Legal Malpractice

Client Sells Privileged Communications in Legal Malpractice

By (Andrew Lavoott Bluestone)

This seems to be a new twist.  It dovetails with our earlier discussions of  new venues in legal malpractice, and cases being brought against lawyers by persons other than their clients.  Here, former opponents sue the attorneys after bargaining with the bankrupt client and obtaining communications between bankrupt client and its attorney.  Now:

"Eager to put an end to a fraud suit brought by a software developer, New Century Mortgage agreed, as part of a settlement in federal bankruptcy court in Delaware, to turn over to opponent Positive Software Solutions Inc. privileged material and internal company documents that also concern a related federal software licensing suit, according to Texas Lawyer.

Now, Positive Software is using those privileged materials to seek sanctions against New Century's counsel, the Susman Godfrey law firm and two of its partners, Barry Barnett and Ophelia Camina in a federal lawsuit in Texas. It contends that they engaged in fraud and misconduct that eventually caused Positive Software to lose a 2004 arbitration of the software licensing suit, the legal publication explains.

The partners say they did nothing wrong, Texas Lawyer reports. But Positive Software is using material it got from New Century to bolster its argument, in an August filing, that Susman Godfrey should have to turn over internal litigation work product, on the theory that the crime-fraud exception applies, according to attorney Michael Shore of Shore Chan Bragalone in Dallas. He represents the software developer.

"As a practical matter, documents that were thought to be privileged are in the other side's hands. So, basically, what they did was bought the privilege. And that, in my experience, is unprecedented," says partner David Beck of Beck Redden & Secrest in Houston, who represents the Susman Godfrey defendants."

Full post as published by New York Attorney Malpractice Blog on September 09, 2008 (boomark / email).