to the loss or theft of a laptop, thumb drive, smart phone, tablet, or some other mobile device. If the information on the lost or stolen device was not encrypted and contained PII, a breach likely occurred. With access to office email and other law office networks, cyber criminals can gain access to and steal confidential information.

This is an ethical dilemma for attorneys for several reasons. Besides the common law duty owed by attorneys to protect the confidential information entrusted to them by clients, the ABA Rules of Professional Conduct requires an attorney to maintain the confidentiality of information related to the representation of current and former clients, and state and federal law also imposes a duty upon attorneys to protect PII for clients.

To learn more about data breach and cyber liability coverage, Jeremy Del Priore at USI Affinity today.