Legal malpractice claim can be pursued against first attorney in matrimonial action for inadequate settlement when subsequent settlement does not place litigant in as good a posture, even if litigant describes subsequent settlement as reasonable.

The plaintiff resolved a property dispute with her ex-husband and entered into a settlement agreement with a reservation of rights to sue her former attorney for legal malpractice. In placing the settlement on the record, the plaintiff stated that the settlement was reasonable, but not fair or equitable. Rather, under the circumstances, she believed that "it's the best (she) could do and (she was) satisfied with it."

Subsequently, the plaintiff filed her malpractice action against her former attorney, who then successfully obtained summary judgment on the basis of Puder v. Buechel, 183 N.J. 428, 874 A.2d 534 (2005), in which the Supreme Court held that a matrimonial litigant who resolves a dispute and testifies that the second settlement is acceptable, fair and a voluntary compromise before a judicial determination as to the validity and enforceability of the prior settlement agreement, may not thereafter sue the prior attorney for the balance not received in the original settlement.

The Supreme Court reversed the summary judgment and distinguished Gere from Puder. Significant to the Court's decision was the distinction that in Gere, unlike Puder, the plaintiff was not returned to the position she would have been in had the attorney not allegedly committed malpractice. The Court also attempted to distinguish Puder by noting that the plaintiff settled on the subsequent agreement before the court had ruled on the validity of the first agreement, thereby waiving her rights with full knowledge of the issues outstanding in the first agreement. In Gere, the parties also entered into a subsequent settlement agreement before the court ruled on post-judgment proceedings regarding the disputed aspect that arose from the prior settlement.

Gere instructs that the Puder holding, which barred a legal malpractice claim against the former attorney by a matrimonial client who agreed on the record that a settlement was fair, reasonable and voluntary, is no longer valid. Rather, the court is required to explore whether or not the complaining litigant has received all that he/she would have received in the first settlement had no malpractice occurred. Matrimonial counsel, when placing the settlement on the record, should expressly ask the client not only if the settlement is fair, reasonable and voluntary, but also if the client has obtained all that was sought.

Case Law Alert - 2nd Qtr 2012