Legal Updates for Lawyers' Professional Liability - RESULTS & THOUGHT LEADERSHIP

January 3, 2022

LAWYERS’ PROFESSIONAL LIABILITY RESULTS*

Jack Slimm and Jeremy Zacharias (Mount Laurel, NJ), obtained a precedent setting decision in Johnson v. McClellan, A-2683-19 (App. Div. July 19, 2021), certif. denied 2021 WL 5446825, where the Appellate Division reversed the trial court’s ruling which held that a law professor, an attorney admitted to practice in Pennsylvania, was liable for hundreds of thousands of dollars in damages in connection with the alleged unauthorized practice of law and obtaining a referral fee. The trial court entered judgment against the professor, ordering a disgorgement of the referral fee, treble damages and attorneys’ fees under New Jersey’s Criminal Statute N.J.S.A. 2C:21-22(a). The trial court ruled that the professor, by accepting a referral fee and by consulting on an underlying medical malpractice case which was filed in New Jersey, had committed the unauthorized practice of law because the professor was not admitted to practice in New Jersey.

On appeal, the Appellate Division held that the trial court erred in finding that the professor violated New Jersey’s Criminal Statute. In addition, the Appellate Division agreed with the professor’s argument that he did not violate the Rules of Professional Conduct. The court held that an attorney admitted to practice before the highest court of another state may engage in the lawful practice of law in New Jersey if the out-of-state lawyer’s practice in New Jersey is occasional and the lawyer associates himself with a lawyer admitted in New Jersey who will be responsible for the conduct of the out-of-state lawyer in the matter.

The Appellate Division also ruled that the trial court erred in determining that the receipt of a fee would amount to an independent instance of unauthorized practice of law. The Appellate Division found that such a finding would have rendered every attorney who violates an RPC relating to the unauthorized practice of law open to criminal prosecution. Commentators have written that this case could spare other attorneys from criminal prosecution.

Subsequently, the plaintiff filed a petition for certification before the New Jersey Supreme Court, which Jack and Jeremy successfully opposed. The Supreme Court, in its decision, denied the plaintiff’s petition, with costs in favor of the Professor, on November 19, 2021.

On December 9, 2021, the New Jersey Law Journal recognized this case as one of the top three legal victories in 2021. See Toutant, Charles, “Law’s Winners and Losers of 2021: Some Saw Breakthroughs, While Others Hit Rock Bottom,” NEW JERSEY LAW JOURNAL, December 9, 2021.

Also handled by Jack Slimm and Jeremy Zacharias, in 2820 Mt. Ephraim Avenue v. Dembo Brown & Burns, LLP, 2021 WL 2934611, certif. denied, 2021 WL 5879486 (December 10, 2021), the New Jersey Appellate Division affirmed a trial court decision granting summary judgment in a $10 million tortious interference and defamation case filed by borrowers against the attorneys for a lender bank. This case arose out of an underlying deficiency and foreclosure action filed by a bank due to the plaintiff’s failure to repay a multi-million dollar loan used to finance the purchase of real estate.

During the course of negotiations to resolve the debt, the bank’s counsel had discussions with the plaintiff’s new lender. The plaintiff alleged that during these discussions, the bank’s attorney called the plaintiff a “wannabe gangster.”

On appeal, Jack and Jeremy successfully argued that the trial court was correct in dismissing this case on summary judgment. The Appellate Division held that the trial judge correctly concluded that a statement made by the bank’s attorney to a potential new lender calling the plaintiff a “wannabe gangster” was mere name calling, not actionable defamation. Counsel for the bank’s attorney argued on appeal that this pejorative was simply name calling and did not rise to the level of actionable defamation or slander. The claims for tortious interference were based upon the lost opportunity since the new lender rescinded its conditional commitment after the alleged statement was made. The Appellate Division also held that the trial court was correct in holding that the statement was protected under the litigation privilege. The Appellate Division held that the litigation privilege is not confined to the courtroom, but extends to all statements or communications in connection with judicial proceedings.

Howard Mankoff (Roseland, NJ) represented an attorney who was sued by a former client, whom the attorney represented in a personal injury claim. The plaintiff alleged that the attorney failed to file suit within the time allowed by the statute of limitations. We argued in our summary judgment motion that the attorney sent two letters to the plaintiff, advising that the attorney would not file suit and further informing the plaintiff when the statute of limitations would expire. The plaintiff, who filed suit four years later, argued that he did not receive the letters and the attorney was obligated to do more than send letters. We successfully argued that the plaintiff failed to overcome the presumption that a letter, correctly addressed, was received. The Appellate Division affirmed, adopting our argument that the plaintiff could not overcome the presumption by simply claiming he did not receive the letters. The appeal was handled by Walter Kawalec (Mount Laurel, NJ).

Aaron Moore (Philadelphia, PA) handled a complaint filed with the Pennsylvania Lawyers’ Fund for Client Security against our client attorney, which was successfully dismissed as unsupported. In a second case handled by Aaron, a surcharge claim was filed against our client attorney in the Philadelphia Orphans’ court, which was dismissed as unsupported.

Edwin Schwartz (Harrisburg, PA) successfully settled a $1.5 million liability claim for $450,000 by effectively challenging the damage model as speculative with plaintiffs’ counsel and the mediator. In a second matter, Ed convinced opposing counsel to drop his efforts in pursuing a claim of ineffective assistance of counsel against our client in an underlying criminal matter. Ed also received a favorable Report and Recommendation from a U.S. Magistrate Judge recommending dismissal with prejudice based on his motion to dismiss. Finally, two of Ed’s cases were dismissed with prejudice based on preliminary objections.

*Prior Results Do Not Guarantee A Similar Outcome

THOUGHT LEADERSHIP

Josh Byrne (Philadelphia, PA) published articles in the Legal Intelligencer over the last quarter on lessons to be learned from the Disciplinary Board’s disbarments in 2021 and considerations in purchasing legal malpractice insurance. He also published an article for the PLUS Blog on the issues surrounding employing a formerly admitted attorney. In addition to authoring articles, Josh has presented on professional liability issues surrounding cyber-attacks at the Lackawanna Bench Bar Conference as well as to the Pennsylvania Bar Association.

Edwin Schwartz (Harrisburg, PA) presented the program “Avoiding Legal Malpractice” to the Dauphin County Bar Association on December 15th.

Charlene Seibert (Pittsburgh, PA) presented “Role as a Risk Manager in Avoiding Legal Malpractice Centre” to the County Bar Association’s Bench Bar.

^{The material in this law alert has been prepared for our readers by Marshall Dennehey Warner Coleman & Goggin. It is solely intended to provide information on recent legal developments, and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. If you receive the alerts in error, please send a note tamontemuro@mdwcg.com. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2022 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved.}