Legal Malpractice

Client's Fiduciary Duty and Legal Malpractice

By (Andrew Lavoott Bluestone)

It being a Friday in the Summer, we bring you legal malpractice news from the Jersey Shore, by way of Law.Com.  Legal malpractice issues arise wherever attorneys represent clients.  Clients sometimes bear some portion of the blame when cases/transactions go sour.  Here is a description of one, from Law.Com.

Charles Toutant writes: "Warning clients of their own duty to read critical documents, a New Jersey appeals court held Wednesday that a malpractice suit over Sills, Cummis & Gross' drafting of a bank-merger agreement was time-barred and meritless.

The panel found in Sullivan v. Sills, Cummis, Zuckerman, Radin, Tischman, Epstein & Gross, A-4805-07, that the plaintiffs were experienced in the world of banking and failed to follow their lawyers' advice to look over the agreement.

At issue was the suit by four directors of the former West Jersey Community Bank in Fairfield, N.J., who claimed they were shortchanged when Sovereign Bank of Wyomissing, Pa., bought their institution in 1995. They said their lawyers failed to incorporate into the merger agreement Sovereign's oral promises to form a post-merger advisory board and, as a result, the plaintiffs lost out on stock options and fees they would have received from serving on the board.

The bank retained Sills Cummis in 1995 to represent it in the Sovereign negotiations. Soon after, the law firm instructed the plaintiffs and other board members in a letter that their duty of care included "carefully reviewing all documents and other items presented" and that "blind reliance on the opinions of legal or financial advisors without independent fact gathering or decision-making" was "viewed unfavorably by courts."

The merger agreement was approved on Sept. 29, 1995. It called for formation of the advisory board and for members of that board to receive stock options if the bank were to adopt a stock option plan for its main board of directors.

But Sovereign never formed the advisory board, and when it created a stock options plan for its board of directors in 1997, it never gave that benefit to the plaintiffs -- John Sullivan, Peter Stewart, Raymond Durkin and Leonard Schneider.

In December 1999, the plaintiffs and two other former West Jersey directors sought to enforce the oral promises in a suit against Sovereign in federal court in Newark. Sovereign moved for dismissal for failure to state a claim on which relief could be granted, and the case was dismissed in January 2001.

The plaintiffs then filed their malpractice suit against Sills Cummis and lawyers Steven Gross, Frederick Tudor and Victor Boyajian on Jan. 21, 2003. Hudson County Superior Court Judge Maurice Gallipoli granted summary judgment to the defendants, finding the suit time-barred and meritless."

Full post as published by New York Attorney Malpractice Blog on August 20, 2010 (boomark / email).