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Law Firm Wins in Attorney Fee Dispute Litigation

January 31, 2017 | Posted in : Ethics & Professional Responsibility, Fee Dispute, Fee Dispute Litigation / ADR, Fee Issues on Appeal

A recent Bloomberg BNA story, by Joan C, Rogers, “Alston & Bird Beats Suit Disputing $10M in Legal Fees,” reports that Alston & Bird rightfully got out early from a client’s suit alleging the firm’s negligence cost the client an extra $10 million in legal fees, a New York appeals court in Manhattan said.

The complaint just lodged “hindsight arguments” about what Alston & Bird allegedly did wrong in defending a client in a patent infringement suit, the New York Supreme Court, Appellate Division, First Department said.  Usually malpractice plaintiffs are suing because they lost the underlying case.  But the unhappy client here theorized that it would have won more speedily — with a much lower legal tab — but for Alston & Bird’s pretrial missteps.

Alston & Bird initially represented Brookwood Cos. Inc. in the underlying patent infringement action.  However, the company went to trial with different attorneys and ultimately prevailed.  Brookwood claimed that it would have achieved the same result more quickly and economically but for Alston & Bird’s pretrial negligence.  In particular, Brookwood said Alston & Bird mishandled its defense under a federal statute on patent infringement for the benefit of the U.S. government, by not bringing key evidence to the court‘s attention.

The trial court was right to dismiss the complaint against Alston & Bird, the appeals court concluded.  The court said the issue here was whether absent Alston & Bird’s alleged negligence, Brookwood would have sustained the expense of having to go to trial and further defend the infringement claims against it.

“Decisions regarding the evidentiary support for a motion or the legal theory of a case are commonly strategic decisions and a client’s disagreement with its attorney’s strategy does not support a malpractice claim, even if the strategy had its flaws,” the court said.  “[A]n attorney is not held to the rule of infallibility and is not liable for an honest mistake of judgment where the proper course is open to reasonable doubt,” the court said, quoting a 1990 New York appellate decision.

“Moreover, an attorney’s selection of one among several reasonable courses of action does not constitute malpractice,” the court said. Brookwood didn’t allege sufficient facts to support its negligence claims, it said.  The court also upheld dismissal of Brookwood’s attorney deceit claim against Alston & Bird under N.Y. Jud. Law §487(1).

Brookwood claimed that Alston & Bird was deceitful in getting Brookwood to retain the firm as its litigation counsel, and that Alston & Bird made litigation decisions to drag out the case for its own financial gain.  But the facts alleged weren’t sufficient to find that Alston & Bird intentionally deceived Brookwood or otherwise acted egregiously enough to violate Section 487, the court said.