Legal Malpractice

The Demise of a Law Firm and the Aftermath

By (Andrew Lavoott Bluestone)

Plaintiff says that this is not a legal malpractice case, but it is the death knell of a well known and long lived law firm in New York City.  150 Broadway N.Y. Assoc., L.P. v Shandell ;2011 NY Slip Op 30009(U); January 3, 2011; Supreme Court, New York County; Docket Number: 601950/09; Judge: Judith J. Gische discusses the story of what happens when a law firm closes.

"Plaintiff was the landlord for Shandell Blitz Blitz & Bookgon, LLP (SBSSB) which later became known as Shandell Blitz Blitz & Ashley, LLP ('Shandell Ashley'). Eventually the firm fell into arrears on its rent and plaintiff brought a nonpayment proceeding against SBB&B. Plaintiff obtained a money judgment against SBB&B for $257,378.72. The action at bar seeks to enforce the judgment the attorneys who personally guaranteed SBB&B's obligations under the lease."

"Plaintiff has asserted a claim for 'an accounting of prior monies received' against Shenwick, based on claims that Shenwick and Berenson (the CPA) 'received various monies and properties belonging to [SBBSB and/or Shandell Ashley] without accounting' and that Berenson and or Shenwick distributed the funds 'arbitrarily, unreasonably and capriciously to the detriment and harm of the Plaintiff.' Stating that it has only received a single payment of $5,000 payment, plaintiff states that it is entitled to a 'pro-rata distribution of all the monies collected to date by Berenson and Shenwick'

"Plaintiff does not squarely identify its claim against Shenwick as being for circumstances, an attorney is not liable to third parties for caused by professional negligence (Ch ipello v. Nixon Harqrave et al., 15 AD3d 894 [4* Dept 20051). Furthermore, unless the attorney placed his or her own interests above that of his or fiduciary, the attorney is not liable for breach of fiduciary duty to a third party with whom s/he is not in privity (Chinello v. Nixon Harqrave et a I,, supra). Breach of Fiduciary Duty, on the other hand, is a tort. In deciding whether there is a fiduciary relationship, the a court will look to see 'whether a party reposed confidence in another and reasonably relied on the other's superior expertise or knowledge' (Wiener v. Lazard Freres & Co., 241 A.D.2d 114, 12 [I9981 ). It is unrefuted that Shenwick was hired to assist Shandell Ashley in winding up its affairs and the partnership was his client (see Gaillard Realtv v. Man hattan Brass,  38 AD 84 [Ist Dept 1991). This is clearly stated in the Notice of Dissolution that -Shandell Ashley sent to plaintiff and other creditors. The Notice identifies Berenson as the liquidating agent and Shenwick's firm as the par ,,iership's attorneys. All of Shenwick's interaction with plaintiff was as an attorney with the law firm acting on behalf of Shandlel Ashley. Even assuming Shenwick answered any of the liquidation agent's legal inquiries, Shenwick provided such advice, direction, etc., on behalf of his client, Shandell Ashley, not for the particular benefit of the plaintiff or any other creditor. There is no claim by plaintiff that Shenwick acted out of self interest (Chinello v. Nixon Hargreve et al., supra).
Any claim by plaintiff that it had a fiduciary relationship with Shenwick is without any factual basis, since Shenwick and plaintiff did not have a relationship based upon confidence."

Full post as published by New York Attorney Malpractice Blog on January 10, 2011 (boomark / email).